Exhibit 10.22
[EXECUTION COPY]
AGREEMENT AND PLAN OF MERGER
Dated as of July 9, 1999
among
WORLDWIDE WEB NETWORX CORPORATION,
INTRAC ACQUISITION CORPORATION,
THE INTRAC GROUP
and
THE SELLERS SIGNATORY HERETO
TABLE OF CONTENTS
PAGE NUMBER
ARTICLE I DEFINITIONS............................................................................................1
1.1 DEFINED TERMS.......................................................................................1
ARTICLE II THE MERGER, THE SURVIVING CORPORATION; CONVERSION OF SHARES...........................................9
2.1 THE MERGER..........................................................................................9
2.2 THE SURVIVING CORPORATION..........................................................................10
2.3 CONVERSION OF SHARES...............................................................................10
2.4 CLOSING OF TRANSFER BOOKS..........................................................................11
ARTICLE III MERGER AND CLOSING..................................................................................11
3.1 CLOSING............................................................................................11
3.2. MERGER CONSIDERATION...............................................................................12
3.3 WORKING CAPITAL CONTRIBUTION.......................................................................12
3.4 FURTHER ASSURANCES; POST-CLOSING COOPERATION.......................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS
AND INTRAC
4.1 AUTHORITY ........................................................................................13
4.2 ORGANIZATION OF INTRAC.............................................................................13
4.3 CAPITALIZATION AND OWNERSHIP.......................................................................13
4.4 TITLE TO SHARES....................................................................................14
4.5 SUBSIDIARIES.......................................................................................14
4.6 NO CONFLICTS.......................................................................................14
4.7 GOVERNMENTAL APPROVALS AND FILINGS.................................................................15
4.8 BOOKS AND RECORDS..................................................................................15
4.9 FINANCIAL STATEMENTS...............................................................................15
4.10 ABSENCE OF CHANGES.................................................................................15
4.11 UNDISCLOSED LIABILITIES............................................................................17
4.12 TAXES..............................................................................................18
4.13 COMPLIANCE WITH LAWS AND ORDERS....................................................................19
4.14 BENEFIT PLANS; ERISA...............................................................................19
4.15 REAL PROPERTY......................................................................................19
4.16 TANGIBLE PERSONAL PROPERTY: INVESTMENT ASSETS.....................................................19
4.17 INTELLECTUAL PROPERTY RIGHTS.......................................................................19
4.18 CONTRACTS..........................................................................................19
4.19 LITIGATION AND CLAIMS..............................................................................21
4.20 LICENSES...........................................................................................21
4.21 INSURANCE..........................................................................................21
4.22 ENVIRONMENTAL MATTERS..............................................................................21
ii
4.23 PRODUCT WARRANTY...................................................................................21
4.24 BROKERS............................................................................................21
4.25 PRODUCT WARRANTY...................................................................................22
4.26 AFFILIATE TRANSACTIONS.............................................................................22
4.27 EMPLOYEES: LABOR RELATIONS.........................................................................22
4.28 ENVIRONMENTAL MATTERS .............................................................................22
4.29 BANK AND BROKERAGE ACCOUNTS........................................................................22
4.30 DISCLOSURE.........................................................................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF WWWX AND ACQUISITION SUB............................................23
5.1 ORGANIZATION.......................................................................................23
5.2 AUTHORITY..........................................................................................23
5.3 NO CONFLICTS.......................................................................................23
5.4 GOVERNMENTAL APPROVALS AND FILINGS.................................................................24
5.5 PURCHASE FOR INVESTMENT............................................................................24
5.6 BROKERS............................................................................................24
5.7 WWWX SHARES........................................................................................24
5.8 BUSINESS...........................................................................................25
5.9 COMPLETION OF DUE............................................................................ 25
ARTICLE VI COVENANTS OF INTRAC AND THE SELLERS..................................................................25
6.1 REGULATORY AND OTHER APPROVALS.....................................................................25
6.2 INVESTIGATION BY WWWX AND ACQUISITION SUB..........................................................26
6.3 CONDUCT OF BUSINESS................................................................................26
6.4 EMPLOYEE MATTERS...................................................................................27
6.5 CERTAIN RESTRICTIONS...............................................................................27
6.6 AFFILIATE TRANSACTIONS.............................................................................28
6.7 BOOKS AND RECORDS..................................................................................28
6.8 NOTICE AND CURE....................................................................................29
6.9 FULFILLMENT OF CONDITIONS..........................................................................29
6.10 COMPOSITION OF BOARD OF DIRECTORS..............................................................Page #
ARTICLE VII COVENANTS OF WWWX AND ACQUISITION SUB...............................................................29
7.1 REGULATORY AND OTHER APPROVALS.....................................................................29
7.2 NOTICE AND CURE....................................................................................30
7.3 FULFILLMENT OF CONDITIONS..........................................................................30
7.4 BUSINESS...........................................................................................30
7.5 COMPLETION OF DUE DILIGENCE........................................................................31
7.6 MANAGEMENT OF ACQUISITION SUB.....................................................................31
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF WWWX AND ACQUISITION SUB..............................................31
8.1 REPRESENTATIONS AND WARRANTIES.....................................................................31
8.2 PERFORMANCE........................................................................................31
iii
8.3 SELLERS' CERTIFICATE; OFFICERS' CERTIFICATES.......................................................31
8.4 ORDERS AND LAWS....................................................................................32
8.5 REGULATORY CONSENTS AND APPROVALS..................................................................32
8.6 THIRD PARTY CONSENTS...............................................................................32
8.7. PROCEEDINGS........................................................................................32
8.8 OPINIONS OF COUNSEL................................................................................33
8.9 OTHER TRANSACTION DOCUMENTS........................................................................33
ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLERS AND INTRAC......................................................33
9.1 REPRESENTATIONS AND WARRANTIES.....................................................................33
9.2 PERFORMANCE........................................................................................34
9.3 OFFICERS' CERTIFICATES.............................................................................33
9.4 ORDERS AND LAWS....................................................................................34
9.5 REGULATORY CONSENTS AND APPROVALS..................................................................34
9.6 THIRD PARTY CONSENTS...............................................................................34
9.7 OPINION OF COUNSEL.................................................................................35
9.8 PROCEEDINGS........................................................................................35
9.9 OTHER TRANSACTION DOCUMENTS........................................................................35
9.10 TAX FREE EXCHANGE..................................................................................35
ARTICLE X TAX MATTERS AND POST-CLOSING TAXES....................................................................35
10.1 TRANSFER TAXES.....................................................................................35
10.2 TAX COOPERATION....................................................................................35
ARTICLE XI SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS....................................36
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..................................36
ARTICLE XII INDEMNIFICATION.....................................................................................36
12.1 INDEMNIFICATION....................................................................................36
12.2 METHOD OF ASSERTING CLAIMS.........................................................................37
ARTICLE XIII TERMINATION........................................................................................40
13.1 TERMINATION........................................................................................40
13.2 EFFECT OF TERMINATION..............................................................................41
ARTICLE XIV MISCELLANEOUS.......................................................................................41
14.1 NOTICES............................................................................................41
14.2 RESTRICTIVE COVENANTS..............................................................................42
14.3 COVENANTS AGAINST COMPETITION......................................................................42
14.4 ENTIRE AGREEMENT...................................................................................45
14.5 EXPENSES...........................................................................................45
14.6 PUBLIC ANNOUNCEMENTS...............................................................................46
14.7 WAIVER.............................................................................................46
iv
14.8 AMENDMENT..........................................................................................46
14.9 NO THIRD PARTY BENEFICIARY.........................................................................46
14.10 NO ASSIGNMENT: BINDING EFFECT. ....................................................................46
14.11 HEADINGS...........................................................................................47
14.12 INVALID PROVISIONS.................................................................................47
14.13 GOVERNING LAW ....................................................................................47
14.14 COUNTERPARTS........................................................................................4
EXHIBITS
EXHIBIT A Form of Employment Agreement
EXHIBIT B Memorandum of Terms for Shareholders Agreement for ATM Service,
Ltd.
EXHIBIT C Terms for the Management of Acquisition Sub
SCHEDULES
SCHEDULE 3.2 Shareholders
SCHEDULE 4.10 Material Changes
SCHEDULE 4.17 Intellectual Property Rights
SCHEDULE 4.18 Contracts
SCHEDULE 4.19 Litigation and Claims
SCHEDULE 4.20 Licenses
SCHEDULE 4.21 Insurance
SCHEDULE 4.27 Officers, Directors and Employees
SCHEDULE 14.1 Notification Addresses
v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 9, 1999, among WORLDWIDE
WEB NETWORX CORPORATION, a Delaware corporation ("WWWX"), INTRAC ACQUISITION
CORPORATION, a Delaware corporation ("ACQUISITION SUB"), THE INTRAC GROUP, a
Nevada corporation ("INTRAC"), and the individual Sellers signatory hereto (the
"SELLERS").
BACKGROUND
A. Intrac is an international marketing and financial services
organization engaged in the development of marketing solutions
and asset management programs for clients (the "BUSINESS").
X. Xxxxxxx own all of the issued and outstanding shares of Common
Stock of Intrac.
C. Intrac, Sellers, WWWX, and Acquisition Sub have agreed to
merge Intrac into Acquisition Sub and, simultaneously
therewith, Sellers shall exchange their shares of Common Stock
for the Merger Consideration, on the terms and conditions set
forth in this Agreement.
D. Subsequent to the execution and delivery of this Agreement,
WWWX and Acquisition Sub intend to continue at least one
historic business line of Intrac, or to use at least a
significant portion of Intrac's historic business assets in a
business, in each case for a period of at least 1 year
following the Closing Date, within the meaning of Treasury
Regulation Section 1.368-1(d).
E. It is the intention of the parties hereto that the Merger
shall, for federal income tax purposes, qualify as a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, as amended.
AGREEMENT
In consideration of the Background, which is incorporated by reference, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be bound legally, agree as
follows:
ARTICLE I
DEFINITIONS
DEFINED TERMS
(a) DEFINED TERMS. As used in this Agreement, the following
defined terms have the meanings indicated below:
(i) "ACQUISITION PROPOSAL" means any proposal for a
merger or other business combination to which Intrac
is a party or the direct or indirect acquisition of
any equity interest in, or a substantial portion of
the assets of, Intrac, other than the transactions
contemplated by this Agreement.
(ii) "ACQUISITION SUB" means Intrac Acquisition
Corporation, a Delaware corporation.
(iii) "ACTIONS OR PROCEEDINGS" means any action, suit,
proceeding, arbitration or Governmental or Regulatory
Authority investigation or audit.
(iv) "AFFILIATE" means any Person that directly, or
indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, the Person specified. For purposes of
this definition, control of a Person means the power,
direct or indirect, to direct or cause the direction
of the management and policies of such Person,
whether by Contract or otherwise, and, in any event
and without limitation of the foregoing, any Person
owning ten percent (10%) or more of the voting
securities of another Person shall be deemed to
control that Person.
(v) "AGREEMENT" means this Agreement and Plan of Merger
and the Exhibits and Schedules hereto and the
certificates delivered in accordance with SECTIONS
8.3 and 9.3, as the same shall be amended, modified
or supplemented from time to time.
(vi) "AMENDED AND RESTATED ATM SERVICE, LTD. SHAREHOLDERS
AGREEMENT" means the shareholders agreement to be
entered into among the Sellers, Xxxxxx Xxxxxxxxx, and
WWWX, relating to ATM Service, Ltd. and containing
the essential terms that appear in the Memorandum of
Terms for Shareholders Agreement for ATM Service,
Ltd. attached to this Agreement as EXHIBIT B.
(vii) "ANNUAL FINANCIAL STATEMENT DATE" means December 31,
1998.
(viii) "ANNUAL FINANCIAL STATEMENTS" means the Financial
Statements for Intrac's fiscal year ended December
31, 1998, delivered to WWWX and Acquisition Sub
pursuant to SECTION 4.9.
(ix) "ARTICLES OF MERGER" has the meaning ascribed to it
in SECTION 2.1 (b).
(x) "ASSETS AND PROPERTIES" of any Person means all
assets and properties of every kind, nature,
character and description (whether real, personal or
mixed, whether tangible or intangible, whether
absolute, accrued, contingent, fixed or otherwise and
wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person,
including, without limitation, cash, cash
equivalents, Investment Assets, accounts and notes
receivable, chattel paper, documents, instruments,
general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.
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(xi) "ATM" means ATM Service, Ltd., a Delaware
corporation.
(xii) "BENEFIT PLAN" means any employee benefit plan
established by Intrac, or any predecessor or
Affiliate of Intrac, existing at the Closing Date or
prior thereto, to which Intrac contributes or has
contributed, or under which any employee, former
employee or director of Intrac or any beneficiary
thereof is covered, is eligible for coverage or has
benefit rights.
(xiii) "BOOKS AND RECORDS" means all files, documents,
instruments, papers, books and records relating to
the Business or Condition of Intrac including,
without limitation, financial statements, Tax Returns
and related work papers and letters from accountants,
budgets, pricing guidelines, ledgers, journals,
deeds, title policies, minute books, stock
certificates and books, stock transfer ledgers,
Contracts, Licenses, customer lists, computer files
and programs, retrieval programs, operating data and
plans and environmental studies and plans.
(xiv) "BUSINESS DAY" means a day other than Saturday,
Sunday or any day on which banks located in the State
of New York are authorized or obligated to close.
(xv) "BUSINESS OR CONDITION OF INTRAC" means the business,
condition (financial or otherwise), results of
operations, Assets and Properties of Intrac taken as
a whole.
(xvi) "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended, and the rules and regulations promulgated
thereunder.
(xvii) "CERTIFICATE OF MERGER" has the meaning ascribed to
it in SECTION 2.1 (B).
(xviii) "CLAIM NOTICE" means written notification pursuant to
SECTION 12.2 (A) of a Third Party Claim as to which
indemnity under SECTION 12.1 is sought by an
Indemnified Party, enclosing a copy of all papers
served, if any, and specifying the nature of and
basis for such Third Party Claim and for the
Indemnified Party's claim against the Indemnifying
Party under SECTION 12.1, together with the amount
or, if not then reasonably determinable, the
estimated amount, determined in good faith, of the
Loss arising from such Third Party Claim.
(xix) "CLOSING" means the closing of the transactions
contemplated by SECTION 3.1.
(xx) "CLOSING DATE" means (a) July 23, 1999 or (b) such
other date as WWWX, Acquisition Sub, Intrac, and
Sellers mutually agree upon in writing.
(xxi) "CODE" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder.
3
(xxii) "COMMON STOCK" means the common stock, no par value,
of Intrac.
(xxiii) "CONTRACT" means any agreement, lease, license,
evidence of Indebtedness, mortgage, indenture,
security agreement or other contract (whether written
or oral).
(xxiv) "CONSTITUENT CORPORATIONS" means, collectively,
Acquisition Sub and Intrac.
(xxv) "DGCL" means the Delaware General Corporation Law, as
amended, modified or supplemented from time to time.
(xxvi) "DISPUTE PERIOD" means the period ending thirty (30)
days following receipt by an Indemnifying Party of
either a Claim Notice or an Indemnity Notice.
(xxvii) "DISSENTING SHARES" has the meaning ascribed to it in
SECTION 2.3 (D) hereof.
(xxviii) "EFFECTIVE TIME" has the meaning set forth in SECTION
2.1 (B) hereof.
(xxix) "EMPLOYMENT AGREEMENTS" means the Employment
Agreements to be entered into between each of
Acquisition Sub and ATM and each Seller each
substantially in the form of EXHIBIT A.
(xxx) "ENVIRONMENTAL LAW" means any Law or Order relating
to the regulation or protection of human health,
safety or the environment or to emissions,
discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient
air, soil, surface water, ground water, wetlands,
land or subsurface strata), or otherwise relating to
the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling
of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes. (xxxi)
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and
regulations promulgated thereunder.
(xxxii) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations
promulgated thereunder.
(xxxiii) "FINANCIAL STATEMENTS" means the financial statements
of Intrac delivered to Acquisition Sub pursuant to
SECTION 4.9 (A).
(xxxiv) "GAAP" means United States generally accepted
accounting principles, consistently applied.
(xxxv) "GOVERNMENTAL OR REGULATORY AUTHORITY" means any
court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the
United States, any foreign country or any domestic or
foreign state, county, city or other political
subdivision.
4
(xxxvi) "INDEBTEDNESS" of any Person means all obligations of
such Person (i) for borrowed money, (ii) evidenced by
notes, bonds, debentures or similar instruments,
(iii) for the deferred purchase price of goods or
services (other than trade payables or accruals
incurred in the ordinary course of business), (iv)
under capital leases and (v) in the nature of
guarantees of the obligations described in CLAUSES
(I) through (IV) above of any other Person.
(xxxvii) "INDEMNIFIED PARTY" means any Person claiming
indemnification under any provision of ARTICLE XIII.
(xxxviii) "INDEMNIFYING PARTY" means any Person against whom a
claim for indemnification is being asserted under any
provision of ARTICLE XII.
(xxxix) "INDEMNITY NOTICE" means written notification
pursuant to SECTION 12.2 (b) of a claim for indemnity
under ARTICLE XII by an Indemnified Party, specifying
the nature of and basis for such claim, together with
the amount or, if not then reasonably determinable,
the estimated amount, determined in good faith, of
the Loss arising from such claim.
(xl) "INTELLECTUAL PROPERTY" means all patents and patent
rights, trademarks and trademark rights, trade names
and trade name rights, service marks and service xxxx
rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights
and copyright rights, trade dress, business and
product names, logos, slogans, trade secrets,
industrial models, processes, designs, methodologies,
computer programs (including all source codes) and
related documentation, technical information,
manufacturing, engineering and technical drawings,
know-how and all pending applications for and
registrations of patents, trademarks, service marks
and copyrights.
(xli) "INTERIM FINANCIAL STATEMENT DATE" means the last day
of the most recent fiscal period of Intrac for which
Financial Statements are delivered to Acquisition Sub
pursuant to SECTION 4.9 (b).
(xlii) "INTERIM FINANCIAL STATEMENTS" means the Financial
Statements for the most recent fiscal period of the
Intrac delivered to Acquisition Sub pursuant to
SECTION 4.9 (b).
(xliii) "INTRAC" means The Intrac Group, a Nevada
corporation, and its successors and assigns.
(xliv) "INVESTMENT ASSETS" means all debentures, notes and
other evidences of Indebtedness, stocks, securities
(including rights to purchase and securities
convertible into or exchangeable for other
securities), interests in joint ventures and general
and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or
beneficially by Intrac or any Subsidiary and issued
by any Person other than Intrac or any Subsidiary
(other than trade receivables generated in the
ordinary course of business of Intrac).
5
(xlv) "IRS" means the United States Internal Revenue
Service.
(xlvi) "KNOWLEDGE OF SELLERS" or "KNOWN TO SELLERS" means
the actual knowledge of Sellers and/or any officer,
director, or manager or supervisory employee of
Intrac.
(xlvii) "LAWS" means all laws, statutes, rules, regulations,
and other pronouncements having the effect of law of
the United States, any foreign country or any
domestic or foreign state, county, city or other
political subdivision or of any Governmental or
Regulatory Authority.
(xlviii) "LIABILITIES" means all Indebtedness, obligations,
and other liabilities of a Person (whether absolute,
accrued, contingent, fixed or otherwise, or whether
due or to become due).
(xlix) "LICENSES" means all licenses, permits, certificates
of authority, authorizations, approvals,
registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory
Authority.
(l) "LIENS" means any mortgage, pledge, assessment,
security interest, lease, lien, adverse claim, levy,
charge or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract
or other Contract to give any of the foregoing.
(li) "LOSS" means any and all actual damages, fines, fees,
liabilities, penalties, deficiencies, losses and
expenses (including without limitation interest,
court costs, reasonable fees of attorneys,
accountants and other experts or other proceedings or
of any claim, default or assessment) and specifically
excluding any and all consequential, punitive, and
similar damages, fines, fees, liabilities, penalties,
deficiencies, and losses.
(lii) "MERGER" means the merger of Intrac with and into
Acquisition Sub, as more fully described in SECTION
2.1 hereof.
(liii) "MERGER CONSIDERATION" has the meaning ascribed to it
in SECTION 3.2.
(liv) "NRS" means the Nevada Revised Statutes, as amended
and supplemented.
(lv) "OPTION" with respect to any Person means any
security, right, subscription, warrant, option,
"phantom" stock right or other Contract that gives
the right to (i) purchase or otherwise receive or be
issued any shares of capital stock of such Person or
any security of any kind convertible into or
exchangeable or exercisable for any shares of capital
stock of such Person or (ii) receive or exercise any
benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock
of such Person, including any rights to participate
in the equity or income of such Person or to
participate in or direct the election of any
directors or officers of such Person or the manner in
which any shares of capital stock of such Person are
voted.
6
(lvi) "ORDER" means any writ, judgment, decree, injunction
or similar order of any Governmental or Regulatory
Authority (in each such case whether preliminary or
final).
(lvii) "PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
(lviii) "PERMITTED LIEN" means (i) any Lien for Taxes not yet
due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves
have been established in accordance with GAAP, (ii)
any statutory Lien arising in the ordinary course of
business by operation of Law with respect to a
Liability that is not yet due or delinquent and (iii)
any minor imperfection of title or similar Lien which
individually or in the aggregate with other such
Liens does not impair the value of the property
subject to such Lien or the use of such property in
the conduct of the business of Intrac.
(lix) "PERSON" means any natural person, corporation,
limited liability company, general partnership,
limited partnership, proprietorship, other business
organization, trust, union, association or
Governmental or Regulatory Authority.
(lx) "REPRESENTATIVES" has the meaning ascribed to it in
SECTION 6.2.
(lxi) "RESOLUTION PERIOD" means the period ending thirty
(30) days following receipt by an Indemnified Party
of a written notice from an Indemnifying Party
stating that it disputes all or any portion of a
claim set forth in a Claim Notice or an Indemnity
Notice.
(lxii) "SELLERS" means the Persons signatory hereto which
own the Common Stock, and the heirs, executors,
administrators and personal representatives of each
of them.
(lxiii) "SELLER INDEMNIFIED PARTIES" means Sellers and the
officers, directors, employees, and agents of the
Sellers.
(lxiv) "SHARES" means the shares of Common Stock set forth
on the attached SCHEDULE 3.2 representing all of the
issued and outstanding capital stock of Intrac and
all of the Common Stock owned by each of the Sellers.
(lxv) "SUBSIDIARY" means any Person in which Intrac,
directly or indirectly through Acquisition
Subsidiaries or otherwise, beneficially owns more
than fifty percent (50%) of either the equity
interests in, or the voting control of, such Person.
(lxvi) "SURVIVING CORPORATION" has the meaning ascribed to
it in SECTION 2.1(a).
7
(lxvii) "TAX RETURNS" means a report, return or other
information (including any amendments) required to be
supplied to a governmental entity by Intrac with
respect to Taxes including, where permitted or
required, combined or consolidated returns for any
group of entities that includes Intrac.
(lxviii) "TAXES" means mean any federal, state, county, local
or foreign taxes, charges, fees, levies, other
assessments, or withholding taxes or charges imposed
by any governmental entity, and includes any interest
and penalties (civil or criminal) on or additions to
any taxes and any expenses incurred in connection
with the determination, settlement or litigation of
any Tax liability.
(lxix) "TRANSACTION DOCUMENTS" means this Agreement, the
Employment Agreements, the Amended and Restated ATM
Service, Ltd. Shareholders Agreement and the other
agreements and documents delivered herewith and
therewith.
(lxx) "THIRD PARTY CLAIM" has the meaning ascribed to it in
SECTION 12.2(a).
(lxxi) "TRANSFER TAXES" has the meaning ascribed to it in
SECTION 10.1.
(lxxii) "WWWX" means WorldWide Web NetworX Corporation, a
Delaware corporation, and its successors and assigns.
(lxxiii) "WWWX SHARES" has the meaning ascribed to it in
SECTION 3.2(b)
(lxxiv) "WWWX INDEMNIFIED PARTIES" means WWWX, Acquisition
Sub, and the respective officers, directors,
employees, and agents of each of them.
(b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the context of
this Agreement otherwise requires, (i) words of one gender include
the other gender; (ii) words using the singular or plural number
also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar
words refer to this entire Agreement; (iv) the terms "Article" or
"Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "ordinary course of business" and
"ordinary course of business consistent with past practice" refer
to the business and practice of Intrac or a Subsidiary. Whenever
this Agreement refers to a number of days, such number shall refer
to calendar days unless Business Days are specified. All
accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
ARTICLE II
THE MERGER, THE SURVIVING CORPORATION; CONVERSION OF SHARES
2.1 THE MERGER.
(a) PROCEDURES OF MERGER.
8
i. At the Effective Time and subject to the terms and
conditions of this Agreement, Intrac shall be merged
into Acquisition Sub and the separate existence of
Intrac shall thereupon cease, in accordance with the
applicable provisions of the DGCL and the NRS.
ii. Acquisition Sub will be the surviving corporation in
the Merger (sometimes referred to herein as the
"SURVIVING CORPORATION") and will continue to be
governed by the laws of the State of Delaware, and
the separate corporate existence of Acquisition Sub
and all of its rights, privileges, immunities and
franchises, public or private, and all its duties and
liabilities as a corporation organized under the
DGCL, will continue unaffected by the Merger.
iii. The Merger will have the effects specified by the
DGCL and the NRS.
(b) EFFECTIVE TIME.
As soon as practicable following fulfillment or waiver of the
conditions specified in ARTICLES VIII and IX hereof, and
provided that this Agreement has not been terminated or
abandoned pursuant to ARTICLE XIII hereof, the Constituent
Corporations shall cause a Certificate of Merger (the
"CERTIFICATE OF MERGER") to be filed with the office of the
Secretary of State of the State of Delaware as provided in
Section 252 of the DGCL and will cause the Merger Agreement
together with a duly executed Certificate of Approval of
Merger, certificates of the officers of WWWX and the
Constituent Corporations and tax clearance certificates to be
filed with the office of the Secretary of State of the State
of Delaware, as required by the DGCL. The Constituent
Corporations will also cause Articles of Merger (the "ARTICLES
OF MERGER") to be filed with the Secretary of State of the
State" of Nevada pursuant to NRS 92A.200. Subject to and in
accordance with the laws of the States of Delaware and Nevada,
the Merger will become effective at the date and time the
Certificate of Merger is filed with the office of the
Secretary of State of the State of Delaware and the Articles
of Merger are filed with the Secretary of State of the State
of Nevada or such later time or date as may be specified in
the Certificate of Merger and the Articles of Merger (the
"EFFECTIVE TIME"). Each of the parties will use its best
efforts to cause the merger to be consummated as soon as
practicable following the fulfillment or waiver of the
conditions specified in ARTICLES VIII and IX hereof.
2.2 THE SURVIVING CORPORATION.
(a) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Acquisition Sub as in effect
immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving
Corporation after the Effective Time.
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(b) BY-LAWS. The By-Laws of Acquisition Sub as in effect
immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation after the
Effective Time.
(c) BOARD OF DIRECTORS. From and after the Effective
Time, the Board of Directors of Acquisition Sub shall
be the Board of Directors of the Surviving
Corporation.
2.3 CONVERSION OF SHARES.
(a) CONVERSION OF SHARES OF INTRAC IN THE MERGER.
Pursuant to this Agreement, at the Effective Time, by
virtue of the Merger and without any action on the
part of any holder of Common Stock, each share of
Common Stock, other than Dissenting Shares, shall,
subject to SUBSECTION (d) below (in addition to the
other Merger Consideration) be converted into, and
become exchangeable for, the WWWX Shares.
(b) STATUS OF ACQUISITION SUB SHARES. At the Effective
Time, by virtue of the Merger and without any action
on the part of any holder of any capital stock of
Acquisition Sub, each issued and outstanding share of
common stock of Acquisition Sub shall continue
unchanged and remain outstanding as a share of common
stock of the Surviving Corporation.
(c) EXCHANGE OF INTRAC CAPITAL STOCK CERTIFICATES.
i. On the Closing Date, WWWX shall make
available to the Sellers the certificates
representing the WWWX Shares required to
effect the exchange referred to in this
SECTION 2.3 below. WWWX Shares into which
the Common Stock shall be converted in the
Merger shall be deemed to have been issued
at the Effective Time.
ii. From and after the Effective Time, each
holder of a certificate which immediately
prior to the Effective Time represented the
outstanding Common Stock other than shares
with respect to which dissenters' rights, if
any, are granted by reason of the Merger
under the NRS, shall be entitled to receive
in exchange therefor, upon surrender
thereof, the amount of the Merger
Consideration for which such holder's Common
Stock was converted subject to the
provisions of this Agreement.
(d) DISSENTING SHARES. Notwithstanding anything to the
contrary contained in this Agreement, holders of the
Common Stock with respect to which dissenters'
rights, if any, are granted by reason of the Merger
under the NRS and who do not vote in favor of the
Merger and otherwise comply with the NRS ("DISSENTING
SHARES"), shall not be entitled to Merger
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Consideration pursuant to SUBSECTION (a) above,
unless and until the holder thereof shall have failed
to perfect or shall have effectively withdrawn or
lost such holder's dissenters' rights under the NRS,
such holder's target Dissenting Shares shall
thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective
Time, the right to receive the Merger Consideration.
2.4 CLOSING OF TRANSFER BOOKS.
From and after the Effective Time, the stock transfer books of Intrac
shall be closed and no transfer of the Shares shall thereafter be made.
If, after the Effective Time, certificates representing the Shares
shall be presented to WWWX, they shall be cancelled and exchanged for
the Merger Consideration in accordance with the procedures set forth in
this ARTICLE II .
ARTICLE III
MERGER AND CLOSING
3.1 CLOSING.
(a) The Closing shall take place at the offices of WWWX, or at
such other place as the parties may mutually agree, at 10:00
A.M. local time, on the Closing Date.
(b) At the Closing, in exchange for the Merger Consideration,
Sellers will sell, assign and transfer to Acquisition Sub all
of Sellers' right, title and interest in and to the Shares by
delivering to Acquisition Sub certificates representing the
Shares, in genuine and unaltered form, duly endorsed in blank
or accompanied by duly executed stock powers endorsed in
blank, with requisite stock transfer tax stamps, if any,
attached. At the Closing, Sellers, Acquisition Sub, WWWX and
Intrac shall also deliver the opinions and other agreements,
documents, instruments and certificates to be delivered under
ARTICLES VIII and IX.
3.2 MERGER CONSIDERATION.
The consideration for the Shares shall be the following (the "MERGER
CONSIDERATION"), payable by Acquisition Sub and/or WWWX to Sellers in
the manner set forth below.
(a) $1,500,000 in immediately available funds, wired to the
account(s) specified by the Sellers on the Closing Date;
(b) 1,000,000 shares of WWWX common stock (the "WWWX SHARES"),
evidenced by a certificate(s) delivered on the Closing Date;
and
(c) 240 shares of common stock of ATM Service, Ltd., representing
24% of the total issued and outstanding shares of capital
stock of ATM, on a fully diluted basis, evidenced by a
certificate(s) delivered on the Closing Date.
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The Merger Consideration will be allocated to the Sellers as set forth on the
attached SCHEDULE 3.2
3.3 WORKING CAPITAL CONTRIBUTION
WWWX will make an additional capital contribution to ATM in the
amount of $1,000,000 in consideration for ATM'S agreement to lend
Acquisition Sub up to $1,000,000 for working capital. Acquisition
Sub will either cause the release of Xxxxxx Xxxxxxxxx'x personal
guarantee of Intrac's existing line of credit or payoff said line on
the Closing Date.
3.4 FURTHER ASSURANCES; POST-CLOSING COOPERATION.
(a) At any time or from time to time after the Closing, the
parties shall execute and deliver such other documents and
instruments, provide such materials and information and take
such other actions any other party may reasonably request to
more effectively accomplish the consummation of the
transactions contemplated hereunder.
(b) Following the Closing, each party will afford each other
party, its counsel and its accountants, during normal business
hours, reasonable access to the books, records and other data
relating to the Business or Condition of Intrac in its
possession with respect to periods prior to the Closing and
the right to make copies and extracts therefrom, to the extent
that such access may be reasonably required by the requesting
party in connection with (i) the preparation of Tax Returns,
(ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the
requirements of any Governmental or Regulatory Authority, (iv)
the determination or enforcement of the rights and obligations
of any party to this Agreement or any of the Transaction
Documents or (v) in connection with any actual or threatened
Action or Proceeding. Further, each party agrees for a period
extending 7 years after the Closing Date not to destroy or
otherwise dispose of any such books, records and other data
unless such party first offers in writing to surrender such
books, records and other data to the other party and such
other party shall not agree in writing to take possession
thereof during the 20 day period after such offer is made.
(c) If, properly to prepare its Tax Returns, other documents or
reports required to be filed with Governmental Regulatory
Authorities or its financial statements or to fulfill its
obligations hereunder, it is necessary that a party be
furnished with additional information, documents or records
relating to the Business or Condition of Intrac not referred
to in SUBSECTION (b) above, and such information, documents or
records are in the possession or control of the other party,
such other party shall use its best efforts to furnish or make
available such information, documents or records (or copies
thereof) at the recipient's request, cost and expense.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS AND INTRAC
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Sellers and Intrac hereby jointly and severally represent and warrant to WWWX
and Acquisition Sub as follows:
4.1 AUTHORITY. Intrac and each Seller have all necessary authority to
execute and deliver this Agreement and the Transaction Documents, and
to perform their obligations hereunder and thereunder. This Agreement
has been duly and validly executed and delivered by Intrac and each
Seller and constitutes and, upon the execution and delivery by Intrac
and each Seller of the Transaction Documents, the Transaction
Documents, will constitute the legal, valid and binding obligations of
Intrac and each Seller, enforceable against Intrac and each Seller in
accordance with their terms.
4.2 ORGANIZATION OF INTRAC. Intrac is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada,
and has full corporate power and authority to conduct its business as
and to the extent now conducted, to own, use and lease its Assets and
Properties and to execute and deliver this Agreement and the
Transaction Documents to which it is a party, and to perform its
obligations hereunder and thereunder. Intrac is duly qualified,
licensed or admitted to do business and is in good standing in those
jurisdictions in which it is required to maintain good standing unless
failure to do so would not result in a material adverse effect to
Intrac and the Sellers.
4.3 The authorized capital stock of Intrac consists of 100 shares of common
stock, no par value, of which all 100 shares are issued and
outstanding. The Sellers are the record and beneficial owners of all
the Shares. All of such issued and outstanding shares of Intrac stock
have been duly authorized, validly issued, are fully paid and
nonassessable, were not issued in violation of the terms of any
agreement or other understanding binding upon Intrac or any other
Person and were issued in compliance with all applicable federal and
state securities or "blue-sky" laws and regulations. There are no
outstanding securities, options, warrants, rights, agreements, calls,
subscription commitments, demands, or understandings of any character
whatsoever, fixed or contingent, that directly or indirectly (i) call
for the issuance, sale or other disposition of any capital stock and
there are no securities convertible into or exchangeable for the stock
of Intrac or (ii) obligate the Sellers to grant, offer or enter into
any of the foregoing or (iii) relate to the voting or control of any
capital stock of Intrac.
4.4 (a) All Intrac stock is owned free and clear of all liens, and (b) the
sale and delivery of the Shares pursuant to this Agreement will vest in
Acquisition Sub legal and beneficial title to the Shares free and clear
of any lien.
4.5 SUBSIDIARIES. Intrac does not have any Subsidiaries and does not own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
Person.
4.6 NO CONFLICTS. The execution and delivery by Intrac and the Sellers of
this Agreement does not, and the execution and delivery by Intrac and
each Seller of the Transaction Documents to which they are a party, the
performance by Intrac and each Seller of their
13
obligations under this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby will
not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of
incorporation or by-laws (or other comparable corporate
charter documents) of Intrac;
(b) conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to Intrac and the
Sellers , or any of their respective Assets and Properties; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a
default under, (iii) require Intrac and the Sellers to obtain
any consent, approval or action of, make any filing with or
give any notice to any Person as a result or under the terms
of, (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or
with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (vi) result in
the creation or imposition of any Lien upon Intrac or any
Seller or any of their respective Assets and Properties under,
any Contract or License to which Intrac or any Seller is a
party or by which any of their respective Assets and
Properties are bound, or (vii) conflict with, or constitute,
or result in any breach, default or violation of (or an event
which might, with or without the passage of time or the giving
of notice or both, constitute or result in any such a breach,
default or violation) any of the terms, conditions, or
provisions of any indenture, mortgage, loan, or credit
agreement, or any other instrument, contract, agreement or
commitment to which Intrac or any Seller is a party, or by
which any of them or any of the Acquisition Assets may be
bound or affected, or any judgment or order of any
Governmental Authority, or any law, rule, or regulation.
4.7 GOVERNMENTAL APPROVALS AND FILINGS. No consent, approval or action of,
filing with, or notice to any Governmental or Regulatory Authority on
the part of Intrac or any Seller is required in connection with the
execution, delivery and performance of this Agreement or any of the
Transaction Documents to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
4.8 BOOKS AND RECORDS. The minute books and other similar records of Intrac
contain a true and complete record, in all material respects, of all
action taken at all meetings and by all written consents in lieu of
meetings of the stockholders, the board of directors and committees of
the board of directors of Intrac, and the stock transfer and other
similar records of Intrac accurately reflect all record transfers prior
to the execution of this Agreement in the capital stock of Intrac.
4.9 FINANCIAL STATEMENTS. Prior to the Closing, Intrac and the Sellers
shall have delivered to WWWX and Acquisition Sub true and complete
copies of the following financial statements:
14
(a) the balance sheets of Intrac as of December 31, 1998, December
31, 1997, and December 31, 1996, and the related statements of
operations, stockholders equity, and cash flows for the fiscal
years then ended;
(b) the balance sheet of Intrac as of April 30, 1999, and the
related statement of operations, stockholders' equity and cash
flows for the portion of the fiscal year then ended.
Except as set forth in the notes thereto, the financial statements in
(a) above (i) were prepared in accordance with GAAP, (ii) fairly
present the financial condition and results of operations of Intrac in
all material respects as of the respective dates thereof and for the
respective periods covered thereby, and (iii) were compiled from the
Books and Records of Intrac regularly maintained by management and used
to prepare the financial statements of Intrac in accordance with the
principles stated therein. Intrac has maintained its Books and Records
in a manner sufficient to permit the preparation of financial
statements in accordance with GAAP and that fairly present the
financial condition and results of operations of Intrac in all material
respects as of the respective dates thereof and for the respective
periods covered thereby.
4.10 ABSENCE OF CHANGES. Except (1) as disclosed or presented in the Interim
Financial Statements and (2) for the execution and delivery of this
Agreement and the transactions to take place pursuant hereto on or
prior to the Closing Date, since the Annual Financial Statement Date,
there has not been any material adverse change, or any event or
development which, individually or together with other such events,
could reasonably be expected to result in a material adverse change, in
the Business or Condition of Intrac. Without limiting the foregoing,
other than in the ordinary course of business, except as set forth on
SCHEDULE 4.10, there has not occurred between the Annual Financial
Statement Date and the date hereof:
(a) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of Intrac,
or any direct or indirect redemption, purchase or other
acquisition of any such capital stock of or any Option with
respect to Intrac;
(b) any authorization, issuance, sale or other disposition by
Intrac or any Seller of any shares of capital stock of or
Option with respect to Intrac or any modification or amendment
of any right of any holder of any outstanding shares of
capital stock of or option with respect to Intrac;
(c) (i) incurrences by Intrac of Indebtedness in an aggregate
principal amount exceeding $50,000 (net of any amounts
discharged during such period), or (ii) any voluntary
purchase, cancellation, prepayment or complete or partial
discharge in advance of a scheduled payment date with respect
to, or waiver of any right of Intrac under, any Indebtedness
of or owing to Intrac;
15
(d) any material change in (i) any pricing, investment,
accounting, financial reporting, inventory, credit, allowance
or Tax practice or policy of Intrac, or (ii) any method of
calculating any bad debt, contingency or other reserve of
Intrac for accounting, financial reporting or Tax purposes, or
any change in the fiscal year of Intrac;
(e) any write-off or write-down of or any determination to write
off or write down any of the Assets and Properties of Intrac
in, an aggregate amount exceeding $25,000;
(f) any acquisition or disposition of, or incurrence of a Lien
(other than a Permitted Lien) on, any Assets and Properties of
Intrac or either Seller which affects the Shares;
(g) any (i) amendment of the certificate of incorporation or
by-laws (or other comparable corporate charter documents of
Intrac, (ii) recapitalization, reorganization, liquidation or
dissolution of Intrac or (iii) merger or other business
combination involving Intrac and any other Person;
(h) other than in the ordinary course of business, capital
expenditures or commitments for additions to property, plant
or equipment of Intrac constituting capital assets in an
aggregate amount exceeding $50,000;
(i) any commencement or termination by Intrac of any line of
business;
(j) any transaction by Intrac with any officer, director or
Affiliate other than on an arm's-length basis, other than
pursuant to any Contract in effect on the Annual Financial
Statement Date;
(k) any termination or amendment to or suspension or termination
of, or receipt by either Seller or Intrac of any notice of
breach or default of any material lease, contract or other
agreement to which Intrac is a party or from which Intrac,
directly or indirectly, derives rights;
(l) any payment, discharge or satisfaction of any liability or
obligation (whether accrued, absolute, contingent or
otherwise) by Intrac, other than the payment, discharge or
satisfaction, in the ordinary course of business consistent
with past practice, of liabilities or obligations shown or
reflected on the Financial Statements or incurred in the
ordinary course of business since the Financial Statement
Date;
(m) any material adverse change or any threat of any material
adverse change in Intrac's relations with, or any loss or
threat of loss of, suppliers or customers which, individually
or in the aggregate, has been or is likely to be materially
adverse;
(n) any creation, incurrence, assumption or guarantee by Intrac of
any material obligation or liability (whether absolute,
accrued, contingent or otherwise and whether due or to become
due), except in the ordinary course of business consistent
with past practice, or any creation, incurrence, assumption or
guarantee by Intrac of
16
any material indebtedness for money borrowed; any disposition
of or failure to keep in effect any rights in, to or for the
use of any patent, trademark, service xxxx, trade name or
copyright, or any disclosure to any person not an employee or
other disposal of any trade secret, process or know-how;
(o) any other material transaction, agreement or event outside the
ordinary course of any Intrac's business or inconsistent with
past practice; or
(p) any entering into of a Contract or making of a commitment to
do or engage in any of the foregoing after the date hereof.
4.11 UNDISCLOSED LIABILITIES. Except as reflected or reserved against in the
balance sheet included in the Annual Financial Statements or in the
notes thereto or in the Interim Financial Statements, there are no
Liabilities against, relating to or affecting Intrac or its Assets and
Properties, other than Liabilities (a) incurred in the ordinary course
of business consistent with past practice since the Annual Financial
Statement Date or (b) which, individually or in the aggregate, are not
material to the Business or Condition of Intrac. There are no
attachments, executions, assignments for the benefit of creditors or
any other debtor relief pending or threatened.
4.12 TAXES.
(a) Intrac has filed, or will file on or before the Closing, all
Tax Returns required to be filed by applicable law. All Tax
Returns were true, complete and correct in all material
respects and filed on a timely basis. Intrac has paid all
Taxes that are due, or claimed or asserted by any taxing
authority to be due, from Intrac for the periods covered by
the Tax Returns.
(b) Intrac has established on its books and records reserves
adequate to pay all Taxes not yet due and payable.
(c) There are no tax liens upon the assets of Intrac or any Seller
except Liens for Taxes not yet due.
(d) Intrac has not requested any extension of time within which to
file any Tax Return which remains in effect.
(e) (i) Intrac has not entered into any agreements with any taxing
authority extending the statute of limitations for the
assessment of Taxes, (ii) there have been no audits and there
are no ongoing audits or administrative proceedings with
respect to any Taxes of Intrac or any Seller, and (iii) no
deficiency for any Taxes has been suggested, proposed,
asserted or assessed against Intrac or any Seller that has not
been resolved and paid in full.
(f) No audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes or
Tax Returns of Intrac.
17
(g) Intrac and the Sellers have not received any written ruling of
a taxing authority relating to Taxes or entered into any
written and legally binding agreement with any taxing
authority relating to Taxes.
(h) Intrac has made available to WWWX and Acquisition Sub complete
and accurate copies of all Tax Returns and associated work
papers filed by or on behalf of Intrac for all taxable periods
ending on or prior to the date of this Agreement.
(i) Intrac is not party or subject to, or bound by, any agreements
relating to the allocation or sharing of Taxes.
(j) All transactions that could give rise to an understatement of
federal income tax (within the meaning of Code section 6661
for Tax Returns filed on or before December 31, 1989, and
within the meaning of Code section 6662 for tax returns
filed after December 31, 1989) by Intrac have been
adequately disclosed on Intrac 's Tax Returns in accordance
with Code section 6661(b)(2)(B) for Tax Returns filed on or
prior to December 31, 1989, and in accordance with Code
section 6662(d)(2)(B) for Tax Returns filed after December
31, 1989.
4.13 COMPLIANCE WITH LAWS AND ORDERS. Intrac is not and has not at any time
since its formation been, and has not received any notice that it is or
has at any time since its formation been, in violation of or in default
under, in any material respect, any Law or Order applicable to Intrac
or any of its Assets and Properties.
4.14 BENEFIT PLANS; ERISA. Intrac does not now maintain, nor has it ever
maintained, sponsored or contributed to, any plan that is subject to
ERISA.
4.15 REAL PROPERTY. Intrac does not own any real property.
4.16 TANGIBLE PERSONAL PROPERTY; INVESTMENT ASSETS.
(a) Intrac is in possession and has good title to, or has valid
leasehold interests in or valid rights under Contract to use,
all tangible personal property used in or reasonably necessary
for the conduct of its business, including all tangible
personal property reflected on the balance sheet included in
the Annual Financial Statements and tangible personal property
acquired since the Annual Financial Statement Date other than
property disposed of since such date in the ordinary course of
business consistent with past practice. All such tangible
personal property is free and clear of all Liens, and is in
good working order and condition, ordinary wear and tear
excepted, and its use complies in all material respects with
all applicable Laws.
(b) Intrac owns no Investment Assets.
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4.17 INTELLECTUAL PROPERTY RIGHTS. Intrac has interests in or uses only the
Intellectual Property disclosed in the attached SCHEDULE 4.17, each of
which Intrac either has all right, title and interest in or a valid and
binding right under Contract to use. No other Intellectual Property is
used in the conduct of the business of Intrac. Neither Intrac nor any
Seller has received notice that Intrac is infringing any Intellectual
Property of any other Person, no claim is pending or has been made to
such effect that has not been resolved and, to the knowledge of Intrac
and the sellers, Intrac is not infringing any Intellectual Property of
any other Person and no person is infringing any Intellectual Property
of Intrac.
4.18 CONTRACTS.
(a) All material Contracts to which Intrac is a party are
described on the attached SCHEDULE 4.18.
(b) Except as set forth in SCHEDULE 4.18 or another Schedule to
this Agreement (with appropriate cross-references), there are
no contracts, agreements, arrangements, commitments,
instruments, plans or leases, oral or written (collectively,
the "CONTRACTS") to which Intrac is a party or by which it is
bound, meeting any of the following descriptions:
i. any Contract for consulting or other services
obligating any Intrac to payments of more than
$50,000 annually or having a duration in excess of 1
year;
ii. any Contract relating to the management of Intrac;
iii. any Contract evidencing or related to indebtedness,
obligations or liability for borrowed money, or
liability for the deferred purchase price of
property, in excess of $50,000 (excluding trade
payables incurred in the ordinary course of business
consistent with past practice), or any Contract of
guaranty, indemnification or other similar commitment
relating to the obligations or liabilities of any
other Person;
iv. any Contract involving a sharing of profits, joint
venture or partnership;
v. any Contract relating to sales agency, brokerage,
distribution or similar matters;
vi. any Contract containing covenants limiting the
freedom of Intrac or any Seller to compete in any
line of business or in any area or with any Person;
vii. any Contract relating to orders for future purchase
or delivery of goods or retention of services which
is material to Intrac or which has an aggregate
future liability of greater than $50,000; or
19
viii. any other Contract relating to the Business, except
Contracts excluded by an express exception from the
descriptions set forth in Subparagraphs (i) through
(vii) above and except such Contracts which are
terminable on less than 30 days' notice without
penalty or payment or involving expenditures of less
than $50,000 in the aggregate.
(c) CONTRACT COMPLIANCE. The Contracts listed on SCHEDULE 4.18 are
all of the Contracts which are material to the Business.
Copies of all such Contracts have been provided to WWWX and
Acquisition Sub and are true, correct and complete and have
been subject to no amendment, extension or modification,
except such as are described in SCHEDULE 4.18. Each Contract
referred to in SCHEDULE 4.18 is valid and binding as to Intrac
and, to Intrac's and the Sellers' best knowledge, as to any
other party and, with respect to such Contracts, there is no
material default by Intrac or, to Intrac's and the Sellers'
best knowledge, by any other party, and no event which, with
notice or the passage of time or both, would constitute such a
default by Intrac, or, to Intrac's and the Sellers' best
knowledge, by any other party. Upon consummation of the
transactions contemplated hereby, Intrac will continue to be
entitled to the full economic, legal and other benefits of the
Contracts on their present terms. No party has any right to
cancel, terminate or modify any of the Contracts by reason of
the transactions contemplated under this Agreement.
4.19 LITIGATION AND CLAIMS. Except as set forth on SCHEDULE 4.19, there is
no Claim pending or, to the best of Intrac's or the Sellers' knowledge,
threatened (or, to the best knowledge of Intrac or the Sellers, no
state of facts exist which reasonably could be expected to lead to any
such Claim) by, against or affecting or in any way relating to Intrac,
or affecting the Common Stock or the Sellers' rights thereto, at law or
in equity, before any Governmental Authority or any arbitrator. There
are presently no outstanding judgments, decrees, or orders of any
Governmental Authority or any arbitrator against or affecting Intrac or
any Acquisition Asset or affecting the stock. Nothing listed on
SCHEDULE _4.19 could reasonably be expected to have a material adverse
effect on Intrac.
4.20 LICENSES. Except as set forth on SCHEDULE 4.20, Intrac does not require
any Licenses to operate its business, other than normal business
licenses and permits.
4.21 INSURANCE. A list of all insurance polices of Intrac is attached as
SCHEDULE 4.21.
4.22 ENVIRONMENTAL MATTERS. Intrac is not in material violation of any
federal, state or local Environmental Laws applicable to it or its
properties, or any material limitations, restrictions, conditions,
standards, obligations or timetables contained in any Environmental Law
or any regulation, code, plan, order, decree, notice or demand letter
issued, entered, promulgated or approved thereunder. No notice or
action alleging such violation is pending or, to Intrac's knowledge,
threatened, and, to Intrac 's knowledge, no past or present condition
or practice of Intrac would prevent continued compliance with
applicable environmental permits or give rise to any common law or
statutory liability or otherwise form the basis of any claim, action or
proceeding with respect to Intrac
20
involving any pollutant or hazardous or toxic material or waste. To
Seller's and Intrac's knowledge, Intrac has no liability, present or
past, under CERCLA, including, without limitation, as the result of
their ownership or operation of any "facility" as defined in CERCLA, or
their arrangement for, disposal, treatment or transport of "hazardous
substances," also as defined in CERCLA.
4.23 POWER OF ATTORNEY. Intrac and the Sellers do not have any powers of
attorney or comparable delegations of authority outstanding.
4.24 BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Intrac
directly with WWWX, Acquisition Sub and ATM without the intervention of
any Person on behalf of Intrac or the Sellers in such manner as to give
rise to any valid claim by any Person against WWWX, Acquisition Sub,
ATM, Intrac or any Subsidiary for a finder's fee, brokerage commission
or similar payment.
4.25 PRODUCT WARRANTY. Neither Intrac nor Any Seller has received a notice
from any of the customers of Intrac that the products and services,
leased or delivered by Intrac fail to conform in any material respect
with the contractual commitments and all express and implied
warranties. Neither Intrac nor the Sellers have any material liability
(and there is no reasonable basis for any present or future action,
suit, proceeding, hearing investigation, charge, complaint, claim or
demand against it giving rise to any such liability) for replacement or
repair thereof or other damages in connection therewith in excess of
the past custom, practice and experience.
4.26 AFFILIATE TRANSACTIONS.
There are no intercompany Liabilities between Intrac, on the one hand,
and Sellers or Affiliates (other than Intrac) of Sellers, on the other;
(a) neither Sellers nor any such Affiliate provides or causes to
be provided any material assets, services or facilities to
Intrac; and
(b) Intrac does not provide or cause to be provided any material
assets, services or facilities to Sellers or any such
Affiliate. Each of the Liabilities and transactions was
incurred or engaged in, as the case may be, on an arm's-length
basis. Since the Annual Financial Statement Date, all
settlements of intercompany Liabilities of Intrac, on the one
hand, and Sellers or any such Affiliate, on the other, have
been made, and all allocations of intercompany expenses have
been paid or reserved, in the ordinary course of business
consistent with past practice.
4.27 EMPLOYEES; LABOR RELATIONS.
SCHEDULE 4.27 contains a list of the name of each officer, director and
employee of Intrac at the date hereof, together with each such person's
position or function. Intrac and the Sellers have not received any
information that would lead it to believe that a material number of
such persons will cease to be employees, or will refuse offers of
employment from Acquisition Sub or ATM, because of the consummation of
the transactions
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contemplated by this Agreement. Since its inception Intrac has complied
in all material respects with all applicable Laws relating to the
employment of labor, including, without limitation those relating to
wages, hours and collective bargaining.
4.28 BANK AND BROKERAGE ACCOUNTS.
Other than a banking relationship with The Chase Manhattan Bank and
Fleet Bank, Intrac does not maintain any relationship with any bank,
trust company, securities broker or other financial institution.
4.29 The Agreement between The Intrac Group and Fundacion Primero Mexico
A.C., dated as of March 25, 1999, is in full force and effect and is
enforceable by its terms.
4.30 DISCLOSURE.
No representation or warranty contained in this Agreement, and no
statement contained in any Schedule or in any certificate furnished to
WWWX and Acquisition Sub pursuant to any provision of this Agreement,
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make statements made, in the light
of the circumstances under which they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WWWX AND ACQUISITION SUB
WWWX and Acquisition Sub hereby represent and warrant to Intrac and the Sellers
as follows:
5.1 ORGANIZATION.
Each of WWWX and Acquisition Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and each has full corporate power and authority to execute and
deliver this Agreement and the Transaction Documents to which it is a
party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.
5.2 AUTHORITY.
The execution and delivery by WWWX and Acquisition Sub of this
Agreement and the Transaction Documents to which each is a party, and
the performance by each of its obligations hereunder and thereunder,
have been duly and validly authorized by the members or other
applicable governing body of such person. This Agreement has been duly
and validly executed and delivered by WWWX and Acquisition Sub and
constitutes, and upon the execution and delivery by WWWX and
Acquisition Sub of the Transaction Documents to which it is a party,
the Transaction Documents will constitute, legal, valid and binding
obligations of WWWX and Acquisition Sub enforceable against each of
them in accordance with their terms.
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5.3 NO CONFLICTS.
The execution and delivery by WWWX and Acquisition Sub of this
Agreement do not, and the execution and delivery by each of them of the
Transaction Documents to which it is a party, the performance by each
of them of its obligations under this Agreement and such Transaction
Documents and the consummation of the transactions contemplated hereby
and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of
organization and operating agreement of each of them;
(b) conflict with or result in a violation or breach of any term
or provision of any Law or Order applicable to either of them
or any of its Assets and Properties; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a
default under, (iii) require either of them to obtain any
consent, approval or action of, make any filing with or give
any notice to any Person as a result or under the terms of, or
(iv) result in the creation or imposition of any Lien upon
either of them or any of its Assets or Properties under, any
Contract or License to which either of them is a party or by
which any of its Assets and Properties is bound.
5.4 GOVERNMENTAL APPROVALS AND FILINGS.
No consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of WWWX or Acquisition
Sub is required in connection with the execution, delivery and
performance of this Agreement or the Transaction Documents to which it
is a party or the consummation of the transactions contemplated hereby
or thereby.
5.5 PURCHASE FOR INVESTMENT.
WWWX and Acquisition Sub each warrants and represents that it has, and
as of the Effective Time of the Merger will have, no present plan,
intention or arrangement to sell, transfer or otherwise dispose of all
or any part of the business or assets of Intrac, and WWWX and
Acquisition Sub each agrees that Acquisition Sub will continue at least
one significant historic business line of Intrac, or use at least a
significant portion of the Intrac's historic business assets in a
business, for a period of at least one (1) year following the Closing
Date (the "POST-MERGER CONTINUITY Period"), in each case within the
meaning of Reg. section 1.368-1 (d), except that Acquisition Sub may
transfer Intrac's historic business assets during the Post-Merger
Continuity Period to a corporation that is a member of Acquisition
Sub's "qualified group," within the meaning of Reg. section 1.368-1(d)
(4) (ii).
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5.6 BROKERS.
All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by WWWX and Acquisition Sub
directly with Sellers and Intrac without the intervention of any Person
on behalf of WWWX and Acquisition Sub in such manner as to give rise to
any valid claim by any Person against Sellers or Intrac for a finder's
fee, brokerage commission or similar payment.
5.7 WWWX SHARES.
When issued and delivered to the Sellers in accordance with the terms
of this Agreement, the WWWX Shares will be duly authorized, validly
issued, fully paid and non-assessable.
5.8 BUSINESS.
WWWX and Acquisition Sub intend to have the Surviving Corporation
continue at least one significant, historic business line of Intrac, or
to use at least a significant portion of Intrac's historic business
assets in a business, in each case for a period of at least 1 year
following the Closing Date, within the meaning of Treasury Regulation
Section 1.368-1(d).
5.9 COMPLETION OF DUE DILIGENCE.
WWWX and Acquisition Sub agree to complete their due diligence review
of Intrac no later than July 23, 1999.
ARTICLE VI
COVENANTS OF INTRAC AND THE SELLERS
Intrac and the Sellers covenant and agree with WWWX and Acquisition Sub that, at
all times from and after the date hereof until the Closing and, with respect to
any covenant or agreement by its terms to be performed in whole or in part after
the Closing, for the period specified therein or, if no period is specified
therein, indefinitely, Sellers will comply with all covenants and provisions of
this ARTICLE VI, except to the extent WWWX and Acquisition Sub may otherwise
consent in writing.
6.1 REGULATORY AND OTHER APPROVALS.
Sellers and Intrac will as promptly as practicable to:
(a) take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions of, make all
filings with and give all notices to Governmental or
Regulatory Authorities or any other Person required of Sellers
or Intrac to consummate the transactions contemplated hereby
and by the Transaction Documents;
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(b) provide such other information and communications to such
Governmental or Regulatory Authorities or other Persons as
WWWX and Acquisition Sub or such Governmental or Regulatory
Authorities or other Persons may reasonably request in
connection therewith; and
(c) cooperate with WWWX and Acquisition Sub in connection with the
performance of its obligations under SECTIONS 7.1 AND 7.5.
Sellers will provide prompt notification to WWWX and
Acquisition Sub when any such consent, approval, action,
filing or notice referred to in Subsection (a) above is
obtained, taken, made or given, as applicable.
6.2 INVESTIGATION BY WWWX AND ACQUISITION SUB.
Sellers will, and will cause Intrac to,
(a) provide each of WWWX and Acquisition Sub and its officers,
directors, employees, agents, counsel, accountants, financial
advisors and consultants (together "REPRESENTATIVES") with
reasonable access, upon reasonable prior notice and during
such hours as shall least disrupt the operation of Intrac, to
all officers, employees, agents and accountants of Intrac and
its Assets and Properties and Books and Records, and
(b) furnish WWWX and Acquisition Sub and such other Persons with
all such information and data (including without limitation
copies of Contracts, Benefit Plans and other Books and
Records) concerning the business and operations of Intrac as
WWWX and Acquisition Sub or any of such other Persons
reasonably may request in connection with such investigation.
6.3 CONDUCT OF BUSINESS.
Sellers will cause Intrac to conduct business only in the ordinary
course consistent with past practice. Without limiting the generality
of the foregoing, Sellers will:
(a) cause Intrac to use commercially reasonable efforts to (i)
preserve intact the present business organization and
reputation of Intrac, (ii) keep available (subject to
dismissals and retirements in the ordinary course of business
consistent with past practice) the services of the present
officers, employees and consultants of Intrac, (iii) maintain
the Assets and Properties of Intrac in good working order and
condition, ordinary wear and tear excepted, (iv) maintain the
goodwill of customers, suppliers, lenders and other Persons to
whom Intrac sells goods or provides services or with whom
Intrac otherwise has significant business relationships, and
(v) continue all current sales, marketing and promotional
activities relating to the business and operations of Intrac;
(b) except to the extent required by applicable laws (i) cause the
Books and Records to be maintained in the usual, regular and
ordinary manner, (ii) not permit any material change in (A)
any pricing, investment, accounting, financial reporting,
inventory, credit, allowance or Tax practice or policy of
Intrac, or (B) any method
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of calculating any bad debt, contingency or other reserve of
Intrac for accounting, financial reporting or Tax purposes,
and (iii) not permit any change in the fiscal year of Intrac;
and
(c) cause Intrac to comply, in all material respects, with all
Laws and Orders applicable to the business and operations of
Intrac, and promptly following receipt thereof to give
Acquisition Sub copies of any notice received from any
Governmental or Regulatory Authority or other Person alleging
any violation of any such Law or Order.
6.4 EMPLOYEE MATTERS.
Except as may be required by Law, Sellers will refrain, and will cause
Intrac to refrain, from directly or indirectly:
(a) making any representation or promise, oral or written, to any
officer, employee or consultant of Intrac concerning any
Benefit Plan, except for statements as to the rights or
accrued benefits of any officer, employee or consultant under
the terms of any Benefit Plan;
(b) entering into any written employment agreement or making any
increase n the salary, wages or other compensation of any
officer, employee or consultant of Intrac;
(c) adopting, entering into or becoming bound by any Benefit Plan,
employment-related Contract or collective bargaining
agreement, or amending, modifying or terminating (partially or
completely) any Benefit Plan, employment-related Contract or
collective bargaining agreement, except to the extent required
by applicable Law; or
(d) establishing or modifying any (i) targets, goals, pools or
similar provisions in respect of any fiscal year under any
Benefit Plan, employment-related Contract or other employee
compensation arrangement or (ii) salary ranges, increase
guidelines or similar provisions in respect of any Benefit
Plan, written employment-related Contract or other written
employee compensation arrangement.
6.5 CERTAIN RESTRICTIONS.
Other than in the ordinary course of business, Sellers will cause
Intrac to refrain from:
(a) amending its certificate of incorporation or by-laws or taking
any action with respect to any such amendment or any
recapitalization, reorganization, liquidation or dissolution
of any such corporation;
(b) authorizing, issuing, selling or otherwise disposing of any
shares of capital stock of or any Option with respect to
Intrac, or modifying or amending any right of any holder of
outstanding shares of capital stock of or Option with respect
to Intrac;
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(c) declaring, setting aside or paying any dividend or other
distribution in respect of the capital stock of Intrac, or
directly or indirectly redeeming, purchasing or otherwise
acquiring any capital stock of or any Option with respect to
Intrac (except as set forth on SCHEDULE 4.10);
(d) disposing of, or incurring any Lien (other than a Permitted
Lien) on, any Assets and Properties;
(e) (i) entering into, amending, modifying, terminating (partially
or completely), granting any waiver under or giving any
consent with respect to (A) any material Contract or (B) any
material License or (ii) granting any irrevocable powers of
attorney;
(f) violating, breaching or defaulting under in any material
respect, or taking or failing to take any action that (with or
without notice or lapse of time or both) would constitute a
material violation or breach of, or default under, any term or
provision of any License held or used by Intrac or any
Contract to which Intrac is a party or by which any of its
Assets and Properties is bound;
(g) (i) incurring Indebtedness in an aggregate principal amount
exceeding $100,000 net of any amounts of Indebtedness
discharged during such period, or (ii) voluntarily purchasing,
canceling, prepaying or otherwise providing for a complete or
partial discharge in advance of a scheduled payment date with
respect to, or waiving any rights of Intrac under, any
Indebtedness of or owing to Intrac;
(h) making capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets in an
aggregate amount exceeding $150,000;
(i) making any change in the lines of business in which it
participates or is engaged;
(j) writing off or writing down any of its Assets and Properties;
or
(k) entering into any Contract to do or engage in any of the
foregoing.
6.6 AFFILIATE TRANSACTIONS.
Prior to the Closing, Intrac will not enter into any Contract or amend
or modify any existing Contract, and will not engage in any transaction
outside the ordinary course of business consistent with past practice
or not on an arm's-length basis with Sellers or any such Affiliate.
6.7 BOOKS AND RECORDS.
On the Closing Date, Sellers will deliver or make available to WWWX and
Acquisition Sub all of the Books and Records, and if at any time after
the Closing Sellers discover in their possession or under their control
any other Books and Records, they will forthwith deliver such Books and
Records to Acquisition Sub.
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6.8 ACQUISITION PROPOSALS.
From the date hereof through the Closing, none of the Sellers, Intrac,
or any of their Affiliates, nor any of their officers, directors,
employees, representatives, or agents, shall, directly or indirectly,
solicit, initiate, or participate in any way in discussions or
negotiations with, or provide any information or assistance to, any
Person or group of Persons (other than WWWX or Acquisition Sub)
concerning any acquisition of an equity interest in, or any merger or
consolidation with, or any acquisition of a substantial portion of the
assets of Intrac other than in the ordinary course of business and as
specifically permitted pursuant to this Agreement (each, an
"Acquisition Proposal"), or assist or participate in, facilitate, or
encourage any effort or attempt by any other Person to do or seek to do
any of the foregoing. Since June 1, 1999, none of the conduct
prohibited by this sentence has occurred. Intrac shall promptly
communicate to WWWX and Acquisition Sub the terms of any Acquisition
Proposal which any of them or any such other Person may receive.
6.9 NOTICE AND CURE.
Sellers will notify WWWX and Acquisition Sub in writing of, and
contemporaneously will provide WWWX and Acquisition Sub with true and
complete copies of any and all information or documents relating to,
and will use all commercially reasonable efforts to cure before the
Closing, any event, transaction or circumstance, as soon as practicable
after it becomes known to Sellers, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of
Sellers under this Agreement to be breached or that renders or will
render untrue any representation or warranty of Sellers contained in
this Agreement as if the same were made on or as of the date of such
event, transaction or circumstance.
6.10 FULFILLMENT OF CONDITIONS.
Sellers will execute and deliver at the Closing each of the Transaction
Documents that Sellers are required hereby to execute and deliver as a
condition to the Closing, will take all commercially reasonable steps
necessary or desirable and proceed diligently and in good faith to
satisfy each condition to the obligations of WWWX and Acquisition Sub
contained in this Agreement and will not, and will not permit Intrac
to, take or fail to take any action that could reasonably be expected
to result in the nonfulfillment of any such condition.
ARTICLE VII
COVENANTS OF WWWX AND ACQUISITION SUB
Each of WWWX and Acquisition Sub covenants and agrees with Intrac and Sellers
that, at all times from and after the date hereof until the Closing and, with
respect to any covenant or agreement by its terms to be performed in whole or in
part after the Closing, for the period specified therein or, if no period is
specified therein, indefinitely, WWWX and Acquisition Sub will comply with all
covenants and provisions of this ARTICLE VII, except to the extent Sellers may
otherwise consent in writing.
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7.1 REGULATORY AND OTHER APPROVALS.
Each of WWWX and Acquisition Sub will as promptly as practicable (a)
take all commercially reasonable steps necessary or desirable to obtain
all consents, approvals or actions of, make all filings with and give
all notices to Governmental or Regulatory Authorities or any other
Person required of WWWX and Acquisition Sub to consummate the
transactions contemplated hereby and by the Transaction Documents, (b)
provide such other information and communications to such Governmental
or Regulatory Authorities or other Persons as Sellers or such
Governmental or Regulatory Authorities or other Persons may reasonably
request in connection therewith, and (c) cooperate with Sellers and
Intrac in connection with the performance of their obligations under
Sections 6.1 AND 6.2. Each of WWWX and Acquisition Sub will provide
prompt notification to Intrac and the Sellers when any such consent,
approval, action, filing or notice referred to in CLAUSE (A) above is
obtained, taken, made or given, as applicable.
7.2 NOTICE AND CURE.
Each of WWWX and Acquisition Sub will notify Sellers in writing of, and
contemporaneously will provide Sellers with true and complete copies of
any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance, as soon as practicable after it becomes
known to WWWX and Acquisition Sub, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of WWWX
and Acquisition Sub under this Agreement to be breached or that renders
or will render untrue any representation or warranty of WWWX and
Acquisition Sub contained in this Agreement as if the same were made on
or as of the date of such event, transaction or circumstance.
7.3 FULFILLMENT OF CONDITIONS.
Each of WWWX and Acquisition Sub will execute and deliver at the
Closing each of the Transaction Documents that WWWX and Acquisition Sub
is hereby required to execute and deliver as a condition to the
Closing, will take all commercially reasonable steps necessary or
desirable and proceed diligently and in good faith to satisfy each
condition to the obligations of Sellers contained in this Agreement and
will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
7.4 BUSINESS.
Acquisition Sub will continue at least one significant business line of
Intrac, or at least a significant portion of Intrac's historic business
assets in a business, in each case for a period of at least 1 year
following the Closing Date, within the meaning of Treasury Regulation
Section 1.368-1(d).
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7.5 COMPLETION OF DUE DILIGENCE.
WWWX and Acquisition Sub agree to complete their due diligence review
of Intrac no later than July 23, 1999.
7.6 MANAGEMENT OF ACQUISITION SUB.
Acquisition Sub will be managed in accordance with the terms set forth
in the attached Exhibit C.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF WWWX AND ACQUISITION SUB
The obligations of WWWX and Acquisition Sub hereunder to purchase the Shares are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by WWWX and
Acquisition Sub in their sole discretion):
8.1 REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties made by Sellers and Intrac
in this Agreement (other than those made as of a specified date earlier
than the Closing Date) shall be true and correct in all material
respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date, and any representation
or warranty made as of a specified date earlier than the Closing Date
shall have been true and correct in all material respects on and as of
such earlier date.
8.2 PERFORMANCE.
Sellers and Intrac shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by Sellers and
Intrac at or before the Closing.
8.3 SELLERS' CERTIFICATE; OFFICERS' CERTIFICATES.
Sellers shall have delivered to WWWX and Acquisition Sub a certificate,
dated the Closing Date and executed by Sellers stating that their
representations and warranties contained in this Agreement are true and
correct as of the Closing Date and that all of their covenants and
conditions contained in this Agreement have been met or waived, in a
form reasonably satisfactory to WWWX and Acquisition Sub. Intrac shall
have delivered to WWWX and Acquisition Sub a certificate, dated the
Closing Date and executed in the name and on behalf of Intrac by an
authorized officer of Intrac stating that Intrac's representations and
warranties contained in this Agreement are true and correct as of the
Closing Date and that all of its covenants and conditions contained in
this Agreement have been met or waived, in a form reasonably
satisfactory to WWWX and Acquisition Sub, and a certificate, dated the
Closing Date and executed by the Secretary of Intrac attaching Intrac's
organizational documents, resolutions, incumbency certificate and
30
certifying as to the due authorization of the transactions contemplated
by this Agreement, in a form reasonably satisfactory to WWWX and
Acquisition Sub.
8.4 ORDERS AND LAWS.
There shall not be in effect on the Closing Date any Order or Law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement
or any of the Transaction Documents or which could reasonably be
expected to otherwise result in a material diminution of the benefits
of the transactions contemplated by this Agreement or any of the
Transaction Documents to WWWX and Acquisition Sub, and there shall not
be pending or threatened on the Closing Date any Action or Proceeding
in, before or by any Governmental or Regulatory Authority which could
reasonably be expected to result in the issuance of any such Order or
the enactment, promulgation or deemed applicability to WWWX,
Acquisition Sub, Intrac, or the transactions contemplated by this
Agreement or any of the Transaction Documents of any such Law.
8.5 REGULATORY CONSENTS AND APPROVALS.
All consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority necessary to permit WWWX, Intrac,
Acquisition Sub and Sellers to perform their obligations under this
Agreement and the Transaction Documents and to consummate the
transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall be in form and substance reasonably
satisfactory to WWWX and Acquisition Sub, (c) shall not be subject to
the satisfaction of any condition that has not been satisfied or
waived, and (d) shall be in full force and effect, and all terminations
or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Transaction Documents shall have
occurred.
8.6 THIRD PARTY CONSENTS.
At or prior to Closing, all consents (or in lieu thereof waivers) to
the performance by WWWX, Intrac, Acquisition Sub and Sellers of their
obligations under this Agreement and the Transaction Documents or to
the consummation of the transactions contemplated hereby and thereby as
are required under any Contract to which WWWX, Acquisition Sub, Sellers
or Intrac is a party or by which any of their respective Assets and
Properties are bound (a) shall have been obtained, (b) shall be in form
and substance reasonably satisfactory to WWWX, Acquisition Sub, Seller
or Intrac, as the case may be, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived,
and (d) shall be in full force and effect, except where the failure to
obtain any such consent (or in lieu thereof waiver) could not
reasonably be expected, individually or in the aggregate with other
such failures, to materially adversely affect WWWX or Acquisition Sub
or the Business or Condition of Intrac or otherwise result in a
material diminution of the benefits of the transactions contemplated by
this Agreement and the Transaction Documents to WWWX and Acquisition
Sub.
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8.7 PROCEEDINGS.
All proceedings to be taken on the part of Sellers and Intrac in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to WWWX and Acquisition Sub, and WWWX and Acquisition Sub
shall have received copies of all such documents and other evidences as
WWWX and Acquisition Sub may reasonably request in order to establish
the consummation of such transactions and the taking of all proceedings
in connection therewith.
8.8 OPINION OF COUNSEL.
WWWX and Acquisition Sub shall have received an opinion of counsel to
Sellers and Intrac, dated the Closing Date, in a form reasonably
satisfactory to WWWX and Acquisition Sub.
8.9 OTHER TRANSACTION DOCUMENTS.
WWWX, Acquisition Sub, Sellers and Intrac, as the case may be, shall
have executed and delivered the Employment Agreements and the Amended
and Restated ATM Service, Ltd. Shareholders Agreement.
8.10 COMPLETION OF DUE DILIGENCE.
WWWX and Acquisition Sub shall have completed their due diligence
review of Intrac and the transactions contemplated by this Agreement to
their satisfaction.
8.11 SCHEDULES.
Intrac and Sellers shall have attached and/or amended the schedules to
this Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLERS AND INTRAC
The obligations of Sellers hereunder to sell the Shares are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Sellers in their sole
discretion):
9.1 REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties made by WWWX and Acquisition
Sub in this Agreement (other than those made as of a specified date
earlier than the Closing Date) shall be true and correct in all
material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date, and
any
32
representation or warranty made as of a specified date earlier than the
Closing Date shall have been true and correct in all material respects
on and as of such earlier date.
9.2 PERFORMANCE.
WWWX and Acquisition Sub shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by WWWX and
Acquisition Sub at or before the Closing.
9.3 OFFICERS' CERTIFICATES.
Each of WWWX and Acquisition Sub shall have delivered to Sellers a
certificate, dated the Closing Date and executed in the name and on
behalf of each of WWWX and Acquisition Sub by an authorized officer of
each of WWWX and Acquisition Sub stating that each of their
representations and warranties contained in this Agreement are true and
correct as of the Closing Date and that all of its covenants and
conditions contained in this Agreement have been met or waived, in a
form reasonably satisfactory to Sellers and Intrac, and a certificate,
dated the Closing Date and executed by the Secretary of each of WWWX
and Acquisition Sub attaching each of their organizational documents,
resolutions, incumbency certificate and certifying as to the due
authorization by each of the transactions contemplated by this
Agreement, in a form reasonably satisfactory to Sellers and Intrac.
9.4 ORDERS AND LAWS.
There shall not be in effect on the Closing Date any Order or Law
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement
or any of the Transaction Documents.
9.5 REGULATORY CONSENTS AND APPROVALS.
All consents, approvals and actions of, filings with and notices to any
Governmental or Regulatory Authority necessary to permit Sellers and
Acquisition Sub to perform their obligations under this Agreement and
the Transaction Documents and to consummate the transactions
contemplated hereby and thereby (a) shall have been duly obtained, made
or given, (b) shall be in form and substance reasonably satisfactory to
Sellers, (c) shall not be subject to the satisfaction of any condition
that has not been satisfied or waived, and (d) shall be in full force
and effect, and all terminations or expirations of waiting periods
imposed by any Governmental or Regulatory Authority necessary for the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents shall have occurred.
THIRD PARTY CONSENTS.
All consents (or in lieu thereof waivers) to the performance by
Sellers, WWWX and Acquisition Sub of their obligations hereunder and to
the consummation of the transactions contemplated hereby as are
required hereunder (a) shall have been obtained, (b) shall be in form
and substance reasonably satisfactory to Sellers, (c) shall not be
33
subject to the satisfaction of any condition that has not been
satisfied or waived, and (d) shall be in full force and affect.
9.7 OPINION OF COUNSEL.
Sellers shall have received an opinion of counsel to WWWX and
Acquisition Sub, dated the Closing Date, and in a form reasonably
satisfactory to Sellers and Intrac.
9.8 PROCEEDINGS.
All proceedings to be taken on the part of WWWX and Acquisition Sub in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Sellers, and Sellers shall have received copies of all
such documents and other evidences as Sellers may reasonably request in
order to establish the consummation of such transactions and the taking
of all proceedings in connection therewith.
9.9 OTHER TRANSACTION DOCUMENTS.
WWWX, Acquisition Sub, Sellers and Intrac, as the case may be, shall
have executed and delivered the Employment Agreements and the Amended
and Restated ATM Service, Ltd. Shareholders Agreement.
9.10 TAX FREE EXCHANGE.
Sellers and Intrac shall have received reasonable evidence that the
transactions evidenced by this Agreement, including, without
limitation, the Merger, shall be accorded tax free exchange status
under Section 368(a) of the Internal Revenue Code, as amended.
ARTICLE X
TAX MATTERS AND POST-CLOSING TAXES
10.1 TRANSFER TAXES.
WWWX and Acquisition Sub shall pay all sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar
taxes and fees (collectively, "TRANSFER TAXES") arising out of or in
connection with the transactions effected pursuant to this Agreement,
and shall indemnify, defend, and hold harmless Sellers and Intrac with
respect to such Transfer Taxes. WWWX and Acquisition Sub shall timely
file all necessary documentation and Tax Returns with respect to such
Transfer Taxes and shall provide reasonable evidence no later than the
Closing Date that any such Transfer Taxes have been provided for.
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10.2 TAX COOPERATION.
After the date hereof, Sellers, WWWX, Acquisition Sub and Intrac will
cooperate in the preparation of all Tax Returns and will provide to
each other (or cause to be provided) any records and other information
requested, and will provide access to, and the cooperation of their
respective auditors, and will cooperate with each other in connection
with any Tax investigation, audit or other processing.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
The representations, warranties, covenants and agreements of Sellers,
WWWX, Acquisition Sub and Intrac contained in this Agreement will
survive the Closing: (a) until the expiration of the applicable
statutes of limitation with respect to matters covered by SECTION 4.3;
and (b) for 18 months after the Closing Date in the case of all other
representations and warranties and any covenant or agreement to be
performed in whole or in part on or prior to the Closing; and (c) with
respect to each other covenant or agreement contained in this
Agreement, until 60 days following the last date on which such covenant
or agreement is to be performed or, if no such date is specified, the
date that is two years after the Closing Date, PROVIDED, HOWEVER, that
any representation, warranty, covenant or agreement that would
otherwise terminate in accordance with clauses (a), (b) or (c) above
will continue to survive if a Claim Notice or Indemnity Notice (as
applicable) shall have been timely given under ARTICLE XII on or prior
to such termination date, until the related claim for indemnification
has been satisfied or otherwise resolved as provided in ARTICLE XII.
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION.
(a) Subject to the other SECTIONS of this ARTICLE XII, Sellers
shall, severally (pro rata based upon the allocation of the
Merger Consideration to Sellers as set forth on SCHEDULE 3.2),
and not jointly, indemnify the WWWX Indemnified Parties in
respect of, and hold each of them harmless from and against,
any and all Losses suffered, incurred or sustained by any of
them or to which any of them becomes subject, resulting from,
arising out of or relating to any material breach of any
representation or warranty in this Agreement, in any Schedule
or certificate delivered in connection with this Agreement and
the other documents and agreements delivered in connection
with this Agreement or any nonfulfillment of or failure to
perform any material covenant or agreement on the part of
Sellers contained in this Agreement.
35
(b) Subject to the other Sections of this ARTICLE XII, WWWX and
Acquisition Sub shall jointly and severally indemnify the
Seller Indemnified Parties in respect of, and hold each of
them harmless from and against, any and all Losses suffered,
incurred or sustained by any of them or to which any of them
becomes subject, resulting from, arising out of or relating to
any breach of any material representation or warranty of WWWX
or Acquisition Sub in this Agreement, in any Schedule or
Certificate delivered in connection with this Agreement and
the other documents and agreements delivered in connection
with this Agreement or any nonfulfillment of or failure to
perform any material covenant or agreement on the part of WWWX
or Acquisition Sub contained in this Agreement, including
without limitation the breach of any warranty, representation
and/or covenant of WWWX and/or Acquisition Sub contained in
this Agreement which causes the Merger not to qualify as a tax
free reorganization under Section 368 of the Code for which
Losses shall include any and all income taxes, interest and
penalties which become due and payable as a result of Sellers'
recognition of capital gain in connection with the WWWX Shares
received by the Sellers as a part of the Merger Consideration,
as well as any and all damages, costs and expenses, including
reasonable attorneys' fees suffered, sustained or incurred by
the Sellers as a result thereof or in connection therewith.
(c) Notwithstanding Subsections (a) and (b) above, the WWWX
Indemnified Parties shall not be entitled to indemnification
under this ARTICLE XII until such parties' Losses in the
aggregate are equal to an amount in excess of $100,000, and
only then for those amounts in excess of $100,000.
12.2 METHOD OF ASSERTING CLAIMS.
All claims for indemnification by any Indemnified Party will be
asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 12.1 is
asserted against or sought to be collected from such
Indemnified Party by a third party (a "THIRD PARTY CLAIM"),
the Indemnified Party shall deliver a Claim Notice with
reasonable promptness to the Indemnifying Party. If the
Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives
notice of such Third Party Claim, the Indemnifying Party will
not be obligated to indemnify the Indemnified Party with
respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably
prejudiced by such failure of the Indemnified Party. The
Indemnifying Party will notify the Indemnified Party as soon
as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the
Indemnified Party under Section 12.1 and whether the
Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party
Claim.
i. If the Indemnifying Party notifies the Indemnified
Party within the Dispute Period that the Indemnifying
Party desires to defend the Indemnified Party
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with respect to the Third Party Claim pursuant to
this 12.2(a), then the Indemnifying Party will have
the right to defend, with counsel reasonably
satisfactory to the Indemnified Party, at the sole
cost and expense of the Indemnifying Party, such
Third Party Claim by all appropriate proceedings,
which proceedings will be vigorously and diligently
prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of
the Indemnifying Party (but only with the consent of
the Indemnified Party, which consent will not be
unreasonably withheld, in the case of any settlement
that provides for any relief other than the payment
of monetary damages as to which the Indemnified Party
will be indemnified in full). The Indemnifying Party
will be deemed to have waived its right to dispute
its liability to the Indemnified Party under Section
12.1 with respect to any Third Party Claim as to
which it elects to control the defense. The
Indemnifying Party will have full control of such
defense and proceedings, including (except as
provided in the immediately preceding sentence) any
settlement thereof; PROVIDED, HOWEVER, that the
Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice referred
to in the first sentence of this clause (i), file any
motion, answer or other pleadings or take any other
action that the Indemnified Party reasonably believes
to be necessary or appropriate to protect its
interests; and PROVIDED FURTHER, that if requested by
the Indemnifying Party, the Indemnified Party will,
at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to contest.
The Indemnified Party may retain separate counsel to
represent it in, but not control, any defense or
settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this clause (i), and
the Indemnified Party will bear its own costs and
expenses with respect to such separate counsel,
except as provided in the preceding sentence and
except that the Indemnifying Party will pay the costs
and expenses of such separate counsel if (x) in the
Indemnified Party's good faith judgment, it is
advisable, based on advice of counsel, for the
Indemnified Party to be represented by separate
counsel because a conflict or potential conflict
exists between the Indemnifying Party and the
Indemnified Party which makes representation of both
parties inappropriate under applicable standards of
professional conduct or (y) the named parties to such
Third Party Claim include both the Indemnifying Party
and the Indemnified Party and the Indemnified Party
determines in good faith, based on advice of counsel,
that defenses are available to it that are
unavailable to the Indemnifying Party.
Notwithstanding the foregoing, the Indemnified Party
may retain or take over the control of the defense or
settlement of any Third Party Claim the defense of
which the Indemnifying Party has elected to control
if the Indemnified Party irrevocably waives its right
to indemnity under Section 12.1 with respect to such
Third Party Claim.
37
ii. If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the
Indemnifying Party desires to defend the Third Party
Claim pursuant to Section 12.2(a), or if the
indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the
Third Party Claim, then the Indemnified Party will
have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which
proceedings will be prosecuted by the Indemnified
Party in good faith or will be settled at the
discretion of the Indemnified Party (with the consent
of the Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will
have full control of such defense and proceedings,
including (except as provided in the immediately
preceding sentence) any settlement thereof; PROVIDED,
HOWEVER, that if requested by the Indemnified Party,
the Indemnifying Party will, at the sole cost and
expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnified Party and its counsel
in contesting any Third Party Claim which the
Indemnified Party is contesting. Notwithstanding the
foregoing provisions of this clause (ii), if the
Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party
disputes its liability hereunder to the Indemnified
Party with respect to such Third Party Claim and if
such dispute is resolved in favor of the Indemnifying
Party in the manner provided in clause (iii) below,
the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's
defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified
Party will reimburse the Indemnifying Party in full
for all reasonable costs and expenses incurred by the
Indemnifying Party in connection with such
litigation. The Indemnifying Party may retain
separate counsel to represent it in, but not control,
any defense or settlement controlled by the
Indemnified Party pursuant to this clause (ii), and
the Indemnifying Party will bear its own costs and
expenses with respect to such participation.
iii. If the Indemnifying Party notifies the Indemnified
Party that it does not dispute its liability to the
Indemnified Party with respect to the Third Party
Claim under Section 12.1, the Loss arising from such
Third Party Claim will be conclusively deemed a
liability of the Indemnifying Party under Section
12.1 and the Indemnifying shall pay the amount of
such Loss to the Indemnified Party within 10 days of
demand therefor following the final determination
thereof. If the Indemnifying Party disputes its
liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will
proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through
negotiations within the Resolution Period, such
dispute shall be resolved by litigation in a court of
competent jurisdiction.
(b) In the event any Indemnified Party should have a claim under
Section 12.1 against any Indemnifying Party that does not
involve a Third Party Claim, the Indemnified
Party shall deliver an Indemnity Notice with reasonable
promptness to the
38
Indemnifying Party. The failure by any Indemnified Party to
give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that an Indemnifying Party
demonstrates that it has been irreparably prejudiced thereby.
If the Indemnifying Party notifies the Indemnified Party that
it does not dispute the claim described in such Indemnity
Notice, the Loss arising from the claim specified in such
Indemnity Notice will be conclusively deemed a liability of
the Indemnifying Party under Section 12.1 and the Indemnifying
Party shall pay the amount of such Loss to the Indemnified
Party within 10 days of demand therefor following the final
determination thereof. If the Indemnifying Party disputes its
liability with respect to such claim, the Indemnifying Party
and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved
through negotiations within the Resolution Period, such
dispute shall be resolved by litigation in a court of
competent jurisdiction.
(c) The indemnification remedies provided in this Agreement shall
be exclusive of any other remedies that may be available to
the Parties. For purposes of the indemnification provisions
hereunder, WWWX and Acquisition Sub shall each have the right
of setoff with respect to each Seller's shareholdings in WWWX
or ATM. Such right of setoff must be exercised at the
respective fair market value of respective shares and may only
be exercised 10 days after a demand for indemnification has
been unfulfilled.
ARTICLE XIII
TERMINATION
13.1 TERMINATION.
This Agreement may be terminated, and the transactions contemplated
hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
Sellers, WWWX, Acquisition Sub and Intrac;
(b) at any time before the Closing, by Sellers and Intrac, on the
one hand, or WWWX and Acquisition Sub, on the other hand, (i)
in the event of a material breach hereof by the
non-terminating party if such non-terminating party fails to
cure such breach within five (5) Business Days following
notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating
party that the satisfaction of any condition to the
terminating party's obligations under this Agreement becomes
impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be
satisfied is not caused by a breach hereof by the terminating
party; or
(c) at any time after August 31, 1999 by Sellers and Intrac, on
the one hand or WWWX and Acquisition Sub, on the other hand,
upon notification of the non-terminating party by the
terminating party if the Closing shall not have occurred
39
on or before such date and such failure to consummate is not
caused by a breach of this Agreement by the terminating party.
13.2 EFFECT OF TERMINATION.
If this Agreement is validly terminated pursuant to SECTION 13.1, this
Agreement will forthwith become null and void, and there will be no
liability or obligation on the part of Sellers, Intrac, WWWX or
Acquisition Sub (or any of their respective officers, directors,
employees, agents or other representatives or Affiliates), except as
provided in the next succeeding sentence and except that the provisions
with respect to expenses in SECTION 14.5, shall continue to apply
following any such termination. Notwithstanding any other provision in
this Agreement to the contrary, upon termination of this Agreement
pursuant to SECTION 13.1 (B) OR (C), Sellers and Intrac will remain
liable to WWWX and Acquisition Sub for any willful breach of this
Agreement by Sellers existing at the time of such termination, WWWX and
Acquisition Sub will remain liable to Sellers and Intrac for any
willful breach of this Agreement by WWWX and Acquisition Sub existing
at the time of such termination, and Sellers and Intrac or WWWX and
Acquisition Sub may seek such remedies, including damages and fees of
attorneys, against the other with respect to any such breach as are
provided in this Agreement or as are otherwise available at Law or in
equity.
ARTICLE XIV
MISCELLANEOUS
14.1 NOTICES.
All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission (receipt of which is confirmed
by an officer of the receiving party) or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile
numbers:
(a) If to WWWX or Acquisition Sub, to:
00 Xxxxxxxxxx Xxxx, Xxxx 00
Xxxxxx Xxxx, XX 00000
Facsimile No.: 609. 627.6893
Attn: Xx. Xxxxxx X. Xxxx, President and CEO
With a copy to:
Xxxxxxxxx, Goss, Schleifer, Eisenberg, Winkler, Xxxxxxxxxx &
Xxxxxxx, P.C.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX
Facsimile No.: 000-000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
40
(b) If to Intrac or the Sellers, to:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to:
Astor, Weiss, Xxxxxx & Xxxxxxxxx, LLP
The Bellevue, Sixth Floor
Broad Street at Walnut
Xxxxxxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: G. Xxxxx Xxxxxxxxx, Esq.
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section 14.1 be
deemed given upon delivery, (ii) if delivered by facsimile transmission
to the facsimile number as provided in this Section 14.1, be deemed
given upon receipt of confirmation by an officer of the receiving
party, and (iii) if delivered by mail in the manner described above to
the address as provided in this Section 14.1, be deemed given upon
receipt (in each case regardless of whether such notice, request or
other communication is received by any other Person to whom a copy of
such notice, request or other communication is to be delivered pursuant
to this Section 14.1. Any party from time to time may change its
address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the
other parties hereto.
14.2 COVENANTS AGAINST COMPETITION. Intrac and the Sellers acknowledge that
WWWX and Acquisition Sub would not purchase the Shares but for the
agreements and covenants of the Sellers (the "COVENANTORS").
Accordingly, each of the Covenantors, jointly and severally, covenants
and agrees as follows:
(a) COVENANT NOT TO COMPETE. Such Covenantors shall not at any
time for a period of 5 years after Closing (the "RESTRICTED
PERIOD") have any ownership interest (of record or beneficial)
in, or have any interest as an employee, salesman, consultant,
officer or director in, or otherwise aid or assist in any
manner, (i) any firm, corporation, partnership, proprietorship
or other business that engages in a business which is similar
to the Business of Intrac so long as WWWX, Acquisition Sub or
ATM (collectively the "WWWX PARTIES") or any successor in
interest to the Business remains actively engaged in the
Business; provided, however, that any such Covenantors may
own, directly or indirectly, solely as an investment, stock in
a corporation sold on a securities exchange if such
Covenantors (i) are not a controlling person of, or a member
of a group which controls, such Person or (ii) does not,
directly or indirectly own one percent or more of any class of
securities of such Person.
41
I. SOLICITATION OF BUSINESS. During the Restricted
Period, such Covenantors shall not solicit or accept
or assist any other person to solicit or accept any
business which is the same or substantially similar
to the Business (other than for the WWWX Parties)
from any present or past customer of the Business; or
request or advise any present or future customer of
the Business to withdraw, curtail or cancel its
business dealings with the WWWX Parties or any
successor to the WWWX Parties; or commit any other
act or assist others to commit any other act which
might injure the Business. For purposes of this
SECTION 14.2, present or past customer means a
customer that has transacted business with
Acquisition Sub, Intrac or WWWX, or any of their
affiliates or subsidiaries within the previous two
years.
II. EMPLOYEES. During the Restricted Period, such
Covenantors shall not directly or indirectly (i)
solicit or encourage any employee of the Business to
leave the employment of the WWWX Parties or (ii) hire
any employee who has left the employment of the WWWX
Parties or any successor to the WWWX Parties if such
hiring is proposed to occur within one year after the
termination of such employee's employment with the
WWWX Parties or any successor to the WWWX Parties;
III. CONSULTANTS. During the Restricted Period, such
Covenantors shall not directly or indirectly solicit
or encourage any consultant then under contract with
the WWWX Parties to cease work with such entity.
IV. CONFIDENTIAL INFORMATION. From and after the Closing
Date, such Covenantors shall keep secret and retain
in strictest confidence, and shall not use for the
benefit of such Covenantors or any Person other than
the WWWX Parties all confidential matters and trade
secrets known to them relating to the Business,
including, without limitation, customer lists,
pricing policies, operational methods, marketing
plans or strategies, product development techniques
or plans, business acquisition plans, new personnel
acquisition plans, the software, technical processes,
designs and design projects, invention and research
projects and other business affairs relating to the
Business learned by the Covenantors heretofore or
hereafter, and shall not disclose them to anyone
outside of the WWWX Parties and any successors to the
WWWX Parties except upon the WWWX Parties' express
written consent.
V. RIGHTS AND REMEDIES UPON BREACH. If any Covenantor
breaches, or threatens to commit a breach of any of
the provisions of the restrictive covenants contained
in this Section, the WWWX Parties shall have the
following rights and remedies, each of which rights
and remedies shall be in addition to, and not in lieu
of, any other rights and remedies available to the
WWWX Parties at law or in equity;
42
VI. SPECIFIC PERFORMANCE. The WWWX Parties shall have the
right to seek to have the covenants specifically
enforced by any court having equity jurisdiction, all
without the need to prove any amount of actual
damage, it being acknowledged and agreed that any
such breach or threatened breach will cause
irreparable injury to the WWWX Parties and that
monetary damages will not provide an adequate remedy
to the WWWX Parties; and
VII. ACCOUNTING AND INDEMNIFICATION. The right and remedy
to require such Covenantors (i) to account for and
pay over to the WWWX Parties all compensation,
profits, monies, accruals, increments or other
benefits derived by such Covenantors or any
associated party deriving such benefits as a result
of any such breach of the covenants; and (ii) to
indemnify the WWWX Parties against any other losses,
damages, including special and consequential damages,
costs and expenses, including actual attorneys fees
and court costs, which may be incurred by them and
which result from or arise out of any such breach or
threatened breach of the covenants.
(b) SEVERABILITY OF COVENANTS. If any court determines that any of
the covenants, or any part thereof, is invalid or
unenforceable, the remainder of the covenants shall not
thereby be affected and shall be given full effect, without
regard to the invalid portions. If any court determines that
any of the covenants, or any part thereof, is unenforceable
because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the
duration or area of such provision and, in its reduced form,
such provision shall then be enforceable and shall be
enforced. Such Convenantors hereby waive any and all right to
attack the validity of the covenants on the grounds of the
breadth of their geographic scope or the length of their term.
(c) ENFORCEABILITY IN JURISDICTION. The Covenantors and the WWWX
Parties intend to and do hereby confer jurisdiction to enforce
the covenants upon the courts of any jurisdiction within the
geographical scope of such covenants and in which the WWWX
Parties are conducting the Business. If the courts of any one
or more of such jurisdictions hold the covenants wholly
unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the Covenantors and the WWWX
Parties that such determination not bar or in any way affect
the right of the WWWX Parties to the relief provided above in
the courts of any other jurisdiction within the geographical
scope of such covenants, as to breaches of such covenants in
such other respective jurisdictions, such covenants as they
relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.
(d) DEFINITIVE NON-COMPETITION AGREEMENT; INVENTION AND
CONFIDENTIALITY AGREEMENT. To give full effect to the
provisions of this Section, such Covenantors shall deliver to
the WWWX Parties at the Closing a definitive Non-Competition
Agreement containing, among other things, specific
descriptions of the types of
43
business activities and the geographic areas to be covered by
the covenants, and otherwise in a form provided by the WWWX
Parties. Furthermore, such Covenantors shall also deliver to
the WWWX Parties at the Closing a definitive Employee
Invention and Confidentiality Agreement, whereby such
Covenantor, among other things, (i) agrees to hold in
strictest confidence all confidential proprietary information
and trade secrets of the Business which are in his possession
or known to him and (ii) agrees that all inventions (the
software) conceived by him while engaged as an employee or
independent contractor of the WWWX Parties are the exclusive
property of the WWWX Parties. Notwithstanding the foregoing,
however, neither the failure of such Covenantors to deliver
either of such agreements nor the failure of the WWWX Parties
to require the same shall otherwise affect the enforceability
of the covenants. Notwithstanding anything contained herein to
the contrary, the restrictive covenants contained in this
Section 14.2 shall not apply to a Seller in the event of a
material breach of this Agreement by any of the WWWX Parties
or in the event that Acquisition Sub or ATM terminates the
employment agreement with such Seller without cause (as
defined therein) or in the event that such Seller terminates
said employment agreement as a result of a material breach
which is not cured within the cure period provided therein.
14.3 SCHEDULES.
Any schedules referenced in this Agreement that are not attached to and
made a part of this Agreement at the time of execution of this
Agreement shall be added prior to Closing, and when added shall be made
a part of this Agreement.
14.4 ENTIRE AGREEMENT.
This Agreement and the Transaction Documents supersede all prior
discussions and agreements between the parties with respect to the
subject matter hereof and thereof, and contain the sole and entire
agreement between the parties hereto with respect to the subject matter
hereof and thereof.
14.5 EXPENSES.
Except as otherwise expressly provided in this Agreement, whether or
not the transactions contemplated hereby are consummated, each of WWWX
and Acquisition Sub will pay its own costs and expenses, and Intrac and
Sellers will pay their own costs and expenses in connection with the
negotiation, execution and closing of this Agreement and the
Transaction Documents and the transactions contemplated hereby and
thereby.
14.6 PUBLIC ANNOUNCEMENTS.
At all times at or before the Closing, Sellers, Intrac, WWWX and
Acquisition Sub will not issue or make any reports, statements or
releases to the public with respect to this Agreement or the
transactions contemplated hereby without the consent of the others,
which consent shall not be unreasonably withheld. If any party is
unable to obtain the
44
approval of its public report, statement or release from the other
parties and such report, statement or release is, in the opinion of
legal counsel to such party, required by Law in order to discharge such
party's disclosure obligations, then such party may make or issue the
legally required report, statement or release and promptly furnish the
other parties with a copy thereof. Sellers, WWWX and Acquisition Sub
will also obtain the other party's prior approval of WWWX of any press
release to be issued immediately following the Closing announcing the
consummation of the transactions contemplated by this Agreement.
14.7 WAIVER.
Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition.
No waiver by any party of any term or condition of this Agreement, in
any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on
any future occasion. All remedies, either under this Agreement or by
Law or otherwise afforded, will be cumulative and not alternative.
14.8 AMENDMENT.
This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each party hereto.
14.9 NO THIRD PARTY BENEFICIARY.
The terms and provisions of this Agreement are intended solely for the
benefit of each party hereto and their respective heirs, executors,
administrators, personal representatives, successors or permitted
assigns, and it is not the intention of the parties to confer
third-party beneficiary rights upon any other Person other than any
Person entitled to indemnity under ARTICLE XII.
14.10 NO ASSIGNMENT; BINDING EFFECT.
Neither this Agreement nor any right, interest or obligation hereunder
may be assigned by any party hereto without the prior written consent
of all other parties hereto and any attempt to do so will be void,
except (a) for assignments and transfers by operation of Law and (b)
that WWWX and Acquisition Sub may assign any or all of its rights,
interests and obligations hereunder to a wholly-owned subsidiary,
provided that any such subsidiary agrees in writing to be bound by all
of the terms, conditions and provisions contained herein, and provided
that WWWX and Acquisition Sub shall remain fully liable for the
satisfaction of the obligations of such subsidiary. Subject to the
preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
45
14.11 HEADINGS.
The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.
INVALID PROVISIONS.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future Law, and if the rights or
obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never comprised
a part hereof, and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance
herefrom.
GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to a Contract executed and
performed in such state, without giving effect to the conflicts of laws
principles thereof.
COUNTERPARTS.
This Agreement may be executed in any number of counterparts (including
by way of facsimile), each of which will be deemed an original, but all
of which together will constitute one and the same instrument.
THE NEXT PAGE IS THE SIGNATURE PAGE
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The parties have executed this Agreement on the date first above written.
WWWX:
WORLDWIDE WEB NETWORX CORPORATION
By /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx
Title: President and Chief
Executive Officer
ACQUISITION SUB:
INTRAC ACQUISITION CORPORATION
By /s/ XXXXXX X. XXXX
---------------------------------
Name: Xxxxxx X. Xxxx
Title: President
INTRAC:
THE INTRAC GROUP
By /s/ XXXXXX X XXXXXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman and Chief
Executive Officer
By /s/ XXXX X. XXXX
---------------------------------
Name: Xxxx X. Xxxx
Title: President and Chief
Operating Officer
SELLERS:
/s/ XXXXXX X. XXXXXXXXX
------------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ XXXX X. XXXX
------------------------------------
Xxxx X. Xxxx
