AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 11, 2000
BY AND AMONG
XXXXX CARIBE, INC.,
ITRACT ACQUISITION COMPANY, LLC,
ITRACT, INC.
ITRACT, LLC
AND
INTERNATIONAL COMMERCE EXCHANGE SYSTEMS, INC.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of
April 11, 2000, by and among XXXXX CARIBE, INC., a Puerto Rico corporation
("XXXXX"); iTRACT INC., a Delaware corporation ("PURCHASER"); iTRACT ACQUISITION
COMPANY, LLC, a Delaware limited liability company and a wholly-owned subsidiary
of Purchaser ("PURCHASER SUBSIDIARY"); iTRACT, LLC, a Delaware limited liability
company ("iTRACT"); and INTERNATIONAL COMMERCE EXCHANGE SYSTEMS, INC., a
Delaware corporation ("ICES").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Boards of Directors of Xxxxx and Purchaser, and
the managers of Purchaser Subsidiary and iTract, have determined that it is in
the best interests of each such company and its respective stockholders and
members for Purchaser Subsidiary to merge with and into iTract (the "iTRACT
MERGER") upon the terms and subject to the conditions set forth herein;
WHEREAS, the Boards of Directors of Xxxxx and Purchaser have
adopted resolutions approving this Agreement and the transactions contemplated
hereby;
WHEREAS, the managers and a majority of the members of
Purchaser Subsidiary and iTract have adopted resolutions approving this
Agreement and the transactions contemplated hereby pursuant to Section 18-209 of
the Delaware Limited Liability Company Act;
WHEREAS, the parties to this Agreement intend that the iTract
Merger shall qualify as an exchange within the meaning of Section 351 of the
Internal Revenue Code of 1986, as amended;
WHEREAS, ICES is the indirect beneficial owner of
approximately 78% of the outstanding interests in iTract; and
WHEREAS, prior to the Effective Time (as defined below), Xxxxx
will reincorporate in Delaware by merging with and into Purchaser.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements hereinafter set
forth, the parties hereto do hereby agree as follows:
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1. CERTAIN DEFINITIONS.
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1.1 DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings specified or referred to below (terms defined in
the singular to have the correlative meaning in the plural and VICE VERSA):
"ACT" shall mean the Delaware Limited Liability Company Act.
"AFFILIATE" of any Person shall mean any Person which,
directly or indirectly, controls or is controlled by that Person, or is under
common control with that Person. For the purposes of this definition, "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the recitals.
"ALTERNATIVE TRANSACTION" shall have the meaning set forth in
Section 9.8.
"ASSET SALE" shall have the meaning set forth in Section 6.4.
"BUSINESS DAY" shall mean any day that is not a Saturday or a
Sunday or a day on which banks located in New York City are authorized or
required to be closed.
"CLOSING" shall have the meaning set forth in Section 3.1.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended. All citations to the Code or to the regulations promulgated thereunder
shall include any amendments or any substitute or successor provisions thereto.
"CONTEMPLATED TRANSACTIONS" shall mean the iTract Merger, the
Reincorporation Merger and the Asset Sale, and the execution, delivery and
performance of and compliance with this Agreement and all other agreements to be
executed and delivered pursuant to this Agreement.
"CONTRACT" shall have the meaning set forth in Section 4.15.
"EFFECTIVE TIME" shall mean the date and time of consummation
of the iTract Merger, as evidenced by the filing of a certificate of merger with
the Secretary of State of the State of Delaware.
"ENCUMBRANCE" shall mean any security interest, pledge,
mortgage, lien, charge, encumbrance, license, easement, right-of-way, adverse
claim, preferential arrangement or restriction of any kind, including, but not
limited to, any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership.
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"ENVIRONMENTAL LAWS" shall mean any Law, now or hereafter in
effect and as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended through the date hereof; the
Resource Conservation and Recovery Act, 42 U.S.C. xx.xx 6901 ET SEQ.; the
Hazardous Materials Transportation Act, 49 U.S.C. xx.xx 6901 ET SEQ.; the Clean
Water Act, 33 U.S.C. xx.xx 1251 ET SEQ.; the Toxic Substances Control Act, 15
U.S.C. xx.xx 2601 ET SEQ.; the Clean Air Act, 42 U.S.C. xx.xx 7401 ET SEQ.; the
Safe Drinking Water Act, 42 U.S.C. xx.xx 300f ET SEQ.; the Atomic Energy Act, 42
U.S.C. xx.xx 2011 ET SEQ.; the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. xx.xx 136 ET SEQ.; the Federal Food, Drug and Cosmetic Act, 21
U.S.C. xx.xx 301 ET SEQ.; and the Puerto Rico Public Policy Environmental Act,
12 LPRA xx.xx 1121 ET SEQ.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations and publications thereunder.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
"GAAP" shall mean generally accepted accounting principles in
the United States.
"GOVERNMENTAL BODY" shall mean any United States federal,
state or local, Puerto Rico, or any foreign government, governmental, regulatory
or administrative authority, agency or commission or any court, tribunal or
judicial or arbitral body or any quasi-governmental or private body exercising
any regulatory or taxing authority thereunder.
"HAZARDOUS MATERIALS" shall mean (a) petroleum and petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain polychlorinated biphenyls, and radon gas, (b) any other chemicals,
materials or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants" or "pollutants" or words of
similar import, under any applicable Environmental Law, and (c) any other
chemical, material or substances exposure to which is regulated by any
Governmental Body.
"ICES" shall mean International Commerce Exchange Systems,
Inc., a Delaware corporation.
"INTELLECTUAL PROPERTY" shall mean any and all United States
and foreign: (a) inventions, whether or not patentable, whether or not reduced
to practice, and whether or not yet made the subject of a pending patent
application or applications, (b) ideas and conceptions of potentially patentable
subject matter, including, without limitation, any patent disclosures, whether
or not reduced to practice and whether or not yet made the subject of a pending
patent application or applications, (c) national (including, but not limited to
the United States) and multinational statutory invention registrations, patents
(including but not limited to design patents), patent
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registrations and patent applications (including all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations) and all
rights therein provided by international treaties or conventions and all
improvements to the inventions disclosed in each such registration, patent or
application, (d) trademarks, service marks, trade dress, logos, trade names and
corporate names, whether or not registered and regardless of where used,
including but not limited to all common law rights, and registrations and
applications for registration thereof, including, but not limited to, all marks
registered in the United States Patent and Trademark office, the Trademark
Offices of the States and Territories of the United States of America, and the
Trademark Offices of other nations throughout the world, and all rights therein
provided by international treaties or conventions, (e) copyrights (including but
not limited to copyrights on designs) (registered or otherwise) and
registrations and applications for registration thereof, and all rights therein
provided by any national law, international treaties or conventions, (f)
computer software, including, without limitation, source code, operating systems
and specifications, data, data bases, files, documentation and other materials
related thereto, data and documentation, (g) trade secrets and confidential,
technical and business information (including but not limited to ideas,
formulas, compositions, inventions, and conceptions of inventions whether
patentable or unpatentable and whether or not reduced to practice), (h) whether
or not confidential, technology (including know-how and show-how), manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, (i) any right arising under any law providing protection to
industrial or other designs, (j) copies and tangible embodiments of all the
foregoing, in whatever form or medium, (k) all rights to obtain and rights to
apply for patents, and to register trademarks and copyrights, and (l) all rights
to xxx or recover and retain damages and costs and attorneys fees for present
and past infringement of any of the foregoing.
"IRS" means the Internal Revenue Service.
"iTRACT" shall mean iTract, LLC, a Delaware limited liability
company.
"iTRACT APPROVALS" shall have the meaning set forth in Section
4.5.
"iTRACT ASSETS" shall have the meaning set forth in Section
4.7(b).
"iTRACT INTELLECTUAL PROPERTY" shall have the meaning set
forth in Section 4.9.
"iTRACT LICENSES" shall have the meaning set forth in Section
4.17(a).
"iTRACT MERGER" shall mean the merger of Purchaser Subsidiary
with and into iTract, as contemplated by this Agreement.
"iTRACT PLANS" shall have the meaning set forth in Section
4.13(a).
"iTRACT RECENT BALANCE SHEET: shall have the meaning set forth
in Section 4.6(c).
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"iTRACT UNITS" shall have the meaning set forth in Section
2.3(a).
"LAWS" shall mean all federal, state, local, regional,
municipal or foreign laws, statutes, regulations, ordinances, codes, decrees,
judgments, orders or other legal requirements and shall include the Laws of
Puerto Rico.
"LEASES" shall have the meaning set forth in Section 4.8
"MATERIAL ADVERSE EFFECT" shall mean, when used in connection
with any Person, any change, effect, event, occurrence, condition or development
that is or is reasonably likely to be materially adverse to (i) the business,
assets, liabilities, properties, results of operations, prospects or condition
(financial or otherwise) of such Person (excluding industry and general economic
changes) or (ii) the ability of such Person to perform its obligations under
this Agreement.
"XXXXX" shall mean Xxxxx Caribe, Inc., a Puerto Rico
corporation.
"XXXXX APPROVALS" shall have the meaning set forth in Section
5.5.
"XXXXX FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 5.7.
"XXXXX LICENSES" shall have the meaning set forth in Section
5.10.
"XXXXX PLANS" shall have the meaning set forth in Section 5.9.
"XXXXX RECENT BALANCE SHEET" shall have the meaning set forth
in Section 5.7(b).
"XXXXX SEC DOCUMENTS" shall have the meaning set forth in
Section 5.7(a).
"MAXIMUM PURCHASER SHARES" shall have the meaning set forth in
Section 2.4.
"MEMBERS" shall mean the members of iTract prior to the
Effective Time.
"MERGER CONSIDERATION" shall have the meaning set forth in
Section 2.4.
"NASDAQ" shall mean The Nasdaq Stock Market, Inc.
"NASDAQ LISTING" shall have the meaning set forth in Section
6.5.
"NURSERY BUSINESS ASSETS" shall mean all assets, other than
cash and cash equivalents, owned or used by Xxxxx or its Subsidiaries in
connection with any of the businesses presently conducted by any of them and
shall include the capital stock of Margo's Subsidiaries owned by Xxxxx other
than Purchaser and Purchaser Subsidiary.
"PARTY" shall mean any of Xxxxx, Purchaser, Purchaser
Subsidiary, iTract, the Members, and ICES.
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"PERMITTED ENCUMBRANCES" shall have the meaning set forth in
Section 4.7(b).
"PERSON" shall mean any individual, corporation, limited
liability company, partnership, joint venture, trust, association,
unincorporated organization, other entity or Governmental Body.
"P.R. INTERNAL REVENUE CODE" shall mean the Puerto Rico
Internal Revenue Code of 1994, as amended. All citations to the Puerto Rico
Internal Revenue Code shall include any amendments or any substitute or
successor provisions thereto.
"PURCHASER" shall mean iTract Inc., a Delaware corporation and
wholly-owned subsidiary of Xxxxx prior to the Effective Time.
"PURCHASER COMMON STOCK" shall mean the common stock, par
value $.001 per share, of Purchaser.
"PURCHASER SHARES" shall have the meaning set forth in Section
2.4.
"PURCHASER SUBSIDIARY" shall mean iTract Acquisition Company,
LLC, a Delaware limited liability company.
"REGISTRATION STATEMENT" shall have the meaning set forth in
Section 6.2.
"REINCORPORATION MERGER" shall mean the merger of Xxxxx with
and into Purchaser, with Purchaser as the surviving corporation of such merger.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"STOCKHOLDER APPROVAL" shall have the meaning set forth in
Section 6.6. on
"SUBSIDIARY" shall mean with respect to any specified Person,
any other Person (a) whose board of directors or similar governing body, or a
majority thereof, may presently be directly or indirectly elected or appointed
by such specified Person, (b) whose management decisions and corporate actions
are directly or indirectly subject to the present control of such specified
Person, or (c) whose voting securities or equity securities are more than fifty
percent (50%) owned, directly or indirectly, by such specified Person.
"SURVIVING LLC" shall have the meaning set forth in Section
2.1.
"TAXES" shall mean all taxes, charges, fees, imposts, levies
or other assessments, including, without limitation, all net income, gross
receipts, capital, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll,
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employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, together with any interest and any penalties, fines,
additions to tax or additional amounts imposed by any Governmental Body and
shall include any transferee liability in respect of Taxes.
"TAX RETURNS" means any federal, state, local, Puerto Rico, or
foreign return, report, information return or other document (including any
related or supporting information) filed or required to be filed with any
Governmental Body in connection with the determination, assessment or collection
of any Taxes or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
1.2 REFERENCES TO DOLLARS. References to dollars or "$" in this
Agreement shall mean United States dollars.
2. THE iTRACT MERGER.
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2.1 THE iTRACT MERGER. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the provisions of the Act, Purchaser
Subsidiary shall be merged with and into iTract as soon as practicable following
the satisfaction or waiver of the conditions set forth in Articles 7 and 8
hereof. Following the iTract Merger, iTract shall continue as the surviving
limited liability company (the "SURVIVING LLC") under its current name and shall
continue its existence under the laws of the State of Delaware and the separate
existence of Purchaser Subsidiary shall thereupon cease. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, by
virtue of the iTract Merger and without further act or deed, all properties,
rights, privileges, powers and franchises of iTract and Purchaser Subsidiary
shall vest in the Surviving LLC, and all debts, liabilities, obligations and
duties of iTract and Purchaser Subsidiary shall become the debts, liabilities,
obligations and duties of the Surviving LLC.
2.2 CONSUMMATION OF THE iTRACT MERGER AND EFFECTIVE TIME. The iTract
Merger shall be effected by the filing of a certificate of merger with the
Secretary of State of the State of Delaware in the form of EXHIBIT A to this
Agreement (the "CERTIFICATE OF MERGER"), pursuant to Section 18-209 of the Act.
Subject to the terms and conditions of this Agreement, the Parties hereto shall
take all other actions as may be required by Law to make the iTract Merger
effective.
2.3 CONVERSION OR CANCELLATION OF UNITS. The manner of converting or
canceling membership interests of iTract or Purchaser Subsidiary in the iTract
Merger shall be as follows. At the Effective Time;
(a) The units of membership interest of iTract (the "iTRACT
UNITS") issued and outstanding immediately prior to the Effective Time shall, by
virtue of the iTract Merger and without any action on the part of the holders
thereof, be converted into the right to receive the Merger Consideration. At the
Effective Time, all iTract Units shall, by virtue of the iTract Merger and
without any action on the part of the holders thereof, no longer be outstanding
and shall be canceled and retired and shall cease to exist.
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(b) Each of Purchaser Subsidiary's units of membership
interest issued and outstanding immediately prior to the Effective Time shall,
by virtue of the iTract Merger and without any action on the part of the holder
thereof, be converted into one unit of membership interest of the Surviving LLC.
2.4 MERGER CONSIDERATION. The "MERGER CONSIDERATION" shall mean the
number of shares of Purchaser Common Stock equal to the difference between: (i)
Maximum Purchaser Shares (as defined below); and (ii) the number of shares of
Purchaser Common Stock that will be the subject of Purchaser Options pursuant to
Section 2.5 below. Each Member shall be entitled to receive its pro rata share
of the Merger Consideration (rounded to the nearest whole number of shares of
Purchaser Common Stock) based on the proportion that the iTract Units held by
such Member immediately prior to Effective Time bears to the total number of
issued and outstanding iTract Units at the Effective Time. The Maximum Purchaser
Shares shall mean the product of: (i) 0.868; and (ii) the quotient obtained by
dividing the sum of (aa) the number of shares of Purchaser Common Stock
outstanding immediately prior to the Effective Time, and (bb) the number of
shares of Purchaser Common Stock underlying all options, warrants and any other
securities convertible into shares of Purchaser Common Stock which are
outstanding immediately prior to the Effective Time, by 0.132. The shares of the
Purchaser Common Stock which constitute the Merger Consideration are referred to
as the "PURCHASER SHARES."
2.5 CONVERSION OF iTRACT OPTIONS. All of the options and warrants to
purchase iTract Units (the "iTRACT OPTIONS") outstanding immediately prior to
the Effective Time shall, by virtue of the iTract Merger and without any further
action on the part of iTract or the holders of such options or warrants, be
converted into options or warrants to acquire shares of the Purchaser Common
Stock (the "Purchaser Options"). Each Purchaser Option issued in exchange for an
iTract Option shall be exercisable for that whole number of shares of Purchaser
Common Stock (to the nearest whole share) that a holder of the number of iTract
Units subject to such iTract Option immediately prior to the Effective Time
would be entitled to receive under Section 2.4 hereof. The aggregate purchase
price for the shares of Purchaser Common Stock subject to each Purchaser Option
issued in exchange for an iTract Option shall be the same as the aggregate
purchase price for the iTract Units subject to the corresponding iTract Option
immediately prior to the Effective Time. Purchaser agrees that as soon as
practicable after the Effective Time it will cause to be filed one or more
registration statements on Form S-8 under the Securities Act in order to
register the shares of Purchaser Common Stock issuable upon exercise of the
converted iTract Options (if such shares may be registered on Form S-8).
2.6 CERTIFICATE OF FORMATION AND LIMITED LIABILITY COMPANY AGREEMENT.
The Certificate of Formation of iTract shall be and remain the Certificate of
Formation of the Surviving LLC. On the Effective Date, the limited liability
company agreement of the Surviving LLC shall be in the form annexed hereto as
EXHIBIT B.
2.7 MANAGERS AND OFFICERS.
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(a) At the Effective Time, the managers and officers of the
Surviving LLC shall be the managers and officers of iTract immediately prior to
the Merger.
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(b) At the Effective Time, the directors and officers of the
Purchaser shall resign as directors and officers of the Purchaser and shall
appoint as their successors the Persons to be designated by iTract.
3. THE CLOSING.
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3.1 CLOSING.
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(a) Unless this Agreement shall have been terminated pursuant
to Section 10.1, a closing of the iTract Merger (the "Closing") will be held at
the offices of Kronish Xxxx Xxxxxx & Xxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, five (5) Business Days after the date on which the
conditions set forth in Sections 7 and 8 shall be satisfied or duly waived (or
such other place and date as Purchaser and iTract may agree in writing).
(b) At the Closing:
(1) iTract and the Members, as applicable, shall
deliver to Purchaser or Purchaser Subsidiary, as
applicable, all documents contemplated by Article 7,
to the extent not theretofore delivered.
(2) Purchaser or Purchaser Subsidiary, as applicable,
shall deliver to iTract all documents contemplated by
Article 8, to the extent not theretofore delivered.
(3) Purchaser shall deliver to the Members
certificates representing the Purchaser Shares.
4. REPRESENTATIONS AND WARRANTIES OF iTRACT .
-----------------------------------------
iTract represents and warrants to Xxxxx, Purchaser and Purchaser
Subsidiary as follows:
4.1 ORGANIZATION AND GOOD STANDING. iTract is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. iTract has all requisite corporate power to own, operate
and lease its properties and carry on its business as the same is now being
conducted and as currently proposed to be conducted. Complete and correct copies
of the certificate of formation and limited liability company agreement of
iTract as currently in effect have been delivered to Xxxxx. iTract has no
Subsidiaries nor does it own any equity interest in, or control directly or
indirectly, any other entity.
4.2 CAPITALIZATION OF iTRACT.
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(a) iTract has issued 10,728,700 iTract Units, all of which
are fully paid and non-assessable. Except as set forth on SCHEDULE 4.2(A), there
are no outstanding subscriptions, options,
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rights, warrants, convertible securities, pre-emptive rights or other agreements
(other than this Agreement) or calls, demands or commitments of any kind
relating to the issuance, sale or transfer of any membership interests or other
equity securities of iTract, whether directly or upon the exercise or conversion
of other securities. There are no outstanding contractual obligations of iTract
to repurchase, redeem or otherwise acquire any interests in iTract or to provide
funds to, or make any investments (in the form of a loan, capital contribution
or otherwise), in any other Person. All of the outstanding iTract Units were
issued in compliance with all applicable federal and state securities laws.
(b) SCHEDULE 4.2(B) sets forth the name of each Person owning
iTract Units and the number of iTract Units owned by such Person.
4.3 AUTHORITY RELATIVE TO AGREEMENT. iTract has all requisite power and
authority, to execute, deliver and perform its obligations under this Agreement,
and has taken all action necessary in order to execute and deliver this
Agreement and to consummate the Contemplated Transactions. This Agreement has
been duly executed and delivered by iTract. This Agreement constitutes the valid
and binding obligation of iTract, enforceable against iTract in accordance with
its terms, subject to laws relating to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, marshaling or other laws and rules of
law affecting the enforcement generally of creditors' rights and remedies
(including such as may deny giving effect to waivers of debtors' or guarantors'
rights).
4.4 ABSENCE OF CONFLICT. Neither the execution and delivery of this
Agreement nor the consummation of the Contemplated Transactions will (a)
violate, conflict with, result in a material breach or termination of,
constitute a default under or give rise to a right to terminate or accelerate
(or an event which, with notice or lapse of time or both, would constitute the
same) (i) any material agreement, commitment, deed of trust, indenture, lease,
mortgage or other instrument to which iTract is a party or by which any of its
properties or assets is bound, (ii) the certificate of formation or limited
liability company agreement of iTract, or (iii) any Law, order of a Governmental
Body or any other restriction of any kind or character applicable to iTract or
any of its properties or assets, or (b) result in the creation or imposition of
any Encumbrance upon any properties or assets of iTract under any material
agreement or commitment to which iTract is a party or by which iTract or its
properties or assets may be bound, except, in each of the foregoing cases, for
such items as would not constitute a Material Adverse Effect with respect to
iTract.
4.5 CONSENTS AND APPROVALS; EFFECT OF CHANGE IN CONTROL. SCHEDULE 4.5
sets forth a complete list of all consents, waivers, registrations,
certificates, approvals, grants, franchises, concessions, permits, licenses,
exceptions or authorizations of, or declarations or filings with, or notices or
reports to, (a) any Governmental Body and (b) any other Person (including, but
not limited to, any party to a Contract or other agreement or commitment of
iTract) (collectively, the "iTRACT APPROVALS"), which iTract must obtain or make
in order to consummate the Contemplated Transactions. All iTract Approvals have
been obtained and are in full force and effect, and Purchaser is in full
compliance with each of such iTract Approvals.
4.6 FINANCIAL STATEMENTS.
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(a) Attached to this Agreement as SCHEDULE 4.6(A) are true and
correct copies of the statements of operations and cash flows of iTract for the
period from inception through June 30, 1999, for the six month period ended
December 31, 1999 and for the eight month period ended February 29, 2000, and
balance sheets as of June 30, 1999, December 31, 1999 and February 29, 2000
(collectively the "iTRACT FINANCIAL STATEMENTS").
(b) The iTract Financial Statements comply as to form in all
material respects with applicable accounting requirements and have been prepared
in conformity with GAAP consistently applied (except as may be indicated in the
notes thereto or, in the case of unaudited financial statements, as permitted by
the rules and regulations of the SEC) and present fairly, in all material
respects, the financial position of iTract at the dates thereof and the results
of its operations and cash flows for the periods then ended (subject in the case
of unaudited interim financial statements to normal recurring year-end audit
adjustments).
(c) Except as set forth in SCHEDULE 4.6(C), iTract does not
have any liabilities or obligations (whether known or unknown, absolute,
accrued, contingent or otherwise and whether due or to become due) that were not
fully reflected or reserved against in the balance sheet of iTract as of
February 29, 2000 (the "iTRACT RECENT BALANCE SHEET") except for non-material
liabilities and obligations incurred in the ordinary course of business and
consistent with past practice (in nature and scope) since the date thereof. The
reserves reflected in the iTract Recent Balance Sheet are adequate, appropriate
and reasonable and the reserves reflected in the iTract Recent Balance Sheet are
in accordance with GAAP consistently applied. Since the date of the iTract
Recent Balance Sheet, there has been no change in the business, operations or
financial condition of iTract which has or could reasonably be expected to have
a Material Adverse Effect with respect to iTract.
4.7 TITLE TO PROPERTY; SUFFICIENCY; ENCUMBRANCES.
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(a) iTract has never owned any real property.
(b) Except for those properties or assets leased by iTract
(each of which is listed in Schedule 4.8(a)), or as disclosed in SCHEDULE
4.7(B), iTract owns all the properties and assets used in the conduct of its
business and, with respect to contract rights, is a party to and enjoys the
right to the benefits of all material contracts, agreements and other
arrangements used by iTract in the conduct of its business (all such properties,
assets and contract rights being the "iTRACT ASSETS"). iTract has good and
marketable title to all the iTract Assets, free and clear of all Encumbrances,
except for Permitted Encumbrances. As used herein, "PERMITTED ENCUMBRANCES"
means (i) statutory liens for current taxes or assessments not yet due or
delinquent, and (ii) those Encumbrances disclosed on SCHEDULE 4.7(B).
(c) Following the consummation of the Contemplated
Transactions, the Surviving LLC will continue to own the iTract Assets without
incurring any penalty or other adverse consequence, including, without
limitation, any increase in royalties, or licenses or other fees imposed as a
result of, or arising from, the consummation of the Contemplated Transactions.
Immediately following the Effective Time, the Surviving LLC shall own and
possess all documents,
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books, records, agreements and financial data of any sort used by iTract in the
conduct of its business.
4.8 LEASED PROPERTY.
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(a) SCHEDULE 4.8 sets forth a true and complete list of each
lease under which iTract is a lessee or lessor (each, a "LEASE"). iTract has
delivered to Purchaser complete and correct copies of each such Lease. Each such
Lease is a valid and binding obligation of iTract, enforceable in accordance
with its terms, is in full force and effect, and except as set forth on SCHEDULE
4.8, upon consummation of the Contemplated Transactions, will continue to
entitle the Surviving LLC to the use and possession of the property specified in
such lease for the purposes for which such property is now being used by iTract,
without incurring any penalty or other adverse consequence, including without
limitation, any increase in rentals or other fees imposed as a result of or
arising from the consummation of the Contemplated Transactions.
(b) There is not under any of such Leases any material default
or any claim of a material default by iTract.
4.9 INTELLECTUAL PROPERTY RIGHTS.
----------------------------
(a) SCHEDULE 4.9 sets forth a list and brief description of
all Intellectual Property owned or licensed or used or held for use by iTract,
specifying as to each, as applicable: (i) the nature of such right, (ii) the
owner of such right and (iii) the jurisdiction in which registration has been
issued or applied for with respect to such right, including the respective
registration or application numbers. iTract owns or possesses adequate licenses
or rights to use all Intellectual Property necessary to the conduct of its
business as presently conducted and as proposed to be conducted as of the date
hereof, and no claim is pending or, to the knowledge of iTract, threatened to
the effect that the operations of iTract infringe upon or conflict with the
asserted rights of any other Person under any Intellectual Property and, to the
knowledge of iTract, there is no reasonable basis for any such claim (whether or
not pending or threatened). No claim is pending or, to the knowledge of iTract,
threatened to the effect that any such Intellectual Property owned or licensed
by iTract or by which iTract otherwise has the right to use, is invalid or
unenforceable by iTract, and, to the knowledge of iTract, there is no reasonable
basis for any such claim (whether or not pending or threatened). iTract has
taken reasonable steps to establish and maintain the confidentiality of all
manufacturing processes, formulae, trade secrets, customers lists and know how
of iTract, and, to the knowledge of iTract, all such items have remained
confidential. SCHEDULE 4.9 also contains a list of all licenses and sublicenses
and all consulting software development and other agreements relating to any
Intellectual Property of iTract, including the identity of all parties thereto.
iTract is not nor will it be as a result of the execution and delivery of this
Agreement and the consummation of the Contemplated Transactions, in violation of
any license, sublicense or agreement described in SCHEDULE 4.9.
(b) The Intellectual Property owned by iTract or, for which
iTract is the exclusive licensee, are free and clear of all liens and
encumbrances of every nature, are not currently being challenged in any way,
have not lapsed or expired, and are not involved in any pending or, to the
12
knowledge of iTract, threatened interference proceedings. SCHEDULE 4.9 sets
forth all challenges to or any pending or threatened interference proceedings
relating to Intellectual Property known to iTract.
(c) Neither iTract nor any of its Affiliates has during the
preceding 5 years been sued or charged in writing with or have been a defendant
in any claim, suit, action or proceeding that involved a claim of infringement
of any of the Intellectual Property of iTract. iTract has no knowledge of any
other claim of infringement by iTract and no knowledge of any continuing
unauthorized use, misappropriation or infringement by any party of any
Intellectual Property of iTract. No Intellectual Property of iTract is subject
to any outstanding order, judgment, decree, stipulation or agreement restricting
the use thereof by iTract or restricting the licensing thereof by iTract to any
other party. Other than as set forth in SCHEDULE 4.9, iTract has not entered
into any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property of iTract.
(d) As of April 18, 2000, none of the present or former
employees, officers and directors of iTract or their Affiliates will own,
directly or indirectly, in whole or in part, any Intellectual Property of iTract
or application therefor as set forth in SCHEDULE 4.9.
4.10 LITIGATION. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
against or involving iTract, which questions or challenges the validity of this
Agreement or the Contemplated Transactions, and iTract has not received any
notice of any event or occurrence which could result in any such action, suit,
inquiry, proceeding or investigation nor, to the knowledge of iTract, is there
any valid basis for any such action, suit, inquiry, proceeding or investigation.
4.11 TAX MATTERS. iTract elected to be treated as a partnership for
federal income tax purposes upon its inception and has not changed such election
since such time. Except as set forth on SCHEDULE 4.11, all Tax Returns required
to be filed by iTract on or before the Effective Time by or on behalf of or with
respect to iTract have been or will be timely filed on or before the Effective
Time in accordance with all applicable laws. iTract is not delinquent in the
payment of any Tax nor has iTract requested any extension of time within which
to file any Tax Return, which Return has not since been timely filed. No
deficiency for any Tax or claim for additional Taxes has been proposed, asserted
or assessed by any Governmental Body against iTract. There is no audit, action,
suit, claim, proceeding or, any investigation or inquiry, whether formal or
informal, public or private, now pending or, to the knowledge of iTract,
threatened against or with respect to iTract in respect of any Tax. There are no
liens for Taxes upon the assets of iTract except liens for current Taxes not yet
due.
4.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999,
except as set forth in SCHEDULE 4.12, iTract has conducted its business only in
the ordinary course and there has not been:
(i) any material adverse change in the financial condition,
operations, properties, assets, liabilities or business of iTract;
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(ii) any material damage, destruction or loss of any material
properties of iTract; and
(iii) any occurrence not included in paragraphs (i) through
(ii) of this Section which has resulted or, in which iTract has reason to
believe could reasonably be expected to result, in a Material Adverse Effect.
4.13 EMPLOYEE BENEFITS; EXECUTIVE OFFICERS; LABOR.
--------------------------------------------
(a) No employees of iTract are covered by collective
bargaining agreements or are members of unions. SCHEDULE 4.13 sets forth a true
and complete list of all written executive compensation plans, bonus plans,
incentive compensation plans, deferred compensation plans or agreements,
employee pension plans or retirement plans, employee profit sharing plans,
employee stock purchase plans, group life insurance, hospitalization insurance,
severance or other employee benefit plans (as defined in Section 3(3) of ERISA)
of iTract (the "iTRACT PLANS") providing for benefits for any employees of
iTract. iTract has no unfunded obligations relating to the iTract Plans. To the
extent applicable, the iTract Plans comply in all material respects with ERISA.
(b) Except as set forth in SCHEDULE 4.13, neither the
execution and delivery of this Agreement nor the consummation of any of the
Contemplated Transactions under this Agreement will entitle any current or
former employee of iTract to severance pay or other similar payment or
accelerate the time of payment or increase the amount or compensation due to any
such employee or former employee. iTract has no pending or, to the knowledge of
iTract, threatened labor disputes with its employees.
4.14 INSURANCE; CLAIMS. SCHEDULE 4.14 sets forth a true, correct and
complete list of all insurance policies of any kind or nature maintained as of
the date of this Agreement by or on behalf of iTract and relating to its
business and/or assets, indicating the type of coverage, name of insured, name
of insurance carrier or underwriter, premium thereon, policy limits and
expiration date of each policy. All such insurance policies are in full force
and effect, and iTract is not in default with respect to its obligations under
any such insurance policy and no notice of cancellation or termination has been
received with respect to any such policy.
4.15 MATERIAL CONTRACTS AND COMMITMENTS. SCHEDULE 4.15 contains a true,
complete and accurate list of all of the material contracts, agreements,
understandings or other obligations (whether written or oral) to which iTract is
a party or by which any of its assets or properties are bound (together with the
agreements disclosed on SCHEDULES 4.8, 4.9, 4.13, and 4.14 a "CONTRACT"),
including, but not limited to:
(a) all rental or use agreements, contracts, covenants or
obligations;
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(b) any contract, agreement, commitment or obligation to make
any capital expenditures;
(c) contracts, agreements, commitments or other obligations
with any Person containing any provision or covenant limiting the ability of
iTract to engage in any line of business or to compete with or to obtain
products or services from any Person or limiting the ability of any Person to
compete with or to provide products or services to, or obtain products or
services from, iTract, or covering indemnification of another Person;
(d) any profit-sharing or similar contract, agreement,
understanding or obligation with any Person;
(e) contracts, agreements, commitments or other obligations
with respect to the purchase or sale by or to iTract of any product, equipment,
facility, or similar item;
(f) license, royalty, franchise, distributorship, dealer,
service, sales agency, consulting, advisory, public relations or advertising
contracts, agreements, commitments or other obligations;
(g) contracts, agreements, commitments or other obligations to
provide services or facilities with a value in excess of $5,000 per annum by or
to iTract or to or by another Person;
(h) all joint ventures and joint marketing agreements; or
(i) all other material contracts, agreements, commitments, or
other obligations whether or not made in the ordinary course of business.
4.16 STATUS OF AGREEMENTS. All Contracts to which iTract is a party are
in full force and effect and constitute valid and binding obligations of iTract
and, to the knowledge of iTract, are binding on the other parties thereto. There
are no existing material defaults (or events which, with notice or lapse of time
or both, would constitute a default) by iTract or any other party thereunder.
iTract is not a party to any Contract that has or may reasonably be expected to
have, individually or in the aggregate, with any other Contracts a Material
Adverse Effect on iTract.
4.17 COMPLIANCE WITH LAW.
-------------------
(a) SCHEDULE 4.17(A) is a true and complete list of each
license, permit, order, authorization or approval of Governmental Bodies
("iTRACT LICENSES") held or obtained by iTract which is required in connection
with the business conducted by iTract. The operations of iTract have been
conducted in all material respects in accordance with all applicable Laws.
iTract has not received any notification of any asserted present or past failure
to comply with any such Laws. iTract has all iTract Licenses required for the
conduct of iTract's business and is not in violation of any such iTract License.
All such iTract Licenses are in full force and effect and no suspension or
cancellation thereof has been threatened of which iTract is aware.
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(b) iTract has obtained all iTract Licenses which are required
with respect to iTract under all Environmental Laws. iTract is in compliance in
all material respects with all terms and conditions of such required iTract
Licenses, and is also in compliance in all material respects with all
Environmental Laws. Except as set forth in SCHEDULE 4.17(B), there does not
exist as a result of any action or inaction of iTract or, to the knowledge of
iTract, as a result of any action or inaction of any other Person, nor has
iTract received notice of, any events, condition or circumstances which may
interfere with or prevent continued compliance, or which may give rise to any
liability, or otherwise form the basis of any claim, action, suit, proceedings,
hearing or investigation, based on or related to the violation of an
Environmental Law or the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission, discharge, release
or threatened release into the environment, of any Hazardous Material.
(c) To the best of iTract's knowledge, no Hazardous Material
has been incorporated in, used on, stored on or under, released from, treated
on, transported to or from, or disposed of by iTract on or from any property
owned or leased by iTract or by any other Person such that, under Environmental
Laws (i) any such Hazardous Material would be required to be removed, cleaned up
or remediated before the property owned or leased by iTract could be altered,
renovated, demolished or transferred, or (ii) the owner or lessee of the
property (as applicable to iTract) could be subjected to liability for the
removal, clean up or remediation of such Hazardous Material; and iTract has not
received notification from any Governmental Bodies or other Persons relating to
Hazardous Material on or affecting any property owned or leased by iTract or
relating to any potential or known liability under Environmental Laws arising
from the ownership or leasing of any property.
4.18 NO BROKERS OR FINDERS. Except as set forth on SCHEDULE 4.18,
iTract has not, and its Affiliates, officers, directors or employees have not,
employed any broker or finder or incurred any liability for any brokerage or
finder's fee or commissions or similar payment in connection with any of the
Contemplated Transactions.
4.19 REGISTRATION STATEMENT. None of the information to be supplied by
iTract in writing for inclusion in the Registration Statement or any amendments
thereof or supplements thereto, at the time of the filing of the Registration
Statement, as amended or supplemented, or at the time it becomes effective, will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading; PROVIDED, that Xxxxx shall furnish the Registration Statement and
any amendments or supplements thereto to iTract for its review a reasonable
period (and in no case less than 24 hours) prior to the filing of same with the
SEC and prior to the distribution thereof.
4.20 TAX REPORTING. Consistent with the intent of the parties hereto,
iTract shall treat, and cause their Affiliates to so treat, the iTract Merger as
an exchange under Section 351 with respect to all Tax Returns, to the extent
consistent with Law.
4.21 DISCLOSURE. No representations or warranties by iTract in this
Agreement and no statement contained in any schedules, exhibits or certificates
furnished or to be furnished by iTract
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to Xxxxx, Purchaser or Purchaser Subsidiary or any of their representatives
pursuant to the provisions hereof, contains or will contain any untrue statement
of material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading. Documents delivered or to be
delivered by iTract to Xxxxx, Purchaser or Purchaser Subsidiary pursuant to this
Agreement are or will be true and complete copies of what they purport to be.
5. REPRESENTATIONS AND WARRANTIES OF XXXXX, PURCHASER AND
------------------------------------------------------
PURCHASER SUBSIDIARY.
---------------------
Xxxxx, Purchaser and Purchaser Subsidiary hereby, jointly and
severally, represent and warrant to iTract as follows:
5.1 ORGANIZATION AND GOOD STANDING. Xxxxx is a corporation duly
organized, validly existing and in good standing under the laws of Puerto Rico.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Purchaser Subsidiary is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. Each of Xxxxx, Purchaser and Purchaser
Subsidiary has the requisite corporate power to own, operate and lease its
properties and carry on its business as the same is now being conducted, and
following the Reincorporation Merger, Purchaser will have all requisite
corporate power to own, operate and lease its properties and carry on its
business as the same are then being conducted. Complete and correct copies of
the certificate of incorporation and bylaws of Xxxxx and Purchaser, and complete
and correct copies of the certificate of formation and limited liability company
agreement of Purchaser Subsidiary, as currently in effect, have been delivered
to iTract. Other than the Subsidiaries set forth on SCHEDULE 5.1, Xxxxx has no
Subsidiaries.
5.2 CAPITALIZATION.
--------------
(a) The authorized capital stock of Xxxxx consists of (i)
10,000,000 shares of common stock, par value $.001 per share, of which 1,882,322
shares are issued and outstanding as of the date of this Agreement and are fully
paid and non-assessable (ii) 250,000 shares of preferred stock, par value $.01
per share, of which no shares are outstanding. Except as set forth on SCHEDULE
5.2(A), there are no outstanding subscriptions, options, rights, warrants,
convertible securities, preemptive rights or other agreements (other than this
Agreement) or calls, demands or commitments of any kind relating to the issuance
of any capital stock or other equity securities of Xxxxx, whether directly or
upon the exercise or conversion of other securities. There are no outstanding
contractual obligations of Xxxxx to repurchase, redeem or otherwise acquire any
shares of Margo's capital stock or to provide funds to, or make any investment
(in the form of a loan, capital contribution or
17
otherwise) in, any other Person. All of the outstanding securities of Xxxxx were
issued in compliance with all applicable federal and state securities laws.
(b) The authorized capital stock of Purchaser consists of (i)
100,000,000 shares of common stock, par value $.001 per share, of which 10
shares are issued and outstanding as of the date of this Agreement, are fully
paid and non-assessable and owned by Xxxxx, and (ii) 5,000,000 shares of
preferred stock, par value $.01 per share, of which no shares are currently
outstanding or will be outstanding at the Effective Time. Except as set forth on
SCHEDULE 5.2(B), there are no outstanding subscriptions, options, rights,
warrants, convertible securities, preemptive rights or other agreements (other
than this Agreement) or calls, demands or commitments of any kind relating to
the issuance, sale or transfer of any capital stock or other equity securities
of Purchaser, whether directly or upon the exercise or conversion of other
securities. There are no outstanding contractual obligations of Purchaser to
repurchase, redeem or otherwise acquire any shares of Purchaser's capital stock
or to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person.
(c) Purchaser owns 100% of the membership interests of
Purchaser Subsidiary and has no other Subsidiaries.
(d) All of the Purchaser Shares to be issued to the Members in
the Merger will, as of the Effective Time, be duly authorized and validly
issued, fully paid and nonassessable.
5.3 AUTHORITY RELATIVE TO AGREEMENT. Each of Xxxxx, Purchaser and
Purchaser Subsidiary, as applicable, has all requisite power and authority,
corporate or otherwise, to execute, deliver and perform their obligations under
this Agreement and has taken all action necessary, corporate or otherwise, in
order to execute and deliver this Agreement. This Agreement has been duly
executed and delivered by Xxxxx, Purchaser and Purchaser Subsidiary. This
Agreement constitutes the valid and binding obligations of Xxxxx, Purchaser and
Purchaser Subsidiary, as applicable, enforceable against Xxxxx, Purchaser and
Purchaser Subsidiary in accordance with its terms, subject to laws relating to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
marshaling or other laws and rules of law affecting the enforcement generally of
creditors' rights and remedies (including such as may deny giving effect to
waivers of debtors' or guarantors' rights).
5.4 ABSENCE OF CONFLICT. Except as listed on SCHEDULE 5.4, neither the
execution and delivery of this Agreement nor the consummation of the
Contemplated Transactions will (a) violate, conflict with, result in a breach or
termination of, constitute a default under or give rise to a right to terminate
or accelerate (or an event which, with notice or lapse of time or both, would
constitute the same) (i) any agreement, commitment, deed of trust, indenture,
lease, mortgage or other instrument to which Xxxxx, Purchaser and Purchaser
Subsidiary is a party or by which any of their respective properties or assets
are bound; (ii) the certificate of incorporation or bylaws of Xxxxx or Purchaser
or the certificate of formation or limited liability company agreement of
Purchaser Subsidiary or (iii) any Law, order of a Governmental Body or any other
restriction of any kind or character applicable to Xxxxx, Purchaser and
Purchaser Subsidiary or any of their respective properties or assets; except,
18
in each of such cases, for such items as would not constitute, in the aggregate,
a Material Adverse Effect with respect to Xxxxx, Purchaser or Purchaser
Subsidiary, as the case may be.
5.5 CONSENTS AND APPROVALS; EFFECT OF CHANGE IN CONTROL. SCHEDULE 5.5
sets forth a complete list of all consents, waivers, registrations,
certificates, approvals, grants, franchises, concessions, permits, licenses,
exceptions or authorizations of, or declarations or filings with, or notices or
reports to, (a) any Governmental Body and (b) any other Person (including, but
not limited to, any party to a contract or other agreement or commitment of
Xxxxx) (collectively, the "XXXXX APPROVALS"), which Xxxxx or Purchaser must make
or obtain in order to consummate the Contemplated Transactions. Except as set
forth in SCHEDULE 5.5, there are no contracts or Xxxxx Approvals by which Xxxxx
or any of its assets or properties may be bound that contain any change in
control provisions that will become applicable or inapplicable as a result of
the consummation of the Contemplated Transactions.
5.6 TAX MATTERS.
-----------
(a) Xxxxx and its Subsidiaries have filed or caused to be
filed on a timely basis all Tax Returns that are or were required to be filed by
or with respect to them, their operations and their assets through the Effective
Time, pursuant to the Laws or administrative requirements of each Governmental
Body with taxing power over it or its assets. As of the time of filing, such Tax
Returns correctly reflected the facts regarding the income, business, assets,
operations, activities, status, and other matters of Xxxxx and its Subsidiaries
and any other information required to be shown thereon. In particular, such Tax
Returns are not subject to penalties under Section 6662 of the Code or any
predecessor provision of law or any other provision of the Code. An extension of
time within which to file any Tax Return that has not been filed has not been
requested or granted. Xxxxx and its Subsidiaries have delivered to Purchaser
true, complete and correct copies of all federal, state, local or foreign income
Tax Returns filed by them since formation. SCHEDULE 5.6(A) lists all state,
local and foreign jurisdictions in which Xxxxx and its Subsidiaries have
previously filed or currently file Tax Returns, which are all of the state,
local or foreign taxing jurisdictions in which Xxxxx and its Subsidiaries have
been or are required to file Tax Returns.
(b) With respect to all amounts in respect of Taxes imposed on
Xxxxx and its Subsidiaries or for which Xxxxx and its Subsidiaries are or could
be liable, whether to Governmental Bodies (as, for example, under law) or to
other persons or entities (as, for example, under tax allocation agreements),
with respect to all taxable periods or portions of periods through the Effective
Time, (i) all applicable tax laws and agreements have been fully complied with,
(ii) all such amounts required to be paid by Xxxxx and its Subsidiaries to
Governmental Bodies or others on or before the date hereof have been paid,
except such taxes, if any, as are set forth in SCHEDULE 5.6(B) and are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP consistently applied) have been provided in the Financial
Statements, and (iii) reserves have been established for the payment of all
Taxes not yet due and payable, which reserves are reflected on the Preliminary
Balance Sheet and are adequate and in accordance with the past custom and
practice of Xxxxx and its Subsidiaries.
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(c) As of the date hereof, none of Xxxxx and its Subsidiaries
have requested, executed or filed with the IRS or any other Governmental Body
any agreement or other document extending or having the effect of extending the
period for assessment or collection of any Taxes for which Xxxxx and its
Subsidiaries could be liable.
(d) There exists no proposed tax assessment against Xxxxx and
its Subsidiaries nor any lien for Taxes against any property of Xxxxx and its
Subsidiaries except as disclosed in the Xxxxx Financial Statements or on
SCHEDULE 5.6(d).
(e) All Taxes that Xxxxx and its Subsidiaries are or were
required by law to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental Body or other
Person.
(f) Xxxxx and its Subsidiaries are not, were not and will not
be a party to, bound by or subject to any obligation under any tax sharing, tax
indemnity, tax allocation or similar agreement.
(g) There is no claim, audit, action, suit, proceeding, or
investigation with respect to Taxes due or claimed to be due from Xxxxx and its
Subsidiaries or of any Tax Return filed or required to be filed by Xxxxx and its
Subsidiaries pending or threatened against or with respect to Xxxxx and its
Subsidiaries.
(h) Xxxxx and its Subsidiaries have not made, and are not
parties to any agreement requiring them to make, any payment which would not be
deductible under Code Section 280G or which would be subject to the excise tax
imposed by Code Section 4999.
(i) Xxxxx and its Subsidiaries have not executed or entered
into any closing agreement pursuant to Section 7121 of the Code or any
corresponding provision of state, local, Puerto Rico or foreign income tax law.
(j) Xxxxx and its Subsidiaries have not filed a consent
pursuant to Section 341(f) of the Code (or any corresponding provision of state,
local or foreign income tax law) or agreed to have Section 341(f)(2) of the Code
(or any corresponding provision of state, local, Puerto Rico or foreign income
tax law) apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by Xxxxx and its Subsidiaries.
(k) Xxxxx and its Subsidiaries (i) have not agreed to or are
not required to make any adjustment pursuant to Section 481(a) of the Code (or
any corresponding provision of state, local, Puerto Rico or foreign income tax
law) by reason of a change in accounting method initiated by a Tax Affiliate,
(ii) are not aware that the IRS or any Governmental Body has proposed any such
adjustment or change in accounting method that relates to the business and
operations of Xxxxx and its Subsidiaries, or (iii) have no application pending
with any Governmental Body requesting permission for any change in accounting
method that relates to the business and operations of Xxxxx and its
Subsidiaries.
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(l) Except as Set forth in SCHEDULE 5.4(L), Xxxxx and its
Subsidiaries do not hold any debt instrument with respect to which they are
reporting the income under the installment method or that has an adjusted basis
that is less than 90 percent of the stated redemption price at maturity.
(m) Xxxxx and its Subsidiaries have no liability for the Taxes
of any person under Treas. Reg. ss. 1.1502-6, as a transferee or successor, or
otherwise.
(n) All material elections with respect to Taxes affecting
Xxxxx and its Subsidiaries as of the date hereof are set forth in SCHEDULE
5.6(N). After the date hereof, no election with respect to Taxes will be made
without the written consent of Purchaser, which may not be unreasonably withheld
or delayed.
(o) None of the assets of Xxxxx and its Subsidiaries is
required to be treated as owned by any other person pursuant to the "safe harbor
lease" provisions of former Section 168(f)(8) of the Code or otherwise pursuant
to the Code.
(p) None of the assets of Xxxxx and its Subsidiaries directly
or indirectly secures any debt the interest on which is tax-exempt under Section
103(a) of the Code.
(q) None of the assets of Xxxxx and its Subsidiaries are
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(r) Xxxxx and its Subsidiaries have not participated in or
will not participate in an international boycott within the meaning of Section
999 of the Code.
(s) Neither Xxxxx nor any of its Subsidiaries is and has been
a United States real property holding corporation (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(t) The transaction contemplated herein is not subject to the
tax withholding provisions of Section 3406 of the Code, Subchapter A of Chapter
3 of the Code, or any other provision of state, local, Puerto Rico or foreign
law.
(u) Xxxxx and its Subsidiaries have not had either a permanent
establishment in any foreign country (other than Puerto Rico), as defined in any
applicable tax treaty or convention between the United States and such foreign
country, or business activity in any country other than the United States that
would subject it to a Tax in such country that would not apply to a United
States person without a business activity in such country.
(v) Except as set forth in SCHEDULE 5.6(V), neither Xxxxx nor
any of its Subsidiaries is a party to any joint venture, partnership, or other
arrangement or contract that could be treated as a partnership for federal or
Puerto Rico income tax purposes.
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(w) Xxxxx and its Subsidiaries do not file Tax Returns that
are combined, consolidated, unitary or otherwise joined with the tax reporting
obligations of any other Person.
5.7 SEC DOCUMENTS: FINANCIAL STATEMENTS.
-----------------------------------
(a) As of their respective filing dates (i) each quarterly and
other report and registration statement (without exhibits) filed by Xxxxx since
December 31, 1995 (the "XXXXX SEC DOCUMENTS"), complied in all material respects
with the applicable requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) none of the Xxxxx 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. The financial statements
of Xxxxx included in the Xxxxx SEC Documents (the "XXXXX 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 conformity with GAAP consistently applied
(except as may be indicated in the notes thereto or, in the case of unaudited
financial statements, as permitted by the rules and regulations of the SEC) and
present fairly, in all material respects, the financial position of Xxxxx and
its consolidated subsidiaries at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, recurring and certain non-recurring
audit adjustments).
(b) Xxxxx does not have any liabilities or obligations
(whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due) that were not fully reflected or reserved against
in the consolidated balance sheet of Xxxxx as of December 31, 1999 (the "XXXXX
RECENT BALANCE SHEET") except for non-material liabilities and obligations
incurred in the ordinary course of business and consistent with past practice
(in nature and scope) since the date thereof. The reserves reflected in the
Xxxxx Recent Balance Sheet are adequate, appropriate and reasonable and the
reserves reflected in the Xxxxx Recent Balance Sheet are in accordance with GAAP
consistently applied.
(c) Except as set forth on SCHEDULE 5.7(C), since the date of
the Xxxxx Recent Balance Sheet to the date of this Agreement, there has been no
material adverse change in the business, operations or financial condition of
Xxxxx or any event, condition or contingency that could reasonably be expected
to result in such a Material Adverse Effect with respect to Xxxxx.
(d) The Xxxxx Common Stock is registered under Section 12 of
the Exchange Act. Except as set forth in SCHEDULE 5.7], since March 31, 1995,
Xxxxx has filed all reports, registration statements and other documents,
together with any amendments thereto, required to be filed under the Securities
Act and the Exchange Act, including, without limitation, reports on Form10-K,
Form 10-Q and Form 8-K, and Xxxxx (and Purchaser following the Reincorporation
Merger) will file all such reports, registration statements and other documents
required to be filed by it from the date of this Agreement to the Effective
Time.
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5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999 to
the date of this Agreement, except as set forth in SCHEDULE 5.8, Xxxxx has
conducted its business only in the ordinary course consistent with past practice
and there has not been:
(i) any material adverse change in the financial
condition, operations, properties, assets, liabilities or business of Xxxxx;
(ii) any material damage, destruction or loss of any
material properties of Xxxxx;
(iii) any material change in the manner in which the
business of Xxxxx has been conducted;
(iv) any occurrence not included in paragraphs (i)
through (iii) of this Section which has resulted, or which Xxxxx has reason to
believe could reasonably be expected to result, in a Material Adverse Effect.
5.9 EMPLOYEE BENEFITS; EXECUTIVE OFFICERS; LABOR.
--------------------------------------------
(a) Except as set forth on SCHEDULE 5.9(A), no employees of
Xxxxx, Purchaser or their Subsidiaries are covered by collective bargaining
agreements or are members of unions. SCHEDULE 5.9(A) sets forth a true and
complete list of all written executive compensation plans, bonus plans,
incentive compensation plans, deferred compensation plans or agreements,
employee pension plans or retirement plans, employee profit sharing plans,
employee stock purchase plans, group life insurance, hospitalization insurance,
severance or other employee benefit plans (as defined in Section 3(3) of ERISA)
of Xxxxx, Purchaser and their Subsidiaries (the "XXXXX PLANS") providing for
benefits for any employees of Xxxxx or its Subsidiaries. Xxxxx has no agreement
or commitment to create any additional such Xxxxx Plan. There are no unfunded
obligations relating to the Xxxxx Plans. To the extent applicable, the Xxxxx
Plans comply in all material respects with ERISA, the Code and the P.R. Internal
Revenue Code.
(b) Xxxxx and Purchaser will provide notifications to all of
their employees of their rights under Section 4980B of the Code within the time
required for the giving of such notification under such section, and Xxxxx and
Purchaser will comply with all of the other provisions of such Section 4980B in
connection with the iTract Merger, the Asset Sale and the other Contemplated
Transactions.
(c) Except as set forth on SCHEDULE 5.9,(c), neither the
execution and delivery of this Agreement nor the consummation of any of the
Contemplated Transactions under this Agreement will entitle any current or
former employee of Xxxxx or Purchaser to severance pay or other similar payment,
or accelerate the time of payment or increase the amount of compensation due to
any such employee or former employee. Xxxxx and Purchaser have no threatened or
pending labor disputes with their employees.
5.10 COMPLIANCE WITH LAW.
-------------------
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(a) Except as set forth on SCHEDULE 5.10(A), the operations of
Xxxxx, Purchaser and their Subsidiaries have been conducted in all material
respects in accordance with all applicable Laws. Except as set forth on SCHEDULE
5.10(A), neither Xxxxx nor Purchaser has received any notification of any
asserted present or past failure to comply with any such Laws. Except as set
forth in Schedule 5.10(b), Xxxxx, Purchaser and their Subsidiaries have all
licenses, permits, orders, authorizations or approvals of Governmental Bodies
("XXXXX LICENSES") required for the conduct of their businesses and are not in
violation of any such Xxxxx License. All such Xxxxx Licenses are in full force
and effect and no suspension or cancellation thereof has been threatened of
which Xxxxx is aware.
(b) Xxxxx, Purchaser and their Subsidiaries, as the case may
be, have obtained all Xxxxx Licenses which are required with respect to Xxxxx,
Purchaser and their Subsidiaries under all Environmental Laws. Xxxxx, Purchaser
and their Subsidiaries are in compliance in all material respects with all terms
and conditions of such required Xxxxx Licenses, and are also in compliance in
all material respects with all Environmental Laws. Except as set forth in
Schedule 5.10(b), there does not exist as a result of any action or inaction of
Xxxxx, Purchaser or their Subsidiaries, or, to the knowledge of Xxxxx any of the
predecessors of any of the foregoing, or, as a result of any action or inaction
of any other Person, nor has Xxxxx or Purchaser or any of the predecessors of
any of the foregoing, received notice of, any events, condition or circumstances
which may interfere with or prevent continued compliance, or which may give rise
to any liability, or otherwise form the basis of any claim, action, suit,
proceedings, hearing or investigation, based on or related to the violation of
an Environmental Law or the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any Hazardous
Material which would result in a Material Adverse Effect on Xxxxx or Purchaser
or any of their Subsidiaries or with respect to the Nursery Business Assets.
(c) To the best of Margo's knowledge, no Hazardous Material
has been incorporated in, used on, stored on or under, released from, treated
on, transported to or from, or disposed of by Xxxxx, Purchaser or their
Subsidiaries or any of the predecessors of any of the foregoing, on or from any
property owned or leased by Xxxxx, Purchaser or their Subsidiaries or any of the
predecessors of any of the foregoing, or by any other Person such that, under
Environmental Laws (i) any such Hazardous Material would be required to be
removed, cleaned up or remediated before the property owned or leased by Xxxxx,
Purchaser or their Subsidiaries could be altered, renovated, demolished or
transferred, or (ii) the owner or lessee of the property (as applicable to
Xxxxx, Purchaser or their Subsidiaries) could be subjected to liability for the
removal, clean up or remediation of such Hazardous Material; and neither Xxxxx
nor Purchaser, their Subsidiaries or any of the predecessors of any of the
foregoing, has received notification from any Governmental Bodies or other
Persons relating to Hazardous Material on or affecting any property owned or
leased by Xxxxx, Purchaser or any of their Subsidiaries or any of the
predecessors of any of the foregoing, or relating to any potential or known
liability under Environmental Laws arising from the ownership or leasing of any
property.
5.11 PURCHASER AND PURCHASER SUBSIDIARY'S OPERATIONS. Each of Purchaser
and Purchaser Subsidiary was formed solely for the purpose of engaging in the
Contemplated Transactions and has
24
not (i) engaged in any business activities, (ii) conducted any operations other
than in connection with the Contemplated Transactions, (iii) incurred any
liabilities other than in connection with the Contemplated Transactions or (iv)
owned any assets or property.
5.12 LITIGATION. Except as listed in SCHEDULE 5.12, there is no action,
suit, inquiry, proceeding or investigation by or before any court or
Governmental Body pending or threatened against or involving Xxxxx or Purchaser,
Purchaser Subsidiary or the Nursery Business Assets or which questions or
challenges the validity of this Agreement or the Contemplated Transactions, and
Xxxxx has not received any notice of any event or occurrence which could result
in any such action, suit, inquiry, proceeding or investigation nor, to the
knowledge of Xxxxx, is there any valid basis for any such action, suit, inquiry,
proceeding or investigation.
5.13 RECORDS. The books of account, corporate records and minute books
of Xxxxx, Purchaser and Purchaser Subsidiary are complete and correct in all
material respects. Complete and accurate copies of all such books of account,
corporate records and minute books of Xxxxx, Purchaser and Purchaser Subsidiary
have been provided to iTract.
5.14 NO BROKERS OR FINDERS. Except as set forth in SCHEDULE 5.14,
Purchaser and Purchaser Subsidiary have not, nor have any of their officers,
directors or employees, employed any broker or finder or incurred any liability
for any brokerage or finder's fee or commissions or similar payment in
connection with any of the Contemplated Transactions.
5.15 REGISTRATION STATEMENT. The Registration Statement and any
amendments thereof or supplements thereto, at the time of the filing or mailing,
at the time of the meeting of the stockholders of Xxxxx to be held in connection
with the transactions contemplated by this Agreement, and at the time it is
filed or becomes effective, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; provided, that neither Xxxxx nor
Purchaser shall have liability under this Section 5.15 for information supplied
by iTract or ICES or their respective officers, directors, stockholders or
affiliates in writing for inclusion in the Registration Statement.
5.16 NASDAQ. The Xxxxx Common Stock has been approved for listing on
Nasdaq Small Cap market under the symbol "MRGO" and is in compliance in all
material respects with all rules and regulations of the National Association of
Securities Dealers, Inc. and Nasdaq applicable to Xxxxx and the listing of such
securities on Nasdaq.
5.17 TAX REPORTING. Consistent with the intent of the parties hereto,
Purchaser and Purchaser Subsidiary shall treat, and cause their Affiliates to so
treat, the Merger as an exchange under Section 351 with respect to all Tax
Returns, to the extent consistent with Law.
5.18 DISCLOSURE. No representations or warranties by Xxxxx, Purchaser
or Purchaser Subsidiary in this Agreement and no statement contained in any
schedules, exhibits or certificates furnished or to be furnished by Xxxxx,
Purchaser or Purchaser Subsidiary to iTract or ICES pursuant to the provisions
hereof, contains or will contain any untrue statement of material fact or omits
or
25
will omit to state any material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading. Documents delivered or to be delivered by Xxxxx, Purchaser or
Purchaser Subsidiary to iTract or ICES pursuant to this Agreement are or will be
true and complete copies of what they purport to be.
6. COVENANTS RELATING TO REINCORPORATION AND CONTEMPLATED TRANSACTIONS.
-------------------------------------------------------------------
6.1 REINCORPORATION MERGER.
----------------------
(a) From and after the date of this Agreement, Xxxxx and
Purchaser will take all commercially reasonable actions necessary to cause Xxxxx
to be merged with and into Purchaser, with Purchaser as the surviving
corporation of such merger, so that as a result of such merger, Purchaser will
assume all of the assets, liabilities, properties and rights of Xxxxx. In
effecting the Reincorporation Merger, Xxxxx and Purchaser will cause each share
of Xxxxx Common Stock to be converted into one share of Purchaser Common Stock,
so that immediately after the Reincorporation Merger, each Person that was
previously a holder of Xxxxx Common Stock will be the holder of the same number
of shares of Purchaser Common Stock.
(b) All of the options to purchase Xxxxx Common Stock (the
"Xxxxx Options") outstanding as of the effective time of the Reincorporation
Merger shall, by virtue of the Reincorporation Merger and without any further
action on the part of Xxxxx or the holders of such options, be converted into
Purchaser Options in the manner provided by this Section 6.1(b). Each Purchaser
Option issued in exchange for a Xxxxx Option shall be exercisable for that whole
number of shares of Purchaser Common Stock (to the nearest whole share) that a
holder of the number of Xxxxx Common Stock subject to such Xxxxx Option
immediately prior to the effective time of the Reincorporation Merger would be
entitled to receive under Section 6.1(a) of this Agreement. The aggregate
purchase price for the shares of Purchaser Common Stock subject to each
Purchaser Option issued in exchange for a Xxxxx Option shall be the same as the
aggregate purchase price for the Xxxxx Common Stock subject to the corresponding
Xxxxx Option immediately prior to such effective time. Purchaser agrees that as
soon as practicable after the Effective Time it will cause to be filed one or
more registration statements on Form S-8 under the Securities Act, in order to
register the shares of Purchaser Common Stock issuable upon exercise of the
converted Xxxxx Options (if the issuance of such shares may be registered on
Form S-8).
6.2 REGISTRATION OF PURCHASER SHARES. In connection with the
Reincorporation Merger, Xxxxx and Purchaser will (i) prepare and file with the
SEC a proxy/registration statement on Form S-4 (the "Registration Statement"),
(ii) use commercially reasonably efforts to cause the Registration Statement to
become effective as soon as practicable after filing, and (iii) cause the
Registration Statement to be mailed to Margo's shareholders immediately after it
has become effective. The Registration Statement will (A) solicit proxies to
vote in favor of (i) the Reincorporation Merger, and (ii) the approval of the
Contemplated Transactions, including the transactions contemplated by this
Agreement and the Asset Sale, (B) register the Purchaser Shares to be issued to
the former shareholders of Xxxxx in connection with the Reincorporation Merger,
(C) register any Xxxxx Options and any iTract Options to be outstanding after
the Effective Date (if required); and (D)
26
register the Purchaser Shares to be issued to the Members as the Merger
Consideration.
6.3 COOPERATION OF iTRACT. iTract and ICES will furnish to Xxxxx in
writing all information reasonably requested by Xxxxx for use in connection with
the preparation of the Registration Statement and obtaining the effectiveness
thereof.
6.4 ASSET SALE.
----------
(a) Purchaser and/or Xxxxx will take all commercially reasonable
efforts necessary to cause the Nursery Business Assets to be sold (the "ASSET
SALE") as soon as practicable after obtaining the approval of such sale from
Margo's shareholders. The Asset Sale shall be consummated on or prior to the
Effective Time.
(b) Xxxxx shall provide iTract with a copy of any proposed purchase
agreement for the Asset Sale prior to its execution by Xxxxx. The terms and
conditions of the purchase agreement must be reasonably acceptable to iTract,
including the structure of the transaction (i.e., an asset sale or a stock
sale). Notwithstanding the foregoing, iTract shall not be entitled to object to
the purchase price under the proposed purchase agreement if the purchase price
equals or exceeds $5,000,000 in cash. iTract shall either approve or disapprove
the terms and conditions of the purchase agreement within three business days of
its delivery by Xxxxx to iTract. Xxxxx shall not consummate the Asset Sale on
terms which are different from those set forth in the purchase agreement
approved by iTract without iTract's prior written consent (which may not be
unreasonably withheld).
6.5 NASDAQ LISTING. Xxxxx shall timely notify Nasdaq of the
Contemplated Transactions and the shares to be issued in connection therewith.
The Parties shall together take such actions as are reasonably required to
obtain the approval of Nasdaq to list the Purchaser Shares on The Nasdaq
SmallCap Market immediately upon the effectiveness of the iTract Merger (the
"NASDAQ LISTING").
6.6 STOCKHOLDERS APPROVAL. Xxxxx shall use commercially reasonable
efforts to obtain the approval of its stockholders (the "STOCKHOLDER APPROVAL")
of the Contemplated Transactions (to the extent required by applicable law and
the rules of Nasdaq) as soon as practicable following the date upon which the
Registration Statement is declared effective by the SEC. Subject to the
fiduciary duties of the Board of Directors of Xxxxx under applicable law, Xxxxx
shall, through its Board of Directors, recommend to the holders of Xxxxx Common
Stock approval of this Agreement and the transactions contemplated by this
Agreement.
6.7 VOTING AGREEMENT OF XXXXXXX. Concurrent with the execution of this
Agreement, Xxxxxxx X. Xxxxxxx, the principal shareholder of Xxxxx, has entered
into an agreement with iTract in the form of EXHIBIT C, pursuant to which Xx.
Xxxxxxx has agreed to vote all of the shares of Xxxxx Common Stock held by him
in favor of the Contemplated Transactions.
6.8 iTRACT LOCK-UP AGREEMENTS. Prior to the effective date of the
Registration Statement, iTract and ICES shall cause each of the Members
receiving Purchaser Shares in the Merger (and each person who may receive shares
of Purchaser Common Stock upon the exercise of any iTract Options) to execute
and deliver to Purchaser the iTract Lock-Up Agreement in the form of EXHIBIT
27
D to this Agreement, pursuant to which each such Person shall have agreed not to
sell, pledge, dispose of or otherwise transfer any of such shares until the
eight months after the Effective Time.
6.9 OCCUPANCY AGREEMENT. Prior to April 18, 2000, iTract shall have
entered into a written occupancy agreement with ICES relating to the lease by
iTract of a portion of the premises located at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx.
7. CONDITIONS TO THE OBLIGATIONS OF XXXXX, PURCHASER AND PURCHASER SUBSIDIARY.
--------------------------------------------------------------------------
The obligations of Xxxxx, Purchaser and Purchaser Subsidiary to effect
the Contemplated Transactions, including the iTract Merger, shall be subject to
the satisfaction at or prior to the Effective Time of each of the following
conditions, any one or more of which may be waived by Xxxxx or Purchaser, as
applicable to the extent permitted by applicable law:
7.1 LEGAL OPINION. Purchaser and Purchaser Subsidiary shall have
received the opinion of Kronish Xxxx Xxxxxx & Xxxxxxx LLP, counsel to iTract,
dated the Effective Time and addressed to Purchaser and Purchaser Subsidiary, in
form and substance reasonably acceptable to Xxxxx.
7.2 NO INJUNCTION. There shall not be in effect or threatened any
injunction, order or decree of a Governmental Body of competent jurisdiction
that prohibits or delays, or seeks to prohibit or delay, consummation of any
material part of the transactions contemplated hereunder.
7.3 STOCKHOLDER APPROVAL. Xxxxx shall have obtained the Stockholder
Approval.
7.4 FAIRNESS OPINION. (i) Xxxxx shall have received an opinion of
Xxxxxxxx, Xxxxxx Group, Inc. or another independent investment banking firm
addressed to Xxxxx that the iTract Merger is fair, from a financial point of
view, to the stockholders of Xxxxx and (following the Reincorporation Merger) to
the shareholders of Purchaser; and (ii) Xxxxx shall have received an opinion of
San Xxxx Holdings, Inc. or another investment banking firm addressed to Xxxxx
that the Asset Sale is fair, from a financial point of view, to the stockholders
of Xxxxx.
7.5 REPRESENTATIONS, WARRANTIES AND AGREEMENTS. (i) The representations
and warranties of iTract set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time with the same effect as though made as of the Effective Time,
unless made as of another date, in which case they shall be true and correct in
all materials respects as of such date, (ii) iTract shall have performed and
complied in all material respects with the agreements contained in this
Agreement required to be performed and complied with by it prior to or as of the
Effective Time and (c) Purchaser shall have received certificates to the
foregoing effect signed by the manager of iTract.
7.6 APPROVALS. All iTract Approvals necessary in connection with the
execution, delivery and performance of this Agreement by iTract or for the
consummation of the Contemplated Transactions shall have been obtained or made
and shall be in full force and effect.
28
7.7 REGISTRATION. The Registration Statement registering the Purchaser
Shares being issued to the shareholders of Xxxxx in the Reincorporation Merger
shall be effective in accordance with the provision of the Securities Act, and
no stop order suspending such effectiveness shall have been issued and remain in
effect.
7.8 NASDAQ LISTING. The Purchaser Shares shall be listed on the Nasdaq
SmallCap Market.
7.9 NO MATERIAL ADVERSE EFFECT. No event, occurrence, fact, condition,
change, development or effect shall have occurred, exist or come to exist since
the date of this Agreement that, individually or in the aggregate, has
constituted or resulted in, or could reasonably be expected to constitute or
result in a Material Adverse Effect for iTract.
7.10 PROCEEDINGS SATISFACTORY. All certificates, opinions and other
documents to be delivered by iTract to Xxxxx and Purchaser and all other
corporate or organizational matters to be accomplished by iTract prior to or at
the Closing shall be reasonably satisfactory to Xxxxx, Purchaser and their
counsel.
7.11 SECRETARY OF STATE CERTIFICATES. Purchaser shall have received
certificates of the Secretary of State of the State of Delaware with respect to
iTract and ICES showing iTract and ICES to be validly existing and in good
standing in the State of Delaware.
7.12 MANAGER'S CERTIFICATE OF iTRACT. Purchaser shall have received a
certificate of the manager of iTract certifying (i) a true and complete copy of
the resolutions duly and validly adopted by the manager and a majority of the
Members of iTract, evidencing the authorization of the execution and delivery of
this Agreement and the consummation of the Contemplated Transactions, (ii) the
names and signatures of the manager and officers of iTract authorized to sign
this Agreement and the other documents to be delivered hereunder and (iii) a
true and complete copy of the certificate of formation and limited liability
company agreement of iTract.
7.13 SECRETARY'S CERTIFICATE. Xxxxx and Purchaser shall have received
certificates of the Secretary or Assistant Secretary of ICES certifying (i) a
true and complete copy of the resolutions duly and validly adopted by the Board
of Directors of ICES evidencing the authorization of the execution and delivery
of this Agreement and the consummation of the Contemplated Transactions, (ii)
the names and signatures of the officers of ICES authorized to sign this
Agreement and the other documents to be delivered hereunder and (iii) a true and
complete copy of the certificate of incorporation and bylaws of ICES.
7.14 iTRACT LOCKUP AGREEMENTS. Each of the Members receiving Purchaser
Shares and each of the holders of the iTract Options shall have executed and
delivered to Purchaser the iTract Lock-Up Agreements.
7.15 PUERTO RICO RULING. Xxxxx shall have received a ruling from the
Puerto Rico Department of the Treasury confirming that the Reincorporation
Merger qualifies as a tax free reorganization under the Puerto Rico Internal
Revenue Code of 1994, as amended.
29
7.16 REPAYMENT OF LOANS FROM XXXXXXX X. XXXXXXX AND J. XXXXXX XXXXX.
Purchaser shall have delivered to Xxxxxxx X. Xxxxxxx and J. Xxxxxx Xxxxx (the
"Lenders") reasonable evidence that the ICES Loans, including accrued interest
thereon, shall be repaid immediately following the Effective Time. The "ICES
Loans" consist of the loans made by the Lenders to ICES in the aggregate
principal amount of $2,000,000 (as evidenced by that certain Promissory Note in
the original principal amount of $ 1,715,000 payable to Xxxxxxx X. Xxxxxxx and
that certain Promissory Note in the original principal amount of $ 285,000
payable to J. Xxxxxx Xxxxx).
7.17 ASSIGNMENT OF INTELLECTUAL PROPERTY. ICES, Core Active ACG LLC and
XxxXxxxXxxx.xxx, Inc. shall have executed and delivered to iTract assignments,
in form and substance reasonably satisfactory to Xxxxx, of all rights which any
of them may have in any of the Intellectual Property used by iTract, including
but not limited to, all rights to the "iTract" tradename, all rights to the
"xXxxxx.xxx" domain registration, and all rights to the software developed by
them and utilized by iTract.
7.18 MODIFICATION OF TECHSPAN AGREEMENT. iTract shall have entered into
a modification of its existing agreement with TechSpan, Inc., in form and
substance reasonably satisfactory to Xxxxx, to clarify that the software program
to be developed by TechSpan for iTract is a "work for hire" and iTract shall be
the sole and exclusive owner of such software.
7.19 RELEASE FROM XXXXXXX XXXX. iTract shall obtain a release from
Xxxxxxx Xxxx of any right to receive any compensation (including any
compensation in the form of equity) from iTract or any other Person in
connection with, or as a result of, the Contemplated Transactions.
7.20 INDEMNIFICATION BY ICES. ICES shall have executed and delivered to
Purchaser and iTract an indemnification agreement in form and substance
reasonably acceptable to Xxxxx pursuant to which ICES shall agree to indemnify
Purchaser and iTract for any liability arising from the failure of iTract to own
or license the Intellectual Property set forth on Schedule 4.9 or the
Intellectual Property set forth on Schedule 4.9 being subject to any
Encumbrances other than Permitted Encumbrances.
8. CONDITIONS TO THE OBLIGATIONS OF iTRACT.
---------------------------------------
The obligations of iTract to effect the iTract Merger shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any one or more of which may be waived by iTract, to the extent
permitted by applicable law:
8.1 LEGAL OPINION. iTract shall have received the legal opinion of
Xxxxxx & Xxxxx LLP and Xxxxxxxxxxx Xxxxxx and Xxxxxxx LLP, counsel to Purchaser,
in form and substance reasonably acceptable to iTract.
8.2 NO INJUNCTION. There shall not be in effect or threatened any
injunction, order or decree of a Governmental Body of competent jurisdiction
that prohibits or delays, or seeks to prohibit or delay, consummation of any
material part of the Contemplated Transactions.
30
8.3 REPRESENTATIONS, WARRANTIES AND AGREEMENTS. (i) The representations
and warranties of Xxxxx, Purchaser and Purchaser Subsidiary set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time with the same effect as though made
as of the Effective Time, unless made as of another date, in which case they
shall be true and correct in all material respects as of such date, (ii) Xxxxx,
Purchaser and Purchaser Subsidiary shall have performed and complied in all
material respects with the agreements contained in this Agreement required to be
performed and complied with by them prior to or at the Closing; and (iii) iTract
shall have received a certificate to the foregoing effect signed by an
authorized executive officer of Purchaser.
8.4 REINCORPORATION. Xxxxx shall have merged with and into Purchaser in
the manner contemplated by Section 6.1.
8.5 REGISTRATION. The Registration Statement registering the Purchaser
Shares being issued to the Members as the Merger Consideration shall be
effective in accordance with the provision of the Securities Act, and no stop
order suspending such effectiveness shall have been issued and remain in effect.
8.6 ASSET SALE. (i) The Asset Sale shall have been consummated, (ii)
Purchaser shall have no Subsidiaries other than Purchaser Subsidiary, (iii) at
the Effective Time, Purchaser shall have assets consisting of cash and cash
equivalents of at least $5,000,000, (iv) at the Effective Time, the aggregate
liabilities of the Purchaser (after deducting the amount of any cash and cash
equivalents in excess of $5,000,000) do not exceed $10,000; and (iv) iTract
shall have received a certificate to the foregoing effect signed by an executive
officer of Purchaser.
8.7 TAX-FREE EXCHANGE. iTract shall have received an opinion from
Kronish, Lieb, Weiner and Xxxxxxx LLP that the iTract Merger qualifies as a
tax-free exchange under Section 351 of the Code and an opinion from Xxxxxxxxxxx
Xxxxxx & Xxxxxxx LLP that (i) the Reincorporation Merger qualifies as a tax free
reorganization under the P.R. Internal Revenue Code and (ii) the iTract Merger
is not subject to taxation in Puerto Rico.
8.9 APPROVALS. All Xxxxx Approvals, including the Stockholder Approval,
necessary in connection with the execution, delivery and performance of this
Agreement by Xxxxx, Purchaser and Purchaser Subsidiary or for the consummation
of the Contemplated Transactions shall have been obtained or made and shall be
in full force and effect.
8.10 PROCEEDINGS SATISFACTORY. All certificates, opinions and other
documents to be delivered by Xxxxx, Purchaser or Purchaser Subsidiary to iTract
and ICES and all other corporate or organizational matters to be accomplished by
Xxxxx, Purchaser or Purchaser Subsidiary prior to or at the Closing shall be
reasonably satisfactory to iTract and its counsel.
8.11 CORPORATE APPROVAL. Prior to the Effective Time, the Contemplated
Transactions, including this Agreement, shall have been duly approved by the
Board of Directors of Xxxxx and
31
Purchaser, and by the managers of Purchaser Subsidiary and the member of
Purchaser Subsidiary, in accordance with applicable law, and the Stockholder
Approval shall have been obtained.
8.12 SECRETARY OF STATE CERTIFICATES. iTract shall have received
certificates of the Secretary of State of the State of Delaware with respect to
Purchaser and Purchaser Subsidiary as of a recent date, showing Purchaser and
Purchaser Subsidiary to be validly existing and in good standing in the State of
Delaware.
8.13 RESIGNATIONS; ELECTION OF NEW DIRECTORS.
---------------------------------------
(a) Each and every director, officer, manager and employee of
Xxxxx, Purchaser and Purchaser Subsidiary shall either have been terminated or
tendered his or her resignation to Xxxxx, Purchaser and Purchaser Subsidiary,
respectively, effective at the Effective Time.
(b) The directors and officers of the Purchaser shall have
resigned and shall have appointed as their successors the Persons designated by
iTract.
8.14 SECRETARY'S CERTIFICATE. iTract shall have received certificates
of the Secretary or Assistant Secretary of Purchaser and of the officer or
manager of Purchaser Subsidiary certifying (i) a true and complete copy of the
resolutions duly and validly adopted by the Boards of Directors of Purchaser and
Xxxxx and by the managers of Purchaser Subsidiary, as applicable, evidencing the
authorization of the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions, (ii) the names and signatures of
the officers of Purchaser and Xxxxx and Purchaser Subsidiary, as applicable,
authorized to sign this Agreement and the other documents to be delivered
hereunder and (iii) a true and complete copy of the certificate of incorporation
and bylaws of Purchaser and of the certificate of formation and limited
liability company agreement of Purchaser Subsidiary.
8.15 LOCK UP AGREEMENT. Each Person who is the holder of 5% or more of
the Purchaser Common Stock immediately prior to the Effective Time shall have
executed and delivered to Purchaser a Lock Up Agreement in the form of EXHIBIT E
to this Agreement (the "Xxxxx Lockup Agreement") pursuant to which each such
Person agrees not to dispose of such shares until four months after the
Effective Time; PROVIDED however that (i) Xxxxxxx X. Xxxxxxx and Xxxxxxxx X.
Xxxxxxx shall be entitled to pledge their shares of Purchaser Common Stock to a
unaffiliated lender for purposes of financing the Asset Sale, and (ii) up to
30,000 shares of Purchaser Common Stock owned by Xxxxxxxx Xxxxxxx shall be
excluded from the lock-up; and FURTHER PROVIDED, that such a lender shall not be
subject to the provisions of the Lock Up Agreement.
8.16 RELEASE OF CLAIMS. Xxxxxxx X. Xxxxxxx and Xxxxxxxx X. Xxxxxxx
(collectively, the "Spectors") and Xxxxx Nursery Farms Inc. ("Xxxxx Farms")
shall have executed and delivered a release in form and substance reasonably
acceptable to iTract (the "Xxxxxxx Release"), pursuant to which each of the
Spectors and Xxxxx Farms shall release Xxxxx, Purchaser, iTract, ICES and their
respective affiliates from any and all liability to them arising from the
occupancy by Xxxxx or its Subsidiaries of the nursery farm located at Xxxx Xxxx,
Puerto Rico leased by the Spectors to Xxxxx
32
Nursery Farms, Inc. under the Lease Agreement between Xxxxx Nursery Farms, Inc.
and the Spectors (the "Xxxxxxx Lease Agreement").
8.17 INDEMNIFICATION BY XXXXXXX. Xxxxxxx X. Xxxxxxx and Xxxxx Farms (if
the sale of the Nursery Business Assets is made to Xxxxxxx Xxxxxxx or any Person
affiliated with or related to Xxxxxxx Xxxxxxx) shall have executed and delivered
an indemnification agreement in form and substance reasonably acceptable to
iTract (the "Xxxxxxx Indemnification Agreement"), pursuant to which Xxxxxxx
Xxxxxxx and Xxxxx Farms shall, jointly and severally, agree to indemnify
Purchaser, iTract, ICES and their respective affiliates for any liability or
claim arising from a breach of the representations and warranties set forth in
Sections 5.10(b) and (c) of this Agreement; provided, that such indemnification
agreement shall not incorporate the references in Section 5.10(b) and (c)
relating to knowledge of Xxxxx and materiality and shall exclude any exceptions
referred to in Schedule 5.10(b).
8.18 NASDAQ LISTING. The Purchaser Shares shall be listed on the Nasdaq
Small Cap Market.
8.19 PUERTO RICO RULING. Xxxxx shall have received a ruling from the
Puerto Rico Department of the Treasury confirming that the Reincorporation
Merger qualifies as a tax free reorganization under the P.R. Internal Revenue
Code.
8.20 OTHER RELEASES. Xxxxx shall have received releases, in form and
substance reasonably acceptable to iTract, with respect to the release of
Xxxxx by the appropriate third parties with respect to any and all liabilities
or claims which may arise under the agreements listed on Schedule 8.20 hereto.
9. FURTHER AGREEMENTS OF THE PARTIES.
---------------------------------
9.1 EXPENSES. The Parties shall each bear their own respective expenses
incurred in connection with this Agreement and the Contemplated Transactions,
except as otherwise specifically provided herein.
9.2 ACCESS PRIOR TO THE CLOSING.
---------------------------
(a) Between the date of this Agreement and the Effective Time,
each Party (the "REQUESTING PARTY") may from time to time request any of the
other Parties (the "REQUESTED PARTY"), upon reasonable notice to the Requested
Party, (i) to give the Requesting Party and its authorized representatives full
and complete access to all properties, personnel, facilities and offices of the
Requested Party and to the books and records of the Requested Party (and permit
the Requesting Party to make copies thereof), (ii) to permit the Requesting
Party to make inspections thereof, (iii) to cause the officers and employees of,
and consultants to, the Requested Party to furnish the Requesting Party with all
financial information and operating data and other information with respect to
the business and properties of the Requesting Party and to discuss with the
Requesting Party and its authorized representatives the affairs of the Requested
Party.
33
(b) Between the date of this Agreement and the Effective Time,
each of the Parties shall use reasonable efforts to cause their respective
Affiliates, officers, directors, employees, auditors, attorneys, consultants,
advisors and agents, to treat as confidential and hold in strict confidence,
unless compelled to disclose by judicial or administrative process or, in the
opinion of its counsel, by other requirements of Law, and after prior written
notice to the other Party, all confidential information of iTract or Xxxxx or
Purchaser, as the case may be, furnished to Xxxxx or Purchaser by iTract or to
iTract by Xxxxx or Purchaser, as the case may be, or any of their respective
representatives in connection with the Contemplated Transactions and will not
release or disclose such confidential information to any other Person, except
their respective auditors, attorneys, financial advisors and other consultants,
agents and advisors in connection with the consummation of the Contemplated
Transactions. If the Closing does not occur (i) such confidence shall be
maintained by the Parties and each Party shall use reasonable efforts to cause
its officers, directors, Affiliates and such other Persons to maintain such
confidence, except to the extent such information comes into the public domain
(other than as a result of an action by such Party, its officers, directors or
such other persons in contravention of this Agreement), (ii) each Party shall
and shall use reasonable efforts to cause its officers, directors, Affiliates
and such other Persons to refrain from using any of such confidential
information except in connection with this Agreement, and (iii) upon the request
of any Party, the other Party shall promptly return to the requesting Party any
written materials remaining in its possession, which materials it has received
from the requesting Party, or their respective representatives.
9.3 PUBLICITY. Between the date of this Agreement and the Effective
Time, except to the extent required by Law or the rules of the Nasdaq, none of
the Parties shall, and none of them shall permit any Affiliate to, issue any
press release or public announcement of any kind concerning, or otherwise
publicly disclose, the Contemplated Transactions without the consent of the
other; and in the event any such public announcement, release or disclosure is
required by Law or the rules of the Nasdaq, the Parties will consult prior to
the making thereof and use their best efforts to agree upon a mutually
satisfactory text.
9.4 CONDUCT OF BUSINESS OF iTRACT. Except as expressly permitted by
this Agreement, between the date of this Agreement and the Effective Time,
iTract shall conduct its business only in the manner currently conducted and
currently proposed to be conducted, and use all its reasonable efforts to
preserve intact its present business organization and employees and to preserve
the goodwill of Persons having business relations with iTract. Without limiting
the generality of the foregoing, except as otherwise expressly provided in this
Agreement, between the date of this Agreement and the Effective Time, iTract
shall pay accounts payable on a reasonable basis and pay and perform other
obligations of the business of iTract when they become due and payable in the
ordinary course of business, or when required to be performed, as the case may
be, and shall not:
(i) amend its certificate of formation in an adverse
manner;
(ii) organize any Subsidiary or acquire any capital
stock or other equity securities of any Person or any equity or ownership
interest in any business;
34
(iii) incur any debt or liabilities of any kind other
than in the ordinary course of business or in furtherance of the iTract Merger
and the Contemplated Transactions;
(iv) grant or extend any power of attorney other than
in the ordinary course of business which does not affect the material part of
iTract business;
(v) fail to keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by it;
(vi) split, combine or reclassify its outstanding
membership interests or declare, certify or pay any dividend or distribution
payable in cash, stock, property or otherwise, spin off any assets or business,
sell any assets or business, effect any extraordinary corporate transaction in
which iTract retains all the proceeds from such sale, engage in any transaction
for the purpose of effecting any recapitalization or engage in any transaction
or series of related transactions which have a similar effect on any of the
foregoing;
(vii) sell, pledge, dispose of or agree to issue,
sell or dispose of any additional interests or any options, warrants or rights
of any kind, to acquire any interest in other securities, or any debt or
securities convertible into or exchangeable for such membership interests or
modify or amend the terms and conditions of any of the foregoing, PROVIDED,
HOWEVER, that iTract may issue interests upon exercise of outstanding iTract
Options, and PROVIDED FURTHER iTract may issue additional iTract Options and
additional iTract Units if such options and units shall be converted into
Purchaser Options or Purchaser Common Stock at the Effective Time under Article
2 of this Agreement;
(viii) redeem, purchase, acquire or offer to purchase
or acquire any interests other than as required by the Operating Agreement for
iTract,
(ix) make any acquisition of any assets or businesses
other than purchases of assets in the ordinary course of business;
(x) promptly advise Xxxxx and Purchaser in writing of
any Material Adverse Effect with respect to iTract;
(xi) take any action which would jeopardize the
treatment of the Merger as an exchange within the meaning of Section 351 of the
Code; or
(xii) agree or otherwise commit, whether in writing
or otherwise, to do, or take any action or omit to take any action that would
result in, any of the foregoing.
9.5 CONDUCT OF BUSINESS OF XXXXX, PURCHASER AND PURCHASER SUBSIDIARY.
Except as expressly permitted by this Agreement, between the date of this
Agreement and the Effective Time, Xxxxx (and Purchaser following the
Reincorporation Merger) shall conduct its business only in the ordinary course
in substantially the same manner as heretofore conducted, and, other than with
respect to its efforts to effect the Reincorporation Merger and the Asset Sale,
use all its reasonable
35
efforts to preserve intact its present business organization and employees and
to preserve the goodwill of Persons having business relations with Xxxxx and its
Subsidiaries. Without limiting the generality of the foregoing, except as
otherwise expressly provided in this Agreement, and except in connection with
effecting the Reincorporation Merger in accordance with Section 6.1, between the
date of this Agreement and the Effective Time, Xxxxx, Purchaser and Purchaser
Subsidiary shall pay accounts payable and pay and perform other obligations of
their businesses when they become due and payable in the ordinary course of
business consistent with past practice, or when required to be performed, as the
case may be, and each of them shall not:
(i) amend its articles or certificate of
incorporation or bylaws (except to include such provisions in Purchaser's
By-laws as is consistent with Section 9.11.);
(ii) organize any Subsidiary or acquire any capital
stock or other equity securities of any Person or any equity or ownership
interest in any business;
(iii) incur any debt or liabilities of any kind other
than in the ordinary course of business or in furtherance of the iTract Merger
and the Contemplated Transactions;
(iv) grant or extend any power of attorney other than
in the ordinary course of business which does not affect a material part of
Margo's business;
(v) fail to keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by it;
(vi) (i) split, combine or reclassify its outstanding
capital stock or declare, set aside or pay any dividend or distribution payable
in cash, stock, property or otherwise, (ii) spin-off any assets or businesses,
sell any assets or businesses or effect any extraordinary corporate transaction
(excluding the Asset Sale), in which Xxxxx or Purchaser, as the case may be,
retains all of the proceeds from such sale, (iii) engage in any transaction for
the purpose of effecting a recapitalization, or (iv) engage in any transaction
or series of related transactions which as a similar effect to any of the
foregoing;
(vii) sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any additional shares of, or any options, warrants
or rights of any kind to acquire any shares of its capital stock of any class,
or any debt or equity securities convertible into or exchangeable for such
capital stock or amend or modify the terms and conditions of any of the
foregoing, PROVIDED, HOWEVER, that Xxxxx xxx issue shares upon exercise of
outstanding Xxxxx Options;
(viii) (i) redeem, purchase, acquire or offer to
purchase or acquire any shares of its capital stock, other than as required by
the governing terms of such securities, (ii) take any action (either before or
after the Effective Time) which would jeopardize the treatment of the Merger as
an exchange within the meaning of Section 351 of the Code, and (iii) make any
acquisition of any assets or businesses (other than purchases of assets in the
ordinary course of business);
36
(ix) promptly advise iTract in writing of any
Material Adverse Effect with respect to Xxxxx, Purchaser or any of their
Subsidiaries; or
(x) agree or otherwise commit, whether in writing or
otherwise, to do, or take any action or omit to take any action that would
result in, any of the foregoing.
After effecting the Asset Sale, neither Xxxxx, Purchaser or Purchaser Subsidiary
will engage in or conduct any business except in connection with performing its
obligations under this Agreement.
9.6 CERTAIN ACTIONS BY XXXXX. Notwithstanding the provisions of Section
9.5 of this Agreement, Xxxxx and Purchaser shall have the right to take the
following actions at any time prior to the consummation of the iTract Merger:
(a) Xxxxx or Purchaser, as applicable, shall have the right to
make a cash dividend to their shareholders, provided that such dividend
distribution does not cause Purchaser to have less than $5,000,000 in cash and
cash equivalents as of the Effective Time;
(b) Xxxxx and Purchaser shall have the right to accelerate the
vesting of all Xxxxx Options which are currently outstanding; (provided that
such Xxxxx Options shall be included in the calculation of the Merger
Consideration under Section 2.4);
(c) Xxxxx and Purchaser shall have the right to grant
additional Xxxxx Options in such amounts and on such terms as may be approved by
the Board of Directors of Xxxxx or Purchaser, PROVIDED that any such additional
Xxxxx Options shall be included in the calculation of the Merger Consideration
under Section 2.4;
(d) Xxxxx and Purchaser shall have the right to authorize the
modification of the terms of the Xxxxxxx Lease Agreement.
(e) Xxxxx and Purchaser shall have the right to authorize
Xxxxx Nursery Farms, Inc., to enter into employment agreements with its key
executives, so long as neither Xxxxx nor Purchaser shall have any liability
under such employment agreements on or after the Effective Time;
(f) Xxxxx and Purchaser shall have the right to authorize a
payment of bonuses to the employees of Xxxxx, Purchaser and their Subsidiaries
PROVIDED that such bonuses do not cause Purchaser to have less than $5,000,000
in cash and cash equivalents at the Effective Time; and FURTHER PROVIDED that
neither Xxxxx nor Purchaser shall have any liability for such bonuses on or
after the Effective Date.
9.7 FURTHER ASSURANCES. Following the Closing, the Parties shall use
commercially reasonable efforts to cause each of their Affiliates, from time to
time, to execute and deliver such additional instruments, documents, conveyances
or assurances and take such other actions as shall be necessary, or otherwise
reasonably requested by the other Party, to confirm and assure the rights and
obligations provided for in this Agreement and render effective the consummation
of the Contemplated Transactions.
37
9.8 EXCLUSIVITY. Through the earlier of the Effective Time or the date
of termination of this Agreement pursuant to Article 10 hereof, none of the
Parties shall (i) solicit, initiate or encourage the submission of inquiries,
proposals or offers from any Person relating to (x) any business combination
with respect to iTract, Xxxxx or Purchaser; or (y) other then with respect to
the Asset Sale in the manner contemplated by this Agreement, the sale of a
material portion of the assets and/or capital stock of such Party (an
"ALTERNATIVE TRANSACTION"), (ii) enter into or participate in any negotiations,
nor initiate any discussions or continue any discussions initiated by others,
regarding any Alternative Transaction, or furnish to any other person any
information with respect to the assets or business of iTract for the purposes of
pursuing a possible Alternative Transaction with any other party, or (iii)
otherwise participate in, assist, facilitate or encourage any effort or attempt
by any other Person to do any of the foregoing. None of the Parties shall
authorize their investment bankers or other advisors to violate the provisions
of this paragraph and shall use reasonable efforts to prevent their investment
bankers or other advisors from violating the provisions of this paragraph.
9.9 CONSENTS: REGULATORY APPROVAL. Each Party will use commercially
reasonable efforts to obtain all Approvals from Persons or Governmental Bodies
in order to permit the consummation of the Contemplated Transactions.
9.10 REGISTRATION RIGHTS FOR PRINCIPAL SHAREHOLDERS. At the Effective
Time, Purchaser shall enter into a registration rights agreement in the form of
EXHIBIT D to this Agreement, pursuant to which Purchaser shall agree to register
shares of Purchaser Common Stock held by persons who were affiliates of Xxxxx
and Purchaser immediately prior to the Effective Time, and the shares of
Purchaser Common Stock issued directly to Xxxxx Xxxxxxxxx in exchange for the
iTract Units held by him as of the date of this Agreement.
9.11 INDEMNIFICATION OF FORMER DIRECTORS AND OFFICERS OF XXXXX,
PURCHASER AND THEIR AFFILIATES.
(a) From and after the Effective Time, Purchaser shall
indemnify and hold harmless each present and former officer and director of
Xxxxx, Purchaser, Purchaser Subsidiary and the other Subsidiaries of Xxxxx prior
to the Effective Time (the "INDEMNIFIED PARTIES"), against all claims, losses,
liabilities, damages, judgments, fines, fees, costs and expenses, including
without limitation, attorney's fees and disbursements (collectively, "COSTS")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time (including without limitation this Agreement and the Contemplated
Transactions) whether asserted or claimed prior to, at or prior to the Effective
Time, to the fullest extent permitted under the Certificate of Incorporation and
Bylaws of Xxxxx or Purchaser, as the case may be, as in effect immediately prior
to the consummation of the Reincorporation Merger, including provisions relating
to advances and expenses incurred in the defense of any claim, actions, suit,
proceeding or investigation. Without limiting the foregoing, in the event that
any claim, action, suit or proceeding or investigation is brought against the
Indemnified Party (whether arising before or after the Effective Time), the
Indemnified Party may retain counsel satisfactory to such Indemnified Party and
38
reasonably satisfactory to Purchaser and Purchaser shall advances the fees and
expenses of such counsel for the Indemnified Party in accordance with the
Certificate of Incorporation or Bylaws of the Purchaser in effect immediately
prior to the consummation of the iTract Merger, provided that as a condition to
the advance of expenses, the indemnified party must execute an undertaking to
reimburse Purchaser if indemnified party is ultimately determined not to be
entitled to indemnity.
(b) In the event that the Purchaser or any of its successors
or assigns (i) consolidates with, or merges into another person and shall be not
the continuing or surviving corporation of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its property assets to any
person, then, in any such case, to the extent necessary to effectuate the
purposes of this Section 9.11, proper provision shall be made so that the
successors and assigns of Purchaser shall succeed to the obligations set forth
in this Section 9.11.
9.12 AMENDING SCHEDULES. From time to time prior to the Closing, the
Parties shall promptly supplement or amend the Schedules to this Agreement with
respect to any matter arising after the date of this Agreement which, if
EXISTING or occurring at the date of this Agreement, would have been required to
have been set forth in the Schedules to this Agreement. Such supplement or
amendment shall have the effect of curing any related misrepresentation or
breach of warranty made in connection with the transactions contemplated by this
Agreement; PROVIDED, HOWEVER, that if such misrepresentation or breach is
material, each Party shall have a commercially reasonable period of time
following receipt of any supplemented or amended Schedules to elect (i) to
terminate this Agreement without any further liability to the Parties or (ii) in
such non-amending Party's sole discretion, to waive such breach and consummate
the transactions contemplated by this Agreement.
9.13 CAPITALIZATION OF CERTAIN EXPENSES. iTract shall, prior to the
Effective Time, convert all of the amounts payable by iTract to ICES and its
Affiliates as of February 29, 2000 into capital contributions to iTract (or
otherwise arrange to release iTract from such liabilities), PROVIDED, HOWEVER,
that the amount of $525,000 (plus interest) payable by iTract to Core Active ACG
LLC on demand, may remain as a liability of iTract. iTract acknowledges that the
amounts to be converted to capital contributions (or released) include, without
limitation, the (a) $100,000 payable to ICES, (b) $145,000 payable to
XxxXxxxXxxx.xxx, Inc. and (c) $139,000 payable to ICES.
10. TERMINATION.
-----------
10.1 TERMINATION PROCEDURES. This Agreement may be terminated before
the Effective Time only as follows:
(a) by written agreement of all of the Parties at any time;
(b) by Xxxxx or Purchaser, by notice to iTract, if
satisfaction of any of the conditions to Purchaser's or Purchaser Subsidiary's
obligations set forth in Section 7 becomes impossible, and such condition has
not been waived by Xxxxx and Purchaser or (y) has not occurred by August 15,
2000 (subject to up to a sixty (60) day extension if the Registration Statement
has not been declared effective by the SEC and the Parties are using their best
efforts to cause such
39
effectiveness), in either case other than as a result of a material breach or
default of Purchaser, Xxxxx or Xxxxxxx;
(c) by iTract, by notice to Xxxxx and Purchaser, if
satisfaction of any of the conditions to iTract's obligations set forth in
Section 8 becomes impossible, and such condition has not been waived by iTract
or (y) has not occurred by August 15, 2000 (subject to up to a sixty (60) day
extension if the Registration Statement has not been declared effective by the
SEC and the Parties are using their best efforts to cause such effectiveness),
in either case other than as a result of the breach or default by iTract;
(d) by Purchaser or Xxxxx, by notice to iTract, if iTract has
breached this Agreement in any material respect and such breach has not been
cured within 10 days after written notice from Xxxxx or Purchaser to iTract; or
(e) by iTract, by notice to Xxxxx and Purchaser if either of
them have breached this Agreement in any material respect, and such breach has
not been cured within 10 days after written notice from iTract to Xxxxx and
Purchaser.
10.2 EFFECT OF TERMINATION. In the event that this Agreement is
terminated pursuant to Section 10.1, this Agreement shall terminate without any
liability or further obligation of any Party (other than the obligations of the
Parties under Sections 9.1 and 9.2), except that: (i) in the event of the
termination of this Agreement by Xxxxx or Purchaser under Section 10.1(d),
iTract and ICES shall be jointly and severally obligated to reimburse Xxxxx and
Purchaser for all out-of-pocket expenses incurred by Xxxxx and Purchaser in
connection with this Agreement and the Contemplated Transactions, up to a
maximum of $100,000; and (ii) in the event of the termination of this Agreement
by iTract under Section 10.1(e), Xxxxx and Purchaser shall be jointly and
severally obligated to reimburse iTract for all out-of-pocket expenses incurred
by iTract incurred in connection with this Agreement and the Contemplated
Transactions, up to a maximum of $100,000; and (iii) none of the parties shall
be released from liability for any intentional misrepresentation or fraud.
11. MISCELLANEOUS.
-------------
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
The representations, warranties, covenants and agreements of the Parties set
forth in this Agreement and in any certificate delivered pursuant to this
Agreement shall expire as of the Effective Time, other than the covenants and
agreements contained in Article 2 and Sections 6.1, 6.8, 9.7, 9.10, 9.11 and
Article 11.
11.2 ENTIRE AGREEMENT. This Agreement contains, and is intended as, a
complete statement of all of the terms and the arrangements between the Parties
with respect to the matters provided for, supersede any previous agreements and
understandings between the Parties with respect to those matters and cannot be
changed or terminated orally. No Party makes, and each Party hereby expressly
disclaims reliance upon, any representations or warranties with respect to the
Contemplated Transactions other than as expressly set forth in this Agreement.
40
11.3 SEVERABILITY. In the event that a court of competent jurisdiction
shall finally determine that any provision of this Agreement or any portion
thereof is unlawful or unenforceable, such provision or portion thereof that is
not invalidated by such determination shall remain in full force and effect. To
the extent that a provision is deemed unenforceable by virtue of its scope but
may be made enforceable by limitation thereof, such provision shall be
enforceable to the fullest extent permitted under the laws and public policies
of the state whose laws are deemed to govern enforceability.
11.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the law of the State of New York applicable to agreements
made and to be performed therein without giving effect to conflicts of law
principles.
11.5 HEADINGS. The section headings contained in this Agreement are
solely for the purpose of reference, are not part of the Agreement of the
Parties and shall not in any way affect the meaning or interpretation of this
Agreement. All references in this Agreement to Sections, Schedules and Exhibits
are to sections, schedules and exhibits to this Agreement, unless otherwise
indicated.
11.6 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when (a) delivered by hand, (b)
transmitted by facsimile (and confirmed by return facsimile), or (c) delivered,
if sent by Express Mail, Federal Express or other express delivery service, or
registered or certified mail, return receipt requested, to the addressee at the
following addresses or telecopier numbers (or to such other addresses, or
telecopier number as a party may specify by notice given to the other party
pursuant to this provision):
If to Xxxxx, Purchaser or Purchaser Subsidiary to:
Xxxxx Caribe, Inc.
Xxxxxxxxx 000, XX 0.0
Xxxx Xxxx, Xxxxxx Xxxx 00000
ATTENTION: Xxxxxxx Xxxxxxx
---------
Facsimile No.: (000) 000-0000
with copies to:
Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
ATTENTION: Xxxxxx X. Xxxxx, XX, Esq.
---------
Facsimile No.: (000) 000-0000
and
Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP
41
000 Xxxxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
ATTENTION: Xxxxxxx Xxxxxxx, Esq.
---------
Facsimile No.: (000) 000-0000
If to iTract, Surviving LLC or ICES, to:
iTract, LLC
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxx Xxxxxxxxx
---------
Facsimile No.: (000) 000-0000
with copies to:
Xxxxx Xxxxxx, Esq.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
and
Kronish Xxxx Xxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTENTION: Xxxxxx Xxxxxx, Esq.
---------
Facsimile No.: (000) 000-0000
11.7 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any Person who is not a Party, except for
(i) the rights of the Indemnified Parties under Section 9.11 of this Agreement;
(ii) the rights of the holders of the iTract Options and Xxxxx Options under
Sections 2.5 and 6.1(b); and (iii) the rights of the shareholders of Xxxxx and
Xxxxx Xxxxxxxxx under Section 9.10. No assignment of this Agreement or of any
rights or obligations hereunder may be made by the Parties and any such
attempted assignment shall be void.
11.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9 AMENDMENT AND WAIVER. This Agreement may be amended, or any
provision of this Agreement may be waived, provided that such amendment or
waiver will be binding on a Party only if such amendment or waiver is set forth
in a writing executed by such Party. The waiver of any
42
Party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any other breach.
11.10 DISPUTE RESOLUTION.
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(a) The Parties agree to attempt initially to solve all
claims, disputes or controversies arising under, out of or in connection with
this Agreement by conducting good faith negotiations. If the Parties are unable
to settle the matter between themselves, the matter shall thereafter be resolved
by alternative dispute resolution, starting with mediation and including, if
necessary, a final and binding arbitration.
(b) Whenever a Party shall decide to institute arbitration
proceedings, it shall give written notice to that effect to the other Parties.
The Party giving such notice shall refrain from instituting the arbitration
proceedings for a period of sixty (60) days following such notice. During such
period, the Parties shall make good faith efforts to amicably resolve the
dispute without arbitration. Any arbitration hereunder shall be conducted under
the rules of the American Arbitration Association. Each such arbitration shall
be conducted by a panel of three arbitrators with one arbitrator being appointed
by Xxxxx (or by Purchaser if the Reincorporation Merger shall have been
previously effected), one arbitrator shall be appointed by iTract and the third
shall be appointed by the American Arbitration Association.
(c) Any such arbitration shall be held in New York, New York.
The arbitrators shall have the authority to grant specific performance. Judgment
upon the award so rendered may be entered in any court having jurisdiction or
application may be made to such court for judicial acceptance of any award and
an order of enforcement, as the case may be. In no event shall a demand for
arbitration be made after the date when institution of a legal or equitable
proceeding based on such claim, dispute or other matter in question would be
barred under this Agreement or by the applicable statute of limitations.
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IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date and year first-above written.
XXXXX CARIBE, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
iTRACT, LLC
By: /s/ Xxxxx Kaufthiel
-----------------------------
Name: Xxxxx Kaufthiel
Title: Manager
iTRACT ACQUISITION COMPANY, LLC,
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
iTRACT, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
INTERNATIONAL COMMERCE EXCHANGE
SYSTEMS, INC.
By: /s/ Xxxxx Kaufthiel
-----------------------------
Name: Xxxxx Kaufthiel
Title: Chairman
44
LIST OF SCHEDULES
XXXXX/ITRACT MERGER AGREEMENT
ITRACT SCHEDULES
Schedule 4.2(a) Outstanding subscriptions, options, rights, warrants, etc.
Schedule 4.2(b) Ownership of iTract Units.
Schedule 4.5 iTract Approvals
Schedule 4.6(a) iTract Financial Statements
Schedule 4.6(c) Changes in business, operations or financial conditions of iTract
Schedule 4.7(b) Exceptions to Ownership of Properties; Permitted Encumbrances
Schedule 4.8 Leases
Schedule 4.9 Intellectual Property
Schedule 4.11 Tax Returns not timely filed by iTract
Schedule 4.12 Material adverse changes, etc.
Schedule 4.13 Employee benefit plans
Schedule 4.14 Insurance Policies
Schedule 4.15 Material Contracts
Schedule 4.17(a) iTract Licenses
Schedule 4.17(b) Environmental Matters
Schedule 4.18 Brokers
Schedule 5.1 Subsidiaries of Xxxxx Caribe, Inc.
Schedule 5.2(a) List of Outstanding Options of Xxxxx
Schedule 5.2(b) List of Outstanding Options of Purchaser
Schedule 5.4 Conflicts with Other Agreements
Schedule 5.5 Xxxxx Approvals
Schedule 5.6(a) List of all State, Local and Foreign Jurisdictions in which
Xxxxx and Subsidiaries have filed Tax Returns
Schedule 5.6(b) Taxes Being Contested by Tax Affiliates
Schedule 5.6(l) Debt Instruments Reported Under the Installment Method
Schedule 5.6(n) Material Tax Elections as of the Date of Merger
Schedule 5.6(v) Joint Ventures, Partnership and Other Similar Arrangements
Schedule 5.7(c) Material Adverse Changes Since December 31, 1999
Schedule 5.7(d) Reports not filed under the Exchange Act since December 31, 1995
Schedule 5.8 List of Certain Material Adverse Changes or Events or other Events
Outside the Ordinary Course of Business
Schedule 5.9(a) Employee Benefits Plans
Schedule 5.9(c) Severance Payments
Schedule 5.10(a) Material Failure to Comply with Applicable Law
Schedule 5.10(b) Environmental Law Violations
Schedule 5.12 Pending Litigation
Schedule 5.14 Brokers or Finders
Schedule 8.20 Other Releases
EXHIBITS:
Exhibit A Form of Certificate of Merger merging iTract Acquisition
Company, LLC into iTract, LLC
Exhibit B Limited Liability Company Agreement of iTract, LLC following the
merger
Exhibit C Spectors Voting Agreement
Exhibit D iTract Lock-Up Agreement
Exhibit E Xxxxx Lock-Up Agreement
Exhibit F Registration Rights Agreement
