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EXHIBIT 2.6
AGREEMENT AND PLAN OF MERGER
by and among
PET QUARTERS, INC.
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
PQ ACQUISITION COMPANY III, INC.
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
AND
XXXXXXX.XXX, INC.
000 Xxxx 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER................................................................................. 1
1.1. The Merger........................................................................ 1
1.2. Conversion of Shares.............................................................. 1
1.3. Surrender of Certificates: Payment of Merger Consideration: Dissenting
Shares............................................................................ 2
1.4. Closing........................................................................... 3
ARTICLE II THE SURVIVING CORPORATION.................................................................. 3
2.1. Certificate of Incorporation...................................................... 3
2.2. Bylaws............................................................................ 3
2.3. Board of Directors................................................................ 4
2.4. Officers.......................................................................... 4
ARTICLE III WARRANTIES OF THE COMPANY.................................................................. 4
3.1. Company's Organization and Good Standing.......................................... 4
3.2. Power and Authority: Execution and Delivery....................................... 4
3.3. Capitalization and Voting Rights.................................................. 4
3.4. Subsidiaries...................................................................... 5
3.5. Valid Issuance of Company Shares: Ownership of Company Shares..................... 5
3.7. No Undisclosed Liabilities........................................................ 5
3.8. Absence of Certain Changes: Agreements with Affiliates............................ 6
3.9. Governmental Approvals and Filings................................................ 7
3.10. Litigation........................................................................ 7
3.11. Compliance with Law............................................................... 7
3.12. Permits: Compliance............................................................... 7
3.13. Proprietary Rights................................................................ 8
3.14. No Conflict....................................................................... 9
3.15. Material Contracts................................................................ 9
3.16. Employee Benefit Plans: Labor Matters............................................. 10
3.17. Tax Matters....................................................................... 10
3.18. Minute Books...................................................................... 11
3.19. Certain Interests................................................................. 11
3.20. Insurance......................................................................... 11
3.21. Brokers and Finders............................................................... 12
3.22. Registration Statement............................................................ 12
3.23. Personnel......................................................................... 12
3.24. Assets............................................................................ 12
3.25. Condition and Operation of the Assets............................................. 12
3.26. Knowledge......................................................................... 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE MERGER SUBSIDIARY......................... 12
4.1. Parent's and Merger Subsidiary's Organization and Good Standing................... 13
4.2. Power and Authority: Execution and Delivery....................................... 13
4.3. Governmental Approvals and Filings................................................ 13
4.4. No Conflict....................................................................... 13
4.5. Merger Consideration.............................................................. 13
4.6 Capitalization.................................................................... 13
4.7. Reports and Financial Statements.................................................. 14
4.8. No Undisclosed Liabilities........................................................ 14
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4.9. Absence of Certain Changes or Events................................................ 15
4.10. Compliance with Laws................................................................ 15
4.11. Litigation.......................................................................... 15
4.12. Ownership of Merger Subsidiary...................................................... 15
4.13. Articles of Incorporation and Bylaws................................................ 15
4.14. No Prior Activities................................................................. 15
4.15. Brokers and Finders................................................................. 16
4.16. Permits: Compliance................................................................. 16
4.17. Taxes............................................................................... 16
4.18. Proprietary Rights.................................................................. 16
ARTICLE V COVENANTS OF THE COMPANY..................................................................... 17
5.1. Regular Course of Business: Restricted Activities and Transactions.................. 17
5.2. Access to Books, Records and Other Information...................................... 17
5.3. Notice of Developments.............................................................. 17
5.4. No Solicitation or Negotiation...................................................... 17
5.5. Preservation of Tax-Free Merger..................................................... 18
ARTICLE VI COVENANTS OF PARENT.......................................................................... 18
6.1. Preservation of Tax - Free Merger................................................... 18
6.2. Certain Employee Matters............................................................ 18
6.3. Access to Information............................................................... 18
6.4. Notice of Developments.............................................................. 18
6.5. Maintenance of Los Angeles Office................................................... 18
ARTICLE VII MUTUAL COVENANTS............................................................................. 18
7.1. Payment of Expenses................................................................. 18
7.2. Public Announcements................................................................ 18
7.3. Further Action...................................................................... 19
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF PARENTS......................................................... 19
8.1. Representations and Warranties True................................................. 19
8.2. Performance of Covenants............................................................ 19
8.3. Opinion of Counsel.................................................................. 19
8.4. No Governmental or Other Proceeding or Litigation................................... 19
8.5. Certificate of the Company.......................................................... 19
8.6. No Material Adverse Effect.......................................................... 19
8.7. Certificate of Merger............................................................... 19
8.8. Employment Agreements............................................................... 20
8.9. Shareholder Consent................................................................. 20
ARTICLE IX CONDITIONS TO OBLIGATIONS OF THE COMPANY..................................................... 20
9.1. Representations and Warranties True................................................. 20
9.2. Performance of Covenants............................................................ 20
9.3. No Governmental or Other Proceeding or Litigation................................... 20
9.4. Certificate of Parent and the Merger Subsidiary..................................... 20
9.5. Certificate of Merger............................................................... 20
9.6. No Material Adverse Effect.......................................................... 20
9.7. Employment Agreements............................................................... 20
9.8. Opinion of Counsel.................................................................. 20
ARTICLE X SURVIVAL AND INDEMNIFICATION................................................................. 21
10.1. Survival of Representations and Warranties.......................................... 21
10.2. Indemnification by the Company Shareholders......................................... 21
10.3. Indemnification by Parent........................................................... 21
10.4. Indemnification Procedures.......................................................... 21
10.5. Limit on Indemnification............................................................ 22
10.6. Treatment of Indemnification Parents................................................ 22
10.7. Sole Remedy......................................................................... 22
ARTICLE XI TERMINATION.................................................................................. 22
11. 1. Termination......................................................................... 22
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11.2. Effect of Termination............................................................... 23
ARTICLE XII POST CLOSING COVENANTS....................................................................... 23
12.1. NASDAQ Small Cap Listing............................................................ 23
12.2. Share Price Achievement............................................................. 23
12.3. Covenant Restriction................................................................ 23
12.4. Current Registration................................................................ 23
12.5. Future Registration................................................................. 25
ARTICLE XIII MISCELLANEOUS PROVISIONS..................................................................... 25
13.1. Notices, Etc........................................................................ 25
13.2. Survival Of Representations and Warranties......................................... 26
13.3. Entire Agreement; Amendment......................................................... 26
13.4. Individual Provisions............................................................... 26
13.5. Press Releases...................................................................... 26
13.6. Governing Law: Consent to Jurisdiction; Venue; Waiver of Jury Trial................. 26
13.7. Specific Performance................................................................ 27
13.8. General............................................................................. 27
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER. dated as of May 30, 2000 by and among Pet
Quarters, Inc., an Arkansas corporation ("PARENT"), PQ Acquisition Company III,
Inc., a Delaware corporation and a wholly owned subsidiary of Parent (the
"MERGER SUBSIDIARY"), and Xxxxxxx.xxx, Inc., a Delaware corporation (the
"COMPANY").
WHEREAS, Parent desires to acquire the Company, and the Company desires
that Parent acquire the Company by a statutory merger of the Company and the
Merger Subsidiary, all on the terms and conditions set forth in this Agreement
(the "MERGER"); and
WHEREAS, Parent and the Company desire that the Merger qualify as a tax
free reorganization under Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "CODE"), and that this Agreement shall constitute a "plan of
reorganization" within the meaning of Section 368 of the Code and the Treasury
regulations promulgated thereunder (the "REGULATIONS"); and
WHEREAS, all of the shareholders of the Company, as listed on Exhibit A
hereto (the "SHAREHOLDERS"), have and will consent to and approve the Merger and
the related transactions contemplated hereby; and
WHEREAS, the Boards of Directors of the Company, Parent and the Merger
Subsidiary have approved and adopted, at meetings of each of such Boards of
Directors, this Agreement and have authorized its execution, and the
Shareholders have consented to and voted in favor of the approval and adoption
of this Agreement and the Merger.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and the mutual covenants, agreements, representations,
warranties, conditions and promises hereinafter contained, the parties to this
Agreement hereby agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. (a) At the Effective Time (as defined in Section
1.1(b)), the Merger Subsidiary shall be merged with and into the Company (the
"MERGER"), in accordance with the General Corporation Law of the State of
Delaware (the "DELAWARE GCL") whereupon the separate existence of the Merger
Subsidiary shall cease, and the Company shall be the surviving corporation (the
"SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction or waiver of all
conditions set forth in Articles VIII and IX, the Company and the Merger
Subsidiary will file a certificate of merger (which shall be in form and
substance reasonably satisfactory to the parties hereto) with the Secretary of
State of the State of Delaware (the "SECRETARY OF STATE") and make all other
filings or recordings required by the Delaware GCL in connection with the
Merger. The Merger shall become effective when the certificate of merger is duly
filed with the Secretary of State or at such later time and date as is agreed by
each of the parties hereto and is specified in the certificate of merger (the
"EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, disabilities, liabilities and duties of the Company,
all as provided in the Delaware GCL.
1.2. Conversion of Shares. At the Effective Time, upon the terms and
subject to the conditions set forth in this Agreement, by virtue of the Merger
and without any action on the part of the Merger Subsidiary or the Company:
(a) Prior to the Effective Time, Parent shall have transferred,
assigned and delivered the number of shares of Parent Common Stock required to
accomplish the transactions described in subparagraph (c) hereof (the "Merger
Consideration") to the Merger Subsidiary in exchange for all of the issued and
outstanding shares of common stock of the Merger Subsidiary.
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(b) Each share of common stock, par value $.001 per share, of the
Merger Subsidiary outstanding immediately prior to the Effective Time shall be
converted into and become the same number of shares of common stock, par value
$.001 per share, of the Company with the same rights, powers and privileges as
the shares so converted.
(c) All of the common stock of the Company, par value $.001 per
share and each share of preferred stock of the Company, par value $.001 per
share (collectively, the "COMPANY SHARES"), issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive the
number of shares of common stock, par value $.001 per share of Parent ("PARENT
COMMON STOCK") as indicated on Exhibit A hereto based on each Company Share
being entitled to receive .790 shares of Parent Common Stock (the "Merger
Ratio").
(d) All holders of stock options outstanding as of the date
hereof, as listed on Exhibit A hereto, whether or not exercisable and whether or
not vested (the "COMPANY STOCK OPTIONS"), shall remain outstanding following the
Effective Time. At the Effective Time the Company's obligations with respect to
each Company Stock Option, as amended in the manner described in the following
sentence, shall be assumed by the Parent and the Surviving Corporation, as set
forth below. The Company Stock Options so assumed by the Surviving Corporation
shall continue to be subject to, and have the same terms and conditions as set
forth in the agreements and/or plan setting forth and/or issuing such Company
Stock Options as in effect immediately prior to the Effective Time. After the
Effective Time, Parent shall use its best efforts to obtain the approval from
each of the holders of the Company Stock Options to modify and amend each
holder's Company Stock Option to provide for the issuance of Parent Company
Stock in lieu of common stock of the Company upon exercise of such Company Stock
Option, provided that such Company Stock Option shall be exercisable for a
number of shares of Parent Common Stock equal to the product of the number of
Company Shares included in such Company Stock Option immediately prior to the
Effective Time multiplied by the Merger Ratio, such conversion having been
computed and specifically set forth on Exhibit A hereto. Moreover, the exercise
price under such Company Stock Options shall be adjusted so that the amount of
consideration a holder of a Company Stock Option would have been required to pay
to exercise a Company Stock Option prior to the Effective Time will be equal to
the amount of consideration the holder will be required to pay after the
Effective Time (based on the new number of shares of Parent Common Stock to be
purchased). Parent shall provide notice to holders of Company Stock Options in
the form attached hereto as Exhibit B within five days of the Effective Time and
holders of Company Stock Options shall be entitled to obtain (and Parent shall
use its best efforts to provide) information regarding the Merger. As each
holder of a Company Stock Option consents to and approves the amendments
contemplated hereby, Parent shall assume the obligations under such Company
Stock Option. Parent shall reserve and set aside a sufficient number of shares
of Parent Common Stock for Parent to honor its obligations under any Company
Stock Option assumed by Parent pursuant to this subsection. Any holder of a
Company Stock Option who refuses to consent to and approve the amendments
contemplated hereby shall continue to be entitled to receive shares of Company
common stock as provided in the Company Stock Options. In the case of any
Company Stock Option to which section 421 of the Code applies by reason of its
qualification under section 422 of the Code (an "INCENTIVE STOCK OPTION"), the
option price, the number of shares purchasable pursuant to such Incentive Stock
Option and the terms and conditions of exercise of such Incentive Stock Option
shall be determined immediately after the Effective Time in such manner as
described above, but shall be modified to the extent necessary to comply with
section 424(a) of the Code.
1.3. Surrender of Certificates: Payment of Merger Consideration. (a)
Surrender of Certificates. At the Effective Time, every certificate (a
"CERTIFICATE") representing any Company Shares shall be canceled and,
simultaneously with such cancellation, a new certificate shall be issued
representing the number of shares of Parent Common Stock into which the Company
Shares formerly held by such Shareholder shall have been converted in the Merger
in accordance with Section 1.2(b) hereof, together with any cash payable in lieu
of fractional shares determined in accordance with Section 1.3(g) hereof.
(b) Prior to the Effective Time, Parent shall designate Atlas
Stock Transfer, 0000 Xxxxx Xxxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, as paying
agent (the "PAYING AGENT") in connection with the Merger to distribute the
Merger Consideration which the Shareholders shall be entitled to receive
pursuant to Section 1.2 hereof.
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(c) Promptly after the Effective Time Surviving Corporation shall
provide notice to each holder of record of Company Shares, at the addresses
provided by the Company, instructing such holder to surrender their Certificates
to the Paying Agent. Upon surrender of each Certificate, the Paying Agent shall
deliver to the Shareholder surrendering such Certificate that portion of the
Merger Consideration allocable to such Shareholder as set forth on Exhibit A
hereto. No interest shall accrue or be paid on the Merger Consideration payable
upon the surrender of any Certificate for the benefit of the holder of such
Certificate. Payment of the Merger Consideration shall only be made to that
person in whose name the surrendered certificate formerly evidencing Company
Shares is registered on the stock transfer books of the Company and as set forth
on Exhibit A hereto.
(d) At any time following the sixth month after the Effective
Time, the Paying Agent shall deliver any undistributed Merger Consideration to
the Surviving Corporation. All certificates representing Merger Consideration
returned to the Surviving Corporation by the Paying Agent after such time may be
cancelled and the rights of any Shareholder to such Merger Consideration shall
be deemed to be only as a general creditor thereof with respect to any Merger
Consideration that may be payable upon surrender of certificates representing
Company Shares.
(e) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the holders of Company Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Company Shares except as otherwise provided herein
or by applicable law.
(f) From and after the Effective Time, each Certificate which
prior to the Effective Time represented Company Shares shall be deemed to
represent only the right to receive the Merger Consideration and the holder of
each such Certificate shall cease to have any rights with respect to the Company
Shares formerly represented thereby other than as provided in this Agreement.
(g) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock will be issued in the Merger upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of
Parent. In lieu of any such fractional shares, each holder of Company Shares who
would otherwise have been entitled to a fraction of a share of Parent Common
Stock in exchange for Certificates pursuant to this Section 1.3 shall receive
from the Surviving Corporation a cash payment in lieu of such fractional share
as determined and as set forth on Exhibit A hereto.
1.4 Closing. Unless this Agreement shall have been terminated and the
Merger herein contemplated shall have been abandoned pursuant to Section 11.1,
the consummation of the Merger shall take place as promptly as practicable after
satisfaction or waiver of the conditions set forth in Articles VIII and IX
(other than those conditions related to the delivery of certificates, opinions
or documents at the Closing) and in any event within three business days after
such satisfaction or waiver. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Xxxxxx, Xxxxxxx
& Xxxxxxxx LLP, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxxxxxxx
00000, at 10:00 a.m., or at such other place as the parties may agree.
ARTICLE II
THE SURVIVING CORPORATION
2.1. Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Company in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
amended in accordance with applicable law.
2.2. Bylaws. At the Effective Time, the bylaws of the Merger Subsidiary
in effect at the Effective Time shall be the bylaws of the Surviving Corporation
until amended in accordance with applicable law.
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2.3. Board of Directors. The Board of Directors of the Surviving
Corporation shall consist of the persons who constitute the Board of Directors
of the Merger Subsidiary as of the Effective Time. The Board of Directors of the
Surviving Corporation shall hold office subject to the provisions of the laws of
the State of Delaware and of the Certificate of Incorporation and bylaws of the
Surviving Corporation.
2.4. Officers. The officers of the Merger Subsidiary immediately prior
to the Effective Time shall continue as the officers of the Surviving
Corporation in the same capacity or capacities, each of such officers to serve,
subject to the provisions of the Certificate of Incorporation and bylaws of the
Surviving Corporation, until his or her successor is duly elected and qualified.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and the Merger Subsidiary to enter into this
Agreement, the Company (and the Shareholders as to Section 3.24) hereby
represent and warrant to Parent and the Merger Subsidiary (as qualified in full
by the Disclosure Schedules attached hereto) as follows:
3.1. Company's Organization and Good Standing. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation and has all corporate power and authority
to own, lease and operate its properties and to carry on its business as now
conducted. The Company is duly licensed or qualified to do business and is in
good standing in each jurisdiction where the character of property owned or
leased by it or the nature of its activities makes such licensing or
qualification necessary except for those jurisdictions where the failure to be
so licensed or qualified would not reasonably be expected, individually or in
the aggregate, to have a Company Material Adverse Effect. As used herein, a
"Company Material Adverse Effect" means any event, circumstance, change in, or
effect on, the business of the Company (the "Business") that, when taken
together with all other events, circumstances, changes and effects occurring
after the date hereof that do not individually have a material adverse effect
and all other circumstances that would, but for the fact that they do not
individually have a material adverse effect, constitute a breach of any
representation or warranty made by the Company in this Agreement that: (a) is,
or would reasonably be expected to be, materially adverse, taken as a whole, to
the business, operations, financial condition, results of operations or
prospects of the Business or the Company or (b) would reasonably be expected to
materially adversely affect the ability of Parent or the Surviving Company to
operate or conduct the Business in the manner in which it is currently operated
or conducted by the Company; provided, however, that "Company Material Adverse
Effect" shall not include events, circumstances, changes or effects (including
legal and regulatory changes) that generally affect the industries in which the
Company operates.
3.2. Power and Authority: Execution and Delivery. The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement. The execution, delivery and performance of
this Agreement have been duly approved and authorized by all requisite corporate
action of the Company (except for Shareholder approval) and such approval has
not been modified or rescinded. Except for the filing of a certificate of merger
in accordance with Section 1.1(b) and approval of the Shareholders in accordance
with the Delaware GCL, no further corporate actions or approvals on the part of
the Company are required under applicable law for the consummation of the
Merger. This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms subject to the effect of any applicable
bankruptcy insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
creditors rights generally and subject to the effect of general principles of
equity (regardless of whether considered in a proceeding at law or in equity.
True and correct copies of the Certificate of Incorporation and bylaws of the
Company, each as in effect on the date hereof, have been made available by the
Company to Parent.
3.3. Capitalization and Voting Rights. (a) The authorized capital of
the Company consist of 10,000,000 shares of common stock, $.001 par value, of
which 2,658,970 shares and no more are issued and outstanding, and 1,500,000
shares of preferred stock, $.001 par value, of which 1,387,560 shares and no
more are issued and outstanding. As of the Effective Time, no Company Shares or
options to acquire Company Shares shall be issued and outstanding except as
listed in Exhibit A hereto.
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(b) Exhibit A hereto accurately records (i) the name and address
of each person and entity owning shares of capital stock of the Company and (ii)
the certificate number of each certificate evidencing shares of capital stock
issued by the Company, the number of shares evidenced by each such certificate,
and the date of issuance.
3.4. Subsidiaries. The Company does not own or control or have the
right to own or control, directly or indirectly, any interest in any other
corporation, association or other business entity. The Company is not a member
of (nor is any part of the Company's business conducted through) any partnership
or limited liability company and it is not a participant in any joint venture or
similar arrangement.
3.5. Valid Issuance of Company Shares: Ownership of Company Shares. All
of the outstanding Company Shares are duly and validly authorized and issued,
fully paid and nonassessable, and have been issued in compliance with all
applicable federal and state securities laws. None of the issued and outstanding
Company Shares was issued in violation of any preemptive rights.
3.6. Financial Statements. The Company has delivered to Parent (a) an
audited consolidated balance sheet for the Company as of December 31, 1999, and
the related statements of operations and cash flows for the year ended December
31, 1999, together with all related notes and schedules thereto, accompanied by
the reports thereon of the Company's accountants, and (b) an unaudited
consolidated balance sheet for the Company as of March 31, 2000, and the related
statements of operations and cash flows for the quarter ended March 31, 2000
(collectively referred to herein as the "FINANCIAL STATEMENTS"). The Financial
Statements (i) were prepared in accordance with the books of account and other
financial records of the Company, (ii) present fairly, in all material respects,
the consolidated financial position, results of operations and cash flows of the
Company, as of the dates thereof or for the periods covered thereby, (iii) have
been prepared in accordance with United States generally accepted accounting
principles and practices as in effect from time to time ("GAAP") applied on a
basis consistent with the past practices of the Company (except the unaudited
financials may omit any related notes or schedules thereto as would otherwise be
required by GAAP) and (iv) include all adjustments (consisting only of normal
recurring accruals) that are necessary for a fair presentation of the financial
position of the Company and the results of the operations and cash flows of the
Company as of the dates thereof or for the periods covered thereby. The accounts
receivable of the Company reflected on the Reference Balance Sheet (as defined
below) and all accounts receivable arising subsequent to such date have been or
will be recorded in accordance with GAAP and have arisen, or will have arisen,
from the sale of services to persons not affiliated with the Company and in the
ordinary course of business, consistent with past practice. Except as reserved
against on the Reference Balance Sheet, the accounts receivable of the Company
constitute or will constitute only valid claims of the Company not subject to
valid claims of set-off or other defenses or counter claims, subject to the
effect of any applicable bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting creditors rights generally and subject to the effect of
general principles of equity (regardless of whether considered in a proceeding
at law or in equity.)
3.7. No Undisclosed Liabilities. Except as set forth on Schedule 3.7,
there are no Liabilities of the Company, other than Liabilities (a) reflected or
reserved against on the December 31, 1999 balance sheet (the "REFERENCE BALANCE
SHEET") or described in the notes thereto or (b) arising following the Reference
Balance Sheet date in the ordinary course of business not in excess of $35,000.
The aggregate amount of Indebtedness of the Company on the date hereof does not
exceed $125,000, and as of the Effective Time shall not exceed $125,000.
Specifically, the Company's liabilities to OneSoft Corporation have been reduced
to $50,000 or less prior to the Effective Time and the two bridge loans in the
amount of $300,000 have been converted to Company Shares prior to the Effective
Time. Reserves are reflected on the Reference Balance Sheet and on the books of
account and other financial records of the Company against all Liabilities of
the Company in amounts that have been established on a basis consistent with the
past practices of the Company and in accordance with GAAP. As used herein,
"LIABILITIES" means any and all Indebtedness, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law, Action or Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking. As used herein "INDEBTEDNESS"
means, with respect to any person or entity, (i) all indebtedness of such person
or entity, whether or not contingent, for borrowed money; (ii) all obligations
of such person or entity for the deferred purchase price of property or
services; (iii) all obligations of such person or entity evidenced by notes,
bonds, debentures or other similar instruments; (iv) all obligations of such
person or entity as lessee under leases that
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have been or should be, in accordance with GAAP, recorded as capital leases; (v)
all obligations, contingent or otherwise, of such person or entity in respect of
acceptances, letters of credit or similar extensions of credit; (vi) all
obligations of such person or entity in respect of interest rate swap, cap or
collar agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar agreements;
and (vii) all Indebtedness of others referred to in clauses (i) through (vi)
above guaranteed directly or indirectly in any manner by such person or entity.
As used herein "Lien" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and Tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
3.8. Absence of Certain Changes: Agreements with Affiliates. Since
December 31, 1999, the business of the Company has been conducted in the
ordinary course and consistent with past practice. As amplification and not
limitation of the foregoing, except as disclosed on Schedule 3.8, between
December 31, 1999 and the date hereof, there has not been:
(a) any amendment to the Certificate of Incorporation or bylaws
of the Company;
(b) any Lien imposed on any material assets or properties
(whether tangible or intangible) of the Company;
(c) any amendment, termination or cancellation by the Company of
a material claim of the Company or a waiver of any other material right to the
Company or of a material debt owed to it;
(d) any issuance or authorization of any issuance of any shares
of capital stock of the Company, or any options, warrants, convertible
securities or other rights relating to the capital stock of the Company or
redemption of any of the capital stock or any declaration or payment of any
dividend or other distribution of the assets of the Company or any direct or
indirect redemption, purchase or acquisition of any securities of the Company;
(e) any failure by the Company to pay any creditor any material
amount owed to such creditor when due, other than trade payables incurred in the
ordinary course of business, consistent with past practice;
(f) any sale, exchange or other disposition of any of the
Company's material assets other than in the ordinary course of business,
consistent with past practice;
(g) a transaction whereby the Company merged with, entered into a
consolidation with or acquired any interest in any person or entity or acquired
a substantial portion of the assets or business of any person or entity or any
division or line of business thereof, or otherwise acquired any material assets
other than in the ordinary course of business, consistent with past practice;
(h) except as listed on Schedule 3.8(h), any capital expenditure
or commitment for any capital expenditure exceeding $15,000 in the aggregate;
(i) any increase or an announcement of any increase in the wages,
salaries, compensation, bonuses, incentives, pension or other benefits payable
or to become payable to its officers or employees, including, without
limitation, any increase or change pursuant to any Company Benefit Plan (as
defined in Section 3.16), except for increases in accordance with past practices
in salaries or wages of employees of the Company who are not officers of the
Company, or grant of any severance or termination pay to, or entry into any
employment or severance agreement (other than as specifically set forth herein
or undertaken in connection with the Merger) with any director, officer or other
employee of the Company, or establishment, adoption, entry into or amendment of
any collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust fund, policy
or arrangement for the benefit of any current or former director, officer or
employee;
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(j) any agreement, arrangement or transaction between the Company
on the one hand and any of their directors, officers, employees or shareholders
(or with any relative, beneficiary, spouse or affiliate of such person or
entity), on the other hand, except for payments of salary or benefits in the
ordinary course, consistent with past practice;
(k) any change in any method of accounting or accounting practice
or policy used by the Company, other than such changes required by GAAP and
disclosed in Section 3.8(k) of the Disclosure Schedule;
(l) any express or deemed election or any material Liability
settled or compromised, with respect to Taxes of the Company;
(m) any agreements, whether in writing or otherwise, to do or
enter into any of the foregoing; or
(n) any other event or condition of any character which would
reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
3.9. Governmental Approvals and Filings. Except for the filing of a
certificate of merger in accordance with the Delaware GCL, and any filings
required under state or federal securities laws, if any, permitted to be made
following the Effective Time, no approval, authorization, consent, license,
clearance or order of, declaration or notification to, or filing, registration
or compliance with, any governmental or regulatory authority, is required in
order to permit the Company to enter into this Agreement or to consummate the
transactions contemplated herein.
3.10. Litigation. (a) Except as set forth on Schedule 3.10, there
are no material claims, actions, suits, arbitrations, inquiries, litigations,
proceedings or investigations by or before any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial body or any
arbitral or other nongovernmental dispute resolution body (each, an "ACTION")
pending or, to the Company's knowledge, threatened by or against the Company (or
by or against any shareholder or any affiliate thereof and relating to the
business of the Company) or affecting any of the Company's assets, or that would
reasonably be likely to affect the legality, validity or enforceability of this
Agreement or the transactions contemplated hereby.
(b) Except as set forth on Schedule 3.10, the Company is not a
party or subject to the provisions of any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any governmental
authority or instrumentality (each, a "GOVERNMENTAL ORDER") that has not been
fully satisfied.
3.11. Compliance with Law. Except as would not reasonably be
expected, individually or in the aggregate, to have a Company Material Adverse
Effect, the Company has conducted its business in accordance with all federal,
state, local or foreign statutes, laws, ordinances, regulations, rules, codes,
orders, other requirements or rules of law (each, a "Law") and Governmental
Orders applicable to the Company or any of the Company's assets or business, and
the Company is not in violation of any such Law or Governmental Order. The
Company has had no correspondence with Governmental Authorities regarding the
regulatory status of the Company or the Company's business that could be
expected to result in a Company Material Adverse Effect.
3.12. Permits: Compliance. The Company is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Authority necessary for the Company to own, lease and operate its properties or
to carry on its business as it is now being conducted (the "PERMITS"), except
where the failure to have, or the suspension or cancellation of, any of the
Permits would not prevent or materially delay consummation of the Merger or
otherwise prevent or materially delay the Company from performing its
obligations under this Agreement and would not, individually or in the
aggregate, have a Company Material Adverse Effect. No suspension or cancellation
of any of the Permits is pending or, to the knowledge of the Company,
threatened, except where the failure to have, or the suspension or cancellation
of, any of the Permits would not prevent or materially delay consummation of the
Merger or otherwise prevent or materially delay the Company from performing its
obligations under this Agreement and would not have a Company Material
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Adverse Effect. Except as disclosed on Schedule 3.12, the Company is not in
conflict with, or in default, breach or violation of any note, bond, mortgage,
indenture, contract, agreement, lease, license, Permit, franchise or other
instrument or obligation to which the Company is a party or by which the Company
or any property or asset of the Company is bound, except for any such conflicts,
defaults, breaches or violations that would not prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement and would not, individually
or in the aggregate, have a Company Material Adverse Effect.
3.13. Proprietary Rights. (a) Schedule 3.13(a) contains a complete
list of all trade secrets, copyrights, patents, trademarks, service marks, and
all similar types of intangible property developed, created or owned by the
Company or used by the Company in connection with its business, whether or not
the same are entitled to legal protection (collectively "Proprietary Rights" as
further defined below) of the Company.
(b) Except as set forth on Schedule 3.13(b), the Company either
owns all right, title and interest to, or has a valid right to use, such
Proprietary Rights.
(c) The Company's use of the Proprietary Rights does not
constitute an infringement of any third party's rights that would reasonably be
expected to have a Company Material Adverse Effect. Except as provided on
Schedule 3.13(c), no actions or proceedings involving the Company are pending
or, to the Company's knowledge, threatened (i) which challenge the ownership,
validity or enforceability of any of its Proprietary Rights, (ii) which seek to
restrict the use by the Company of any of its Proprietary Rights, or (iii) which
allege that the Company infringes or violates the Proprietary Rights owned by
any other person or entity (collectively, "THIRD PARTY INTELLECTUAL PROPERTY").
No pending or, to the Company's knowledge, threatened action or proceeding
listed on Schedule 3.13 has had, or if adjudicated against the Company would
reasonably be expected to have a Company Material Adverse Effect.
(d) Except as set forth on Schedule 3.13(d), the Company is not a
party to any outstanding options, licenses or agreements of any kind relating to
the Proprietary Rights or the Third Party Intellectual Property.
(e) In the case of Proprietary Rights disclosed to Parent
hereunder as trade secrets or otherwise as confidential or proprietary
information, such Proprietary Rights (i) have at all times been maintained in
confidence and (ii) have been disclosed by the Company only to employees and
consultants having "a need to know" the contents thereof in connection with the
performance of their duties to the Company.
(f) As used herein, "PROPRIETARY RIGHTS" means (i) inventions,
whether or not patentable, whether or not reduced to practice, and whether or
not yet made the subject of a pending patent application or applications; (ii)
ideas and conceptions of potentially patentable subject matter, including,
without limitation, any patent disclosures, whether or not reduced to practice
and whether or not yet made the subject of a pending patent application or
applications; (iii) national (including the United States) and multinational
statutory invention registrations, patents, patent registrations and patent
applications (including all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations) and all rights therein
provided by international treaties or conventions and all improvements to the
inventions disclosed in each such registration, patent or application; (iv)
trademarks, service marks, trade dress, logos, trade names and corporate names,
whether or not registered, including all common law rights, and registrations
and applications for registration thereof, including, but not limited to, all
marks registered in the United States Patent and Trademark Office, the trademark
offices of the states and territories of the United States of America, and the
trademark offices of other nations throughout the world, and all rights therein
provided by international treaties or conventions; (v) copyright (registered or
otherwise) and registrations and applications for registration thereof, and all
rights therein provided by international treaties or conventions; (vi) computer
software; (vii) trade secrets and confidential, technical and business
information (including ideas, formulas, compositions, inventions, and
conceptions of inventions whether patentable or unpatentable and whether or not
reduced to practice); (viii) whether or not confidential, technology (including
know-how and show-how), manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information; (ix) copies and tangible
embodiments of all the foregoing in whatever form or medium; (x) all rights to
obtain and rights
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to apply for patents, and to register trademarks and copyrights; and (xi) all
rights to xxx or recover and retain damages and costs and attorneys' fees for
present and past infringement of any of the foregoing.
3.14. No Conflict. Except as set forth on Schedule 3.14, neither the
execution, delivery and performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby, will (a)
result in a breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or bylaws of the Company, (b) result in a breach or
violation of, give rise to a default under or result in the acceleration of
performance under any Material Contract (as defined in Section 3.15) or any Law
or Governmental Order to which the Company or any of its assets, properties or
businesses may be subject, except the effect of which would not have a Company
Material Adverse Effect or would not prevent or materially delay consummation of
the Merger or otherwise prevent or materially delay the Company from performing
its obligations under this Agreement, or (c) give rise to an imposition of any
Lien of any nature whatsoever upon any Company Shares or any of the assets or
the properties of the Company.
3.15. Material Contracts. (a) Schedule 3.15(a) lists, as of the date
hereof, each of the following contracts and agreements of the Company (such
contracts and the agreements set forth in Schedule 3.15(a) of the Disclosure
Schedule, being "MATERIAL CONTRACTS"):
(i) each contract and agreement with any supplier or for the
furnishing of services to the Company related to the Business (A) under the
terms of which the Company is likely to pay or otherwise give consideration of
more than $10,000 in the aggregate during any calendar year or more than $50,000
in the aggregate over the remaining term of such contract and (B) which cannot
be canceled by the Company without penalty or further payment and without more
than 30 days' notice;
(ii) all material franchise, agency, sales promotion, royalty,
market research, marketing, consulting and advertising contracts and agreements
to which the Company is a party;
(iii) all material management contracts and contracts with
independent contractors or consultants (or similar arrangements) to which the
Company is a party and which are not cancelable without penalty or further
payment and without more than 30 days' notice;
(iv) all contracts and agreements relating to Indebtedness of the
Company;
(v) all material contracts and agreements with any Governmental
Authority to which the Company is a party;
(vi) all contracts and agreements that limit or purport to limit
the ability of the Company to compete in any line of business or with any person
or entity or in any geographic area or during any period of time;
(vii) all contracts and agreements between or among the Company
or any of its affiliates, on the one hand, and any officer or director of the
Company or any Shareholders or any relative or spouse (or relative of such
spouse) of such officer, director or Shareholder, on the other hand;
(viii) all contracts or agreements providing for indemnification
obligations of the Company;
(ix) all contracts, agreements or other arrangements granting to
any person or entity any preferential rights to purchase any assets or
properties of the Company;
(x) all contracts, agreements or other arrangements granting to
any person or entity a right to share in the revenues of the Company;
(xi) all contracts, agreements or other arrangements purporting
to grant to any person or entity any exclusive or preferred right to transact
business with the Company;
(xii) all agreements or contracts required by any governmental
entity as a condition to, or settlement of, any certification, licensing matter,
or complaint against or on behalf of the Company; and
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(xiii) all other contracts and agreements, whether or not made in
the ordinary course of business, which are material to Business or the absence
of which would reasonably be expected, individually or in the aggregate, to have
a Company Material Adverse Effect.
(b) Each Material Contract is valid and binding on the Company
and, to the Company's knowledge, the other parties thereto, and is in full force
and effect. The Company is not in material breach of, or material default under,
any Material Contract and, to the Company's knowledge, as of the date hereof, no
other party to any Material Contract is in breach thereof or default thereunder.
(c) The Material Contracts listed on Schedule 3.15 in response to
3.15(a)(viii above all contain terms as favorable to the Company as if the
Company had entered into the Material Contracts with unaffiliated third parties.
Each contract or agreement to be entered into between the date hereof and the
Effective Time between or among the Company or any of its affiliates on the one
hand, and any officer or director of the Company or any Shareholders or any
relative or spouse (or relative of such spouse) of such officer, director or
Shareholder on the other hand shall contain terms as favorable to the Company as
if the Company had entered into such contract or agreement with unaffiliated
third parties.
3.16. Employee Benefit Plans: Labor Matters. (a) Schedule 3.16(a)
lists each material employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plans" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any employment, severance or change in control plans or
arrangements, maintained or contributed to by the Company (collectively, the
"COMPANY BENEFIT PLANS").
(b) Except as set forth on Schedule 3.16(b), none of the Company
Benefit Plans promises or provides material retiree medical or life insurance
benefits to any person other than continuation coverage required by COBRA. Each
Company Benefit Plan intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue Service
to the effect that it is so qualified and to the knowledge of the Company,
nothing has occurred since the date of such letter to affect the qualified
status of such plan. None of the Company Benefit Plans is subject to Title IV of
ERISA, and the Company has not incurred, and does not reasonably expect to
incur, any direct or indirect liability under or by operation of Title IV of
ERISA.
(c) With respect to the Company Benefit Plans, no event has
occurred and, to the knowledge of the Company, there exists no condition or set
of circumstances in connection with which the Company could be subject to any
Liability under the terms of such Company Benefit Plans, ERISA, the Code or any
other applicable law (other than benefits payable in the normal course of
operations), except as could not reasonably be expected to have a Company
Material Adverse Effect.
(d) The Company is not a party to, and is not negotiating, any
collective bargaining or other labor union contract. There is no labor dispute,
strike or work stoppage against the Company pending or threatened in writing
which may interfere with the business activities of the Company. Neither the
Company nor, to the knowledge of the Company, its representatives or employees
has committed any unfair labor practices in connection with the operation of the
business of the Company, and there is no charge or complaint against the Company
by the National Labor Relations Board or any comparable state agency pending or
threatened.
(e) Except as set forth on Schedule 3.16(e) and except as
otherwise provided in the Xxxxxxx.xxx, Inc. 1999 Equity Participation Plan and
the agreements under such plan, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereunder will
(A) result in any payment becoming due to any director or any officer or
employee of the Company or any of its affiliates under any Company Benefit Plan
or otherwise; (B) materially increase any benefits otherwise payable under any
Company Benefit Plan; or (C) result in any acceleration of the time of payment
or vesting of any material benefits.
3.17. Tax Matters. All Returns (as defined below) that are required
to have been filed by or with respect to the Company have been timely (taking
into account all proper extensions) and properly filed (and all such Returns are
true and correct and complete in all material respects). All taxes relating to
such Returns or otherwise due in respect of the Company have been timely and
properly paid (except as expressly reserved and disclosed on the
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Financial Statements). The Company has not received from any governmental
authority any written notice of proposed adjustment, deficiency or underpayment
of any Taxes, which notice has not been satisfied timely and properly by payment
or been withdrawn, and there are no claims that have been asserted or threatened
relating to such Taxes against the Company. No consent under Section 341(f) of
the Code has been filed with respect to the Company. There are no Tax Liens on
any assets of the Company. There are no proposed reassessments of any property
owned by the Company or other proposals that could increase the amount of any
Tax to which the Company would be subject. The Company has not been at any time
a member of any partnership or joint venture or the holder of a beneficial
interest in any trust for any period for which the statute of limitations for
any Tax has not expired; and the Company has not been a member of any affiliated
group other than the affiliated groups of which the Company is the common
parent, or has filed a Return on a consolidated, combined or unitary basis with
any other corporation. The Financial Statements include adequate reserves, and
the Closing Balance Sheet will include adequate reserves, properly accrued and
disclosed in accordance with GAAP for Tax liability of the Company through the
dates covered thereby. Except as set forth on Schedule 3.17, no Returns relating
to the Company have been reviewed or audited by any Taxing authority. The
Company is not doing business in, or engaged in a trade or business in, any
jurisdiction in which any required Return has not been filed. There are no
agreements for the extension of time for the assessment of any Taxes of the
Company. No power of attorney is currently in force that has been granted with
respect to any matter relating to Taxes that could affect the Company. The
Company is not aware of any plan, agreement or other circumstance that would
prevent the Merger from qualifying as a reorganization under Section 368(a) of
the Code. As used herein, "RETURNS" means any report, return, declaration or
other filing required to be supplied to any Taxing authority or jurisdiction
with respect to Taxes, including any amendments thereto, and "Taxes" means any
and all taxes, fees, levies, duties, tariffs, imposts and other charges of any
kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any government or
taxing authority, including, without limitation: taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, withholding
(including, without limitation, employee withholding), social security,
medicare, workers' compensation, unemployment compensation or net worth; taxes
or other charges in the nature of excise, ad valorem, stamp, transfer, value
added or gains taxes; license, registration and documentation fees; and customs
duties, tariffs and similar charges.
3.18. Minute Books. To the Company's knowledge, the minute books of
the Company contain a materially complete and accurate record of all meetings of
directors and stockholders since the date of incorporation and all actions by
written consent.
3.19. Certain Interests. (a) Except as disclosed in Schedule
3.19(a), as of the date hereof, to the Company's knowledge, no Shareholder and
no officer or director of the Company and no relative or spouse (or relative of
such spouse) of any such person owns, directly or indirectly, in whole or in
part, or has any other material interest in, any tangible or intangible property
which the Company uses or has used in the conduct of the Business or otherwise.
(b) Except as disclosed in Schedule 3.19(b), the Company does not
have any Indebtedness or other material Liability or any other obligation of any
nature whatsoever owing from or to any Shareholder, any officer or director of
the Company or any relative or spouse of any such person (or relative of any
such spouse) or, if a Shareholder is an entity, to an equity holder of such
Shareholder or to any relative or spouse (or relative of such spouse) of any of
the foregoing.
3.20. Insurance. (a) Schedule 3.20 (a) sets forth a true and
complete list naming each material insurance policy (the "INSURANCE POLICIES"),
and stating the amount and layers of coverage of such policy and whether such
Insurance Policy is "occurrence based" or "claims based", that is maintained, or
was maintained, by the Company at any time during the three years preceding the
date of this Agreement, the purpose of which was to insure against material risk
of loss to the Company.
(b) With respect to each such Insurance Policy, (i) the policy is
legal, valid, binding and enforceable in accordance with its terms and, except
for policies that have expired under their terms in the ordinary course, is in
full force and effect; (ii) except as listed in Schedule 3.20 (b), the Company
is not in material breach or default, and no event has occurred which, with
notice or the lapse of time, would constitute such a material breach or default
and permit termination or modification under the policy; and (iii) except as
listed in Schedule 3.20 (b), no
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party to the policy has repudiated, or given written notice to the Company of an
intent to repudiate, any material provision thereof.
3.21. Brokers and Finders. Neither the Shareholders, the Company,
nor any of the officers, directors or employees of the Company has employed or
otherwise incurred in any manner any liability for any brokerage fees, agents'
commissions or finder's fees concerning the transactions hereby.
3.22. Registration Statement. None of the information supplied by
the Company for inclusion in the Registration Statement to be filed on Form S-1
as discussed herein (the "REGISTRATION STATEMENT") shall, as of the date hereof
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent or any of Parent's
representatives for inclusion in the forgoing documents.
3.23. Personnel. Schedule 3.23 identifies all of the employees of
the Company as of the date hereof, their salaries, and any contractual
arrangement for the employment or compensation of each person. The Company is
not, and following the Effective Time will not be, bound by an express or
implied contract or agreement to employ, directly or as a consultant or
otherwise, any person for any specific period of time or until any specific age
except as specified in agreement in writing identified on Schedule 3.23 hereof.
3.24. Assets. As of the date hereof and at the Effective Time the
assets of the Company shall consist materially of the following: (a) the
xxx.xxxxxxx.xxx Website, (b) a library of pet related content in text, graphic
and video formats, (c) a customer list of all purchasers from the Company, (d) a
Web site user base exceeding 100,000 unique visitors and their e-mail addresses,
where available, (e) the Single Pet People registered user list of more than
1,000 names, (f) AP Magazine and contracts with all contributing authors, (g)
contracts with Xx. Xxxxxxx Xxxxxx and any other veterinary and pet-related
experts providing content and advice to the Company, (h) The Right Start, Inc.
marketing partnership agreement, (i) contracts with BeFree,
SiteMatic/NetObjects, and OneSoft, (j) domain names, trademarks and other
intellectual property associated with the Company's brand, and (k) cash in
excess of $410,000. This listing of Company assets is as more fully described in
"xxxxxxx.xxx Confidential Due Diligence List Pet Quarters" dated 3/10/00,
prepared for Parent by the Company, attached hereto as Exhibit C. At the
Effective Time, the assets listed above shall be owned by the Company free and
clear of any liens, claims, or encumbrances of any kind. Moreover, every
contract of the Company will be in full force and effect and subject to
assumption by Parent either by its terms or pursuant to written consents if
Parent desires to assume such contract. No current assets of the Company shall
be sold or disposed of by the Company outside of the ordinary course of business
between now and the Effective Time without the written permission of Parent. The
Shareholders, by their consent to the Merger, will have represented and
warranted that the assets listed above are the material assets of the Company as
of the date hereof and will be as of the Effective Time.
3.25. Condition and Operation of the Assets. Except as set forth on
Schedule 3.25, except as would not have a Company Material Adverse Effect, all
assets owned, leased or shared by the Company which are material to the Business
of the Company (the "Company Assets"), are in compliance with all applicable
build-out requirements, are in good operating condition and repair, ordinary
wear and tear excepted, and are suitable, adequate and fit for the uses for
which they are intended and are being used, as the case may be.
3.27. Knowledge. For purposes of this Agreement, the term "Company's
knowledge" shall mean the actual knowledge of Ms. Niloo Xxxx Xxxx and Xx. Xxx
Xxxxxxxxx after reasonable due inquiry.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE MERGER SUBSIDIARY
As an inducement to the Company to enter into this Agreement, Parent
and the Merger Subsidiary jointly and severally represent and warrant to the
Company as follows:
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4.1. Parent's and Merger Subsidiary's Organization and Good
Standing. Each of Parent and the Merger Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of the States
of Arkansas and Delaware, respectively, and has all corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each of Parent and the Merger Subsidiary is duly
qualified to do business and in good standing in each jurisdiction where the
character of property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not result in a Parent Material Adverse Effect
or would not materially prevent or delay consummation of the transactions
contemplated by this Agreement
4.2. Power and Authority: Execution and Delivery. Each of Parent
and the Merger Subsidiary has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved and authorized by
all requisite corporate action of Parent and the Merger Subsidiary and such
approval has not been modified or rescinded. Except for the filing of a
certificate of merger in accordance with the Delaware GCL, no further corporate
actions or approvals on the part of Parent or the Merger Subsidiary are required
under applicable law for the consummation of the Merger. This Agreement has been
duly executed and delivered by Parent and the Merger Subsidiary and constitutes
the legal, valid and binding obligation of Parent and the Merger Subsidiary,
enforceable against each in accordance with its terms subject to the effect of
any applicable bankruptcy insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting creditors rights generally and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding at law or
in equity). True and correct copies of the Certificate of Incorporation and
bylaws of each of Parent and the Merger Subsidiary, each as in effect on the
date hereof, have been made available by Parent to the Company.
4.3. Governmental Approvals and Filings. Except for the filing of a
certificate of merger in accordance with the Delaware GCL, no approval,
authorization, consent, license, clearance or order of, declaration or
notification to, or filing, registration or compliance with, any governmental or
regulatory authority, is required in order to permit Parent or the Merger
Subsidiary to enter into this Agreement or to consummate the transactions
contemplated herein.
4.4. No Conflict. Neither the execution, delivery and performance
of this Agreement by Parent or the Merger Subsidiary, nor the consummation by
Parent and the Merger Subsidiary of the transactions contemplated hereby will
(i) conflict with, or result in a breach of any of the terms, conditions or
provisions of the respective Certificates of Incorporation or By-laws of Parent
or the Merger Subsidiary, (ii) conflict with, result in a breach or violation
of, give rise to a default under or result in the acceleration of performance
under any mortgage, lease, agreement, note, bond, indenture, guarantees,
material contract, or any Law or Governmental Order to which Parent or the
Merger Subsidiary may be subject, which conflict, breach, default, violation or
acceleration would prevent or delay consummation of the transactions
contemplated by this Agreement, or (iii) give rise to an imposition of any Lien,
charge, security interest or encumbrance of any nature whatsoever upon any
Parent Common Stock or any of the assets or the properties of Parent or the
Merger Subsidiary.
4.5. Merger Consideration. When issued, the shares of Parent Common
Stock to be issued in the Merger or pursuant to Sections 12.1 and 12.2 hereof
will be duly authorized, validly issued, fully-paid and nonassessable and free
and clear of all Liens and preemptive rights. The certificates representing such
shares will be in due and proper form.
4.6. Capitalization. The authorized capital stock of Parent
consists of 40,000,000 shares of Parent Common Stock and 10,000,000 shares of
preferred stock ("PARENT PREFERRED STOCK"). As of the date hereof, 14,472,929
shares of Parent Common Stock are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and have been issued in compliance
with all applicable federal and state securities laws, (b) 2,227,916 shares of
Parent Common Stock are reserved for future issuance pursuant to outstanding
vested options or warrants, (c) 2,507,383 shares of Parent Common Stock are
reserved for future conversion rights granted holders of Parent Preferred Stock.
As of the date hereof, 34,642 shares of Parent Preferred Stock are issued and
outstanding. Parent has also reserved an additional 714,286 shares of Parent
Common Stock for repricing features contained in some of the previous financing
agreements executed by Parent and disclosed in the Parent Securities Filings, as
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defined in Section 4.7 hereof, and the Registration Statement. Except as set
forth in the Parent Securities Filings and the Registration Statement, there are
no options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Parent or
obligating Parent to issue or sell any shares of capital stock of, or other
equity interests in Parent. All Shares subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable, and will be issued in compliance with all applicable federal and
state securities laws. There are no outstanding contractual obligations of
Parent to repurchase, redeem or otherwise acquire any Shares or to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any other person. None of the issued and outstanding Parent
Common Stock was issued in violation of any preemptive rights.
4.7. Reports and Financial Statements. (a) Parent has made
available to the Company true and complete copies of (i) Form 10-SB, as amended,
as filed with the Securities Exchange Commission (the "SEC"), and (ii) all other
reports, statements and registration statements and amendments thereto
(including, without limitation, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as amended) filed by Parent with the SEC since December 10,
1999 (collectively, the "PARENT SECURITIES FILINGS"). As of their respective
dates, or as of the date, of the last amendment thereof, if amended after
filing, none of the Parent Securities Filings (including all schedules thereto
and disclosure documents incorporated by reference therein), contained or as to
Parent Securities Filings subsequent to the date hereof, will contain any untrue
statement of a material fact or omitted or, as to the Parent Securities Filings
subsequent to the date hereof, will omit to state a material fact required to be
stated therein or necessary to make the statements therein, in lights of the
circumstances under which they were made, not misleading. Each of the Parent
Securities Filings at the time of filing or as of the date of the last amendment
thereof, if amended after filing, complied or, as to the Parent Securities
Filings subsequent to the date hereof, will comply in all material respects with
the Securities Exchange Act or the Securities Act, as applicable. Any reports,
statements and registration statements and amendments thereof (including,
without limitation, Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, as amended) filed by Parent with the SEC after the
date hereof but before the Effective Time, if any, shall be provided to the
Company on the date of such filing. To the extent Parent has provided the
Company or its shareholders with any additional information, reports or
documents (collectively, the "Parent Information"), as of their respective
dates, the Parent Information was true and correct in all material respects.
(b) The audited financial statements and unaudited interim
financial statements included in the Parent Securities Filings (the "PARENT
FINANCIAL STATEMENTS"), have been prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of Parent as of the date thereof and
the results of operations and changes in cash flow of Parent for the periods
then ended, subject in the case of unaudited interim financial statements, to
normal year-end adjustments which are neither individually nor in the aggregate
expected to be material.
4.8. No Undisclosed Liabilities. Except as set forth on Schedule
4.8, there are no Liabilities of Parent, other than Liabilities (a) reflected or
reserved against on Parent's June 30, 1999 balance sheet or described in the
notes thereto, (b) incurred since June 30, 1999 in the ordinary course of
Parent's business, consistent with past practice, or (c) disclosed in the Parent
Securities Filings or the draft of the Registration Statement previously
provided to the Company on May 26, 2000 that individually or in the aggregate
have not had and are not reasonably likely to have a Parent Material Adverse
Effect. As used herein, a "PARENT MATERIAL ADVERSE EFFECT" means any event,
circumstance, change in, or effect on, the business of Parent that, when taken
together with all other events, circumstances, changes and effects occurring
after the date hereof that do not individually have a material adverse effect
and all other circumstances that would, but for the fact that they do not
individually have a material adverse effect, constitute a breach of any
representation or warranty made by Parent in this Agreement that (a) is, or
would reasonably be expected to be, materially adverse, taken as a whole, to the
business, operations, financial condition, results of operations or prospects of
the Parent's business or (b) would reasonably be expected to materially
adversely affect the ability of Parent or the Surviving Company to operate or
conduct the Parent's business in the manner in which it is currently operated or
conducted by the Parent; provided, however, that "Parent Material Adverse
Effect" shall not include events, circumstances, changes or effects (including
legal and regulatory changes) that generally affect the industries in which
Parent operates.
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4.9. Absence of Certain Changes or Events. Since June 30, 1999, the
business of Parent has been conducted in the ordinary course and consistent with
past practice. As amplification and not limitation of the foregoing, except as
set forth on Schedule 4.9, between June 30, 1999, and the date hereof, there has
not been:
(a) any Lien imposed on any material assets or properties
(whether tangible or intangible) of Parent;
(b) any amendment, termination or cancellation by Parent of a
material claim of Parent or a waiver of any other material right to Parent or of
a material debt owed to it;
(c) any failure by Parent to pay any creditor any material amount
owed to such creditor when due, other than trade payables incurred in the
ordinary course of business consistent with past practice;
(d) any sale, exchange or other disposition of any of Parent's
material assets other than in the ordinary course of business consistent with
past practice;
(e) except as otherwise already disclosed to the Company
(specifically including Parent's acquisition of Chartendure Limited, a United
Kingdom private company limited by shares, and XxXXxxx.xxx, Inc., a Tennessee
corporation) a transaction whereby Parent merged with, entered into a
consolidation with or acquired any interest in any person or entity or acquired
a substantial portion of the assets or business of any person or entity or any
division or line of business thereof, or otherwise acquired any material assets
other than in the ordinary course of business consistent with past practice;
(f) any agreements, whether in writing or otherwise, to do or
enter into any of the foregoing; or
(g) any other event or condition of any character which would
reasonably be expected, individually or in the aggregate, to have a Parent
Material Adverse Effect.
4.10. Compliance with Laws. Except as would not reasonably be
expected, individually or in the aggregate, to have a Parent Material Adverse
Effect, Parent has conducted its business in accordance with all Laws and
Governmental Orders applicable to Parent or any of Parent's assets or business,
and Parent is not in violation of any such Law or Governmental Order.
4.11. Litigation. (a) Except as set forth on Schedule 4.11, there
are no Actions pending or, to Parent's knowledge, threatened by or against
Parent (or by or against any shareholder or any affiliate thereof and relating
to the business of Parent) or affecting any of Parent's assets; or that would
reasonably be likely to affect the legality, validity or enforceability of this
Agreement or the transactions contemplated hereby.
(b) Except as set forth on Schedule 4.11, Parent is not a party or
subject to the provisions of any Governmental Order that has not been fully
satisfied.
4.12. Ownership of Merger Subsidiary. All of the authorized capital
stock of the Merger Subsidiary is owned beneficially and of record by Parent.
4.13. Articles of Incorporation and Bylaws. (a) Each of Parent and
the Merger Subsidiary have delivered to the Company copies of its Articles of
Incorporation and all amendments thereto, which copies are complete and correct.
Neither Parent nor the Merger Subsidiary is in default under, or in violation
of, any provisions of its Articles of Incorporation.
(b) Each of Parent and the Merger Subsidiary have delivered to the
Company copies of its By-laws and all amendments thereto, which copies are
complete and correct. Neither Parent nor the Merger Subsidiary is in default
under, or in violation of, any provision of its bylaws.
4.14. No Prior Activities The Merger Subsidiary has not incurred any
liabilities or obligations, except those incurred in connection with its
incorporation and with the consummation of this Agreement and the
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transactions contemplated hereby. The Merger Subsidiary has not engaged in any
business or activities of any type or kind whatever, or entered into any
agreements or arrangements with any person or entity, and is not subject to or
bound by any obligation or undertaking which is not contemplated by this
Agreement or incurred in connection with its incorporation.
4.15. Brokers and Finders. Other than as set forth on Schedule 4.15,
neither Parent, the Merger Subsidiary, nor any of their officers, directors or
employees have employed or otherwise incurred in any manner any liability for
any brokerage fees, agents' commissions or finder's fees concerning the
transactions hereby.
4.16. Permits: Compliance. Parent is in possession of all Permits,
except where the failure to have, or the suspension or cancellation of, any of
the Permits would not prevent or materially delay consummation of the Merger or
otherwise prevent or materially delay Parent from performing its obligations
under this Agreement and would not, individually or in the aggregate, have a
Parent Material Adverse Effect. No suspension or cancellation of any of the
Permits is pending or, to the knowledge of Parent, threatened, except where the
failure to have, or the suspension or cancellation of, any of the Permits would
not prevent or materially delay consummation of the Merger or otherwise prevent
or materially delay Parent from performing its obligations under this Agreement
and would not have a Parent Material Adverse Effect. Parent is not in conflict
with, or in default, breach or violation of any note, bond, mortgage, indenture,
contract, agreement, lease, license, Permit, franchise or other instrument or
obligation to which Parent is a party or by which Parent or any property or
asset of Parent is bound, except for any such conflicts, defaults, breaches or
violations that would not prevent or materially delay consummation of the Merger
or otherwise prevent or materially delay Parent from performing its obligations
under this Agreement and would not, individually or in the aggregate, have a
Parent Material Adverse Effect.
4.17. Taxes. All Returns (as defined below) that are required to
have been filed by or with respect to Parent have been timely (taking into
account all proper extensions) and properly filed (and all such Returns are true
and correct and complete in all material respects). All taxes relating to such
Returns or otherwise due in respect of Parent (including, without limitation,
pursuant to Treasury Regulation Section 1.1502-6 and similar provisions of state
and local law) have been timely and properly paid (except as expressly reserved
and disclosed on Parent's financial statements). Parent has not received from
any governmental authority any written notice of proposed adjustment, deficiency
or underpayment of any Taxes, which notice has not been satisfied timely and
properly by payment or been withdrawn, and there are no claims that have been
asserted or threatened relating to such Taxes against Parent. No consent under
Section 341(f) of the Code has been filed with respect to Parent. There are no
Tax Liens on any assets of Parent. There are no proposed reassessments of any
property owned by Parent or other proposals that could increase the amount of
any Tax to which Parent would be subject. The financial statements of Parent
include adequate reserves, and the balance sheet of Parent includes adequate
reserves, properly accrued and disclosed in accordance with GAAP for Tax
liability of Parent through the dates covered thereby. Except as set forth on
Schedule 4.17, no Returns relating to Parent have been reviewed or audited by
any Taxing authority. Parent is not doing business in, or engaged in a trade or
business in, any jurisdiction in which any required Return has not been filed.
There are no agreements for the extension of time for the assessment of any
Taxes of Parent. No power of attorney is currently in force that has been
granted with respect to any matter relating to Taxes that could affect Parent.
Parent is not aware of any plan, agreement or other circumstance relating to
Parent that would prevent the Merger from qualifying as a reorganization under
Section 368(a) of the Code. As used herein, "RETURNS" means any report, return,
declaration or other filing required to be supplied to any Taxing authority or
jurisdiction with respect to Taxes, including any amendments thereto, and
"Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts and
other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any government or taxing authority, including, without limitation: taxes or
other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, withholding (including, without limitation, employee withholding),
social security, medicare, workers' compensation, unemployment compensation or
net worth; taxes or other charges in the nature of excise, ad valorem, stamp,
transfer, value added or gains taxes; license, registration and documentation
fees; and customs duties, tariffs and similar charges.
4.18. Proprietary Rights. The Parent Securities Filings contain a
list of the Proprietary Rights of Parent, and Parent either owns sufficient
right, title and interest to, or has a valid right to use, such Proprietary
Rights to enable Parent to conduct its business operations.
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ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees that:
5.1. Regular Course of Business: Restricted Activities and
Transactions. Except as otherwise consented to in writing by Parent, prior to
the Effective Time, the Company will carry on its businesses only in the
ordinary course and in a manner consistent with past practices and the Company
will use all reasonable efforts to preserve its present business organization
intact and keep available the services of its present executive officers. By way
of amplification and not limitation, the Company will not, between the date
hereof and the Effective Time, directly or indirectly, or agree to,
(a) take any of the actions specified in Sections 3.8(a), (c),
(d) (other than issuances of Company Common Stock required hereby), (e) (other
than as set forth on the Disclosure Schedules hereto), (f), or (g) (other than
the Merger);
(b) hire or otherwise employ any individual;
(c) cause any Lien to be imposed on any assets or properties
(whether tangible or intangible) of the Company;
(d) incur any Indebtedness;
5.2. Access to Books, Records and Other Information. The Company
will afford to Parent and its accountants, attorneys and agents, as reasonably
requested by Parent, information and access, during normal business hours, to
the offices, properties, books and records of the Company and to those principal
officers, directors, employees, agents, accountants and counsel of the Company
who have knowledge of the Company or the Business.
5.3. Notice of Developments. Prior to the Effective Time, the
Company shall promptly notify Parent in writing of (a) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any breach of a representation or warranty or
covenant of the Company in this Agreement or which could have the effect of
making any representation or warranty of the Company in this Agreement untrue or
incorrect in any material respect and (b) all other material developments
affecting the Company's assets, Liabilities, business, financial condition,
operations, results of operations, customer or supplier relations, employee
relations or prospects of the Company or the Business.
5.4. No Solicitation or Negotiation. The Company agrees that
between the date of this Agreement and the earlier of (i) the Effective Time and
(ii) the termination of this Agreement, none of the Company or any of its
affiliates, officers, directors, representatives or agents will (a) solicit,
initiate, consider, encourage or accept any other proposals or offers from any
person or entity (A) relating to any acquisition or purchase of all or any
portion of the capital stock or a material portion of the assets of the Company,
(B) to enter into any business combination with the Company or (C) to enter into
any other extraordinary business transaction involving or otherwise relating to
the Company or (b) participate in any discussions, conversations, negotiations
or other communications regarding, or furnish to any other person or entity any
information with respect to, or otherwise cooperate in any way, assist or
participate in, facilitate or encourage, any effort or attempt by any other
person or entity to seek to do any of the foregoing. The Company immediately
shall cease and cause to be terminated all existing discussions, conversations,
negotiations and other communications with any persons or entities conducted
heretofore with respect to any of the foregoing. The Company shall notify Parent
promptly if any such proposal or offer, or any inquiry or other contact with any
person or entity with respect thereto, is made and shall, in any such notice to
Parent, indicate in reasonable detail the identity of the person or entity
making such proposal, offer, inquiry or contact and the terms and conditions of
such proposal, offer, inquiry or other contact. The Company agrees not to,
without the prior written consent of Parent, release any person or entity from,
or waive any provision of, any confidentiality or standstill agreement to which
the Company is a party.
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5.5. Preservation of Tax-Free Merger. The Company will not, nor
shall it permit any of its shareholders or affiliates to, without the prior
written waiver by Parent, knowingly take any action intended or reasonably
likely to prevent or impede the Merger from qualifying as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
ARTICLE VI
COVENANTS OF PARENT
6.1. Preservation of Tax - Free Merger. Parent will not, nor shall
it, permit any of its subsidiaries or affiliates to, without the prior written
waiver of the Company, knowingly take any action intended or reasonably likely
to prevent or impede the Merger from qualifying as a tax-free reorganization
within the meaning of Section 368(a) of the Code.
6.2. Certain Employee Matters. Parent covenants to the Company that
Parent will provide after the Effective Time to continuing employees of the
Company, including, without limitation, those who become directors or officers
of the Surviving Corporation or the Parent (the "TRANSFERRED EMPLOYEES"),
severance arrangements, and employee benefit programs in the aggregate, that are
no less favorable to the Transferred Employees than those being provided to
Parent's similarly situated employees on the date of this Agreement. Parent
shall continue, in good faith, to negotiate, complete and execute employment
agreements satisfactory to Parent with Niloofar Xxxx Xxxx and Xxxxx Xxxxxx. It
being understood and agreed that such employment agreements shall be
substantially, but not identically, similar to the form previously supplied to
Parent by Xxx. Xxxx.
6.3. Access to Information. Parent will afford to the Company and
its accountants, attorneys and agents, as reasonably requested by the Company,
information regarding and access to, during normal business hours, information
relating to the financial performance of the Company.
6.4. Notice of Developments. Prior to the Effective Time, Parent
shall promptly notify the Company in writing of all events, circumstances, facts
and occurrences arising subsequent to the date of this Agreement (a) which could
result in any breach of a representation or warranty or covenant of Parent in
this Agreement or which could have the effect of making any representation or
warranty of Parent in this Agreement untrue or incorrect in any material respect
and (b) all other material developments affecting Parent's assets, Liabilities,
business, financial condition, operations, results of operations, customer or
supplier relations, employee relations or prospects of Parent.
6.5. Maintenance of Los Angeles Office. After the Effective Time,
the Surviving Corporation shall maintain a physical presence and office in the
County of Los Angeles, California. Notwithstanding the covenant contained
herein, nothing shall prevent the board of directors of the Surviving
Corporation or the Parent from closing or relocating the Los Angeles office if
the board of directors determines it is in the best interest of the Surviving
Corporation or Parent to do so.
ARTICLE VII
MUTUAL COVENANTS
7.1. Payment of Expenses. In the event of Termination, each party
to this Agreement shall be responsible for its own costs and expenses incurred
in connection with the transactions contemplated by this Agreement.
7.2. Public Announcements. No party to this Agreement shall issue
any reports, public statements or releases pertaining to this Agreement or any
transaction contemplated hereby without the consent of the other parties hereto.
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7.3. Further Action. (a) Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use its reasonable efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Merger, including, without
limitation, using its reasonable efforts to obtain all Permits, consents,
approvals, authorizations, qualifications and orders of Governmental Authorities
and parties to contracts with the Company as are necessary for the consummation
of the Merger and to fulfill the conditions to the Merger. In case, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall use their reasonable best efforts to take all such
action.
(b) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to vigorously contest and resist any Action, including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of the Merger or the other transactions contemplated
hereby, including, without limitation, by vigorously pursuing all available
avenues of administrative and judicial appeal.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF PARENT
The obligation of Parent to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment of the following conditions:
8.1. Representations and Warranties True. The representations and
warranties of the Company and the Shareholders contained in this Agreement shall
have been true and correct when made and shall be true and correct in all
material respects as of the Effective Time (unless such representations and
warranties are qualified as to materiality or by Company Material Adverse
Effect, in which case, such representations and warranties shall have been true
and correct in all respects when made and shall be true and correct in all
respects as of the Closing), with the same force and effect as if made as of the
Closing, other than the representations and warranties made as of another date
(which shall be true and correct as of such other date).
8.2. Performance of Covenants. The Company and the Shareholders
shall have performed or complied in all material respects with all terms,
covenants and agreements required to be performed by them or complied with under
this Agreement prior to the Closing.
8.3. Opinion of Counsel. The Company shall have delivered to Parent
an opinion, dated the Effective Time and addressed to Parent, in a form
acceptable to Parent and the Company's counsel.
8.4. No Governmental or Other Proceeding or Litigation. No order of
any court or administrative agency shall be in effect which restrains or
prohibits any transaction contemplated hereby; and no suit, action, or
proceeding by any governmental body shall be pending against Parent, the Merger
Subsidiary, any Shareholder or the Company, which challenges the validity or
legality, or seeks to restrain the consummation, of any transaction contemplated
hereby.
8.5. Certificate of the Company. The Company shall have furnished
Parent with a certificate signed by a principal executive officer of the Company
to the effect that, with respect to the Company, the conditions set forth in
Sections 8.1 and 8.2 have been satisfied.
8.6. No Material Adverse Effect. No event or occurrence shall have
occurred that has had or is reasonably likely, individually or in the aggregate,
to have a Company Material Adverse Effect.
8.7. Certificate of Merger. The Company shall have executed and
delivered to Parent and the Merger Subsidiary the Certificate of Merger to be
filed with the Secretary of State of the State of Delaware in connection with
the Merger.
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8.8. Employment Agreements. Each of the applicable employees to
have executed and delivered to Parent counterparts of the following: (a) First
Amendment to Employment Agreement of Xxx Xxxxxxxxx in the form attached hereto
as Exhibit C, and (b) First Amendment to Employment Agreement of Xxxxxxxx Xxxxxx
in the form attached hereto as Exhibit D.
8.9. Shareholder Consent. Parent shall have received evidence of
the consent and approval of the Merger pursuant to and in accordance with this
Agreement by the Shareholders.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment of the
following conditions:
9.1. Representations and Warranties True. The representations and
warranties of Parent and Merger Subsidiary contained in this Agreement shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Effective Time (unless such
representations and warranties are qualified as to materiality, in which case,
such representations and warranties shall have been true and correct in all
respects when made and shall be true and correct in all respects as of the
Effective Time), with the same force and effect as if made as of the Effective
Time, other than the representations and warranties as are made as of another
date (which shall be true and correct as of such other date).
9.2. Performance of Covenants. Each of Parent and the Merger
Subsidiary shall have performed or complied with in all material respects all
terms, covenants and agreements required to be performed by it or complied with
under this Agreement prior to the Effective Time.
9.3. No Governmental or Other Proceeding or Litigation. No order of
any court or administrative agency shall be in effect which restrains or
prohibits any transaction contemplated hereby or which would limit or otherwise
affect in any respect Parent's ownership of the Company; and no suit, action, or
proceeding by any governmental body shall be pending against Parent, the Merger
Subsidiary, the Company or any principal Shareholder, which challenges the
validity or legality, or seeks to restrain the consummation, of any transaction
contemplated hereby or which seeks to limit or otherwise affect the Merger.
9.4. Certificate of Parent and the Merger Subsidiary. Parent shall
have furnished the Company with a Certificate of Parent and the Merger
Subsidiary signed by a principal executive officer to the effect that the
conditions set forth in Sections 9.1 and 9.2 have been satisfied.
9.5. Certificate of Merger. Parent and the Merger Subsidiary shall
have executed and delivered to the Company the certificate of merger to be filed
with the Secretary of State of the State of Delaware in connection with the
Merger.
9.6. No Material Adverse Effect. No event or occurrence shall have
occurred that has had or is reasonably likely, individually or in the aggregate,
to have a Parent Material Adverse Effect.
9.7. Employment Agreements. Parent shall have executed and
delivered to the applicable person counterparts of the following: (a) First
Amendment to Employment Agreement of Xxx Xxxxxxxxx in the form attached hereto
as Exhibit C, and (b) First Amendment to Employment Agreement of Xxxxxxxx Xxxxxx
in the form attached hereto as Exhibit D.
9.8. Opinion of Counsel. Parent shall have delivered to the Company
an opinion, dated the Effective Time and addressed to the Company, in a form
acceptable to the Company and Parent's counsel.
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ARTICLE X
SURVIVAL AND INDEMNIFICATION
10.1. Survival of Representations and Warranties. The representations
and warranties contained in this Agreement and all statements contained in this
Agreement, shall survive the Effective Time until six (6) months after the
Effective Date (the "Indemnification Period"); provided, however that the
representations and warranties made in Sections 3.1, 3.2, 3.3, 3.5, 4.1, 4.2,
4.5 and 4.6 shall survive indefinitely. Neither the period of survival nor the
liability of a party hereto with respect to such party's representations and
warranties shall be reduced by any investigation made at any time by or on
behalf of any other party hereto. If written notice of a claim has been given
prior to the expiration of the applicable representations and warranties, then
the relevant representations and warranties shall survive as to such claim,
until such claim has been finally resolved.
10.2. Indemnification by the Company Shareholders. Parent and its
affiliates (including the Company after the Closing), officers, directors,
employees, agents, successors and assigns (each, a "PARENT INDEMNIFIED PARTY")
shall be indemnified and held harmless by the Company before the Effective Time
and severally but not jointly by the Shareholders who shall have expressly
agreed to the provisions of Article X by their consent to and approval of this
Agreement after the Effective Time for the duration of the Indemnification
Period for any and all Liabilities, Taxes, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, attorneys' and consultants' fees and expenses actually suffered or
incurred by them (including, without limitation, any Action brought or otherwise
initiated by any of them) (hereinafter, a "Loss"), arising out of or resulting
from:
(a) the breach of any representation or warranty made by the
Company or the Shareholders contained in this Agreement; or
(b) the breach of any covenant or agreement by the Company or the
Shareholders contained in this Agreement.
10.3. Indemnification by Parent. Each Shareholder, (each, a
"SHAREHOLDER INDEMNIFIED PARTY") shall be indemnified and held harmless by
Parent for the duration of the Indemnification Period for any and all Losses
arising out of or resulting from:
(a) the breach of any representation or warranty made by Parent
or the Merger Subsidiary contained in this Agreement; or
(b) the breach of any covenant or agreement by Parent or the
Merger Subsidiary contained in this Agreement.
10.4. Indemnification Procedures. For purposes of this Section 10.4,
a party against which indemnification may be sought is referred to as the
"INDEMNITOR" and the party which may be entitled to indemnification is referred
to as the "INDEMNIFIED PARTY". An Indemnified Party that seeks indemnification
from an Indemnitor pursuant to the terms of Section 10.2 or Section 10.3 hereof
shall give the Indemnitor written notice of any matter which an Indemnified
Party has determined has given or is likely to give rise to a right of
indemnification under this Agreement, within 30 days of such determination,
stating the amount of the Loss, if known, and method of computation thereof, and
containing a reference to the provisions of this Agreement in respect of which
such right of indemnification is claimed or arises; provided, however that the
failure to provide such notice shall not release any Indemnitor from any of such
Indemnitor's obligations under this Article X except to the extent (a) any such
Indemnitor is materially Prejudiced by such failure or (b) such notice is not
given prior to the expiration of the time period specified in Section 10. 1
hereof `Me obligations and liabilities of any Indemnitor under this Article X
with respect to Losses arising from claims of any third party which are subject
to the indemnification provided for in this Article X ("THIRD PARTY CLAIMS")
shall be governed by and be contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Indemnitor notice of such Third
Party Claim within 20 days of the receipt by the Indemnified Party of such
notice; provided however, that the failure to provide such notice shall not
release any Indemnitor from any of the Indemnitor's obligations under this
Article X except to the extent (a) any such Indemnitor is materially prejudiced
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by such failure or (b) such notice is not given prior to the expiration of the
time period specified in Section 10.1 hereof. If the Indemnitor acknowledges in
writing such Indemnitor's obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, then
the Indemnitor shall be entitled to assume and control the defense of such Third
Party Claim at the Indemnitor's expense and through counsel of Indemnitor's
choice (reasonably satisfactory to the Indemnitee); provided, however, that if
there exists or is reasonably likely to exist a conflict of interest that would
make it inappropriate in the reasonable judgment of such counsel for the same
counsel to represent both the Indemnified Party and the Indemnitor, then the
Indemnified Party shall be entitled to retain its own counsel (reasonably
satisfactory to the Indemnitor) in each jurisdiction in which separate counsel
is required, at the expense of the Indemnitor. In the event the Indemnitor
exercises the right to undertake any such defense against any such Third Party
Claim as provided above, the Indemnified Party shall cooperate with the
Indemnitor in such defense and make available to the Indemnitor, at the expense
of the Indemnitor, all witnesses, pertinent records, materials and information
in the Indemnified Party's possession or under the Indemnified Party's control
relating thereto as is reasonably required by the Indemnitor. Similarly, in the
event the Indemnified Party is, directly or indirectly, conducting the defense
against any such Third Party Claim, the Indemnitor shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnitor's expense, all such witnesses, records, materials and
information in their possession or under Indemnitor's control relating thereto
as is reasonably required by the Indemnified Party. No such Third Party Claim
may be settled by the Indemnitor without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
10.5. Limit on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement from and after the Effective Time, the
Shareholders shall not be liable for aggregate indemnity obligations under this
Agreement in excess of the value of the shares of Parent Company Stock received
pursuant to this Agreement, valuing each share of Parent Company Stock at the
closing bid price of the Parent Company Stock on the Effective Time, and each
Shareholder's liability for any individual Loss shall be equal to the amount of
such Loss multiplied by the percentage of the outstanding shares of the Company
Common Stock owned by such Shareholder immediately prior to the Effective Time.
In addition, no Shareholder shall be liable for aggregate indemnification
obligations in excess of the value of the shares of Parent Company Stock receive
by such Shareholder pursuant to this Agreement, valuing each share of Parent
Company Stock at the closing bid price of the Parent Company Stock on the
Effective Time. Shareholders may pay all liabilities incurred by them pursuant
to and under this Article X with shares of Parent Company Stock, valuing each
share of Parent Company Stock at the closing bid price of the Parent Company
Stock on the Effective Time, it being expressly understood that, notwithstanding
the foregoing, each Shareholder's liability is limited by the number of shares
of Parent Company Stock held by such Shareholder after the Merger.
10.6. Treatment of Indemnification Payments. To the fullest extent
permitted by law, the Shareholders and Parent agree to treat all payments made
by either of them to or for the benefit of the other (including any payments to
the Company) under this Article X, under other indemnity provisions of this
Agreement and for any misrepresentations or breaches of warranties or covenants
as adjustments to the purchase price or as capital contributions for Tax
purposes.
10.7. Sole Remedy. Subject to Section 12.7 hereof, after the
Effective Time, the sole remedy of the parties hereto and the Shareholders for
breach of this Agreement (other than fraud, willful misrepresentation or
intentional breach) shall be pursuant to this Article X.
ARTICLE XI
TERMINATION
11.1. Termination. This Agreement may be terminated
(a) by the mutual consent of Parent and the Company;
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(b) by Parent or the Company at any time after June 1, 2000 if
for any reason the Merger shall not by such date have been consummated and such
failure to consummate the Merger is not caused by a breach of this Agreement by
the terminating party;
(c) by Parent if there has been a material breach on the part of
the Company or the Shareholders of a representation and warranty, covenant or
material obligation of the Company or the Shareholders set forth herein which,
if curable, has not been cured within ten days of notice thereof by Parent;
provided that such ten-day period shall be extended for an additional twenty
days if the Company or the Shareholders shall be making all reasonable attempts
to cure such breach, unless the breach is not susceptible of a cure;
(d) by the Company if there has been a material breach on the
part of Parent or the Merger Subsidiary of a representation and warranty,
covenant or material obligation of Parent or the Merger Subsidiary set forth
herein which, if curable, has not been cured within ten days of notice thereof
by the Company; provided that such ten-day period shall be extended for an
additional twenty days if Parent or the Merger Subsidiary shall be making all
reasonable attempts to cure such breach, unless the breach is not susceptible of
a cure; and
(e) by Parent or the Company if any court of competent
jurisdiction or other competent governmental or regulatory authority shall have
issued an order making illegal or otherwise restricting, preventing or
prohibiting the Merger and such order shall have become final and nonappealable.
11.2. Effect of Termination. If this Agreement is terminated by
Parent or the Company pursuant to Section 11. 1, this Agreement will forthwith
become null and void and there will be no liability or obligation on the part of
Parent, the Merger Subsidiary or the Company (or any of their respective
representatives or affiliates), except nothing contained herein shall relieve
any party hereto from liability for breach of its representations, warranties,
covenants or agreements contained in this Agreement.
ARTICLE XII
POST CLOSING COVENANTS
12.1. NASDAQ Small Cap Listing. In the event the stock of Parent is
listed on the NASDAQ Small Cap or NASDAQ National market within 270 days of the
effective date of the Registration Statement (the "Effective Date"), the
Shareholders still holding Parent Common Stock and holders of Company Stock
Options prior to the Effective Time (excluding OneSoft Corporation) shall be
entitled to receive a pro-rata distribution of 594,747 newly issued shares of
Parent Common Stock.
12.2. Share Price Achievement. In the event the closing bid price of
Parent Common Stock is at least $6.71875 per share for ten (10) consecutive
trading days prior to one year after the Effective Date, the Shareholders still
holding Parent Common Stock and holders of Company Stock Options prior to the
Effective Time (excluding OneSoft Corporation) shall be entitled to receive a
pro-rata distribution of 594,732 newly issued shares of Parent Common Stock.
12.3. Covenant Restriction. Notwithstanding anything contained
herein to the contrary, only those holders of Company Stock Options who are
employed by Parent or the Surviving Corporation, and holders of Company Stock
Options who serve as directors of Parent or the Surviving Corporation at the
time of the achievements referred to in Sections 12.1 and 12.2 hereof
(considered separately for each achievement) shall be entitled to participate in
the pro-rata distributions of Parent Common Stock referred to therein. Moreover,
holders of Company Stock Options will receive, in lieu of Parent Common Stock,
additional options to purchase Parent Common Stock, immediately vested, on the
same terms and conditions as the holder of Company Stock Options then possesses.
Any Parent Company Stock remaining after distribution on a pro-rata basis as set
forth in Section 12.1, 12.2, and 12.3 (as a result of a holder not being
entitled to participate in such distributions) shall be allocated to the
participating holders on an equitable basis as reasonably determined by the
board of directors of Parent.
12.4. Current Registration. Promptly after the Effective Time,
Parent shall cause the Registration Statement to be filed with the SEC
registering for resale those shares of Parent Common Stock as indicated on
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Exhibit A hereto (the "Holders"), and will continue to work with the SEC to
cause the Registration Statement to become effective as soon as possible. Shares
of Parent Common Stock registered and subject to resale pursuant to the
Registration Statement shall not be sold by the holder or any assignee thereof
for a period of six (6) months beginning on the Effective Date. Parent shall be
solely responsible for all costs, fees and expenses of such registration,
including, but not limited to, all attorneys' fees, accountants and financial
advisors fees, fees and commissions of investment bankers, filing fees and
expenses, and printing and engraving costs and expenses. If such Registration
Statement is not filed with the SEC prior to July 31, 2000, the Shareholders on
Exhibit A entitled to have their shares included in such Registration Statement
shall be entitled to specific performance and damages from Parents for breach of
such commitment. In addition, with respect to any registration statement filed
by Parent that includes Parent Common Stock of any Shareholder, Parent hereby
agrees to the following:
(a) Promptly upon request, Parent will provide to Holders such
number of copies of the prospectus forming a part of the Registration Statements
as are reasonably requested by such Holders, and all supplements or amendments
to such prospectus.
(b) If any time or from time to time after the Effective Date,
Parent notifies the Holders in writing of the existence of a Potential Material
Event (as defined below), the Holders shall not offer or sell any Parent Company
Stock or engage in any other transaction involving or relating to Parent Company
Stock, from the time of the giving of notice with respect to a Potential
Material Event until such Holders receive written notice from Parent that such
Potential Material Event either has been disclosed to the public or no longer
constitutes a Potential Material Event. The period during which such sale cannot
occur is referred to as the "black-out period." If a Potential Material Event
shall occur prior to the date of the Registration Statement is filed, then
Parent's obligation to file the Registration Statement shall be delayed without
penalty for not more than thirty (30) days. Parent must give Holders notice in
writing at least one (1) Trading Day prior to the first day of the blackout
period, if lawful to do so.
(c) "Potential Material Event" means any of the following: (1)
the possession by Parent of material information that is not ripe for disclosure
in a registration statement, as determined in good faith by the Chief Executive
Officer or the board of directors of Parent of that disclosure of such
information in the registration statement would be detrimental to the business
and affairs of Parent; or (2) any material engagement of activity by Parent
which would, in the good faith determination of the Chief Executive Officer or
the board of directors of Parent, be adversely affected by disclosure in a
registration statement at such time, which determination shall be accompanied by
a good faith determination by the Chief Executive Officer or the Board of
Directors of Parent that the registration statement would be materially
misleading absent the inclusion of such information.
(d) Holders shall cooperate with Parent in all respects in
connection with this Agreement, including timely supplying all information
reasonably requested by Parent (which shall include all information regarding
the Holders and proposed manner of sale of the Parent Company Stock requires to
be disclosed in the Registration Statement) and executing and returning all
documents reasonably required in connection with the registration and sale of
the Parent Company Stock and entering into and performing its obligations under
any underwriting agreement, if the offering is an underwritten offering, in
usual and customary form, with the managing underwriter or underwriters of such
underwritten offering.
(e) Parent shall notify each Holder at any time when a prospectus
relating thereto covered by the Registration Statement is required to be
delivered under the Act, of the happening of any event of which it has knowledge
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and Parent shall prepare and file a curative amendment under Section
5(a) as quickly as commercially possible.
(f) Subject to the limitations contained herein or required by
any applicable federal or state securities laws, once the Registration Statement
is declared effective, Parent shall keep the Registration Statement effective
and current until all of the securities registered thereunder are sold or may be
sold freely in any 90-day period without registration under an appropriate
exemption under the Securities Act or for a period of two years whichever shall
occur first.
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12.5. Future Registration. If Parent registers its shares of common
stock for sale or resale to the public under the Securities Act of 1933, Parent
will give prompt written notice thereof to the holders of Parent Common Stock
received pursuant to this Agreement and not registered pursuant to Section 12.3
hereof (the "Unregistered Holders"). Upon the written request of any of the
Unregistered Holders made within thirty (30) days after the receipt of such
notice, Parent shall cause the shares of Parent Common Stock hold by such
Unregistered Holders to be registered under the applicable Securities Act as
part of such public offering. Parent shall be solely responsible for all costs,
fees and expenses of such registration, including, but not limited to, all
attorneys' fees, accountants and financial advisors fees, fees and commissions
of investment bankers, filing fees and expenses, and printing and engraving
costs and expenses. Subject to the limitations contained herein, once the shares
of Parent Common Stock of the Unregistered Holders have been registered pursuant
to this Section, the Unregistered Holders shall possess the same rights, powers,
authority, and duties as the Holders set forth in Section 12.3 above. If such
public offering is an underwritten public offering and the managing underwriter
shall advise Parent and the Unregistered Holders in writing that the inclusion
in any registration pursuant hereto of some or all of the shares sought to be
registered creates a substantial risk that the proceeds or price per unit, which
the sellers of securities covered by such registration will derive from the sale
of such securities pursuant to such registration, will be reduced or that the
number of securities to be registered (including those sought to be registered
by Parent and those sought to be registered by the Unregistered Holders and any
others with similar registration rights) is too large a number to be reasonably
sold, then the number of shares sought to be registered by Unregistered Holders
and the number of shares of common stock of Parent sought to be registered by
any other shareholders shall be reduced pro rata to the extent necessary to
reduce the number of securities to be registered to the number recommended by
the managing underwriter. In no instance shall Parent be required to reduce the
number of shares of common stock it seeks to register to enable the shares held
by the Unregistered Holders or shares owned by other stockholders to be
registered.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1. Notices, Etc. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have been
duly given, when delivered in person, or when mailed by certified or registered
mail, postage prepaid, or when given by confirmed facsimile transmission, as
follows:
(a) If to the Company:
Xxxxxxx.xxx, Inc.
000 Xxxx 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx
with copies to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
000 X. Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
(b) If to Parent or the Merger Subsidiary:
Pet Quarters, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx
Attention: Xxxxx Xxxxxxx
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with copies to:
Xxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxxx
Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: C. Xxx Xxxxxxxx
or such other person as the person entitled to notice shall designate in
writing, such writing to be delivered to the other parties hereto in the manner
provided in this Section 13.1.
13.2. Survival Of Representations and Warranties. Except as provided
in Section 10.1, the representations and warranties contained herein and in any
certificate delivered pursuant hereto shall not survive the Effective Time and
the consummation of any or all of the transactions contemplated hereby. This
Section 13.2 shall not limit the survival of any covenant or agreement of the
parties, specifically including those contained in Articles I, XII, and XIII,
that by its terms contemplates performance after the Effective Time.
13.3. Entire Agreement; Amendment. This Agreement (including the
various Schedules and Exhibits hereto) sets forth the entire agreement and
understanding of the parties in respect of the transactions contemplated hereby
and supersedes all prior agreements, arrangements and understandings relating to
the subject matter hereof, except paragraphs 13 ("Break-up Fee") and 22
("Confidentiality") of the Term Sheet dated May 15, 2000, by and among Parent
and the Company, as amended hereby, which shall remain in full force and effect.
This Agreement may be amended or modified only by a written instrument executed
by Parent, the Merger Subsidiary, and the Company in accordance with Delaware
GCL.
13.4. Individual 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, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid and unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the legal, invalid or unenforceable
provision, and (iv) there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
13.5. Press Releases: Until the Effective Time, the Company and
Parent shall agree with each other as to the form and substance of any press
release related to this Agreement or the transactions contemplated hereby, and
shall consult each other as to the form and substance of other public
disclosures related thereto; provided, however, that nothing contained herein
shall prohibit either party, following notification to the other party if
practicable, from making any disclosure which is required by law or the rules of
any applicable securities exchange.
13.6. Governing Law: Consent to Jurisdiction; Venue; Waiver of Jury
Trial. (a) This Agreement shall be governed by the corporate law of the State of
Delaware applicable to contracts executed and performed entirely within that
State.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Arkansas State court or federal court of the United States
of America sitting in Little Rock, Arkansas, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
Arkansas State court or, to the extent permitted by law, in such federal court.
Such party agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing it this Agreement shall affect
any right that any party may otherwise have to bring any action or proceeding
relating to this Agreement in the courts of any jurisdiction.
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(c) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any
Arkansas State or federal court. Such party hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each of the parties hereto hereby waives all right to trial
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to this Agreement or the actions
of the parties in the negotiation, administration, performance or enforcement
thereof.
13.7. Specific Performance: The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
13.8. General: This Agreement: (i) shall inure to the benefit of and
be binding on the parties hereto and their heirs, personal representatives,
successors and permitted assigns, nothing in this Agreement, expressed or
implied, being intended to confer upon any other person any rights or remedies
hereunder except for the parties benefiting from Sections 1.2(c) and 6.1 shall
be third party beneficiaries hereunder; (ii) may not be assigned by a party
without the prior written consent of the other parties; and (iii) may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument The
Section, Schedule and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
PET QUARTERS, INC.
By:
---------------------------------------------
Xxxxx Xxxxxxx, CEO
PQ ACQUISITION COMPANY III, INC.
By:
---------------------------------------------
Xxxxx Xxxxxxx, President
XXXXXXX.XXX, INC.
By:
---------------------------------------------
Niloofar Xxxx Xxxx, CEO/President and Top Dog
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