EXHIBIT 10.43
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXXXXX.XXX, INC. (DELAWARE),
XXXXXXXX.XXX, INC. (CALIFORNIA),
RG ACQUISITION CORP.,
ACTIVE XXX.XXX, INC. (FLORIDA)
AND
TICKETMASTER ONLINE-CITYSEARCH, INC.
DATED AS OF NOVEMBER 17, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................................1
ARTICLE II AGREEMENT TO PURCHASE AND SELL STOCK..................................................................3
2.1. Authorization............................................................................3
2.2. Agreement to Purchase and Sell Stock.....................................................3
2.3. Agreement to Purchase Stock by Kettle and Austin.........................................3
2.4. Cash Adjustment to Aggregate Purchase Price..............................................4
2.5. Cost of Capital..........................................................................4
ARTICLE III CLOSING; DELIVERY....................................................................................4
3.1. The Closing..............................................................................4
3.2. Delivery.................................................................................4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE RG COMPANIES AND ACTIVEUSA......................................5
4.1. Organization, Good Standing and Qualification............................................5
4.2. Capitalization...........................................................................5
4.3. Subsidiaries.............................................................................6
4.4. Due Authorization........................................................................6
4.5. Valid Issuance of Stock..................................................................6
4.6. Liabilities..............................................................................7
4.7. Title to Properties and Assets...........................................................7
4.8. Intellectual Property; Software..........................................................7
4.9. Material Contracts and Obligations......................................................11
4.10. Litigation.............................................................................12
4.11. Required Consents......................................................................12
4.12. Compliance with Other Instruments......................................................12
4.13. Disclosure.............................................................................12
4.14. Registration Rights....................................................................13
4.15. Insurance..............................................................................13
4.16. Financial Statements...................................................................13
4.17. Certain Actions........................................................................13
4.18. Activities Since Balance Sheet Date....................................................14
4.19. Tax Matters............................................................................14
4.20. Tax Elections..........................................................................15
4.21. Environmental Matters..................................................................15
4.22. Employee Benefits......................................................................15
4.23. Interested Party Transactions..........................................................16
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4.24. Stock Restriction Agreements...........................................................16
4.25. Minute Books...........................................................................16
4.26. Labor Agreements and Actions...........................................................16
4.27. Year 2000 Compliance...................................................................17
4.28. No Restrictions on Shares..............................................................17
4.29. Merger; Merger Agreement...............................................................17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................17
5.1. Authorization...........................................................................18
5.2. Investigation; Economic Risk............................................................18
5.3. Purchase for Own Account................................................................18
5.4. Exempt from Registration; Restricted Securities.........................................18
5.5. Further Limitations on Disposition......................................................18
5.6. Restrictive Legends.....................................................................18
5.7. Removal of Restrictive Legend...........................................................19
5.8. Status of Purchaser.....................................................................19
5.9. SEC Documents; TMCS Financial Statements................................................19
5.10. Valid Issuance of Purchaser Shares.....................................................19
ARTICLE VI CERTAIN COVENANTS....................................................................................20
6.1. Use of Proceeds.........................................................................20
6.2. Invention Assignment and Confidentiality Agreement......................................20
6.3. Expenses................................................................................20
6.4. Conduct of the Business.................................................................20
6.5. Further Assurances......................................................................21
6.6. Confidentiality; Public Announcements...................................................22
6.7. Other Investments.......................................................................22
6.8. Registration Statement..................................................................23
6.9. Merger..................................................................................23
ARTICLE VII CONDITIONS TO CLOSING...............................................................................24
7.1. Conditions to Each Party's Obligations..................................................24
7.2. Conditions to Obligation of the Purchasers..............................................24
7.3. Conditions to Obligation of the Company.................................................26
ARTICLE VIII INDEMNIFICATION....................................................................................26
8.1. Agreement to Indemnify..................................................................26
8.2. Survival of Representations, Warranties and Covenants...................................27
8.3. Limitation..............................................................................27
8.4. Claims for Indemnification..............................................................27
8.5. Defense of Claims.......................................................................28
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ARTICLE IX MISCELLANEOUS........................................................................................28
9.1. Governing Law...........................................................................28
9.2. Captions................................................................................28
9.3. Successors and Assigns..................................................................28
9.4. Entire Agreement........................................................................29
9.5. Notices.................................................................................29
9.6. Amendments and Waivers..................................................................30
9.7. Delays or Omissions.....................................................................31
9.8. Finder's Fees...........................................................................31
9.9. Counterparts; Effectiveness.............................................................31
9.10. Severability...........................................................................31
9.11. Arbitration............................................................................31
9.12. Construction...........................................................................33
9.13. Cumulative Remedies....................................................................33
9.14. Third Party Beneficiaries..............................................................33
EXHIBITS
Exhibit A Merger Agreement
Exhibit B Amended and Restated Certificate of Incorporation
Exhibit C Distribution Agreement
Exhibit D Escrow Agreement
Exhibit E Amended and Restated Investor Rights Agreement
Exhibit F Amended and Restated Restricted Stock and Co-Sale Agreement
Exhibit G Supplemental Stock Restriction Agreement
Exhibit H Proprietary Inventions Agreement
Exhibit I Amended and Restated Voting Agreement
SCHEDULES
Schedule 4.2(c)..............................................Options, Warrants, Reserved Shares
Schedule 4.2(d) .............................................Outstanding Security Holders
Schedule 4.7(a) .............................................Title to Properties and Assets
Schedule 4.7(a) .............................................Real Property
Schedule 4.8(b)..............................................Intellectual Property Rights
Schedule 4.8(d)..............................................Intellectual Property
Schedule 4.8(g) .............................................Software
Schedule 4.8(h)..............................................Licensed Software
Schedule 4.8(i)..............................................Software Agreements
Schedule 4.9.................................................Material Contracts
Schedule 4.15 ...............................................Insurance
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Schedule 4.16................................................Financial Statements
Schedule 4.20................................................Tax Elections
Schedule 4.23................................................Interested Party Transactions
Schedule 6.4 ................................................Capital Expenditures
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SERIES D PREFERRED STOCK PURCHASE AGREEMENT
This Series D Preferred Stock Purchase Agreement (the "AGREEMENT") is
entered into as of November 17, 1999 (the "EFFECTIVE DATE") by and among
XxxxXxxx.xxx, Inc., a Delaware corporation (the "COMPANY"), XxxxXxxx.xxx, Inc.,
a California corporation ("RG-CALIFORNIA"), RG Acquisition Corp., a Delaware
corporation (individually, "ACQUISITION SUB" and collectively with the Company
and RG-California, the "RG COMPANIES"), Active XXX.xxx, Inc., a Florida
corporation ("ACTIVEUSA"; upon consummation of the Merger (defined below) all
references to ActiveUSA shall be deemed references to Acquisition Sub), and the
purchasers identified on Schedule A hereto (each a "PURCHASER" and collectively,
the "PURCHASERS").
R E C I T A L S
WHEREAS, pursuant to a Merger Agreement and Plan of Reorganization to
be entered into by and among the Company, Acquisition Sub and ActiveUSA (the
"MERGER AGREEMENT"), the form of which is attached hereto as EXHIBIT A, and the
applicable laws of the States of Delaware and Florida, the Company shall form
Acquisition Sub and ActiveUSA will be merged with and into Acquisition Sub,
after which Acquisition Sub shall continue as a wholly-owned subsidiary of the
Company (the "MERGER"); and
WHEREAS, simultaneously with or immediately following the Merger, the
Purchasers will purchase from the Company and the Company will sell to the
Purchasers 5,838,813 shares of Series D-1 Preferred Stock and 1,167,315 shares
of Series D-2 Preferred Stock of the Company (the "SHARES") allocated among the
Purchasers as set forth on Schedule A hereto, in exchange for the consideration
set forth in Article II and Schedule A hereto.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the respective meanings given
thereto in the sections indicated below:
DEFINED TERM SECTION PAGE
AAA..........................................................Section 9.11........................................32
Acquisition Sub..............................................Preamble.............................................1
Act..........................................................Section 4.5..........................................7
ActiveUSA....................................................Preamble.............................................1
Aggregate Purchase Price.....................................Section 2.2..........................................3
Aggregate Threshold..........................................Section 8.3.........................................27
Agreed Amount................................................Section 2.4..........................................4
Agreement....................................................Preamble.............................................1
Austin.......................................................Section 2.3..........................................4
Balance Sheet Date...........................................Section 4.16........................................13
Cash Amount..................................................Section 2.2..........................................3
CERCLA.......................................................Section 4.21........................................15
Certificate..................................................Section 2.1..........................................3
Closing Date.................................................Section 3.1..........................................4
Closing......................................................Section 3.1..........................................4
Code.........................................................Section 4.20........................................15
Common Stock.................................................Section 4.2..........................................5
Company Intellectual Property Assets.........................Section 4.8..........................................8
Company Marks and Patents....................................Section 4.8..........................................8
Company......................................................Preamble.............................................1
Conversion Shares............................................Section 4.2..........................................6
Copyrights...................................................Section 4.8..........................................7
Designated Software Agreements...............................Section 4.8.........................................11
Disputing Parties............................................Section 9.11........................................31
Disputing Party..............................................Section 9.11........................................31
Distribution Agreement.......................................Section 2.2..........................................3
Effective Date...............................................Preamble.............................................1
Employee Pension Benefit Plan................................Section 4.22........................................16
ERISA........................................................Section 4.22........................................16
Escrow Agent.................................................Section 3.2..........................................4
Escrow Agreement.............................................Section 3.2..........................................4
Exchange Act.................................................Section 5.9.........................................19
Financial Statements.........................................Section 4.16........................................13
GAAP.........................................................Section 4.16........................................13
Hazardous Materials..........................................Section 4.21........................................15
Indemnifying Party...........................................Section 8.1.........................................27
Indemnitee...................................................Section 8.1.........................................27
Intellectual Property Rights.................................Section 4.8..........................................7
Intellectual Property........................................Section 4.8..........................................8
Investment Transactions......................................Section 6.7.........................................22
Kettle.......................................................Section 2.3..........................................3
Licensed Software............................................Section 4.8.........................................10
Licensed Technology Agreements...............................Section 4.8.........................................10
Marks........................................................Section 4.8..........................................7
Material Contracts...........................................Section 4.9.........................................11
Merger Agreement.............................................Recitals.............................................1
Merger.......................................................Recitals.............................................1
Multiemployer Plan...........................................Section 4.22........................................16
Net Proceeds.................................................Section 2.4..........................................4
Owned Software...............................................Section 4.8.........................................10
Patents......................................................Section 4.8..........................................7
Proceeding...................................................Section 4.10........................................12
Purchaser Shares.............................................Section 2.2..........................................3
2
Purchaser....................................................Preamble.............................................1
Real Property................................................Section 4.7..........................................7
Registration Statement.......................................Section 6.8.........................................23
Required Consents............................................Section 4.11........................................12
RG Companies.................................................Preamble.............................................1
RG-California................................................Preamble.............................................1
SEC..........................................................Section 4.14........................................13
SEC Documents................................................Section 5.9.........................................19
Shares.......................................................Recitals.............................................1
Software.....................................................Section 4.8..........................................8
Taxes........................................................Section 4.19........................................14
Tax Returns..................................................Section 4.19........................................15
TMCS Financial Statements....................................Section 5.9.........................................19
Trade Secrets................................................Section 4.8..........................................8
ARTICLE II
AGREEMENT TO PURCHASE AND SELL STOCK
2.1 AUTHORIZATION. As of the Closing (as defined below), the Company
will have authorized the issuance, pursuant to the terms and conditions of this
Agreement, of (a) up to 6,582,814 shares of the Company's Series D-1 Preferred
Stock, $0.001 par value and (b) up to 1,167,315 shares of the Company's Series
D-2 Preferred Stock, $0.001 par value, each having the rights, preferences,
privileges and restrictions set forth in the Amended and Restated Certificate of
Incorporation of the Company attached to this Agreement as EXHIBIT B (the
"CERTIFICATE").
2.2 AGREEMENT TO PURCHASE AND SELL STOCK. A Subject to the terms and
conditions hereof, the Company will issue and sell to Ticketmaster
Online-CitySearch, Inc., a Delaware corporation ("TMCS"), and TMCS agrees to
purchase from the Company, the number of shares of Series D-1 Preferred Stock
and Series D-2 Preferred Stock set forth opposite TMCS's name on Schedule A
hereto at a price of $2.57 per share, for consideration consisting of (a) a cash
amount of $2.5 million (the "CASH AMOUNT"), (b) that number of shares of TMCS's
Class B Common Stock, par value $0.01 (the "PURCHASER SHARES"), determined by
dividing $10.5 million by the average trading closing trading price on Nasdaq of
TMCS's Class B Common Stock for each of the last five trading days, intended to
have a net value to the Company of $10 million and (c) a cash amount of $1500
and a credit of $2,998,500 for services to be provided by TMCS to the Company
pursuant to the terms of that certain Distribution Agreement between the Company
and TMCS, the substantially final form of which is attached hereto as EXHIBIT C
(the "DISTRIBUTION AGREEMENT"), for an aggregate purchase price of $15.5 million
(the "AGGREGATE PURCHASE PRICE") as set forth on Schedule A; provided, that TMCS
may elect to deliver a cash amount of $10 million to the Company in full
satisfaction of its obligation to deliver the Purchaser Shares pursuant to
clause (b) above.
2.3 AGREEMENT TO PURCHASE STOCK BY KETTLE AND AUSTIN. A Subject to the
terms and conditions hereof, the Company will issue and sell to Kettle Partners
LP ("KETTLE")
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and Austin Ventures VI, L.P. ("AUSTIN") the number of shares of Series D-1
Preferred Stock set forth across from their names on Schedule A hereto, at a
price of $2.57 per share, for consideration of cash payable by check to the
Company or by wire transfer to the Company's designated bank account.
2.4 CASH ADJUSTMENT TO AGGREGATE PURCHASE PRICE. The Company and TMCS
acknowledge and agree that the net proceeds (the gross proceeds minus
underwriter discounts and commissions) realized from the sale of the Purchaser
Shares by the Company following the Closing Date pursuant to the Registration
Statement (as defined below) (the "NET PROCEEDS"), will equal Ten Million
Dollars ($10,000,000) (the "AGREED AMOUNT"). Within ten (10) business days
following the sale of the Purchaser Shares by the Company, in the event that the
Agreed Amount exceeds the Net Proceeds, TMCS shall pay to the Company an amount
in cash equal to such excess; in the event that the Net Proceeds exceed the
Agreed Amount, pursuant to the terms and conditions of the Escrow Agreement (as
defined below) $10 million of the Net Proceeds will be delivered to the Company
and the remainder will be delivered to TMCS.
2.5 COST OF CAPITAL. In the event the Agreed Amount is not paid in cash
to the Company on or prior to the 60th day following the Closing, for the period
beginning on the day following the 60th day following the Closing until the
Agreed Amount is paid in cash to the Company TMCS shall pay the Company interest
on the Agreed Amount, which interest shall be calculated at a rate of the prime
rate plus 2% per annum.
ARTICLE III
CLOSING; DELIVERY
3.1 THE CLOSING. The closing (the "CLOSING") of the transactions
contemplated by this Agreement shall be held at the offices of Xxxxxx, Xxxx &
Xxxxxxxx LLP at 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, on
November __, 1999, or at such other time and place as to which the Company and
Purchaser may agree (the "CLOSING DATE").
3.2 DELIVERY. At the Closing, the Company will deliver to each
Purchaser the certificates representing the Shares to be purchased by such
Purchaser hereunder and (i) Kettle and Austin will deliver to the Company cash
in the amount of their respective purchase price as set forth on Schedule A
hereto, and (ii) TMCS will deliver to the Company (a) the Distribution
Agreement, (b) the Cash Amount by wire transfer (to a bank account designated by
the Company in writing at least one (1) business day prior to the Closing). The
Purchaser Shares shall be delivered into an escrow account pursuant to the
Escrow Agreement (the "ESCROW AGREEMENT") to be entered into in substantially
the form attached hereto as EXHIBIT D by and among TMCS, the Company and an
escrow agent mutually agreeable to TMCS and the Company (the "ESCROW AGENT"). In
the event the Registration Statement (as defined below) has not been declared
effective by the SEC on or prior to the 120 day anniversary of the Closing, TMCS
shall pay to the Company the Agreed Amount in cash and TMCS and the Company
agree to instruct the Escrow Agent to deliver all of the Purchaser Shares to
TMCS. Any time prior to the sale of the Purchaser Shares by the Company, TMCS
may elect to pay a cash amount of $10 million to the
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Company, in which case TMCS and the Company agree to instruct the Escrow
Agent to deliver all of the Purchaser Shares to TMCS.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE RG COMPANIES AND ACTIVEUSA
The RG Companies, jointly and severally, and ActiveUSA, where expressly
included, hereby represent and warrant to the Purchasers as follows, except as
set forth in the Schedules attached hereto which may be updated prior to the
Closing:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the RG
Companies is a corporation duly organized, validly existing and in good standing
under, and by virtue of, the laws of its state of incorporation, and has all
requisite corporate power and authority to own its properties and assets and to
carry on its business as now conducted and as presently proposed to be
conducted. Each of the RG Companies is qualified to do business as a foreign
corporation in each jurisdiction where failure to be so qualified would have a
material adverse effect on its financial condition, business, prospects or
operations.
4.2 CAPITALIZATION. Immediately prior to the Closing, the authorized
capital stock of the Company will consist of the following:
(a) COMMON STOCK. A total of 50,000,000 authorized shares of
Common Stock, $0.001 par value (the "COMMON STOCK"), of which 13,064,661 shares
are issued and outstanding.
(b) PREFERRED STOCK. A total of 17,326,523 authorized shares of
Preferred Stock, $0.001 par value, of which:
(i) 641,500 shares are designated Series A-1 Preferred
Stock, of which 641,500 are issued and outstanding;
(ii) 750,000 shares are designated Series A-2 Preferred
Stock, of which 750,000 are issued and outstanding;
(iii) 405,882 shares are designated Series A-3 Preferred
Stock, of which 405,882 are issued and outstanding;
(iv) 5,050,000 shares are designated Series B Preferred
Stock, of which 5,050,000 are issued and outstanding;
(v) 2,729,012 shares are designated Series C Preferred
Stock, of which 2,729,012 are issued and outstanding;
(vi) 6,582,814 shares are designated Series D-1 Preferred
Stock, none of which are issued and outstanding; and
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(vii) 1,167,315 shares are designated Series D-2
Preferred Stock, none of which are issued and outstanding.
(c) OPTIONS, WARRANTS AND RESERVED SHARES. The Company has
reserved 7,750,129 shares of its Common Stock for possible issuance upon
conversion of the shares of Series D Preferred Stock to be issued hereunder
(the "CONVERSION SHARES"). Except as set forth on SCHEDULE 4.2(c), there are
no options, warrants, conversion privileges or other rights, or agreements
with respect to the issuance thereof, presently outstanding to purchase any
of the capital stock of the Company. Except as set forth on SCHEDULE 4.2(c),
no shares (including the Shares and the Conversion Shares) of the Company's
outstanding capital stock, or stock issuable upon exercise or exchange of any
outstanding options or other stock issuable by the Company, are subject to
any rights of first refusal, preemptive rights or other rights to purchase
such stock (whether in favor of the Company or any other person), pursuant to
any agreement or commitment of the Company. Except as set forth on SCHEDULE
4.2(c) and except for the transactions contemplated by this Agreement, the
Company is not currently a party to or subject to any written or oral
agreements or understandings to issue any capital stock of the Company.
(d) OUTSTANDING SECURITY HOLDERS. SCHEDULE 4.2(d) sets forth
a complete list of all outstanding shareholders, option holders and other
security holders of the Company as of the Effective Date.
4.3 SUBSIDIARIES. The Company owns all of the issued and
outstanding capital stock of RG-California and Acquisition Sub. Except as set
forth in the preceding sentence, none of the RG Companies presently owns or
controls, directly or indirectly, any interest in any other corporation,
partnership, trust, joint venture, association, or other entity.
4.4 DUE AUTHORIZATION. All corporate action on the part of each of
the RG Companies, its officers, directors and shareholders necessary for the
authorization, execution and delivery of, and the performance of all
obligations of such RG Companies under, this Agreement and the authorization,
issuance, reservation for issuance and delivery of all of the Shares being
sold under this Agreement and of the Conversion Shares has been taken or will
be taken prior to the Closing. This Agreement is a valid and binding
obligation of each of the RG Companies enforceable in accordance with its
terms, subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws affecting creditors'
rights generally and to general equitable principles.
4.5 VALID ISSUANCE OF STOCK.
(a) The Shares, when issued, sold and delivered in accordance
with the terms of this Agreement, will be duly and validly issued, fully paid
and non-assessable. The Conversion Shares have been duly and validly reserved
for issuance and, upon issuance in accordance with the terms of the
Certificate, will be duly and validly issued, fully paid and non assessable.
(b) The outstanding shares of the capital stock of each of the
RG Companies are duly and validly issued, fully paid and non assessable, and
such shares of such
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capital stock, and all outstanding stock, options and other securities of
such RG Company have been issued in full compliance with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended
(the "ACT"), and the registration and qualification requirements of all
applicable state securities laws, or in compliance with applicable exemptions
therefrom, and all other provisions of applicable federal and state
securities laws, including, without limitation, anti-fraud provisions.
4.6 LIABILITIES. None of the RG Companies has any indebtedness
for borrowed money that any RG Company has, directly or indirectly, created,
incurred, assumed or guaranteed, or with respect to which such RG Company has
otherwise become directly or indirectly liable.
4.7 TITLE TO PROPERTIES AND ASSETS.
(a) Except as set forth on SCHEDULE 4.7(a), (i) each of the
RG Companies has, or will have, as of the Closing, a good and valid title to
or, in the case of leased properties or properties held under license, a good
and valid leasehold or license interest in, all of its material properties
and assets and (ii) each RG Company holds title to each such property and
asset free and clear of all liens, adverse claims, mortgages, pledges,
encumbrances, security interest or charge of any kind. The representations in
this SECTION 4.7 do not apply to the Marks, Content or Intellectual Property
Rights as to which only the representations in SECTION 4.8 shall apply.
(b) All material tangible assets of each of the RG Companies,
are, or will be as of the Closing, in all material respects in reasonably
serviceable operating condition and repair and are adequate for the conduct
of the businesses of the RG Companies in substantially the same manner as has
heretofore been conducted.
(c) SCHEDULE 4.7(c) sets forth a true and complete list of
all real property owned or leased by the RG Companies (collectively, the
"REAL PROPERTY"), including the location of, and a brief description of the
nature of the activities conducted on, such Real Property.
4.8 INTELLECTUAL PROPERTY; SOFTWARE.
(a) For all purposes of this Agreement,
(i) "INTELLECTUAL PROPERTY RIGHTS" means intellectual
property rights arising from or in respect of the following, whether
protected, created or arising under the laws of the United States or any
other jurisdiction: (A) fictional business names, trade names, service names,
registered and unregistered trademarks and service marks and logos (including
any Internet domain names currently used in the business by the RG
Companies), and applications therefor (collectively, "MARKS"); (B) patents,
patent rights and all applications therefor, including any and all
continuation, divisional, continuation-in-part, or reissue patent
applications or patents issuing thereon (collectively, "PATENTS"); (C)
copyrights and all registrations and applications therefor (collectively,
"COPYRIGHTS"); and (D) know-how, trade
7
secrets, inventions, discoveries, concepts, ideas, methods, processes,
designs, formulae, technical data, drawings, specifications, data bases and
other proprietary and confidential information, including customer lists, in
each case to the extent not included in the foregoing clauses (B) or (C)
(collectively, "TRADE SECRETS"; Marks, Patents, Copyrights and Trade Secrets
are, collectively, "INTELLECTUAL PROPERTY").
(ii) "SOFTWARE" means any and all (A) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (B) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (C) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, and
(D) all documentation, including user manuals and training materials,
relating to any of the foregoing, in each case developed or licensed by the
Company or any of its subsidiaries, or used in or necessary for the conduct
of their business, specifically excluding those items prepared for customers
in the operation of the Company's and its subsidiaries' business for which
the customer contractually has vested title.
(b) SCHEDULE 4.8(b) sets forth a complete and correct list of
all material Intellectual Property Rights, other than Trade Secrets, owned,
licensed or used by the RG Companies in the conduct of their businesses,
together with a listing of all material licenses, franchises, licensing
agreements (whether as licensor or licensee) to which any of the RG Companies
is a party, and any other material arrangement with respect to such
Intellectual Property Rights. All Intellectual Property Rights owned,
licensed or used by each of the RG Companies or used or exercised in or
necessary to the conduct of the RG Companies' businesses, are referred to
herein, collectively, as the "COMPANY INTELLECTUAL PROPERTY ASSETS."
(c) None of the RG Companies has, during the three years
preceding the date of this Agreement, been a party to any Proceeding, nor, to
the knowledge of the RG Companies, is any Proceeding threatened that involved
or is likely to involve a claim of infringement or misappropriation by any
person (including any governmental authority) of any Intellectual Property
Right of such person. No Company Intellectual Property Asset is subject to
any outstanding order, judgment, decree, or stipulation restricting the use
thereof by any of the RG Companies , or restricting the licensing thereof by
the RG Companies or any person. The current use and exploitation of the
Intellectual Property Assets by the RG Companies (including without
limitation the licensing or other distribution of Software to third parties
by any of the RG Companies) does not conflict with, infringe upon, violate or
result in the misappropriation of Intellectual Property Right of any person.
(d) Except as set forth on SCHEDULE 4.8(d):
(i) The RG Companies own all right, title and interest
in each of the Marks and Patents listed in SCHEDULE 4.8(b) (collectively, the
"COMPANY MARKS AND PATENTS"), free and clear of any and all liens and
encumbrances, and none of the RG Companies has received any notice or claim
(whether written or oral) challenging such RG Company's exclusive and
complete ownership of any Company Marks and Patents or suggesting that any
8
other Person has any claim of legal or beneficial ownership or other claim or
interest with respect thereto;
(ii) The Company Marks and Patents are, to the
knowledge of the RG Companies, legally valid and enforceable without any
material qualification, limitation or restriction on their use and none of
the RG Companies has received any notice or claim (whether written or oral)
challenging the validity or enforceability of any Company Marks and Patents;
(iii) None of the RG Companies has taken any action (or
failed to take any action), or used or enforced (or failed to use or enforce)
any of the Company Marks and Patents, in each case in a manner that would
result in the abandonment, cancellation, forfeiture, relinquishment, or
unenforceability of any of the Owned Marks or any of the RG Companies' rights
therein;
(iv) Each of the RG Companies has taken reasonable
steps to protect the RG Companies' rights in and to each of the Company Marks
and Patents and to prevent the unauthorized use thereof by any other Person
and has adequately policed the Company Marks and Patents against third party
infringement of which it is aware;
(v) None of the RG Companies has granted to any Person
any right, license or permission to use any of the Company Marks and Patents
except such grant of non-exclusive rights as may be made by the RG Companies
in the ordinary course of business;
(vi) All Company Marks and Patents that have been
registered have been effectively registered in accordance with all applicable
legal requirements and are currently in compliance with all legal
requirements;
(vii) All maintenance fees and the like due on Company
Marks and Patents have been timely paid;
(viii) No Xxxx that constitutes a Company Xxxx and Patent
has been or is now involved in any opposition or cancellation proceeding and, to
the RG Companies' knowledge, no such action is threatened with the respect to
any of the Company Marks and Patents; and
(ix) No Patent that constitutes a Company Xxxx and
Patent has been or is now involved in any interference, reissue,
reexamination or opposition proceeding or any other litigation or proceeding
of any kind.
(e) Each of the RG Companies has taken reasonable precautions
(as determined by such RG Company's management) to protect the secrecy of any
of its Trade Secrets that derive commercial value from not being generally
known to the public. Each of the RG Companies has the absolute and
unrestricted right to use all of the Trade Secrets and none of the Trade
Secrets owned by the RG Companies is subject to any liens or encumbrances,
and none of the RG Companies has received any notice or claim challenging
such RG Company's absolute and unrestricted right to use any of the Trade
Secrets or suggesting that any other person has any
9
claim with respect thereto. None of the Trade Secrets has been, or is alleged
to have been, misappropriated from any other person. Except under appropriate
confidentiality obligations, there has been no disclosure by the RG Companies
of material confidential information or other Trade Secrets that derive
commercial value from not being generally known to the public.
(f) Each of the RG Companies either owns the entire right,
title and interest in, to and under, or has acquired a license to use, any
and all Company Intellectual Property Assets which are material to the
conduct of their businesses in the manner that such businesses have
heretofore been or is presently being conducted or as contemplated to be
conducted pursuant to the RG Companies' current business plans, and to the
knowledge of the RG Companies no other Intellectual Property Rights are
necessary for the unimpaired continued operation of such businesses after the
Effective Time in the manner that such businesses have heretofore been or are
presently being conducted.
(g) SCHEDULE 4.8(g) sets forth a complete and accurate list
of all of the material Software (excluding Software that is available in
consumer retail stores and subject to "shrink-wrap" agreements). SCHEDULE
4.8(g) specifically identifies all material Software that is owned
exclusively by any of the RG Companies (the "OWNED SOFTWARE") and all
material Software that is used by any of the RG Companies in the conduct of
their business that is not exclusively owned by the RG Companies (excluding
software that is available in consumer retail stores and subject to
"shrink-wrap" agreements) (the "LICENSED SOFTWARE"). The RG Companies are the
owners of all right, title and interest in and to all Owned Software,
including without limitation all Copyrights, Trade Secrets and other
Intellectual Property Rights relating thereto, free and clear of any and all
liens and encumbrances, and none of the RG Companies has received any notice
or claim (whether written, oral or otherwise) challenging the RG Companies'
complete and exclusive ownership of all Owned Software and all such
Intellectual Property Rights relating thereto or claiming that any other
person has any claim of legal or beneficial ownership with respect thereto.
None of the RG Companies has assigned, licensed, transferred or encumbered
any of its rights in or to any Owned Software, including without limitation
any Copyrights, Trade Secrets or other Intellectual Property Rights with
respect thereto, to any person, excluding any non-exclusive licenses granted
to distributors or customers in the ordinary course of business. The RG
Companies have lawfully acquired the right to use the Licensed Software, as
it is used in the conduct of their business as presently conducted, and have
not exercised any rights in respect of any Licensed Software, including
without limitation any reproduction, distribution or derivative work rights,
outside the scope of any license expressly granted by the person from which
the right to use such Licensed Software was obtained.
(h) SCHEDULE 4.8(h) contains a complete and accurate list of
all material agreements and arrangements pertaining to any Licensed Software
or other technology used or practiced by any of the RG Companies as to which
a person other than a RG Company owns the applicable Intellectual Property
Rights (the "LICENSED TECHNOLOGY AGREEMENTS"). SCHEDULE 4.8(h) sets forth a
complete and accurate list of all royalty obligations of the RG Companies
under any Licensed Technology Agreements. All Licensed Technology Agreements
are in full force and effect, and none of the RG Companies is in material
breach thereof, nor are they aware of any claim or information to the
contrary. All Licensed Technology Agreements
10
will be maintained by the RG Companies in full force and effect through the
Effective Time. There are no outstanding, and, to the RG Companies'
knowledge, no threatened disputes with respect to any Licensed Technology
Agreement. The rights licensed under each Licensed Technology Agreement shall
be exercisable by the RG Companies on and after the Effective Time to the
same extent as prior to the Effective Time. The Licensed Technology
Agreements together expressly confer on the RG Companies valid and
enforceable rights under or in respect of all of the Intellectual Property
Rights that are not owned exclusively by the RG Companies and that are used
or practiced in the RG Companies' businesses. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will result in the impairment of any rights under, any
Licensed Technology Agreement.
(i) SCHEDULE 4.8(i) contains a complete and accurate list of
all material agreements and arrangements involving the grant by the RG
Companies to any person of any right to distribute, prepare derivative works
based on, support or maintain or otherwise commercially exploit any Software,
including without limitation any value-added reseller agreements, joint
development or marketing agreements or strategic alliance agreements
involving any Software (collectively, "DESIGNATED SOFTWARE AGREEMENTS"). All
Designated Software Agreements are in full force and effect, and none of the
RG Companies is in material breach thereof, nor are they aware of any claim
or basis for a claim to the contrary. All Designated Software Agreements will
be maintained by the RG Companies in full force and effect through the
Effective Time. There are no outstanding and, to the RG Companies' knowledge,
no threatened disputes or disagreements with respect to any Designated
Software Agreement. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will result in any
impairment of rights under any Designated Software Agreement.
(j) To the knowledge of the RG Companies, each of the RG
Companies has taken commercially reasonable actions in accordance with
industry practice to protect its Intellectual Property Rights in relation to
employees, independent contractors and consultants including entering into
agreements with such persons that assign to the relevant RG Company all of
the employee's, contractor's or consultant's rights, including all
Intellectual Property Rights, in any Intellectual Property created or
developed thereby that is used in connection with, or that relates to, the
business of the RG Companies. To the knowledge of the RG Companies, no
employee of the RG Companies has entered into any contract or other agreement
with any person (other than the relevant RG Company) that restricts or limits
in any way the scope or type of work in which the employee may be engaged for
the relevant RG Company or such subsidiary or requires the employee to
transfer, assign, or disclose information concerning the employee's work with
the RG Companies to any other person.
4.9 MATERIAL CONTRACTS AND OBLIGATIONS. All agreements, contracts,
leases, licenses, instruments, commitments (oral or written), indebtedness,
liabilities and other obligations to which one of the RG Company is a party
or by which it is bound that (a) are material to the conduct and operations
of its business and properties, (b) involve any of the officers, consultants,
directors, employees or shareholders of the RG Companies or (c) obligate one
of the RG Companies to share, license or develop any product or technology
(the "MATERIAL
11
CONTRACTS") are listed in SCHEDULE 4.9 and have been made available for
inspection by Purchaser and its counsel. For purposes of this SECTION 4.9,
"material" shall mean any agreement, contract, indebtedness, liability or
other obligation having an aggregate value, cost or amount in excess of U.S.
$25,000.
4.10. LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation ("PROCEEDING") pending (or, to the RG Companies'
knowledge, currently threatened) against any of the RG Companies, its
activities, properties or assets or, to the RG Companies' knowledge, against
any officer, director or employee of any of the RG Companies in connection
with such officer's, director's or employee's relationship with, or actions
taken on behalf of any of the RG Companies. To the RG Companies' knowledge,
there is no factual or legal basis for any such Proceeding that might result,
individually or in the aggregate, in any material adverse change in the
business, properties, assets, financial condition, affairs or prospects of
any of the RG Companies. None of the RG Companies is a party to or subject to
the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality and there is no Proceeding by
any RG Company currently pending or which any RG Company intends to initiate.
4.11 REQUIRED CONSENTS. All consents, approvals, orders,
authorizations or registrations, qualifications, designations, declarations
or filings on the part of the Company with any federal, state or local
governmental authority or otherwise required in connection with the
consummation of the transactions contemplated herein, including, without
limitation, the Merger (the "REQUIRED CONSENTS"), shall have been obtained
prior to and be effective as of the Closing except for such Required Consents
the failure to obtain will not have a material adverse effect on the RG
Companies. Based in part on the representations of Purchaser set forth in
ARTICLE V below, the offer, sale and issuance of the Shares in conformity
with the terms of this Agreement are exempt from the registration and
prospectus delivery requirements of the Act.
4.12 COMPLIANCE WITH OTHER INSTRUMENTS. None of the RG Companies is
in any violation, breach or default of any term of such RG Company's charter
or bylaws or in any material respect of any term or provision of any
mortgage, indenture, contract, agreement or instrument to which such RG
Company is a party or by which it may be bound, or of any provision of any
foreign or domestic state or federal judgment, decree, order, statute, rule
or regulation applicable to or binding upon such RG Company. The execution,
delivery and performance of and compliance with this Agreement and the
consummation of the transactions contemplated hereby will not result in any
such violation or default, or be in conflict with or constitute, with or
without the passage of time or the giving of notice or both, either a default
under any RG Company's charter or bylaws, or any material agreement or
contract of any RG Company, or, to the best of the RG Companies' knowledge, a
violation of any statutes, laws, regulations or orders, or an event which
results in the creation of any lien, charge or encumbrance upon any asset of
any of the RG Companies.
4.13. DISCLOSURE. No representation or warranty by the RG Companies,
or any of them, in this Agreement or in any statement or certificate signed
by any officer of any of the RG Companies furnished or to be furnished to the
Purchasers pursuant to this Agreement
12
contains 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 in which they are made, not misleading.
4.14. REGISTRATION RIGHTS. Except as provided in the Second Amended
and Restated Investor Rights Agreement, the Company has not granted or agreed
to grant any person or entity any rights (including "piggyback" registration
rights) to have any securities of the Company registered with the U.S.
Securities and Exchange Commission ("SEC") or any other governmental
authority.
4.15. INSURANCE. Set forth on SCHEDULE 4.15 is a complete and
correct list of all insurance policies of the RG Companies of any kind
currently in force and also sets forth for each insurance policy the type of
coverage, the name of the insureds, the insurer, the premium, the expiration
date, the deductibles and loss retention amounts and the amounts of coverage.
4.16. FINANCIAL STATEMENTS. SCHEDULE 4.16 sets forth (1) a balance
sheet of the Company dated September 30, 1999 (the "BALANCE SHEET DATE"), (2)
an income statement of the Company for the period ended September 30, 1999,
(3) a balance sheet of ActiveUSA dated September 30, 1999, and (4) an income
statement of ActiveUSA for the period ended September 30, 1999 (the
"FINANCIAL STATEMENTS"). Such Financial Statements (a) are in accordance with
the books and records of the Company or ActiveUSA, as applicable, (b) are
true, correct and complete and present fairly the financial condition of the
Company or ActiveUSA, as relevant, at the date or dates therein indicated and
the results of operations for the period or periods therein specified and (d)
have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis, except for the omission of
notes thereto and normal year-end audit adjustments or as otherwise noted
therein. The balance sheets of the Financial Statements disclose all of the
Company's or ActiveUSA's, as applicable, material debts, liabilities and
obligations of any nature, whether due or to become due, as of its date
(including, without limitation, absolute liabilities, accrued liabilities and
contingent liabilities) to the extent such debts, liabilities and obligations
are required to be disclosed in accordance with GAAP. The RG Companies have
good and marketable title to all assets set forth on the balance sheet of the
Financial Statements, except for such assets as have been spent, sold or
transferred in the ordinary course of business since the Balance Sheet Date.
4.17. CERTAIN ACTIONS. Since the Balance Sheet Date, none of the RG
Companies has: (a) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital
stock; (b) incurred any indebtedness for money borrowed or incurred any other
liabilities individually in excess of $25,000 or in excess of $100,000 in the
aggregate among all the RG Companies; (c) made any loans or advances to any
person, other than ordinary advances for travel expenses; (d) sold, exchanged
or otherwise disposed of any material assets or rights other than the sale of
inventory in the ordinary course of its business; or (e) entered into any
transactions with any of its officers, directors or employees or any entity
controlled by any of such individuals.
13
4.18. ACTIVITIES SINCE BALANCE SHEET DATE. Since the Balance Sheet
Date, there has not been:
(a) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of any of the RG Companies
(as presently conducted and as presently proposed to be conducted);
(b) any waiver by any of the RG Companies of a valuable right or
of a material debt owed to it;
(c) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by any of the RG Companies, except such
a satisfaction, discharge or payment made in the ordinary course of business
that is not material to the assets, properties, financial condition, operating
results or business of such RG Company;
(d) any material change or amendment to a material contract or
arrangement by which any RG Company or any of its assets or properties is bound
or subject, except for changes or amendments which are expressly provided for or
disclosed in this Agreement;
(e) any material change in any compensation arrangement or
agreement with any present or prospective employee, contractor or director not
approved by the applicable RG Company's Board of Directors; or
(f) to the RG Companies' knowledge, any other event or condition
of any character which would materially and adversely affect the assets,
properties, financial condition, operating results or business of any of the RG
Companies.
4.19. TAX MATTERS.
(a) Definitions. For purposes of this Agreement:
(i) the term "TAXES" means (A) all federal, state, local,
foreign and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts with respect thereto,
(B) any liability for payment of amounts described in clause (A) whether as a
result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law and (C) any liability for the payment of amounts described
in clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify
any other person; and
14
(ii) the term "TAX RETURNS" means all returns,
declarations, reports, statements and other documents required to be filed in
respect of Taxes.
(b) There have been no examinations or audits of any Tax
Returns of any of the RG Companies by any applicable federal, state or local
governmental agency, and there are in effect no waivers of applicable
statutes of limitations with respect to Taxes of any of the RG Companies for
any year.
(c) Each RG Company has accurately completed and timely filed
in correct form all Tax Returns required to have been filed by it, and each
RG Company has paid all Taxes required to be paid by it.
(d) There are no liens for Taxes (other than for current Taxes
not yet due and payable) upon the assets of the Company.
4.20. TAX ELECTIONS. The Company has not filed a consent pursuant to
the collapsible corporation provisions of Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "CODE") (or any corresponding provision
of state, local or foreign Tax law). SCHEDULE 4.20 sets forth all elections
with respect to Taxes that would have a material effect on the Company, its
financial condition, its business as presently conducted or presently
proposed to be conducted, or any of its properties or material assets.
4.21. ENVIRONMENTAL MATTERS. During the period that the RG Companies
have owned or leased their respective properties and facilities, (a) there
have been no disposals, releases or threatened releases of Hazardous
Materials (as defined below) on, from or under such properties or facilities,
(b) none of the RG Companies, nor, to the RG Companies' knowledge, any third
party, has used, generated, manufactured or stored on, under or about such
properties or facilities or transported to or from such properties or
facilities any Hazardous Materials. None of the RG Companies has any
knowledge of any presence, disposals, releases or threatened releases of
Hazardous Materials on, from or under any of such properties or facilities,
which may have occurred prior to such RG Company having taken possession of
any of such properties or facilities. For purposes of this Agreement, the
terms "disposal," "release" and "threatened release" shall have the
definitions assigned thereto by the U.S. Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et
seq., as amended ("CERCLA"). For the purposes of this SECTION 4.22,
"HAZARDOUS MATERIALS" shall mean any hazardous or toxic substance, material
or waste which is regulated under, or defined as a "hazardous substance,"
"pollutant," "contaminant," "toxic chemical," "hazardous material," "toxic
substance" or "hazardous chemical" under (i) CERCLA; (ii) the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 ET SEQ.;
(iii) the U.S. Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, ET SEQ.; (iv) the U.S. Toxic Substances Control Act, 15 U.S.C. Section
2601 ET SEQ.; (v) the U.S. Occupational Safety and Health Act of 1970, 29
U.S.C. Section 651 ET SEQ.; (vi) regulations promulgated under any of the
above statutes or (vii) any applicable state or local statute, ordinance,
rule, or regulation that has a scope or purpose similar to those statutes
identified above.
4.22 EMPLOYEE BENEFITS.
15
(a) For all purposes of this Agreement,
(i) "EMPLOYEE PENSION BENEFIT PLAN" means any employee pension
benefit plan, as defined in Section 3(2) of ERISA, that is subject to Title
IV of ERISA, other than a Multiemployer Plan.
(ii) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(iii) "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined
in Section 3(37) and 4001(a)(3) of ERISA.
(b) None of the RG Companies currently sponsors or has ever
sponsored, maintained, contributed to, or incurred an obligation to contribute
to, any Employee Pension Benefit Plan on behalf of or with respect to any
employee of the RG Companies. None of the RG Companies currently sponsors,
maintains or contributes to any Multiemployer Plan covering its employees.
4.23. INTERESTED PARTY TRANSACTIONS. Except as set forth SCHEDULE 4.23,
no officer or director of any of the Company or any "affiliate" or "associate"
(as those terms are defined in Rule 405 promulgated under the Act) of any such
person has had, either directly or indirectly, a material interest in: (a) any
person or entity which purchases from or sells, licenses or furnishes to any of
the RG Companies any goods, property, technology, intellectual or other property
rights or services or (b) any contract or agreement to which any RG Company is a
party or by which it may be bound or affected.
4.24. STOCK RESTRICTION AGREEMENTS. Each person who, pursuant to any
benefit, bonus or incentive plan of the Company, holds any currently outstanding
shares of common stock or other securities of Company or any option, warrant or
right to acquire such shares or other securities, has entered into or is
otherwise bound by, an agreement granting the Company (a) the right to
repurchase the shares, or to cancel the option, warrant or right, in the event
the holder's employment or services with the Company terminate for any reason,
subject to release of such repurchase or cancellation right pursuant to such
agreement or on terms and conditions specified by the Board of Directors of the
Company and (b) a right of first refusal with respect to all such shares. The
Company has furnished to Purchaser true and complete copies of the forms of all
such stock restriction agreements.
4.25 MINUTE BOOKS. The minute books of each of the RG Companies
provided to Purchasers contain a complete summary of all meetings of directors
and stockholders since the time of incorporation and reflect all transactions
referred to in such minutes accurately in all material respects.
4.26 LABOR AGREEMENTS AND ACTIONS. None of the RG Companies is
bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the RG Companies, has sought to represent any of
16
the employees, representatives or agents of such RG Company. There is no
strike or other labor dispute involving any RG Company pending, or to the
knowledge of the RG Companies, threatened, which could have a material
adverse effect on the assets, properties, financial condition, operating
results or business of the RG Companies, nor are the RG Companies aware of
any labor organization involving their employees. The RG Companies are not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with any of the RG Employees, nor do
any of the RG Companies have a present intention to terminate the employment
of any of the foregoing. The employment of each officer and employee is
terminable at the will of the applicable RG Company.
4.27 YEAR 2000 COMPLIANCE. Each of the RG Company's information
technology, including such RG Company's internal computer systems and all
software and other products designed by and/or sold by such RG Company, is
Year 2000 compliant. "Year 2000 compliant" means the information technology
is designed to be used prior to, during, and after the calendar Year 2000
A.D., and the information technology used during each such time period will
accurately receive, provide and process date/time data (including, but not
limited to, calculating, comparing and sequencing) from, into and between the
twentieth and twenty-first centuries, including the years 1999 and 2000, and
leap year calculations and will not malfunction, cease to function, or
provide invalid or incorrect results as a result of date/time data.
4.28 NO RESTRICTIONS ON SHARES. Other than as set forth in this
Agreement, the Certificate, the Second Amended and Restated Investor Rights
Agreement to be entered into in substantially the form attached hereto as
EXHIBIT E, the Amended and Restated Restricted Stock and Co-Sale Agreement to
be entered into in substantially the form attached hereto as EXHIBIT F, the
Supplemental Stock Restriction Agreement to be entered into in substantially
the form attached hereto as EXHIBIT G, there are no restrictions on the
Shares or Conversion Shares.
4.29 MERGER; MERGER AGREEMENT. All corporate action on the part of
each of the Company and ActiveUSA, its officers, directors and shareholders
necessary for the authorization, execution and delivery of, and the
performance of all obligations of the Company, Acquisition Sub and ActiveUSA,
respectively, under the Merger Agreement has been taken or will be taken
prior to the Closing. The Merger Agreement, when entered into, will be a
valid and binding obligation of each of the Company, Acquisition Sub and
ActiveUSA enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general equitable principles. As of the Closing, the Merger will be effective
and properly consummated under applicable laws of the States of Delaware and
Florida and all actions pursuant to obligations, covenants and agreements of
the Company, Acquisition Sub and ActiveUSA provided in the Merger Agreement
will have been taken.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Each Purchaser severally represents and warrants to the Company as
follows:
17
5.1 AUTHORIZATION. This Agreement when executed and delivered by
Purchaser will constitute a valid and legally binding obligation of Purchaser,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
moratorium, reorganization and similar laws affecting creditors' rights
generally and to general equitable principles.
5.2 INVESTIGATION; ECONOMIC RISK. Purchaser acknowledges that it has
had an opportunity to discuss the business, affairs and current prospects of the
Company with its officers. Purchaser further acknowledges having had access to
information about the Company that it has requested. Purchaser acknowledges that
it is able to fend for itself in the transactions contemplated by this Agreement
and has the ability to bear the economic risks of its investment pursuant to
this Agreement.
5.3 PURCHASE FOR OWN ACCOUNT. The Shares and the Conversion Shares will
be acquired for its own account, not as a nominee or agent, and not with a view
to or in connection with the sale or distribution of any part thereof.
5.4 EXEMPT FROM REGISTRATION; RESTRICTED SECURITIES. Purchaser
understands that the Shares and the Conversion Shares will not be registered
under the Act, on the ground that the sale provided for in this Agreement is
exempt from registration under the Act, and that the reliance of the Company on
such exemption is predicated in part on Purchaser's representations set forth in
this Agreement.
5.5 FURTHER LIMITATIONS ON DISPOSITIONS. Without in any way limiting
the representations set forth above, Purchaser further agrees not to make any
disposition of all or any portion of the Shares or Conversion Shares unless and
until:
(a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a reasonably detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, Purchaser shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such Shares or Conversion Shares
under the Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
5.6 RESTRICTIVE LEGENDS. It is understood that each certificate
representing (a) the Share, (b) the Conversion Shares and (c) any other
securities issued in respect of the any of the foregoing upon any stock split,
stock dividend, recapitalization, merger or similar event shall be stamped or
otherwise imprinted with a legend substantially in the following form:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE
18
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.
(b) Any legend required by state blue sky or corporation laws.
5.7 REMOVAL OF RESTRICTIVE LEGEND. The legend set forth above shall be
removed by the Company from any certificate evidencing Shares or Conversion
Shares upon delivery to the Company of an opinion by counsel, reasonably
satisfactory to the Company, that a registration statement under the Act is at
that time in effect with respect to the legended security or that such security
can be freely transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which the Company issued the Shares or
Conversion Shares.
5.8 STATUS OF PURCHASER. Purchaser is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D of the Act.
5.9 SEC DOCUMENTS; TMCS FINANCIAL STATEMENTS. TMCS has furnished or
made available to the Company true and complete copies of all reports or
registration statement filed by it with the SEC under the Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), for all periods since January 1, 1998, all in
the form so filed (all of the foregoing being collectively referred to as "SEC
DOCUMENTS"). As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Act, or the Exchange Act, as
the case may be, and none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a document subsequently filed with the SEC. The financial
statements of TMCS, including the notes thereto, included in the SEC Documents
(the "TMCS FINANCIAL STATEMENTS") comply as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and present fairly
the consolidated financial position of TMCS at the dates thereof and the
consolidated results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal audit adjustments).
Since January 1, 1998, there has been no change in TMCS's accounting policies
except as described in the notes to the TMCS Financial Statements.
5.10 VALID ISSUANCE OF PURCHASER SHARES. The Purchaser Shares, when
issued, will be duly and validly issued, fully paid and nonassessable.
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ARTICLE VI
CERTAIN COVENANTS
6.1 USE OF PROCEEDS. The Company will use the proceeds from the
purchase of the Shares under this Agreement for general working capital and such
other uses as approved by the Board of Directors of the Company.
6.2 INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT. The Company
shall require each new employee of the RG Company to enter into and execute a
Proprietary Inventions Agreement in the form attached to this Agreement as
EXHIBIT H or an employment or consulting agreement containing substantially
similar terms.
6.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and in closing and carrying out the transactions contemplated hereby
shall be paid by the party incurring such cost or expense. This section shall
survive the termination of this Agreement.
6.4 CONDUCT OF THE BUSINESS. From the date hereof until the Closing
Date, each of the RG Companies and ActiveUSA will conduct its business in the
ordinary course and use its commercially reasonable efforts, without paying or
increasing the compensation, payments, remuneration or fees payable to any
person other than in the ordinary course of business, to preserve intact the
business organizations and relationships and goodwill with third parties.
Without limiting the generality of the foregoing, from the date hereof until the
Closing Date:
(a) except as provided in the Merger Agreement, without the
Purchasers prior consent (which consent shall not be unreasonably withheld),
each of the RG Companies and ActiveUSA will not and will not agree to agree:
(i) purchase or otherwise acquire assets from any other person,
or sell or transfer any assets of its business, other than in the ordinary
course of business;
(ii) incur any liability, except liabilities (A) incurred in the
ordinary course of business where the aggregate dollar amount of all such
liabilities incurred does not exceed One Million Dollars ($1,000,000), (B)
incurred pursuant to existing obligations of the RG Companies or ActiveUSA
that are disclosed in the Schedules hereto or (C) expressly contemplated by
the terms of this Agreement;
(iii) amend or modify in any material respect or terminate any
Material Contract or any other contract entered into by the RG Companies or
ActiveUSA after the date hereof which, if in existence on the date hereof,
would be considered a Material Contract; or
(iv) make or commit to make any capital expenditure, or group of
related capital expenditures, in excess of One Million Dollars
($1,000,000), other than
20
(A) capital expenditures set forth on SCHEDULE 6.4 and (B) capital
expenditures expressly required under any Material Contract.
(b) Each of the RG Companies and Active USA will:
(i) (A) maintain its assets in the ordinary course of business in
reasonably serviceable operating order and condition, reasonable wear and
tear, damage by fire and other casualty excepted, (B) promptly repair,
restore or replace any material assets in the ordinary course of business
and (C) upon any damage, destruction or loss to any of such assets, apply
any and all insurance proceeds received with respect thereto to the prompt
repair, replacement and restoration thereof to the condition of such assets
before such event to the extent reasonably practicable;
(ii) comply with all material applicable laws;
(iii) not allow any liens for taxes to be placed on any of its
assets, except for liens arising from taxes which are due but not yet
payable;
(iv) use its commercially reasonable efforts to obtain, prior to
the Closing Date, all Required Consents;
(vi) promptly notify each Purchaser in writing if it has
knowledge of any action, event, condition or circumstance, or group of
actions, events, conditions or circumstances that materially effect the
business of the RG Companies and ActiveUSA, other than changes in general
economic conditions;
(vii) promptly notify each Purchaser in writing of the
commencement of any Proceeding by or against it, or of becoming aware of
any material claim, action, suit, inquiry, proceeding, notice of violation,
subpoena, government audit or disallowance that could reasonably be
expected to result in a Proceeding; and
(viii) pay accounts payable and pursue collection of its accounts
receivable in the ordinary course of business.
6.5 FURTHER ASSURANCES. The parties hereto shall execute and deliver
such other documents, certificates, agreements and other writings and shall take
such other actions as may be reasonably necessary or desirable (including,
without limitation, obtaining the Required Consents and making necessary filings
with all governmental authorities) in order to consummate or implement
expeditiously the transactions contemplated by this Agreement. Notwithstanding
the foregoing, no party hereto shall have any obligation to expend any funds or
to incur any other obligation in connection with the consummation of the
transactions contemplated hereby (including, by way of illustration only, any
payment in connection with obtaining the Required Consents) other than normal
out-of-pocket expenses (such as fees and expenses of counsel and accountants)
reasonably necessary to consummate such transactions.
21
6.6 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS. The parties hereto shall use
their best efforts to keep this Agreement and the execution and terms hereof
confidential, and shall consult with each other before issuing any press release
or making any public statement with respect to this Agreement or the
transactions contemplated hereby. The parties may, however, disclose such
matters to its directors, officers, executive employees and professional
advisors and those of prospective financing sources to such extent as may be
reasonable for the negotiation, execution and consummation of this Agreement.
Each party shall keep confidential all information concerning the other obtained
pursuant to this Agreement and shall not use such information except in
connection with the transactions set forth herein. If for any reason such
transactions shall not be consummated, each party will return all such
information (including all copies thereof) regarding the other, to the other
party. The foregoing obligations of confidentiality in this SECTION 6.6 do not
pertain to the disclosure of information which is available publicly, is
required to be disclosed by any court or any party discloses, upon advice of
counsel, in order to comply with applicable law. The parties hereto recognize
and agree that in the event of a breach by a party of this section, money
damages would not be an adequate remedy to the injured party for such breach
and, even if money damages were adequate, it would be impossible to ascertain or
measure with any degree of accuracy the damages sustained by such injured party
therefrom. Accordingly, if there should be a breach or threatened breach by a
party of the provisions of this section, the injured party shall be entitled to
an injunction restraining the breaching party from any breach without showing or
proving actual damage sustained by the injured party. Nothing in the preceding
sentence shall limit or otherwise affect any remedies that a party may otherwise
have under applicable law.
6.7 OTHER INVESTMENTS. The RG Companies and their respective officers
and other employees with managerial responsibilities, directors, representatives
and agents shall immediately cease any discussions or negotiations with any
parties with respect to any investment by such parties in the securities of any
of the RG Companies other than with respect to strategic relationships in the
ordinary course of business ("INVESTMENT TRANSACTIONS"). Until the Closing, none
of the RG Companies shall or any of their respective officers, directors,
employees representatives or agents will, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with or provide
any non-public information to any person or group (other than any Purchaser or
any designees of any Purchaser) concerning any Investment Transactions;
PROVIDED, HOWEVER, that nothing herein shall prevent the RG Companies from
conducting such "due diligence" inquiries (which shall be in writing to the
extent possible) in response to any Investment Transaction proposal as the
directors of any RG Company in their good faith judgment, after consultation
with and based upon the advice of legal counsel, may be required in order to
comply with its fiduciary duties. The applicable RG Company shall promptly
notify each Purchaser in the event it receives any proposal or inquiry
concerning an Investment Transaction, including the terms and conditions thereof
and the identity of the party submitting such proposal, and shall advise each
Purchaser time to time of the status and any material developments concerning
the same, including the nature and content of any "due diligence" inquiries made
by it concerning any such proposal and furnishing copies of any such written
inquiries.
22
6.8 REGISTRATION STATEMENT. TMCS shall promptly prepare, with the
cooperation of the Company with respect to information relating to the Company
or its sale of the Purchaser Shares, and TMCS shall file with the SEC as soon as
practicable after Closing a Registration Statement on Form S-1, or, if Purchaser
is eligible to file a Registration Statement on Form S-3, on Form S-3 (the
"REGISTRATION STATEMENT") under the Act, with respect to the Purchaser Shares,
but in any event within 30 days following the Closing. TMCS, with the
cooperation of the Company with respect to information relating to the Company
or its sale of the Purchaser Shares, shall cause the Registration Statement to
comply as to form in all material respects with the applicable provisions of the
Act and the rules and regulations thereunder. TMCS shall use all reasonable
efforts, and the Company will cooperate with TMCS, to have the Registration
Statement declared effective by the SEC as promptly as practicable. TMCS shall
use its reasonable efforts to obtain, prior to the effective date of the
Registration Statement, all necessary state securities law or "Blue Sky" permits
or approvals required to carry out the sale of the Purchaser Shares by the
Company and will pay all expenses incident thereto. TMCS agrees that the
Registration Statement and each amendment or supplement thereto at the time it
is filed or becomes effective, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that the foregoing
shall not apply to the extent that any such untrue statement of a material fact
or omission to state a material fact was made by TMCS in reliance upon and in
conformity with information concerning the Company furnished to TMCS by the
Company specifically for use in the Registration Statement. The Company agrees
that the information provided by it for inclusion in the Registration Statement
and each amendment or supplement thereto at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. TMCS shall advise the Company, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective. TMCS
shall cause the Registration Statement to remain effective until the earlier of
(1) the date at which all of the Purchaser Shares have been sold by the Company
or (2) the three month anniversary of the date on which the Registration
Statement was declared effective.
6.9 MERGER. The RG Companies shall use their best efforts to enter into
the Merger Agreement and to cause the Merger to be properly consummated and
effective pursuant to the terms of the Merger Agreement and the applicable laws
of Florida and Delaware as soon as practicable. The Company shall use its best
efforts to cause the Certificate to be duly adopted by the Company by all
necessary action of its Board of Directors and shareholders and to be duly filed
with and accepted by the Secretary of State of the State of Delaware as soon as
practicable.
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations of each of
the Company and Purchasers to consummate the Closing are subject to the
satisfaction of each of the following conditions:
(a) DISTRIBUTION AGREEMENT. The Company and TMCS shall have
entered into the Distribution Agreement in substantially the form attached as
EXHIBIT C.
(b) INVESTOR RIGHTS AGREEMENT. The Company and the Purchasers
shall have entered into an Amended and Restated Investor Rights Agreement in
substantially the form attached as EXHIBIT E.
(c) STOCK RESTRICTION AND CO-SALE AGREEMENT. The Company and the
Purchasers shall have entered into an Amended and Restated Stock Restriction and
Co-Sale Agreement in substantially the form attached as EXHIBIT F.
(d) VOTING AGREEMENT. The Company and the Purchasers shall have
entered into an Amended and Restated Voting Agreement in substantially the form
attached as EXHIBIT I (the "Voting Agreement").
(e) SUPPLEMENTAL STOCK RESTRICTION AGREEMENT. The Company and
Purchaser shall have entered into a Supplemental Stock Restriction Agreement in
substantially the form attached as EXHIBIT G.
(f) MERGER. The Certificate shall have been duly adopted by the
Company by all necessary corporate action of its Board of Directors and
shareholders and shall have been duly filed with and accepted by the Secretary
of State of the State of Delaware. The Merger shall be effective pursuant to the
terms of the Merger Agreement and the applicable laws of the States of Florida
and Delaware.
(g) BOARD COMPOSITION. The Board of Directors of the Company
shall be composed of seven members which shall include: Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxx Xxxx, Xxxxx Xxxxxxx and Xxx Xxxxxxxx, with two vacancies to be
named in accordance with the Voting Agreement. The Compensation Committee of the
Board of Directors shall be composed of Xxx Xxxxxxxx, Xxxxxx Xxxxxx and Xxx
Xxxxxxxxx.
7.2 CONDITIONS TO OBLIGATION OF THE PURCHASERS. The obligation of the
Purchasers to purchase the Shares at the Closing is subject to the satisfaction
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The representations
and warranties made by the RG Companies and ActiveUSA in ARTICLE IV hereof shall
be true and correct in all material respects when made, and shall be true and
correct in all material respects as
24
of the date of Closing with the same force and effect as if they had been
made on and as of such date, subject to changes contemplated by this
Agreement; and the RG Companies and ActiveUSA shall have performed all
obligations and conditions herein required to be performed or observed by it
on or prior to the Closing.
(b) PERFORMANCE OF OBLIGATIONS. Each of the RG Companies and
ActiveUSA shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing and shall have obtained all
approvals, consents and qualifications necessary to complete the purchase and
sale described herein.
(c) CONSENTS AND WAIVERS. The Company shall have obtained any and
all consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
(d) COMPLIANCE CERTIFICATE. At the Closing, the Company shall
deliver to Purchasers a certificate, dated the date of Closing, signed by the
Company's President certifying that the conditions specified in SECTION 7.2(a),
(b), (c) and (f) have been fulfilled.
(e) SECURITIES LAWS. The offer and sale of the Shares to the
Purchasers pursuant to this Agreement shall be exempt from the registration
requirements of the Act and the registration and/or qualification requirements
of all applicable state securities laws.
(f) OPINION OF COUNSEL. The Company shall have furnished
Purchasers with a legal opinion, dated as of the date of Closing, of Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP in a form reasonably acceptable to the Purchasers.
(g) NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no material adverse change in the business, operations,
prospects, condition (financial or otherwise) or results of operations of the RG
Companies.
(h) OWNERSHIP OF TECHNOLOGY. The Purchasers shall have received
from the Company all documents and other materials requested by the Purchasers
for the purpose of examining and determining the RG Companies' rights in and to
any technology, products and proprietary assets now used, proposed to be used
in, or necessary to, the RG Companies' business as now conducted and proposed to
be conducted, and the status of the RG Companies' ownership rights in and to all
such technology, products and proprietary assets shall be reasonably
satisfactory to the Purchasers.
(i) SCHEDULES. Any changes or updates to the Schedules hereto
which have been made by the RG Companies subsequent to the date of this
Agreement and prior to Closing shall be reasonably acceptable to Purchasers.
(j) FINANCIAL STATEMENTS OF ACTIVEUSA. ActiveUSA shall have
furnished Purchasers with the Financial Statements of ActiveUSA, as described in
Section 4.16, which Financial Statements shall be reasonably acceptable to the
Purchasers.
25
7.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to sell the Shares at the Closing is subject to the satisfaction of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchasers contained in ARTICLE V hereof shall be true and
correct in all material respects as of the Closing.
(b) PAYMENT OF PURCHASE PRICE. The Purchasers shall have
delivered to the Company the cash portion of the purchase price and the
Purchaser Shares in accordance with the provisions of ARTICLE III and Schedule
A.
(c) SECURITIES EXEMPTIONS. The offer and sale of the Shares and
the Conversion Shares to the Purchasers pursuant to this Agreement shall be
exempt from the registration requirements of the Act, and the registration
and/or qualification requirements of all applicable state securities laws.
ARTICLE VIII
INDEMNIFICATION
8.1 AGREEMENT TO INDEMNIFY.
(a) The Purchasers shall be indemnified and held harmless to the
extent set forth in this ARTICLE VIII by each of the RG Companies in respect of
any and all demands, claims, actions or causes of action, assessments, losses,
damages, costs, expenses, liabilities, judgments, awards, fines, sanctions,
penalties, charges and amounts paid in settlement (net of insurance proceeds
actually received), including (i) interest on cash disbursements in respect of
any of the foregoing at the per annum rate of interest publicly announced from
time to time by the Bank of America as its prime rate (or reference rate),
compounded quarterly, from the date each such cash disbursement is made until
the person incurring the same shall have been indemnified in respect thereof and
(ii) reasonable costs, fees and expenses of attorneys, accountants and other
agents of such person (collectively, "Damages") reasonably and proximately
incurred by Purchaser as a result of any inaccuracy or misrepresentation in or
breach of any representation, warranty, covenant or agreement made by any of the
RG Companies or ActiveUSA in this Agreement as of the Closing; and
(b) The RG Companies shall be indemnified and held harmless to
the extent set forth in this ARTICLE VIII by Purchaser in respect of any and all
Damages reasonably and proximately incurred by any RG Company as a result of any
inaccuracy or misrepresentation in or breach of any representation, warranty,
covenant or agreement made by the Purchaser in this Agreement.
(c) Except as set forth in SECTIONS 8.1(a), and (b) and except to
the extent of confidentiality provisions in this Agreement, no person shall have
any claim or cause of action as a result of any inaccuracy or misrepresentation
in or breach of or failure to perform any representation, warranty, covenant,
agreement or obligation of a party providing indemnification
26
(each, an "INDEMNIFYING PARTY") against any affiliate, stockholder, director,
officer, employee, consultant or agent of such Indemnifying Party. Nothing
set forth in this ARTICLE VIII shall be deemed to prohibit or limit the right
of a party entitled to indemnification (each, an "INDEMNITEE") at any time
before, on or after the Closing Date, to seek injunctive or other equitable
relief for the failure of any Indemnifying Party to perform any covenant or
agreement contained herein.
8.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties, covenants, agreements and obligations of each
Indemnifying Party contained herein and all claims of any party in respect of
any breach of any representation, warranty, covenant, agreement or obligation of
any Indemnifying Party contained in this Agreement, shall survive the Closing
and shall expire on the second anniversary of the Closing Date, except for (a)
covenants or obligations which by their terms shall be performed after the
Closing, which shall survive the Closing and not expire unless otherwise
provided in this Agreement, (b) (i) the inaccuracy or misrepresentation in or
breach of any representation, warranty, covenant or agreement made by the RG
Companies at any time in this Agreement arising out of fraud or (ii) any
inaccuracy or misrepresentation in or breach of any representation or warranty
made in SECTIONS 4.19 or 4.20, which shall survive the Closing Date until the
thirty (30) days after the expiration of any applicable statute of limitations,
including extensions thereof and (c) the representations and warranties of the
RG Companies made in SECTION 4.8, which shall survive the Closing Date until the
third anniversary of the Closing Date. Notwithstanding anything herein to the
contrary, indemnification for claims for which written notice as provided in
SECTION 8.5 has been timely given shall not expire until the final resolution of
such claim in accordance with SECTION 9.13.
8.3 LIMITATION. The Purchaser shall be entitled to indemnification
pursuant to Section 8.1(a) only if the total aggregate Damages under SECTION
8.1(a) exceeds Two Hundred Fifty Thousand Dollars ($250,000) (the "AGGREGATE
THRESHOLD"); PROVIDED, HOWEVER, that once such aggregate Damages reach the
Aggregate Threshold, the Purchasers shall be entitled to receive the full amount
of its Damages. The aggregate amount which the Purchasers shall be entitled to
be indemnified for under SECTION 8.1(a) will not exceed the cash received by the
Company, consisting of the cash amount received by the Company for each of the
Purchasers plus the cash received upon sale of the Purchaser Shares, plus the
value of services actually provided by TMCS pursuant to the Distribution
Agreement.
8.4 CLAIMS FOR INDEMNIFICATION. If any Indemnitee shall believe that
such Indemnitee is entitled to indemnification pursuant to this ARTICLE VIII in
respect of any Damages, such Indemnitee shall give the appropriate Indemnifying
Party prompt written notice thereof. Any such notice shall set forth in
reasonable detail and to the extent then known the basis for such claim for
indemnification. The failure of such Indemnitee to give notice of any claim for
indemnification promptly, but within the periods specified by SECTION 8.2 shall
not adversely affect such Indemnitee's right to indemnity hereunder except to
the extent that such failure adversely affects the right of the Indemnifying
Party to assert any reasonable defense to such claim. Each such claim for
indemnity shall expressly state that the Indemnifying Party shall have only the
twenty (20) Business Day period referred to in the next sentence to dispute
or deny
27
such claim. The Indemnifying Party shall have twenty (20) Business Days
following its receipt of such notice either (a) to acquiesce in such claim and
its respective responsibilities to indemnify the Indemnitee in respect thereof
in accordance with the terms of this ARTICLE VIII by giving such Indemnitee
written notice of such acquiescence or (b) to object to the claim by giving such
Indemnitee written notice of the objection. If the Indemnifying Party does not
object thereto within such twenty (20) Business Day period, such Indemnifying
Party shall be deemed to have acquiesced in such claim and their respective
responsibilities to indemnify the Indemnitee in respect thereof in accordance
with the terms of this ARTICLE VIII.
8.5 DEFENSE OF CLAIMS. In connection with any claim brought by a person
who is not a party hereto which may give rise to Damages, the Indemnitee shall
promptly notify the Indemnifying Party in writing and the Indemnifying Party
shall assume the defense of such action, including the employment of counsel
reasonably satisfactory to the Indemnitee and the payment of all fees and
expenses of such counsel, as incurred. Any Indemnitee shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnitee unless the employment of such counsel shall have been
specifically authorized in writing by the Indemnifying Party. In any event, the
Indemnifying Party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel). Each Indemnitee shall, and shall cause each of its affiliates,
officers, employees, consultants and agents to, cooperate fully with the
Indemnifying Party in the defense of any claim or Proceeding being defended by
the Indemnifying Party pursuant to this SECTION 8.5. No Indemnifying Party
shall, without the prior written consent of the Indemnitee, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the Indemnitee is or
could have been a party and indemnity or contribution may be or could have been
sought hereunder by the Indemnitee, unless such settlement, compromise or
judgment (1) includes an unconditional release of the Indemnitee from all
liability on claims that are the subject matter of such action and (2) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the Indemnitee.
ARTICLE IX
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the internal laws (without reference to choice or conflict of
laws) of the State of Delaware.
9.2 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
9.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns,
28
heirs, executors and administrators of the parties hereto whose rights or
obligations hereunder are affected by such amendments. This Agreement and the
rights and obligations therein may not be assigned by Purchasers without the
written consent of the Company except to a parent corporation, a subsidiary
or affiliate. This Agreement and the rights and obligations therein may not
be assigned by the Company without the written consent of the Purchasers.
9.4 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits referred to herein which are hereby incorporated by reference and the
other agreements executed simultaneously herewith) constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement; PROVIDED, HOWEVER, that nothing in this Agreement shall be deemed to
terminate or supersede the provisions of any confidentiality and nondisclosure
agreements executed by the parties hereto prior to the date hereof, which
agreements shall continue in full force and effect until terminated in
accordance with their respective terms. Neither this Agreement nor any provision
hereof is intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
9.5 NOTICES. Except as may be otherwise provided herein, all notices,
requests, waivers and other communications made pursuant to this Agreement shall
be in writing and shall be conclusively deemed to have been duly given (a) when
hand delivered to the other party, (b) when received when sent by facsimile at
the address and number set forth below, (c) three business days after deposit in
the U.S. mail with first class or certified mail receipt requested postage
prepaid and addressed to the other party as set forth below or (d) the next
business day after deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-business-day
delivery guaranteed, PROVIDED that the sending party receives a confirmation of
delivery from the delivery service provider.
To each of the RG Companies: XxxxXxxx.xxx, Inc.
0000 Xxxxxxxx Xxxxxx
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
With copies to: Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
00 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx, Esq.
Fax No.: (000) 000-0000
29
To ActiveUSA XxxxxxXXX.xxx, Inc.
0000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx 000X
Xxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxxx
Fax No.: (000) 000-0000
With copies to: Akerman, Senterfitt & Edison, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxx
Fax No.: (000) 000-0000
To TMCS: Ticketmaster Online-CitySearch, Inc.
000 X. Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx
Attention: Xxxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
With copies to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
Each person making a communication hereunder by facsimile shall
promptly confirm by telephone to the person to whom such communication was
addressed each communication made by it by facsimile pursuant hereto but the
absence of such confirmation shall not affect the validity of any suzach
communication. A party may change or supplement the addresses given above, or
designate additional addresses, for purposes of this SECTION 9.5 by giving the
other party written notice of the new address in the manner set forth above.
9.6 AMENDMENTS AND WAIVERS.
(a) Any provision of this Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent occurrence. No failure
30
or delay by a party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
9.7 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to the RG Companies or to Purchasers, upon any breach
or default of any party hereto under this Agreement, shall impair any such
right, power or remedy of the RG Companies or Purchasers, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of any similar breach of default thereafter occurring; nor shall any
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of the
RG Companies or Purchasers of any breach of default under this Agreement or any
waiver on the part of the RG Companies or Purchasers of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to the RG Companies or
Purchasers shall be cumulative and not alternative.
9.8 FINDER'S FEES. Each party hereby agrees to indemnify and to hold
harmless the other party hereto from and against any liability for any
commission or compensation in the nature of a finder's fee of any broker or
other person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which the indemnifying party or any of its
employees or representatives are responsible.
9.9 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts and the signatures delivered by telecopy, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument and delivered in person. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other parties hereto.
9.10 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended..
9.11 ARBITRATION.
(a) Any dispute or difference between or among the parties (such
parties being referred to individually as a "DISPUTING PARTY," and, together, as
the "DISPUTING PARTIES") arising out of this Agreement or the transactions
contemplated hereby, including without limitation any dispute between an
Indemnitee and any Indemnifying Party under ARTICLE VIII, which the parties are
unable to resolve themselves shall be submitted to and resolved by arbitration
as herein provided. Any Disputing Party may request the American Arbitration
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Association (the "AAA") to designate one arbitrator, who shall be qualified as
an arbitrator under the standards of the AAA, and who shall have been engaged in
the private practice of law for not less than fifteen (15) years immediately
prior to appointment as arbitrator pursuant to this Agreement, who, in any such
case, (i) is not affiliated with any party in interest to such arbitration, (ii)
is not a law firm that has within the last three years rendered, or is then
rendering, services to any party hereto, (iii) has not appeared, or is not then
appearing, as counsel of record in opposition to any party hereto and (iv) is
qualified to serve by training for and experience in the matters for which such
arbitrator is designated to serve.
(b) The arbitrator shall consider the dispute at issue in Irvine,
California, at a mutually agreed upon time within one hundred twenty (120) days
(or such other period as may be acceptable to the Disputing Parties or as
directed by the arbitrator) of the designation of the arbitrator. The
arbitration proceeding shall be held in accordance with the rules for commercial
arbitration of the AAA in effect on the date of the initial request by the
Disputing Party, that gave rise to the dispute to be arbitrated (as such rules
are modified by the terms of this Agreement or may be further modified by mutual
agreement of the Disputing Parties) and shall include an opportunity for the
parties to conduct discovery in advance of the proceeding using all of the
authorized methods of discovery allowed by the Federal Rules of Civil Procedure
in effect on the date of the initial request by the Disputing Party.
Notwithstanding the foregoing, the Disputing Parties shall agree that they will
attempt, and they intend that they and the arbitrator should use its best
efforts in that attempt, to conclude the arbitration proceeding and have a final
decision from the arbitrator within one hundred twenty (120) days from the date
of selection of the arbitrator; PROVIDED, HOWEVER, that the arbitrator shall be
entitled to extend such one hundred twenty (120) day period for a total of two
one hundred twenty (120) day periods. The arbitrator shall be bound to follow
the laws of the State of Delaware, both decisional and statutory, in reaching
any decision and making any award and shall deliver a written award, including
written findings of fact and conclusions of law, with respect to the dispute to
each of the parties, who shall promptly act in accordance therewith. Each
Disputing Party to such arbitration agrees that any award of the arbitrator
shall be final, conclusive and binding and that they will not contest any action
by any other party thereto in accordance with an award of the arbitrator;
provided, HOWEVER that any party may appeal based on statutory grounds. It is
specifically understood and agreed that any party may enforce any award rendered
pursuant to the arbitration provisions of this SECTION 9.13 by bringing suit in
any court of competent jurisdiction.
(c) All costs and expenses attributable to the arbitrator shall
be allocated among the parties to the arbitration in such manner as the
arbitrator shall determine to be appropriate under the circumstances.
(d) The arbitrator chosen in accordance with these provisions
shall not have the power to alter, amend or otherwise affect the terms of these
arbitration provisions or the provisions of this Agreement or any other
documents that are executed in connection therewith.
(e) Arbitration under this SECTION 9.13 shall be the sole and
exclusive remedy of the parties for any dispute arising out of this Agreement.
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9.12 CONSTRUCTION. The parties hereto intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) that the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
9.13 CUMULATIVE REMEDIES. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
9.14 THIRD PARTY BENEFICIARIES. No provision of this Agreement shall
create any third party beneficiary rights in any person, including any employee
of Purchasers or employee or former employee of the RG Companies or ActiveUSA
(including any beneficiary or dependent thereof).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year herein above first written.
XXXXXXXX.XXX, INC.,
a Delaware corporation
By: ___________________________
Name: ___________________________
Title: ___________________________
XXXXXXXX.XXX, INC.,
a California corporation
By: ___________________________
Name: ___________________________
Title: ___________________________
RG ACQUISITION CORP.,
a Delaware corporation
By: ___________________________
Name: ___________________________
Title: ___________________________
XXXXXXXXX.xxx, INC.,
a Florida corporation
By: ___________________________
Name: ___________________________
Title: ___________________________
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TICKETMASTER ONLINE CITYSEARCH, INC.,
a Delaware corporation
By: ___________________________
Name: ___________________________
Title: ___________________________
KETTLE PARTNERS IV, L.P.,
By: Xxxxxx L.L.C., its general partner
By: ___________________________
Name: ___________________________
Title: ___________________________
Address:
AUSTIN VENTURES IV, L.P.,
By: A.V. Partners VI, L.P., its general partner
By: ___________________________
Name: ___________________________
Title: ___________________________
Address:
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