EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
by and among
BUY CORP.,
XXXXXXXXXX.XXX INC. and
SPEEDSERVE INC.
TABLE OF CONTENTS
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Page
ARTICLE I THE MERGER.........................................................1
1.1 The Merger.......................................................1
1.2 Closing; Effective Time..........................................1
1.3 Effect of the Merger.............................................2
1.4 Certificate of Incorporation; Bylaws.............................2
1.5 Directors and Officers............................. .............2
1.6 Effect on Capital Stock..........................................2
1.7 No Further Ownership Rights in Target Common Stock...............3
1.8 Taking of Necessary Action; Further Action.......................3
1.9 Surrender of Certificates........................................3
1.10 Consent to Merger; Waiver of Dissenters'Rights...................4
1.11 Lost, Stolen or Destroyed Certificates...........................4
1.12 Minute Books, Stock Ledger and Other Corporate Records...........4
1.13 Legends on BC Stock..............................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND SI..............1
2.1 Corporate Existence, Good Standing and Authority.................5
2.2 Capitalization...................................................5
2.3 Subsidiaries.....................................................6
2.4 Financial Statements.............................................6
2.5 Absence of Certain Changes.......................................6
2.6 Properties.......................................................7
2.7 Inventories......................................................7
2.8 Accounts and Notes Receivable....................................7
2.9 Indebtedness.....................................................8
2.10 Litigation.......................................................8
2.11 Taxes............................................................8
2.12 No Breach........................................................8
2.13 Employees........................................................9
2.14 Insurance........................................................9
2.15 Contracts and Permits............................................9
2.16 Powers of Attorney; Bank Accounts................ ...............11
2.17 Compliance with Law; Governmental Consents.......................11
2.18 Intentionally Omitted............................................11
2.19 Intentionally Omitted............................................11
2.20 Intellectual Property Rights.....................................11
2.21 Year 2000 Compliance.............................................12
2.22 Purchase for Investment..........................................12
2.23 BC Stock Not Registered..........................................12
2.24 Economic Risk....................................................12
2.25 Access to Information............................................12
2.26 No Undisclosed Liabilities.......................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BC AND MERGER
SUB..............................................................13
3.1 Incorporation....................................................13
Table of Contents (continued)
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Page
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3.2 Capitalization...................................................13
3.3 BC Stock Fully Paid and Non-Assessable...........................13
3.4 Corporate Power and Authority....................................13
3.5 Intentionally Omitted............................................13
3.6 Financial Statements.............................................13
3.7 Properties.......................................................14
3.8 Litigation.......................................................14
3.9 No Breach........................................................14
3.10 Compliance with Law; Governmental Consents.......................15
3.11 No Undisclosed Liabilities.......................................15
3.12 Taxes............................................................15
3.13 Year 2000 Compliance.............................................16
3.14 Intellectual Property Rights.....................................16
3.15 Absence of Certain Changes.......................................17
ARTICLE IV COVENANTS OF THE SELLERS AND SI...................................18
4.1 Maintenance of Business..........................................18
4.2 Conduct of Business..............................................18
4.3 Necessary Consents...............................................20
4.4 Access to Information............................................20
4.5 Certain Defaults; Litigation.....................................20
4.6 Other Negotiations...............................................20
4.7 Capital Infusion.................................................21
4.8 Best Efforts.....................................................21
4.9 Market Stand-Off.................................................21
ARTICLE V COVENANTS OF BC AND MERGER SUB.....................................21
5.1 Necessary Consents....................... .......................21
5.2 BC Board of Directors............................................21
5.3 Best Efforts.....................................................22
5.4 Indemnification..................................................22
5.5 Maintenance of Business..........................................22
5.6 Access to Information............................................22
5.7 Certain Defaults; Litigation.....................................23
5.8 Other Negotiations...............................................23
5.9 Conduct of Business..............................................23
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF BC AND
MERGER SUB.......................................................24
6.1 Certificates for Shares..........................................24
6.2 Representations and Warranties True..............................24
6.3 Covenants Performed..............................................24
6.4 Certificate......................................................24
6.5 No Violations; No Actions........................................24
6.6 Proceedings and Documents........................................24
6.7 Delivery of Documents............................................24
6.8 Required Consents................................................24
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Table of Contents (continued)
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Page
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6.9 Repayment of IE Indebtedness.....................................25
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS...............25
7.1 Representations and Warranties True..............................25
7.2 Covenants Performed..............................................25
7.3 Certificate......................................................25
7.4 No Violations; No Actions........................................25
7.5 Proceedings and Documents........................................25
7.6 Delivery of Documents............................................25
7.7 Required Consents................................................26
7.8 Closing of Purchase of Shares by Softbank........................26
7.9 Repayment of IE Indebtedness.....................................26
ARTICLE VIII CLOSING.........................................................26
8.1 Time and Place...................................................26
8.2 Deliveries of the Sellers........................................26
8.3 Deliveries of BC.................................................27
8.4 Certificate of Merger, Articles of Merger and Plan of Merger.....28
8.5 Tax Opinion of Bass, Xxxxx & Xxxx PLC............................29
ARTICLE IX OBLIGATIONS OF THE SELLERS AND BC AFTER CLOSING...................29
9.1 Indemnification by the Sellers...........................29
9.2 Indemnification by BC, Merger Sub and Surviving Corporation......29
9.3 Indemnification Procedure for Claims.............................30
9.4 Defense by Indemnifying Party....................................30
9.5 Arbitration......................................................31
9.6 Limitations on Indemnification...................................32
9.7 Indemnification for Genesys Partners Letter Agreement............
ARTICLE X TERMINATION........................................................32
10.1 Termination by Mutual Consent....................................32
10.2 Termination by Default...........................................32
10.3 Effectiveness of Termination.....................................32
10.4 Effect of Termination............................................32
ARTICLE XI GENERAL PROVISIONS................................................33
11.1 Survival.........................................................33
11.2 Intentionally Omitted............................................33
11.3 No Broker or Finder..............................................33
11.4 Transaction Costs................................................33
11.5 Headings.........................................................33
11.6 Entire Agreement; Wa.............................................33
11.7 Third Parties....................................................33
11.8 Successors and Assigns...........................................34
11.9 Notices..........................................................34
11.10 Attorneys' Fees..................................................34
11.11 Governing Law....................................................35
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Table of Contents (continued)
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Page
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11.12 Counterparts.....................................................35
11.13 Severability.....................................................35
11.14 Publicity........................................................35
11.15 Schedules........................................................35
iv
EXHIBITS
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Exhibit A - Certificate of Merger
Exhibit B-1 - Articles of Merger
Exhibit B-2 - Plan of Merger
Exhibit C - Non-Competition Agreement
Exhibit D - Amended and Restated Investors' Rights Agreement
Exhibit E - Amended and Restated Stockholders' Agreement
Exhibit F - Voting Agreement
Exhibit G - Employment Agreements
Exhibit H - Non-Disclosure Agreement
Exhibit I - System Use Agreement
Exhibit J - Intercompany Service Agreement
Exhibit K - Supply Agreement
Exhibit L - Sublease
Exhibit M - Master Database License Agreement
Exhibit N - Form of Bass, Xxxxx & Xxxx PLC Legal Opinion
Exhibit O - Form of Xxxxxxx, Phleger & Xxxxxxxx LLP Legal Opinion
v
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "Agreement")
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is entered into as of October 26, 1998, by and among Buy Corp., a Delaware
corporation ("BC"), Xxxxxxxxxx.xxx Inc., a Delaware corporation and wholly owned
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subsidiary of BC ("Merger Sub"), SpeedServe Inc., a Tennessee corporation
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("SI"), Xxxxxx Entertainment Inc., a Tennessee corporation ("IE"), Xxxxx X.
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Xxxxx ("DMason"), and Xxxxxxx X. Xxxxx ("MMason", together with IE and DMason,
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the "Sellers").
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RECITALS
A. The Boards of Directors of BC and SI believe it is in the best
interests of their respective companies and the stockholders of their respective
companies that SI and Merger Sub combine into a single company through the
statutory merger of SI with and into Merger Sub (the "Merger") and, in
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furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding shares
of SI Common Stock, no par value ("SI Common Stock"), shall be converted into
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shares of BC Common Stock, $.0001 par value ("BC Stock"), at the rate set forth
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herein.
C. SI, BC and Merger Sub desire to make certain representations and
warranties and other agreements in connection with the Merger.
D. The parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
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reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Code.
NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the parties
agree as follows:
ARTICLE I
THE MERGER
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1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement, SI shall be
merged with and into Merger Sub, the separate corporate existence of SI shall
cease and Merger Sub shall continue as the surviving corporation. Merger Sub as
the surviving corporation after the Merger is hereinafter sometimes referred to
as the "Surviving Corporation."
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1.2 Closing; Effective Time. The closing of the transactions
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contemplated hereby (the "Closing") shall take place as soon as practicable
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after the satisfaction or waiver of each of the conditions set forth in Article
VI hereof or at such other time as the parties hereto agree (the "Closing
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Date"). The Closing shall take place at the offices of Xxxxxxx, Phleger &
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Xxxxxxxx LLP, 00 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, or at such other
location as the parties hereto agree. In connection with the Closing, the
parties hereto shall cause the Merger to be consummated by properly executing
and filing the Certificate of Merger in the form attached
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hereto as Exhibit A (the "Certificate of Merger") with the Delaware Secretary of
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State in accordance with the applicable provisions of the Delaware General
Corporation Law (the "Delaware Law") and Articles of Merger and a Plan of
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Merger, in the forms attached hereto as Exhibits B-1 and B-2, respectively (the
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"Articles of Merger and Plan of Merger"), with the Tennessee Secretary of State
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in accordance with the provisions of the Tennessee Business Corporation Act (the
"Tennessee Law"). The Merger shall become effective upon the filing of the
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Certificate of Merger with the Delaware Secretary of State and the Articles of
Merger and Plan of Merger with the Tennessee Secretary of State (the time of
such filings being the "Effective Time").
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1.3 Effect of the Merger. At the Effective Time, the effect of the
--------------------
Merger shall be as provided in this Agreement, the Certificate of Merger, the
Articles of Merger and Plan of Merger and the applicable provisions of Delaware
and Tennessee Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of SI and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of SI and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
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(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation.
(b) The Bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 Directors and Officers. At the Effective Time, the directors and
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officers of the Merger Sub shall become the directors and officers of the
Surviving Corporation, until their respective successors are duly elected or
appointed and qualified.
1.6 Effect on Capital Stock. By virtue of the Merger and without any
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action on the part of Merger Sub, SI or the holders of any of the following
securities:
(a) Conversion of Target Common Stock. At the Effective Time,
---------------------------------
each share of SI Common Stock issued and outstanding immediately prior to the
Effective Time (other than any shares of SI Common Stock to be canceled pursuant
to Section 1.6(b)) will be canceled and extinguished and be converted
automatically into the right to receive 58.9819 validly issued, fully paid and
non-assessable shares of BC Stock (the "Exchange Ratio").
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(b) Cancellation of Target Common Stock Owned by SI. At the
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Effective Time, all shares of SI Common Stock that are owned by SI as treasury
stock and or any direct or indirect wholly owned subsidiary of SI immediately
prior to the Effective Time shall be canceled and extinguished without any
conversion thereof.
(c) Capital Stock of Merger Sub. At the Effective Time, each
share of Common Stock, $.0001 par value, of Merger Sub ("Merger Sub Common
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Stock") issued and
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outstanding immediately prior to the Effective Time shall remain issued and
outstanding. Each stock certificate of Merger Sub evidencing ownership of any
such shares shall continue to evidence ownership of such shares of capital stock
of the Surviving Corporation.
(d) Adjustments to Exchange Ratio. The Exchange Ratio shall be
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adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
BC Stock or SI Common Stock), reorganization, recapitalization or other like
change with respect to BC Stock or SI Common Stock occurring after the date
hereof and prior to the Effective Time.
(e) Fractional Shares. No fraction of a share of BC Stock will be
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issued in the Merger and the number of shares of BC Stock issuable to a Seller
hereunder shall be rounded upward to the nearest whole share of BC Stock.
1.7 No Further Ownership Rights in Target Common Stock. All shares of BC
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Stock issued upon the surrender for exchange of shares of SI Common Stock in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of SI Common Stock, and
there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of SI Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
1.8 Taking of Necessary Action; Further Action. If, at any time after the
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Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of SI and Merger Sub, the officers and directors of SI and Merger
Sub are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action, so long
as such action is not inconsistent with this Agreement.
1.9 Surrender of Certificates.
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(a) Exchange Procedures. Promptly after the Effective Time, each
holder of record of a certificate or certificates ("Certificates") which
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immediately prior to the Effective Time represented outstanding shares of SI
Common Stock, whose shares were converted into the right to receive shares of BC
Stock (and cash in lieu of fractional shares) shall surrender such Certificates
(duly endorsed in favor of BC or accompanied by stock powers duly executed in
favor of and in a form reasonably acceptable to BC and its counsel, free from
any charge, lien, encumbrance or adverse claim of any kind whatsoever) in
exchange for certificates representing shares of BC Stock (and cash in lieu of
fractional shares). Upon surrender of a Certificate for cancellation to BC, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing the number of whole shares of BC Stock and payment in
lieu of fractional shares which such holder has the right to receive pursuant to
Section 1.6 of this Agreement, and the Certificate so surrendered shall
forthwith be canceled. Until so surrendered, each outstanding Certificate that,
prior to the Effective Time, represented shares of SI Common Stock will be
deemed from and after the Effective Time, for all corporate
3
purposes, other than the payment of dividends, to evidence the ownership of the
number of full shares of BC Stock into which such shares of Target Common Stock
shall have been so converted in accordance with Article I hereof.
(b) Distributions With Respect to Unexchanged Shares. No
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dividends or other distributions with respect to BC Stock with a record date
after the Effective Time will be paid to the holder of any unsurrendered
Certificate with respect to the shares of BC Stock represented thereby until the
holder of record of such Certificate shall surrender such Certificate. Subject
to applicable law, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of BC
Stock issued in exchange therefor, without interest, at the time of such
surrender, the amount of any such dividends or other distributions with a record
date after the Effective Time theretofore payable (but for the provisions of
this Section 1.9(b)) with respect to such shares of BC Stock.
(c) Transfers of Ownership. If any certificate for shares of BC
----------------------
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the person requesting such
exchange will have paid to BC or any agent designated by it any transfer or
other taxes required by reason of the issuance of a certificate for shares of BC
Stock in any name other than that of the registered holder of the Certificate
surrendered, or established to the satisfaction of BC or any agent designated by
it that such tax has been paid or is not payable.
(d) No Liability. Notwithstanding anything to the contrary in
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this Section 1.9, neither the Surviving Corporation nor any party hereto shall
be liable to any person for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar law.
1.10 Consent to Merger; Waiver of Dissenters' Rights. By their
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execution of this Agreement, each Seller (a) consents to the Merger and to the
taking of shareholder action to approve the Merger without a meeting; (b)
acknowledges that he or it is aware of his or its right to dissent to the Merger
and demand payment for shares of SI Common Stock in accordance with Tennessee
Law; and (c) waives such rights to dissent and demand payment with respect to
the Merger.
1.11 Lost, Stolen or Destroyed Certificates. In the event any
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Certificates shall have been lost, stolen or destroyed, BC shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of BC Stock as may be
required pursuant to Section 1.6; provided, however, that BC may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against BC or the Surviving Corporation or with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.12 Minute Books, Stock Ledger and Other Corporate Records. At the
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Closing, SI shall deliver to BC, in addition to those items set forth in Section
8.2, the minute books, stock ledger and other corporate records of SI.
4
1.13 Legends on BC Stock. In addition to any other legend that may be
-------------------
required by federal or state securities laws, each certificate for BC Stock that
is issued hereunder shall bear a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO SUCH SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER OF SUCH SECURITIES
THAT SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS
IN FULL COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNLESS SOLD IN COMPLIANCE WITH RULE 144 UNDER
SUCH ACT."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND SI
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Each of the Sellers and SI agrees with and represents and warrants to
BC and Merger Sub as follows:
2.1 Corporate Existence, Good Standing and Authority. SI is a
------------------------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Tennessee. SI has full corporate power and corporate
authority to carry on its business as now being conducted and to own, lease or
operate the property and assets now owned, leased or operated by it. SI is
qualified to do business, is in good standing and has all required and
appropriate licenses in each jurisdiction in which its failure to obtain or
maintain such qualification, good standing or licensing would, individually or
in the aggregate, have a material adverse effect on the assets, liabilities,
business, financial condition or results of operations of SI (a "Material
--------
Adverse Effect"). SI and each Seller have all requisite power and authority to
--------------
enter into this Agreement and all agreements and other documents to be entered
into in connection herewith and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Sellers and
SI, has been authorized by all necessary corporate and other action of SI and
the Sellers and constitutes a legal, valid and binding obligation of each of the
Sellers and SI, enforceable against each such party in accordance with its
terms, except as enforcement may be limited by equitable principles or
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditors' rights generally.
2.2 Capitalization. Except as set forth in Schedule 2.2, the
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authorized capital stock of SI consists of Ten Thousand (10,000) shares of
common stock, no par value, of which Ten Thousand (10,000) shares are issued and
outstanding (the "Shares"). All of the Shares are owned, beneficially and of
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record by the Sellers, and immediately prior to the Closing, all of the Shares
will be owned, beneficially and of record, by the Sellers. The Shares are free
from any
5
charge, lien, encumbrance, restriction or adverse claim of any kind whatsoever,
other than restrictions imposed by applicable securities laws. All of the Shares
have been duly authorized and validly issued and are fully paid and
nonassessable. There are no options, warrants, conversion rights, rights of
exchange, or other rights, plans, agreements or commitments of any nature
whatsoever (including, without limitation, conversion or preemptive rights)
providing for the purchase, issuance or sale of any shares of capital stock of
SI or any securities convertible into or exchangeable for any shares of capital
stock of SI.
2.3 Subsidiaries. SI does not presently own, directly or indirectly,
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any interest in any other corporation, association, joint venture or other
business entity. On the Closing Date, SI will not own, directly or indirectly,
any interest in any foreign sales corporation.
2.4 Financial Statements. The unaudited balance sheet and related
--------------------
statements of income and cash flows of SI at and for its fiscal year ended
December 31, 1997 and the unaudited balance sheet and related statement of
income and cash flow of SI for the period from January 1, 1998 through August
28, 1998 (collectively the "SI Financial Statements") have been delivered to BC.
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The internal books and records of SI from which the SI Financial Statements were
prepared are complete and correct in all material respects and have been
maintained in accordance with sound business practices. The SI Financial
Statements (i) were prepared in accordance with such books and records; (ii)
were prepared in accordance with the accounting policies and principles of SI,
and are in accordance with generally accepted accounting principles ("GAAP"),
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applied on a consistent basis throughout the periods presented; and (iii)
present fairly the financial position and results of operations of SI at the
dates and for the periods reflected therein.
2.5 Absence of Certain Changes. Except as set forth in Schedule 2.5,
--------------------------
since August 28, 1998, there has not been:
(a) Any Material Adverse Effect;
(b) Any increase in the compensation paid or payable by SI,
other than in the ordinary course of business, to any of its officers,
directors, employees, agents or shareholders;
(c) Any declaration, setting aside or payment of dividends, or
any direct or indirect redemption, purchase or other acquisition of any capital
stock or any agreement to do any of the foregoing;
(d) Any indebtedness incurred by SI in excess of Fifty Thousand
Dollars ($50,000), other than indebtedness permitted pursuant to Section
4.2(a)(i) hereof and indebtedness incurred in the ordinary course of business
consistent with SI's past practices;
(e) Any loan made by SI other than travel loans or advances made
to its employees in the ordinary course of business consistent with SI's past
practices, nor has SI become liable or agreed to become liable as a guarantor
with respect to any loan;
(f) Any waiver or compromise by SI of any right or rights of
material value, or any payment, direct or indirect, of any material debt,
liability or other obligation;
6
(g) Any change in the accounting methods, practices or policies
followed by SI since its inception, other than as disclosed in the Notes to the
SI Financial Statements;
(h) Any sale, assignment, or transfer of any patents,
trademarks, copyrights, trade secrets or other proprietary rights of material
value other than in the ordinary course of business consistent with SI's past
practices;
(i) Any purchase or other acquisition of, or any sale,
disposition of, or subjection to any lien or encumbrance on, any material
property or asset, tangible or intangible, of SI other than in the ordinary
course of business consistent with SI's past practices;
(j) Any actual or threatened amendment, termination or loss of
(i) any material contract, lease, license or other agreement to which SI was or
is a party; (ii) any certificate, license or other authorization required for
the continued operation by SI of any material portion of any of its business; or
(iii) any material customer or other revenue source;
(k) Any resignation or termination of employment of any key
officer or employee of SI, and the Sellers and SI do not know of the impending
resignation or termination of employment of any such officer or employee; or
(l) Any agreement or commitment by SI, or the Sellers on behalf
of SI, to do any of the things described in this Section 2.5.
2.6 Properties. SI does not own or hold title to any real property.
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With respect to the property and assets it leases, SI is in compliance in all
material respects with such leases and holds a valid leasehold interest in such
property and assets free of any liens or encumbrances of any kind whatsoever,
except those for taxes not yet due and payable or such liens or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property, or assets affected thereby.
There is set forth in Schedule 2.6 hereto: (i) a list of all leases or rental
contracts under which SI is a lessee, lessor, sublessee or sublessor and (ii) a
list of all equipment used by SI in the operation of its business which is owned
or leased by SI and which had an original cost of Fifty Thousand Dollars
($50,000) or more. All real and tangible personal property currently used by SI
in, and necessary for the conduct of, the operation of its business is, and at
the time of Closing will be, in good operating condition and repair, ordinary
wear and tear excepted, and is adequate and suitable for the purposes for which
it is presently being used. All improvements on leased property used by SI in
the operation of its business and their present use comply in all material
respects with all applicable laws and the agreements under which such
improvements are leased.
2.7 Inventories. Any inventory of SI consists, and at the time of
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Closing will consist, solely of inventory of the kind and quality regularly and
currently used in its business, subject to normal allowances for excess and
obsolete inventory in accordance with standard business practices.
2.8 Accounts and Notes Receivable. The Sellers have delivered (i) a
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complete and accurate list of the accounts payable, accrued liabilities and
accounts and notes receivable of SI as of October 2, 1998, and (ii) a complete
and accurate schedule showing the aging of such
7
accounts and notes receivable. Such accounts payable, accrued liabilities and
accounts receivable and notes receivable arose in bona-fide arms length
transactions in the normal course of business. The accounts receivable are and
will be at the Closing valid and binding obligations of the account debtors
without counterclaims, set-offs or other defenses thereto except in the ordinary
course of business, and to the knowledge of the Sellers and SI, such accounts
receivable are (except to the extent of the reserves thereon as set forth in the
SI Financial Statements or in the accounting records of SI on the date of this
Agreement) collectible in the ordinary course of business. The values at which
accounts receivable are carried on the books and records of SI accounts payable,
accrued liabilities and are consistent with SI's past practice and in accordance
with GAAP, applied on a consistent basis.
2.9 Indebtedness. Schedule 2.9 hereto contains a complete list of each
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and every agreement or other instrument under or pursuant to which SI has
outstanding indebtedness for borrowed money. SI (and the Sellers to the extent
responsible for the payment of the obligations thereunder) are not in default in
any material respect under any such agreement or instrument. Existing defaults,
if any, do not trigger acceleration of such indebtedness.
2.10 Litigation. No litigation, arbitration or other proceeding is
----------
pending or, to the knowledge of the Sellers and SI, threatened by or against SI,
its properties or assets, or the Shares before any court or any governmental
agency and, to the knowledge of the Sellers and SI, no facts exist which might
form the basis for any such litigation, arbitration or proceeding. To the
knowledge of the Sellers and SI, SI is not the subject of any investigation for
violation of any laws, regulations or administrative orders applicable to its
business. There is no judgment, writ, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against SI, its properties or assets or the Shares.
2.11 Taxes. SI has (i) timely filed or caused to be filed all federal,
-----
state and local tax returns required to be filed by SI prior to the date of this
Agreement which relate to SI or with respect to which SI is liable or otherwise
in any way subject, and all such tax returns (A) are complete, accurate and in
all material respects in accordance with all legal requirements applicable
thereto and (B) as of the time of filing, correctly reflected the facts
regarding the income, business assets, operations, activities, status or other
matters of SI required to be shown thereon, (ii) paid, when due, all taxes shown
to be due and payable on such returns, or pursuant to any assessment or
otherwise, or is contesting in good faith the payment thereof and (iii) properly
accrued, charged or established adequate reserves for all taxes assessed or
assessable against SI (including amounts being contested in good faith) relating
to the business, assets or employees or independent contractors of SI arising in
respect of any fiscal year of SI or portion thereof ended prior to the Closing.
No tax liabilities, disallowances or assessments relating to the business,
assets or employees or independent contractors of SI have been assessed against
SI or are such to the knowledge of the Sellers and SI proposed as of the date
hereof, and to the knowledge of the Sellers and SI there is no basis for any
such liabilities, disallowances or assessments. SI is not a party to or bound by
(nor will SI become a party to or bound by prior to the Closing) any tax
indemnity, tax sharing or tax allocation agreement.
2.12 No Breach. Except as set forth on Schedule 2.12 hereto, the
---------
consummation of the transactions contemplated by this Agreement will not result
in or constitute any of the following: (i) a conflict, violation or default with
or an event that, with notice or lapse
8
of time or both, would be a default, breach, or violation of the Charter or
Bylaws of SI, any License (as hereinafter defined) or any material contract or
other material agreement, instrument or arrangement to which SI is a party or by
which SI or its assets or the Shares are bound; (ii) an event that would permit
any party to terminate any material agreement to which SI is a party or by which
SI or its assets or the Shares are bound or to accelerate the maturity of or
permit the subordination of any material indebtedness or other material
obligation of SI; (iii) the creation or imposition of any material lien, charge,
or encumbrance on the assets of SI or the Shares; or (iv) conflict with or
result in the violation or breach of any law, rule or regulation of any
governmental authority, or any judgment, order, injunction or decree applicable
to SI, its assets or the Shares.
2.13 Employees. Schedule 2.13 contains a listing of (i) each
---------
collective bargaining agreement and other labor agreement to which SI is a party
or by which it is bound; (ii) each employment, consulting, severance, deferred
compensation, bonus, and any other employee benefit plan, contract, agreement,
or other arrangement (whether or not in writing) providing for compensation or
other benefits to employees (including officers), or independent contractors,
individually or as a group, to which SI is a party or by which it is bound;
(iii) each "employee pension benefit plan" as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974 ("ERISA") and not exempted under
-----
Section 4(b) or 201 of ERISA maintained by SI or to which SI is required to
contribute including any multi-employer pension plan; and (iv) each "employee
welfare benefit plan" as defined in Section 3(1) of ERISA maintained by SI or to
which SI contributes or is required to contribute, including any multi-employer
welfare plan, and each other plan under which "fringe benefits" (including,
without limitation, vacation plans or programs, severance benefits, sick leave
plans or programs, dental or medical plans or programs, and related or similar
benefits) are afforded to employees of, or otherwise required to be provided by,
SI. SI has complied in all material respects with all applicable laws, rules and
regulations relating to employment, including those relating to wages, hours,
collective bargaining and the payment and withholding of taxes and other sums as
required by appropriate governmental authorities.
2.14 Insurance. SI, or the Sellers on behalf of SI, maintains policies
---------
of insurance covering SI's assets, properties and business in types and amounts
that are consistent with SI's past practices. Neither SI nor, to the extent that
the Sellers maintain policies on behalf of SI, the Sellers are in default under
any of such policies, and neither SI or the Sellers have failed to give any
notice or to present any claim under any such policy in a due and timely
fashion.
2.15 Contracts and Permits. There is set forth in Schedule 2.15 hereto
---------------------
a complete and accurate list of:
(a) Each customer contract, whether written or oral, between SI
and any party to whom SI provides products or services which involved payments
to SI of more than Fifty Thousand Dollars ($50,000) during SI's last fiscal year
or can reasonably be expected to involve payments to SI of more than Fifty
Thousand Dollars ($50,000) during SI's next fiscal year ;
9
(b) Each contract (except for leases or rental contracts,
evidence of indebtedness and insurance contracts), whether written or oral,
between SI and any party to whom SI is obligated, or can reasonably be expected
to pay more than Fifty Thousand Dollars ($50,000) for any twelve (12)-month
period commencing on or after the Closing Date; and
(c) Each material permit, license, franchise, certificate or
authorization issued to SI by any governmental or other authority having
jurisdiction in any area where SI provides products or services (individually, a
"License" and collectively, the "Licenses").
------- --------
The contracts and agreements which are required to be identified in
Schedule 2.6 or in Schedule 2.15 pursuant to subsections (a) and (b) above are
hereinafter referred to as the "Contracts." Except as set forth in Schedules
---------
2.6 or 2.15:
(i) Each of the Contracts is a valid, binding and
enforceable agreement of SI and, to the knowledge of the Sellers and SI, the
other parties thereto, and to their knowledge will continue to be a valid,
binding and enforceable agreement of Merger Sub after the Closing Date;
(ii) As of the date hereof, the Sellers and SI have no
reason to believe that SI will not be able to fulfill all of its obligations
under the Contracts which remain to be performed after the date hereof to the
extent BC's operation of the business of SI after the Closing Date is consistent
with SI's past practices, and neither the Sellers nor SI has been notified by
any governmental or other party that such parties intend to cancel, terminate or
modify any of such Contracts or the basis upon which SI is paid thereunder, and
neither the Sellers nor SI knows of any valid grounds for any such cancellation,
termination or modification;
(iii) There has not occurred any material default (or event
which upon the provision of notice or lapse of time or both would become a
material default) by SI under any of the Contracts;
(iv) To the knowledge of the Sellers and SI, the Licenses
are the only permits, licenses, franchises, certificates and authorizations that
may be issued by any governmental or other authority having jurisdiction in any
area where SI provides products or services that are required for and are
material to the operation of the business of SI as such business is conducted;
(v) The Licenses are, and as of the Closing will be, in full
force and effect and the continuing validity and effectiveness of such Licenses
will not be affected by the Merger as herein contemplated; and
(vi) The Sellers and SI are and have been in compliance in
all material respects with all material conditions or requirements of the
Licenses, and neither the Sellers nor SI has been notified by any governmental
or licensing authority that such parties intend to cancel, terminate or modify
any of such Licenses, and neither the Sellers nor SI knows of any valid grounds
for any such cancellation, termination or modification.
10
2.16 Powers of Attorney; Bank Accounts. Schedule 2.16 hereto
---------------------------------
lists (i) the names and addresses of all persons holding a power of attorney on
behalf of SI; and (ii) the names and addresses of all banks or other financial
institutions in which SI has an account, deposit, or safe-deposit box, with the
number and a description of the account and the names of all persons authorized
to draw on such accounts or deposits or to have access to such boxes.
2.17 Compliance with Law; Governmental Consents. The business and
------------------------------------------
operations of SI have been and are being conducted in material compliance with
all laws, rules, regulations and licensing requirements applicable thereto,
including, without limitation, federal, state and local laws and regulations
affecting the protection of the environment, the health and safety of employees
and equal employment opportunities. The Sellers and SI are unaware of any facts
which might form the basis for a claim that any material violation by SI of such
laws exists. Except for (i) the filing of a pre-merger notification and
termination or expiration of the waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the
-------
filing of the Certificate of Merger and (iii) the filing of the Articles of
Merger and Plan of Merger, no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of SI or the Sellers
is required in connection with the execution, delivery and performance by the
Sellers and SI of this Agreement, the consummation of the transactions
contemplated hereby or BC's operation of the business of SI following the
Closing Date in a manner that is consistent with SI's past practices.
2.18 Intentionally Omitted.
---------------------
2.19 Intentionally Omitted.
---------------------
2.20 Intellectual Property Rights.
----------------------------
(a) Except as set forth in Schedule 2.20, SI has sufficient
title and ownership of all patents, trademarks, service marks, trade names,
Internet domain names, copyrights, trade secrets, customer lists, information,
proprietary rights and processes, registrations and applications therefor
(collectively, "Intellectual Property") necessary for and material to its
---------------------
business as now conducted and as proposed to be conducted, including all
Intellectual Property used in connection with or contained in any SI site on the
world wide web, without any conflict with or infringement of the rights of
others. Neither the Sellers nor SI has received any communications nor is either
of the Sellers or SI aware of any entity alleging that SI or any SI employee has
violated or, by conducting its business in a manner that is consistent with SI's
past practices, would violate any Intellectual Property of any other person or
entity. Neither the Sellers nor SI is aware that any of SI's employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his or
her best efforts to promote the interests of SI or that would conflict with the
operation of SI's business consistent with SI's past practices. SI does not
believe it is or will be necessary in connection with its business to utilize
any inventions of any of its employees (or persons it currently intends to hire)
made prior to their employment by SI. To the knowledge of the Sellers and SI,
all of the Intellectual Property is vested in (or, if applicable, leased or
licensed by) SI free and clear of any equities, claims, liens, encumbrances or
restrictions of any kind
11
whatsoever. Schedule 2.20 sets forth all patents, patent applications, copyright
registrations, copyright applications, trademarks and trade names (registered or
unregistered), Internet domain names and any other Intellectual Property owned
or licensed by SI or in which SI has any material interest.
(b) Except as set forth in Schedule 2.20, SI does not currently
use nor, to the knowledge of the Sellers and SI, does it propose to use any
Intellectual Property, invention or confidential information in which any of the
Sellers and other employees of SI claims a proprietary interest.
(c) Except as set forth in Schedule 2.20, to the knowledge of the
Sellers and SI, SI is not making use of any Intellectual Property, invention or
any confidential information in which any of its present or past employees has
claimed a proprietary interest; and the Sellers and SI are not actually aware of
any facts that would give rise to such a claim.
2.21 Year 2000 Compliance. SI has reviewed the areas within its
--------------------
business and operations which could be adversely affected by Year 2000 issues
and evaluated the costs associated with modifying and testing its systems for
the Year 2000. To the knowledge of SI, the cost of Year 2000 compliance for its
internal information systems will not have a Material Adverse Effect on SI.
2.22 Purchase for Investment. Each Seller acknowledges that he or it
-----------------------
is acquiring the BC Stock in the Merger for his or its own account and not with
a view to, or present intention of, distribution thereof in violation of the
Securities Act of 1933, as amended (the "1933 Act") or any state securities
--------
laws, and the BC Stock will not be disposed of in contravention of the 1933 Act
or state securities laws.
2.23 BC Stock Not Registered. Each Seller acknowledges that the BC
-----------------------
Stock has not been registered under the 1933 Act or any state securities laws
and, therefore, cannot be sold, and must be held indefinitely, unless
subsequently registered under the 1933 Act and state securities laws or unless
an exemption from such registration is available.
2.24 Economic Risk. Each Seller acknowledges that his or its
-------------
investment in the BC Stock involves a high degree of risk and represents that he
or it is able to bear the economic risk of his or its investment in the BC Stock
for an indefinite period of time.
2.25 Access to Information. Each Seller acknowledges that he or it has
---------------------
made such investigations and inquiries as he or it has deemed necessary for the
purpose of informing himself or itself about BC or its businesses prior to
entering into this Agreement.
2.26 No Undisclosed Liabilities. To the knowledge of the Sellers and
--------------------------
SI, SI does not have, or as of the Closing Date will not have, any material
liabilities, obligations or commitments (absolute, accrued, contingent or
otherwise) matured or unmatured ("Liabilities") except (i) Liabilities which are
-----------
adequately reflected or fully reserved against in the SI Financial
Statements; (ii) Liabilities incurred after the date of the SI Financial
Statements that were incurred in the ordinary course of SI's business and are
consistent with past practices; (iii) Liabilities disclosed in the Schedules
hereto and (iv) Liabilities permitted under Section 4.2(a)(i) hereof.
12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BC AND MERGER SUB
---------------------------------------------------
BC and Merger Sub, jointly and severally, represent and warrant to
each of the Sellers that:
3.1 Incorporation. Each of BC and Merger Sub has been duly
-------------
incorporated and is validly existing and in good standing under the laws of the
State of Delaware. Prior to the date hereof, Merger Sub has not engaged in any
activity other than the transactions contemplated by this Agreement. Each of BC
and Merger Sub has full corporate power and corporate authority to carry on its
business as now being conducted and to own, lease or operate the property and
assets now owned, leased or operated by it. Each of BC and Merger Sub is
qualified to do business, is in good standing and has all required and
appropriate licenses in each jurisdiction in which its failure to obtain or
maintain such qualification, good standing or licensing (i) would, individually
or in the aggregate, have or reasonably could be expected to have a material
adverse effect on the assets, liabilities, business, financial condition,
results of operations, or prospects of BC and its subsidiaries (including Merger
Sub) taken together, or (ii) would result in a material breach of any of the
other representations, warranties or covenants of BC set forth in this
Agreement.
3.2 Capitalization. Immediately prior to the Closing, the authorized
--------------
capital stock of BC will consist of 12,666,542 shares of Common Stock, $.0001
par value, of which 8,675,315 shares are issued and outstanding, and 1,298,742
shares of Series A Preferred Stock, $.0001 par value, all of which are issued
and outstanding. The authorized capital of Merger Sub consists of 1,000 shares
of Common Stock, $.001 par value, all of which are issued and outstanding and
held by BC. All outstanding shares of BC and Merger Sub capital stock have been
duly authorized and validly issued and are fully paid and nonassessable. Except
as set forth on Schedule 3.2 hereof and as of the date of this Agreement, BC
does not own, directly or indirectly, or have any obligation to acquire, any
interest or investment in any corporation, partnership, joint venture, business
trust, limited liability company or other entity. Schedule 3.2 sets forth the
aggregate number of all options, warrants, conversion rights, rights of
exchange, or other rights, plans, agreements or commitments of any nature
whatsoever (including, without limitation, conversion or preemptive rights)
providing for the purchase, issuance, or sale of any capital stock of BC or any
securities convertible or exchangeable for any shares of capital stock of BC.
3.3 BC Stock Fully Paid and Non-Assessable. The BC Stock deliverable
--------------------------------------
pursuant to Section 1.6, when issued and delivered as herein provided, will be
duly authorized, validly issued and outstanding shares of Common Stock of BC,
fully paid and non-assessable, free and clear of all liens, encumbrances,
restrictions and claims of every kind.
3.4 Corporate Power and Authority. Each of BC and Merger Sub has full
-----------------------------
corporate power and authority to enter into, deliver, perform its obligations
under and carry out this Agreement and all agreements and documents contemplated
hereby. This Agreement constitutes, and all agreements and documents
contemplated hereby when executed and delivered pursuant hereto will constitute,
the valid and legally binding obligations of BC and Merger Sub enforceable in
accordance with their terms, subject as to enforcement to bankruptcy,
13
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
3.5 Intentionally Omitted.
---------------------
3.6 Financial Statements. The unaudited balance sheet and related
--------------------
statements of income and cash flows of BC at and for its fiscal year ended
December 31, 1997 and the unaudited balance sheet and related statement of
income and cash flow of SI for the period from January 1, 1998 through July 31,
1998 (collectively the "BC Financial Statements") have been delivered to
-----------------------
Sellers. The internal books and records of BC from which the BC Financial
Statements were prepared are complete and correct in all material respects and
have been maintained in accordance with sound business practice. The BC
Financial Statements (i) were prepared in accordance with such books and
records; (ii) were prepared in accordance with the accounting policies and
principles of BC, and are in accordance with GAAP, applied on a consistent basis
throughout the periods presented; and (iii) present fairly the financial
position and results of operations of BC at the dates and for the periods
reflected therein.
3.7 Properties. Neither BC nor Merger Sub owns or holds title to any
----------
real property. With respect to the property and assets it leases, each of BC and
Merger Sub is in compliance in all material respects with such leases and holds
a valid leasehold interest in such property and assets free of any liens or
encumbrances of any kind whatsoever, except those for taxes not yet due and
payable or such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property, or assets affected thereby. All real and tangible personal property
currently used by each of BC and Merger Sub in, and necessary for the conduct
of, the operation of their respective businesses is, and at the time of Closing
will be, in good operating condition and repair, ordinary wear and tear
excepted, and is adequate and suitable for the purposes for which it is
presently being used. All improvements on leased property used by each of BC and
Merger Sub in the operation of their respective businesses and the present use
comply in all material respects with all applicable laws and the agreements
under which such improvements are leased.
3.8 Litigation. No litigation, arbitration or other proceeding is
----------
pending or, to the knowledge of BC or Merger Sub, threatened by or against BC or
Merger Sub, their respective properties or assets before any court or any
governmental agency, and, to the knowledge of BC or Merger Sub, no facts exist
which might form the basis for any such litigation, arbitration or proceeding.
To the knowledge of BC or Merger Sub, neither BC nor Merger Sub is the subject
of any investigation for violation of any laws, regulations or administrative
orders applicable to their respective businesses. There is no judgment, writ,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against either BC
or Merger Sub, their respective properties or assets.
3.9 No Breach. The consummation of the transactions contemplated by
---------
this Agreement will not result in or constitute any of the following: (i) a
conflict, violation or default with or an event that, with notice or lapse of
time or both, would be a default, breach, or violation of the Certificate of
Incorporation or Bylaws of BC or Merger Sub, or any material contract or other
material agreement, instrument or arrangement to which BC or Merger Sub is a
party or by which BC or Merger Sub or their respective assets are bound; (ii) an
event that would
14
permit any party to terminate any material agreement to which BC or Merger Sub
is a party or by which BC of Merger Sub or their respective assets are bound or
to accelerate the maturity of or permit the subordination of any material
indebtedness or other material obligation of BC or Merger Sub; (iii) the
creation or imposition of any lien, charge, or encumbrance on the assets of BC
or Merger Sub, except for such item that would not have a BC Material Adverse
Effect; or (iv) conflict with or result in the violation or breach of any law,
rule or regulation of any governmental authority, or any judgment, order,
injunction or decree applicable to BC or Merger Sub or their respective assets.
3.10 Compliance with Law; Governmental Consents. The business and
------------------------------------------
operations of BC and Merger Sub have been and are being conducted in material
compliance with all laws, rules, regulations and licensing requirements
applicable thereto, including, without limitation, federal, state and local laws
and regulations affecting the protection of the environment, the health and
safety of employees and equal employment opportunities. Neither BC nor Merger
Sub is aware of any facts which might form the basis for a claim that any
material violation by BC or Merger Sub of such laws exists. Except for (i) the
filing of a pre-merger notification and termination or expiration of the waiting
period under the HSR Act, (ii) the filing of the Certificate of Merger and (iii)
the filing of the Articles of Merger and Plan of Merger, no consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental authority
on the part of BC or the Merger Sub is required in connection with the
execution, delivery and performance by BC and the Merger Sub of this Agreement
or the consummation of the transactions contemplated hereby.
3.11 No Undisclosed Liabilities. Except as set forth on Schedule 3.11
--------------------------
hereof, to the knowledge of BC and Merger Sub, neither BC nor Merger Sub has, or
as of the Closing Date will have, any material liabilities, obligations or
commitments (absolute, accrued, contingent or otherwise) matured or unmatured
("BC Liabilities") except (i) BC Liabilities which are adequately reflected or
--------------
fully reserved against in the BC Financial Statements; (ii) BC Liabilities
incurred after the date of the BC Financial Statements that were incurred in the
ordinary course of BC's business and are consistent with past practices; and
(iii) BC Liabilities disclosed in the Schedules hereto.
3.12 Taxes. BC has (i) timely filed or caused to be filed all federal,
-----
state and local tax returns required to be filed by BC prior to the date of this
Agreement which relate to BC or with respect to which BC is liable or otherwise
in any way subject, and all such tax returns (A) are complete, accurate and in
all material respects in accordance with all legal requirements applicable
thereto and (B) as of the time of filing, correctly reflected the facts
regarding the income, business assets, operations, activities, status or other
matters of BC required to be shown thereon, (ii) paid, when due, all taxes shown
to be due and payable on such returns, or pursuant to any assessment or
otherwise, or is contesting in good faith the payment thereof and (iii) properly
accrued, charged or established adequate reserves for all taxes assessed or
assessable against BC (including amounts being contested in good faith) relating
to the business, assets or employees or independent contractors of BC arising in
respect of any fiscal year of BC or portion thereof ended prior to the Closing.
No tax liabilities, disallowances or assessments relating to the business,
assets or employees or independent contractors of BC have been assessed against
BC or are such to the knowledge of BC proposed as of the date hereof, and to the
knowledge of
15
BC there is no basis for any such liabilities, disallowances or assessments.
BC is not a party to or bound by (nor will BC become a party to or bound by
prior to the Closing) any tax indemnity, tax sharing or tax allocation
agreement.
3.13 Year 2000 Compliance. BC has reviewed the areas within its business
--------------------
and operations which could be adversely affected by Year 2000 issues and
evaluated the costs associated with modifying and testing its systems for the
Year 2000. To the knowledge of BC, the cost of Year 2000 compliance for its
internal information systems will not have a Material Adverse Effect on BC.
3.14 Intellectual Property Rights.
----------------------------
(a) Except as set forth in Schedule 3.14, each of BC and Merger Sub
has sufficient title and ownership of all patents, trademarks, service marks,
trade names, Internet domain names, copyrights, trade secrets, customer lists,
information, proprietary rights and processes, registrations and applications
therefor (collectively, "Intellectual Property") necessary for and material to
---------------------
its business as now conducted and as proposed to be conducted, including all
Intellectual Property used in connection with or contained in any BC site on the
world wide web, without any conflict with or infringement of the rights of
others. BC has not received any communications nor is BC aware of any entity
alleging that BC, Merger Sub or any BC employee has violated or, by conducting
its business in a manner that is consistent with BC's past practices, would
violate any Intellectual Property of any other person or entity. BC is not aware
that any of BC's or Merger Sub's employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his or her best efforts to promote
the interests of BC or that would conflict with the operation of BC's business
consistent with BC's past practices. BC does not believe it is or will be
necessary in connection with its business to utilize any inventions of any of
its employees (or persons it currently intends to hire) made prior to their
employment by BC. To the knowledge of BC, all of the Intellectual Property is
vested in (or, if applicable, leased or licensed by) BC or Merger Sub free and
clear of any equities, claims, liens, encumbrances or restrictions of any kind
whatsoever. Schedule 3.14 sets forth all patents, patent applications, copyright
registrations, copyright applications, trademarks and trade names (registered or
unregistered), Internet domain names and any other Intellectual Property owned
or licensed by BC or Merger Sub or in which BC or Merger Sub has any material
interest.
(b) Except as set forth in Schedule 3.14, neither BC nor Merger Sub
currently uses nor, to the knowledge of BC, does either BC or Merger Sub propose
to use any Intellectual Property, invention or confidential information in which
any employees of BC or Merger Sub claims a proprietary interest.
(c) Except as set forth in Schedule 3.14, to the knowledge of BC,
neither BC nor Merger Sub is making use of any Intellectual Property, invention
or any confidential information in which any of its present or past employees
has claimed a proprietary interest; and BC is not actually aware of any facts
that would give rise to such a claim.
16
3.15 Absence of Certain Changes. Except as set forth in Schedule 3.15,
--------------------------
since August 28, 1998, there has been:
(a) Any Material Adverse Effect;
(b) Any increase in the compensation paid or payable by BC or Merger
Sub, other than in the ordinary course of business, to any of their respective
officers, directors, employees, agents or shareholders;
(c) Any declaration, setting aside or payment of dividends, or any
direct or indirect redemption, purchase or other acquisition of any capital
stock of BC or Merger Sub or any agreement to do any of the foregoing;
(d) Any indebtedness incurred by BC or Merger Sub in excess of Fifty
Thousand Dollars ($50,000), other than indebtedness incurred in the ordinary
course of business consistent with BC's or Merger Sub's past practices;
(e) Any loan made by BC or Merger Sub other than travel loans or
advances made to its employees in the ordinary course of business consistent
with BC's or Merger Sub's past practices, nor has BC or Merger Sub become liable
or agreed to become liable as a guarantor with respect to any loan;
(f) Any waiver or compromise by BC or Merger Sub of any right or
rights of material value, or any payment, direct or indirect, of any material
debt, liability or other obligation;
(g) Any change in the accounting methods, practices or policies
followed by BC since its inception, other than as disclosed in the Notes to the
BC Financial Statements;
(h) Any sale, assignment, or transfer of any patents, trademarks,
copyrights, trade secrets or other proprietary rights of material value other
than in the ordinary course of business consistent with BC's past practices;
(i) Any purchase or other acquisition of, or any sale, disposition of,
or subjection to any lien or encumbrance on, any material property or asset,
tangible or intangible, of BC or Merger Sub other than in the ordinary course of
business consistent with BC's or Merger Sub's past practices;
(j) Any actual or threatened amendment, termination or loss of (i) any
material contract, lease, license or other agreement to which BC or Merger Sub
was or is a party; (ii) any certificate, license or other authorization required
for the continued operation by BC or Merger Sub of any material portion of any
of its business; or (iii) any material customer or other revenue source;
(k) Any resignation or termination of employment of any key officer or
employee of BC or Merger Sub, and BC does not know of the impending resignation
or termination of employment of any such officer or employee; or
17
(l) Any agreement or commitment by BC or Merger Sub to do
any of the things described in this Section 3.15.
ARTICLE IV
COVENANTS OF THE SELLERS AND SI
-------------------------------
4.1 Maintenance of Business. From the date hereof until the Closing,
-----------------------
each of the Sellers and SI shall use its diligent, good faith efforts, to cause
SI to carry on and preserve the business, goodwill and the relationships of SI
with suppliers, employees, agents and others in substantially the same manner as
they have been prior to the date hereof.
4.2 Conduct of Business.
-------------------
(a) From the date hereof until the Closing, except as expressly
permitted hereby, SI shall not, and the Sellers shall not permit SI to, without
BC's prior express written consent:
(i) incur any additional indebtedness, or guarantee any
indebtedness or obligation of any other party, except (A) in the ordinary
course of business or (B) for indebtedness to IE in an amount not to exceed
$1,000,000 in the aggregate, which amount: (1) shall only be advanced by IE
to SI in incremental amounts necessary, in the good faith judgment of the
Sellers, to comply with Section 4.1 hereof; (2) will bear interest at a
rate not to exceed the prime lending rate as reported in the Wall Street
Journal from time to time; and (3) SI agrees to repay by wire transfer of
immediately available funds immediately prior to the Closing;
(ii) except in connection with the capital contribution
contemplated by Section 4.7, issue, redeem, pledge, sell or repurchase any
capital stock of SI or securities convertible into its capital stock or
grant or issue any options, warrants or rights to subscribe for its capital
stock or securities convertible into its capital stock or commit to do any
of the foregoing;
(iii) enter into or terminate any material agreement or
arrangement;
(iv) increase the compensation or bonuses payable or to
become payable to any officers, employees or agents of SI, or adopt or
amend any employee benefit plan or arrangement;
(v) enter into any employment contract or agreement with
any existing or prospective employee which is not terminable at will;
(vi) pay any obligation or liability, fixed or contingent,
other than current liabilities or except as such payment becomes due;
(vii) cancel, without full payment, any note, loan or other
obligation owing to SI, or waive any rights of material value;
18
(viii) acquire or dispose of any properties, assets or
business except in the ordinary course of its business;
(ix) create or suffer to be imposed any lien, mortgage,
security interest or other charge on or against the properties or assets of
SI, other than in the ordinary course of business consistent with SI's past
practices, or the Shares;
(x) engage in any activities or transactions outside the
ordinary course of SI's e-commerce business as conducted at the date
hereof;
(xi) make or adopt any change in the Charter or Bylaws of
SI as in force and effect on the date hereof;
(xii) declare or pay any dividends on or make any other
distributions in respect of any shares of its capital stock; or
(xiii) pay, agree to pay or make any accrual or arrangement
for payment of any pension, retirement allowance or other employee benefit
pursuant to any plan, agreement or arrangement to any officer, director or
employee.
(b) From the date hereof until the Closing, except as expressly
permitted hereby, SI shall, and the Sellers shall cause SI to, unless otherwise
expressly consented to in writing by BC :
(i) maintain the existing insurance policies of SI, unless
comparable insurance is substituted therefor, and shall not take any action
to terminate or modify those insurance policies ;
(ii) maintain the books and records of SI consistent with
past practices and policies and in accordance with GAAP ;
(iii) maintain in good working condition, ordinary wear and
tear excepted, and in compliance in all material respects with all
applicable laws and regulations, all fixed assets owned, leased or
operated, as the case may be, by SI ;
(iv) observe and perform, and remain in compliance with, all
obligations of SI in agreements and contracts the breach or violation of
which would have, individually or in the aggregate, a Material Adverse
Effect and not enter into any agreements or contracts which would require
payments by SI of more than Fifty Thousand Dollars ($50,000) over any
period of twelve (12) months, except for inventory purchased in the
ordinary course of business disclosed in advance to BC and customer
contracts and purchase orders entered in the ordinary course of business
consistent with SI's past practices; and
(v) maintain compliance with the terms and conditions of all
Licenses held by SI or under which it operates or conducts its business and
use best efforts to maintain all such Licenses in full force and effect.
19
4.3 Necessary Consents. Prior to the Closing, the Sellers and SI
------------------
will obtain such written consents and take such other actions as may be
necessary or appropriate to allow the consummation of the transactions
contemplated hereby and to allow the continuation of the business of SI by BC
and Merger Sub after the Closing as conducted at the date hereof in all material
respects.
4.4 Access to Information. The Sellers shall cause SI to give BC
---------------------
and its accountants, legal counsel and other representatives reasonable access,
during normal business hours throughout the period prior to the Closing, to all
of the properties, books, contracts, commitments and records relating to the
business, assets and liabilities of SI, and will furnish BC, its accountants,
legal counsel and other representatives during such period all such information
concerning its affairs as BC may reasonably request; provided that any
furnishing of such information pursuant hereto or any investigation by BC shall
not affect BC's right to rely on the representations, warranties and covenants
made by the Sellers and SI in this Agreement except to the extent BC had, as of
the Closing Date, actual knowledge (based upon its investigation of written
information) of any misrepresentation, breach or alleged breach thereof on or
prior to the Closing Date. BC and its accountants, legal counsel and other
representatives (as "Representatives" of Buycomp LLC under the Confidentiality
---------------
Agreement, dated as August 28, 1998, as amended September 16, 1998, between
BuyComp LLC and SI (the "Confidentiality Agreement")) shall keep all such
-------------------------
information confidential accordance with the terms of the Confidentiality
Agreement.
4.5 Certain Defaults; Litigation. The Sellers and SI will give prompt
----------------------------
notice to BC of:
(a) any notice of default or other notice received by the Sellers
or SI subsequent to the date of this Agreement and prior to the Closing under
any instrument or agreement to which SI is a party or by which its assets are
bound or otherwise, which default could, if not remedied, result in a Material
Adverse Effect or which would render incorrect any representation made herein,
and
(b) any suit, action, proceeding or investigation instituted or
threatened against or affecting SI subsequent to the date of this Agreement and
prior to the Closing which could result in a Material Adverse Effect or which
would render incorrect any representation made herein.
4.6 Other Negotiations. Prior to the Closing, or such earlier date on
------------------
which this Agreement is terminated in accordance with its terms, the Sellers
will not, and the Sellers will cause SI and the officers, directors, employees,
agents and representatives of SI not to, directly or indirectly, initiate
discussions or negotiate, or authorize any person or entity to discuss or
negotiate on behalf of the Sellers or SI, with any other party, or entertain or
consider any inquiries or proposals received from any other party, concerning
the possible disposition of SI, its business, assets or capital stock, in whole
or in part. The Sellers and SI will not furnish any information concerning SI to
any person other than BC for the purpose of, or with the intent of, permitting
such person or entity to evaluate a possible acquisition of SI, its business,
assets or capital stock, in whole or in part.
20
4.7 Capital Infusion. Immediately prior to the Closing, IE shall make
----------------
a capital contribution to SI in the amount of $1,000,000, payable by wire
transfer in immediately available funds .
4.8 Best Efforts. The Sellers and SI will each use their best efforts
------------
to perform and fulfill all obligations on their respective parts to be performed
and fulfilled under this Agreement, and to cause all the conditions precedent to
the consummation of the transactions to be timely satisfied, to the end that the
transactions contemplated by this Agreement shall be effected substantially in
accordance with its terms, including the "tax-free" reorganization status of the
transactions. The Sellers and SI shall each cooperate with BC in such actions
and in securing requisite approvals and shall deliver such further documents as
BC may reasonably request as necessary to evidence such transactions.
4.9 Market Stand-Off. Each Seller hereby agrees that, during the one
----------------
hundred twenty (120) period following the effective date of a registration
statement of BC filed under the 1933 Act (the "Market Stand-Off Period"), he or
-----------------------
it shall not, to the extent requested by BC and/or the managing underwriter,
sell or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any securities of BC held by him or it at any time during such
period except common stock included in such registration; provided, that
officers and directors of BC (as determined by the managing underwriter) enter
into similar agreements. Each of the Sellers agrees to increase the Market
Stand-Off Period to 180 days at the request of the managing underwriter;
provided, that officers and directors of BC (as determined by the managing
underwriter) agree to the same increase. The Sellers agree that, as a condition
to any transfer or disposition of the BC securities held by the Sellers, any
transferee or assignee of the BC securities shall agree in writing to be bound
by the terms of this Section 4.9.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the BC securities held by each Seller
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such one hundred twenty (120) day or longer
period.
ARTICLE V
COVENANTS OF BC AND MERGER SUB
------------------------------
5.1 Necessary Consents. Prior to the Closing, BC and Merger Sub will
------------------
obtain such consents and take such other actions as may be necessary or
appropriate to allow the consummation of the transactions contemplated hereby.
5.2 BC Board of Directors. At the Closing, BC shall take such actions
---------------------
as may be necessary to appoint Xxxxx X. Xxxxxx ("Xxxxxx") to its Board of
------
Directors and, assuming acceptance of such position, to xxxxx Xxxxxx an option
to purchase 10,000 shares of Common Stock of BC at a price per share equal to
the fair market value of such stock as determined by BC's Board of Directors. So
long as Xxxxxx remains on BC's Board of Directors, BC agrees (i) to maintain
Directors and Officer's liability insurance; (ii) engage outside auditors that
are reasonably acceptable to Xxxxxx; provided that any of the Big 5 public
accounting firms shall be deemed acceptable by Xxxxxx; and (iii) to compensate
and reimburse Xxxxxx to the same extent as other non-employee directors of BC.
21
5.3 Best Efforts. Each of BC and Merger Sub will use its best efforts
------------
to perform and fulfill all obligations on its part to be performed and fulfilled
under this Agreement, and to cause all the conditions precedent to the
consummation of the transactions to be timely satisfied, to the end that the
transactions contemplated by this Agreement shall be effected substantially in
accordance with its terms. Each of BC and Merger Sub shall cooperate with the
Sellers and SI in such actions and in securing requisite approvals and shall
deliver such further documents as the Sellers and SI may reasonably request as
necessary to evidence such transactions.
5.4 Indemnification. After the Closing, BC shall cause the Surviving
---------------
Corporation to, and the Surviving Corporation shall, indemnify and hold harmless
each present and former employee, agent, director or officer of SI (the
"Indemnified Parties") to the full extent required or permitted under (a)
-------------------
Delaware Law, (b) as provided in the Surviving Corporation's Certificate of
Incorporation and Bylaws, and (c) as otherwise provided for or permitted
pursuant to any agreement or arrangement in effect at the date hereof (to the
extent consistent with applicable law), which rights to be indemnified and held
harmless shall survive the Closing and shall continue in full force and effect
for a period of not less than six years from the Closing Date, provided, that,
in the event any claim or claims (a "Claim or Claims") are asserted or made
----- ------
within such six-year period, all rights to indemnification in respect of any
such Claim or Claims shall continue until disposition of any and all such Claim
or Claims. Without limiting the foregoing, to the extent permitted by applicable
law, BC shall cause the Surviving Corporation to, and the Surviving Corporation
shall, periodically (no less than on a quarterly basis) advance expenses as
incurred with respect to any Claim to the fullest extent permitted by applicable
law, provided the person to whom the expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification.
5.5 Maintenance of Business. From the date hereof until the Closing,
-----------------------
BC shall use its diligent, good faith efforts, to carry on and preserve the
business, goodwill and the relationships of BC with suppliers, employees, agents
and others in substantially the same manner as they have been prior to the date
hereof.
5.6 Access to Information. BC shall give the Sellers and their
accountants, legal counsel and other representatives reasonable access, during
normal business hours throughout the period prior to the Closing, to all of the
properties, books, contracts, commitments and records relating to the business,
assets and liabilities of BC, and will furnish the Sellers, their accountants,
legal counsel and other representatives during such period all such information
concerning its affairs as the Sellers may reasonably request; provided that any
furnishing of such information pursuant hereto or any investigation by the
Sellers shall not affect the Sellers' right to rely on the representations,
warranties and covenants made by BC in this Agreement except to the extent SI or
the Sellers had, as of the Closing Date, actual knowledge (based upon their
investigation of written information) of any misrepresentation, breach or
alleged breach thereof on or prior to the Closing Date. The Sellers, SI and
their accountants, legal counsel and other representatives (as "Representatives"
---------------
of SI under the Confidentiality Agreement) shall keep all such information
confidential in accordance with the terms of the Confidentiality Agreement.
22
5.7 Certain Defaults; Litigation. BC will give prompt notice to the
----------------------------
Sellers of:
(a) any notice of default or other notice received by BC
subsequent to the date of this Agreement and prior to the Closing under any
instrument or agreement to which BC is a party or by which its assets are bound
or otherwise, which default could, if not remedied, result in a material adverse
effect on the assets, liabilities, business, financial condition or results of
operations of BC (a "BC Material Adverse Effect") or which would render
--------------------------
incorrect any representation made herein, and
(b) any suit, action, proceeding or investigation instituted or
threatened against or affecting BC subsequent to the date of this Agreement and
prior to the Closing which could result in a BC Material Adverse Effect or which
would render incorrect any representation made herein.
5.8 Other Negotiations. Prior to the Closing, or such earlier date on
------------------
which this Agreement is terminated in accordance with its terms, BC will not,
and BC will cause the officers, directors, employees, agents and representatives
of BC not to, directly or indirectly, initiate discussions or negotiate, or
authorize any person or entity to discuss or negotiate on behalf of BC, with any
other party, or entertain or consider any inquiries or proposals received from
any other party, concerning the possible acquisition by BC (including, without
limitation, any reorganization, merger or sale of assets) of any business that
is competitive with the business of SI.
5.9 Conduct of Business. From the date hereof until the Closing,
-------------------
except as expressly permitted hereby, BC shall not, without SI's prior express
written consent:
(a) incur any additional indebtedness, or guarantee any
indebtedness or obligation of any other party, except in the ordinary course of
business;
(b) dispose of any properties, assets or business except in the
ordinary course of its business ;
(c) make or adopt any change in the Certificate of Incorporation
or Bylaws of BC as in force and effect on the date hereof; provided, however,
that BC may amend its Certificate of Incorporation to (i) change its name; (ii)
reduce the number of options that may be issued by BC which do not result in an
adjustment to the conversion price of Series A Preferred Stock (Section 6E of
the Certificate of Incorporation); (iii) increase the authorized capital stock
of BC to accommodate a stock split or stock dividend by BC and (iv) increase the
authorized capital stock of BC to accommodate the sale and issuance of shares of
BC capital stock to Xxxx Xxxxxx; or
(d) issue additional shares of capital stock without first
offering IE the opportunity to purchase up to five percent (5%) of any such
additional shares proposed to be issued by BC; provided that, IE shall have five
days from the receipt of notice delivered pursuant to Section 11.9 hereof of a
proposed issuance to elect to purchase shares under this subsection (d); and
provided further that, the right of first offer provided to IE under this
subsection (d) shall not apply to any stock split or stock dividend effected by
BC.
23
ARTICLE VI
CONDITIONS PRECEDENT TO
-----------------------
OBLIGATIONS OF BC AND MERGER SUB
--------------------------------
The obligation of each of BC and Merger Sub to consummate the
transactions contemplated by this Agreement is subject to the satisfaction, at
or before the Closing, of all the following conditions, unless waived in writing
by BC:
6.1 Certificates for Shares. BC shall have received for cancellation
-----------------------
in the Merger certificates for the Shares, which shall constitute all of the
issued and outstanding capital stock of SI.
6.2 Representations and Warranties True. All representations and
-----------------------------------
warranties of the Sellers and SI in this Agreement or the Schedules and Exhibits
hereto, or in any written statement or certificate that shall be delivered to BC
by the Sellers or SI under this Agreement, shall be true and correct on and as
of the date made and as of the Closing Date as if made on the date thereof
(except to the extent such representation or warranty relates to an earlier
date).
6.3 Covenants Performed. The Sellers and SI shall have performed,
-------------------
satisfied, and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
the Sellers and SI on or before the Closing Date.
6.4 Certificate. BC shall have received from the Sellers a
-----------
certificate, dated the Closing Date, certifying that the conditions specified in
this Article VI have been satisfied.
6.5 No Violations; No Actions. Consummation of the transactions
-------------------------
contemplated by this Agreement shall not violate any order, decree or judgment
of any court or governmental body having competent jurisdiction and no action or
proceeding shall have been instituted or threatened by any person, entity or
governmental agency which, in any such case, in the sole judgment of BC, has a
reasonable probability of resulting in (i) the obtaining of material damages
from BC or SI; (ii) an order, judgment or decree restraining, prohibiting or
rendering unlawful the consummation of the transactions contemplated by this
Agreement; or (iii) other relief in connection therewith.
6.6 Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be in form and substance
reasonably satisfactory to BC and its counsel, and BC shall have received all
such counterpart originals or certified or other copies of such documents as it
may reasonably request.
6.7 Delivery of Documents. BC shall have received all documents and
---------------------
other items to be delivered by the Sellers under Section 8.2.
6.8 Required Consents. All consents, approvals and waivers from third
-----------------
parties and governmental authorities necessary to the transactions as
contemplated hereby, including, without limitation, the expiration or
termination of applicable waiting periods under the HSR
24
Act, and to the continued validity and effectiveness of the Licenses shall have
been obtained without the imposition on BC or SI of any burdensome conditions,
restrictions, or obligations.
6.9 Repayment of IE Indebtedness. SI shall have repaid in full, by
----------------------------
wire transfer of immediately available funds, any amounts owed to IE that have
been incurred prior to the date hereof or otherwise in accordance with Section
4.2(a)(i) of this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO
-----------------------
OBLIGATIONS OF THE SELLERS
--------------------------
The obligation of the Sellers to consummate the transactions
contemplated by this Agreement is subject to the satisfaction, at or before the
Closing, of all the following conditions, unless waived in writing by a majority
in interest of the Sellers:
7.1 Representations and Warranties True. All representations and
-----------------------------------
warranties by BC and Merger Sub in this Agreement or the Schedules and Exhibits
hereto, or in any written statement or certificate that shall be delivered to
the Sellers by BC under this Agreement, shall be true and correct on and as of
the date made and as of the Closing Date as if made on the date thereof (except
to the extent such representation or warranty relates to an earlier date).
7.2 Covenants Performed. BC and Merger Sub shall have performed,
-------------------
satisfied, and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by BC
and Merger Sub in all material respects on or before the Closing Date.
7.3 Certificate. The Sellers shall have received from BC a certificate
-----------
signed by the Chief Financial Officer of BC, dated the Closing Date, certifying
that the conditions specified in this Article VII have been satisfied.
7.4 No Violations; No Actions. Consummation of the transactions
-------------------------
contemplated by this Agreement shall not violate any order, decree or judgment
of any court or governmental body having competent jurisdiction and no action or
proceeding shall have been instituted or threatened by any person, entity or
governmental agency which, in any such case, in the sole judgment of the
Sellers, has a reasonable probability of resulting in (i) the obtaining of
material damages from the Sellers or BC, (ii) an order, judgment or decree
restraining, prohibiting or rendering unlawful the consummation of the
transactions contemplated by this Agreement, or (iii) other relief in connection
therewith.
7.5 Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be in form and substance
reasonably satisfactory to the Sellers and their counsel, and the Sellers shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
7.6 Delivery of Documents. The Sellers shall have received (a) all
---------------------
documents and other items to be delivered by BC under Section 8.3 and (b) the
tax opinion of Bass, Xxxxx & Xxxx PLC to be delivered under Section 8.5.
25
7.7 Required Consents. All consents, approvals and waivers from third
-----------------
parties and governmental authorities necessary to the transactions as
contemplated hereby shall have been obtained, including, without limitation, the
expiration or termination of applicable waiting periods under the HSR Act.
7.8 Closing of Purchase of Shares by Softbank. The sale of shares of
-----------------------------------------
BC Stock by The Xxxxx X. Xxxx Separate Property Trust u/d/t 8/2/95 to Softbank
Holdings Inc. pursuant to a certain Stock Purchase Agreement dated as of
September 30, 1998 shall have been consummated.
7.9 Repayment of IE Indebtedness. SI shall have replied in full, by
----------------------------
wire transfer of immediately available funds, any amounts owed to IE that have
been incurred prior to the date hereof or otherwise in accordance with Section
4.2(a)(i) of this Agreement.
ARTICLE VIII
CLOSING
-------
8.1 Time and Place. The Closing shall occur at the time and place
--------------
specified in Section 1.2 of this Agreement.
8.2 Deliveries of the Sellers. At the Closing, the Sellers will
-------------------------
execute and deliver or cause to be executed and delivered to BC:
(a) Stock Certificates. Certificates representing the Shares,
------------------
presented to BC for conversion into BC Stock ;
(b) Corporate Documents. The Charter of SI, certified by the Secretary
-------------------
of State of Tennessee as of a recent date and the Bylaws of SI, certified by the
Secretary of SI as in effect at the Closing;
(c) Certificates of Good Standing. Certificates of Good Standing,
-----------------------------
dated as of a recent date, with respect to SI, issued by the Secretary of State
of each of the States listed in Schedule 8.2(c);
(d) Books and Records. All of the minute books, stock ledgers and
-----------------
similar corporate records of SI;
(e) The Sellers' Certificate. A certificate from the Sellers, dated
------------------------
the Closing Date, containing the information required pursuant to Section 6.4;
(f) Non-Competition Agreements. Non-Competition Agreements dated the
--------------------------
Closing Date between BC and Merger Sub, on the one hand, and each of DMason,
MMason, IE and Xxxxxx, on the other hand, substantially in form of Exhibit C
attached hereto (the "Non-Competition Agreements");
(g) Amended and Restated Investors' Rights Agreement. An Amended and
------------------------------------------------
Restated Investors' Rights Agreement dated the Closing Date among BC, the
26
Sellers and other BC stockholders named therein substantially in the form of
Exhibit D attached hereto (the "Amended and Restated Investors' Rights
--------------------------------------
Agreement");
---------
(h) Amended and Restated Stockholders' Agreement. An Amended and
--------------------------------------------
Restated Stockholders' Agreement dated the Closing Date among BC, the Sellers
and other BC stockholders named therein substantially in the form of Exhibit E
attached hereto (the "Amended and Restated Stockholders' Agreement");
(i) Voting Agreement. A voting agreement dated the Closing Date among
----------------
BC, the Sellers and other BC stockholders named therein substantially in the
form of Exhibit F attached hereto (the "Voting Agreement");
----------------
(j) Employment Agreements. Employment Agreements between Merger Sub
---------------------
and each of DMason and MMason, substantially in the form of Exhibit G attached
hereto (the "Employment Agreements");
---------------------
(k) Intercompany Agreements. IE and SI (or Merger Sub, if more
-----------------------
appropriate) shall enter into the System Use Agreement in the form attached
hereto as Exhibit I, the Intercompany Services Agreement in the form attached
hereto as Exhibit J, the Supply Agreement in the form attached hereto as Exhibit
K, the Sublease in the form attached hereto as Exhibit L, and the Master
Database License Agreement in the form attached hereto as Exhibit M (the
"Intercompany Agreements").
-----------------------
(l) Non-Disclosure Agreements. Non-disclosure agreements between
-------------------------
Merger Sub, on the one hand, and the persons listed on Schedule 8.2 who accept
employment with Merger Sub as of the Closing on the other hand, substantially in
the form of Exhibit H attached hereto ;
(m) Resolutions. A copy of the resolutions of the Board of Directors
-----------
of SI, certified by the Secretary thereof as having been duly and validly
adopted and being in full force and effect, and a copy of shareholder
resolutions or consents authorizing execution and delivery of this Agreement and
performance of the transactions contemplated hereby by SI;
(n) Legal Opinion. A legal opinion of Bass, Xxxxx & Xxxx PLC
-------------
substantially in the form of Exhibit N attached hereto; and
(o) Other Documents. Such other documents and instruments as BC or
---------------
its counsel reasonably shall deem necessary to consummate the transactions
contemplated hereby.
All documents delivered to BC shall be in form and substance
reasonably satisfactory to BC and its counsel.
8.3 Deliveries of BC. At the Closing, BC and/or Merger Sub will execute and
----------------
deliver or cause to be executed and delivered to the Sellers simultaneously with
delivery of the items referred to in Section 8.2 above:
27
(a) BC Stock. Certificates representing the BC Stock issuable in
--------
accordance with Article I hereof;
(b) Resolutions. A copy of the resolutions of the Board of Directors
-----------
of each of BC and Merger Sub, certified by the Secretary thereof as having been
duly and validly adopted and being in full force and effect, and a copy of
stockholder consents for Merger Sub authorizing execution and delivery of this
Agreement and performance of the transactions contemplated hereby by BC;
(c) Corporate Documents. The Amended and Restated Certificate of
-------------------
Incorporation of BC and the Certificate of Incorporation of Merger Sub,
certified by the Secretary of State of Delaware as of a recent date and the
Bylaws of BC and Merger Sub, certified by the secretaries of BC and Merger Sub,
respectively, as in effect at the Closing;
(d) Officer's Certificate. A certificate dated the Closing Date
---------------------
containing the information required pursuant to Section 7.3;
(e) Non-Competition Agreements. The Non-Competition Agreements;
--------------------------
(f) Amended and Restated Investors' Rights Agreement. The Amended and
------------------------------------------------
Restated Investors' Rights Agreement;
(g) Amended and Restated Stockholders' Agreement. The Amended and
--------------------------------------------
Restated Stockholders' Agreement ;
(h) Voting Agreement. The Voting Agreement;
----------------
(i) Employment Agreements. The Employment Agreements;
---------------------
(j) Intercompany Agreements. The Intercompany Agreements;
-----------------------
(k) Legal Opinion. A legal opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
-------------
substantially in the form of Exhibit O attached hereto; and
(l) Other Documents. Such other documents and instruments as the
Sellers or their counsel reasonably shall deem necessary to consummate the
transactions contemplated hereby.
All documents delivered to the Sellers shall be in form and substance
reasonably satisfactory to the Sellers and their counsel.
8.4 Certificate of Merger, Articles of Merger and Plan of Merger. At the
Closing, the parties hereto shall cause to filed the Certificate of Merger with
the Delaware Secretary of State in accordance with the Delaware Law and the
Articles of Merger and Plan of Merger with the Tennessee Secretary of State in
accordance with the Tennessee Law.
28
8.5 Tax Opinion of Bass, Xxxxx & Xxxx PLC. A tax opinion of Bass,
-------------------------------------
Xxxxx & Xxxx PLC to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code.
ARTICLE IX
OBLIGATIONS OF THE SELLERS AND BC AFTER CLOSING
-----------------------------------------------
9.1 Indemnification by the Sellers. The Sellers shall severally
------------------------------
indemnify and hold harmless BC, Merger Sub and the Surviving Corporation and
their respective officers, directors, employees, successors and assigns in
respect of any and all claims, actions, suits or other proceedings and any and
all losses, costs, expenses, liabilities, fines, penalties, interest, and
damages, whether or not arising out of any claim, action, suit or other
proceeding (and including reasonable counsel and accountants' fees and expenses
and all other reasonable costs and expenses of investigation, defense or
settlement of claims and amounts paid in settlement) incurred by, imposed on or
borne by BC, Merger Sub, the Surviving Corporation or such other parties
(collectively "Damages") resulting from:
-------
(a) The breach of any of the representations or warranties made
by the Sellers or SI in this Agreement; and
(b) The payment of any taxes (including interest and penalties)
of any kind or nature imposed, whether before or after the Closing, by any
governmental agency upon SI or its business, assets or employees or independent
contractors of SI, or otherwise resulting from or relating to the business or
operations of SI prior to the Closing or upon any of its properties or assets as
they existed as of or any time prior to the Closing Date, or as a result of the
transactions contemplated by this Agreement.
Damages shall exclude any amount with respect to which BC or SI as the
case may be shall have received under any insurance policy which provides
coverage for the liability to which such amount relates.
9.2 Indemnification by BC, Merger Sub and Surviving Corporation. Each
-----------------------------------------------------------
of BC, Merger Sub and the Surviving Corporation, jointly and severally, shall
indemnify and hold harmless the Sellers, in respect of any and all claims,
actions, suits or other proceedings and any and all losses, costs, expenses,
liabilities, fines, penalties, interest, and damages, whether or not arising out
of any claim, action, suit or other proceeding (and including reasonable counsel
and accountants' fees and expenses and all other reasonable costs and expenses
of investigation, defense or settlement of claims and amounts paid in
settlement) incurred by, imposed on or borne by the Sellers resulting from the
breach of any of the representations, warranties or agreements made by BC and
Merger Sub in this Agreement.
9.3 Indemnification Procedure for Claims. Whenever any claim shall
------------------------------------
arise for indemnification hereunder, the party entitled to indemnification (the
"indemnified party") shall promptly notify in writing the other party or parties
-----------------
(the "indemnifying party") of the claim and, when known, the facts constituting
------------------
the basis for such claim; provided, that the indemnified party's failure to give
such written notice shall not affect any rights or remedies of an indemnified
party hereunder with respect to indemnification for damages except to the extent
29
that the indemnifying party is materially prejudiced thereby. In the event of
any claim for indemnification hereunder resulting from or in connection with any
claim or legal proceedings by a third party, the written notice to the
indemnifying party shall specify, if known, the amount or an estimate of the
amount of the liability arising therefrom. The indemnified party shall not
settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder, without the prior written consent of the indemnifying
party (which shall not be unreasonably withheld), unless suit shall have been
instituted against it and the indemnifying party shall not have taken control of
and conducted in a diligent manner the defense of such suit after notification
thereof as provided in Section 9.4 of this Agreement.
9.4 Defense by Indemnifying Party. In connection with any claim giving
-----------------------------
rise to indemnity hereunder or resulting from or arising out of any claim or
legal proceeding by a person who is not a party to this Agreement, the
indemnifying party at its sole cost and expense may, upon written notice to the
indemnified party, assume the defense of any such claim or legal proceeding if
it acknowledges to the indemnified party in writing its obligations to indemnify
the indemnified party with respect to all elements of such claim, and thereafter
diligently conducts the defense thereof with counsel reasonably acceptable to
the indemnified party. If the indemnifying party acknowledges in writing as
specified above that it shall assume the defense of any such action, then the
indemnifying party shall keep the indemnified party informed with respect to the
defense of such action and the indemnified party shall be entitled to
participate in (but not control) the defense of such action, with its counsel
and at its own expense. If (A) the indemnifying party does not acknowledge in
writing as specified above that it shall assume or fails to conduct in a
diligent manner the defense of any such claim or litigation resulting therefrom,
or (B) the indemnified party shall have reasonably concluded that there may be
one or more legal defenses available to it which are different from, or,
additional to those available to the indemnifying party or other indemnified
parties with respect to such claim or litigation, then, (i) the indemnified
party may defend against such claim or litigation, in such manner as it may deem
appropriate, including, without limitation, settling such claim or litigation,
after giving notice of the same to the indemnifying party, on such terms as the
indemnified party may deem appropriate, and (ii) the indemnifying party shall be
entitled to participate in (but not control) the defense of such action, with
its counsel and at its own expense. If the indemnifying party thereafter seeks
to question the manner in which the indemnified party defended such third party
claim or the amount or nature of any such settlement, the indemnifying party
shall have the burden to prove by a preponderance of the evidence that the
indemnified party did not defend or settle such third party claim in a
reasonably prudent manner. Each party agrees to cooperate fully with the other,
such cooperation to include, without limitation, attendance at depositions and
the provision of relevant documents as may be reasonably requested by the
indemnifying party; provided, that the indemnifying party will hold the
indemnified party harmless from all of its expenses, including reasonable
attorneys' fees, incurred in connection with such cooperation by the indemnified
party .
9.5 Arbitration. The rights of the indemnified party to
-----------
indemnification and the estimated amount thereof, as set forth in the notice,
shall be deemed objected to by the indemnifying party unless the indemnifying
party notified the indemnified party in writing as specified in Section 9.4
above that the indemnifying party accepts and agrees with the right of the
indemnified party to indemnification or that the indemnifying party elects to
defend such claim. If the claim to indemnification is deemed objected to, the
parties shall attempt to settle
30
and compromise the same, or if unable to do so within sixty (60) days of
receipt of the notice of the claim, such dispute shall be submitted to and
resolved by prompt binding arbitration in a mutually agreed location or, absent
agreement in New York, New York, and any rights of indemnification established
by reason of such settlement, compromise or arbitration shall promptly
thereafter be paid and satisfied by the indemnifying party. Arbitration shall
be final and binding according to the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any state or federal court in Orange County,
California.
9.6 Limitations on Indemnification.
------------------------------
(a) Notwithstanding any provision of this Agreement to the
contrary,
(i) the Sellers shall have no obligation to indemnify any
person entitled to indemnity under Section 9.1 unless the persons so
entitled to indemnity thereunder have suffered Damages in an aggregate
amount in excess of One Hundred Thousand Dollars ($100,000) (the
"Deductible") and then only to the extent of such excess;
----------
(ii) each of MMason's and DMason's liability under Section
9.1 shall in no event exceed the lesser of (A) the fair market value on the
Closing Date of the BC Stock received by each under Section 1.6 or (B) the
fair market value of BC Stock received by each under Section 1.6 on the
date DMason, MMason or both are required to satisfy any obligation under
this Article IX; and
(iii) IE's liability under Section 9.1 shall in no event
exceed the fair market value on the Closing Date of the BC Stock received
by IE under Section 1.6.
Notwithstanding the foregoing, there shall be no Deductible applied against
indemnification for any of the matters set forth in subsection 9.1(c) or any
breach of the representations of the Sellers and SI in Section 2.2. Each of
DMason and MMason shall satisfy any obligation to BC under this Article IX only
by return to BC of BC Stock with a fair market value equal to the amount of such
obligation. IE shall have the right to satisfy any obligation to BC under this
Article IX by return to BC of BC Stock with a fair market value equal to the
amount of such obligation; provided, however, that if the fair market value of
such BC Stock is less than IE's liability under this Article IX, IE shall pay
any difference to BC by wire transfer in immediately available funds.
(b) Notwithstanding any provision of this Agreement to the contrary,
BC shall have no obligation to indemnify any person entitled to indemnity under
Section 9.2, (i) unless the persons so entitled to indemnity thereunder have
suffered Damages in an aggregate amount in excess of One Hundred Thousand
Dollars ($100,000) and then only to the extent of such excess and (ii) BC's
liability under Section 9.2 shall in no event exceed the fair market value on
the Closing Date of the BC Stock to be delivered by BC under Section 1.2.
(c) No party to this Agreement shall have any right to indemnification
under this Article IX or otherwise for damages relating to any untruth or
inaccuracy in any representation or warranty herein in the event and to the
extent such party had actual knowledge
31
(based upon its investigation of written materials) of such untruth or
inaccuracy prior to the Closing Date.
9.7 Indemnification for Genesys Partners Letter Agreement. The
-----------------------------------------------------
Sellers shall, jointly and severally, indemnify and hold harmless BC, Merger Sub
and the Surviving Corporation and their respective officers, directors,
employees, successors and assigns in respect of any and all claims, actions,
suits or other proceedings and any and all losses, costs, expenses, liabilities,
fines, penalties, interest, and damages, whether or not arising out of any
claim, action, suit or other proceeding (and including reasonable counsel and
accountants' fees and expenses and all other reasonable costs and expenses of
investigation, defense or settlement of claims and amounts paid in settlement)
incurred by, imposed on or borne by BC, Merger Sub, the Surviving Corporation or
such other parties resulting from that certain Letter Agreement dated August 17,
1998 between SI and Genesys Partners, Inc. The obligations of the Sellers under
this Section 9.7 shall be in addition to any other liability or obligation of
the Sellers under this Article IX.
ARTICLE X
TERMINATION
-----------
10.1 Termination by Mutual Consent. At any time prior to the Closing,
-----------------------------
this Agreement may be terminated by written consent of BC and the Sellers.
10.2 Termination by Default. At the Closing this Agreement may be
----------------------
terminated and abandoned:
(a) By BC if (i) any of SI or the Sellers has violated or
breached in any material respect any of the agreements, representations or
warranties contained in this Agreement which violation or breach has not been
waived in writing and has not been cured within ten (10) business days following
BC's written notice thereof; and (ii) any of the conditions precedent to BC's
obligations set forth in Article VI above had not been fulfilled or waived at
and as of the Closing;
(b) By SI and/or the Sellers if (i) BC or Merger Sub has
violated or breached in any material respect any of the agreements,
representations or warranties contained in this Agreement which violation or
breach has not been waived in writing and has not been cured within ten (10)
business days following SI's written notice thereof; and (b) any of the
conditions precedent to SI's and/or the Sellers' obligations set forth in
Article VII above have not been fulfilled or waived at and as of the Closing; or
(c) By either party in the event the Closing has not occurred
on or before December 15, 1998.
10.3 Effectiveness of Termination. Any termination of this Agreement
----------------------------
under this Article X will be effective upon the delivery of notice by the
terminating party to the other parties hereto.
10.4 Effect of Termination. In the event of termination as provided
---------------------
above, this Agreement shall forthwith become of no further force or effect and
all parties hereto shall bear their own costs associated with this Agreement and
all transactions mentioned herein; provided,
32
that such termination shall not relieve any person of liability for breach of or
interference with this Agreement.
ARTICLE XI
GENERAL PROVISIONS
------------------
11.1 Survival. All representations and warranties made by the parties
--------
herein or in any instrument or document furnished in connection herewith shall
survive until the first year anniversary of the Closing Date. No claim or action
for indemnity pursuant to Sections 9.1 or 9.2 hereof shall be asserted or
maintained by any party hereto after the first year anniversary of the Closing
Date except for claims made in writing prior to such date and actions (whether
instituted before or after such date) based on any claim made in writing prior
to such date. No claim or action for indemnity pursuant to Section 9.7 hereof
shall be asserted or maintained by any party hereto after the statute of
limitations applicable to any claim under Section 9.7 has run except for claims
made in writing prior to such date and actions (whether instituted before or
after such date) based on any claim made in writing prior to such date.
11.2 Intentionally Omitted.
---------------------
11.3 No Broker or Finder. Each of the parties represents and warrants
-------------------
that, except as set forth on Schedule 11.3, it has dealt with no broker or
finder in connection with any of the transactions contemplated by this
Agreement, and, insofar as it knows, no broker or other person is entitled to
any conversion or finder's fee, in connection with these transactions.
11.4 Transaction Costs. BC shall pay all costs and expenses incurred
-----------------
or to be incurred by it in negotiating and preparing this Agreement and carrying
out the transactions contemplated by this Agreement. The Sellers and SI shall
pay their respective costs and expenses incurred or to be incurred by SI or the
Sellers in negotiating and preparing this Agreement and carrying out the
transactions contemplated by this Agreement.
11.5 Headings. The subject headings of the Articles and Sections of
--------
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
11.6 Entire Agreement; Waivers. This Agreement, the Exhibits and
-------------------------
Schedules hereto and the Confidentiality Agreement constitute the entire
agreement between the parties pertaining to the contemporaneous agreements,
representations, and understandings of the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
11.7 Third Parties. Except as set forth in Article IX, nothing in
-------------
this Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
parties to it and their respective successors and assigns, nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third person to any party to this Agreement, nor shall any provision give
any third persons any right of subrogation or action over against any party to
this Agreement.
33
11.8 Successors and Assigns. This Agreement shall be binding on, and
----------------------
shall inure to the benefit of, the parties to it and their respective heirs,
legal representatives, successors, and assigns.
11.9 Notices. All notices, requests, demands, and other
-------
communications under this Agreement shall be in writing and shall be delivered
during normal business hours by hand, by Federal Express, Express Mail, United
Parcel Service or other reputable overnight delivery service, by telecopy
(confirmation of receipt received) or by first class mail, certified, postage
prepaid, and shall be deemed delivered when so delivered by hand, overnight
delivery or telecopy, or if mailed, five (5) days after the date of mailing,
properly addressed as follows:
To the Sellers at: Xxxxxx Entertainment Inc.
Attn: President
Xxx Xxxxxx Xxxx.
Xx Xxxxxx, XX 00000
Facsimile (000) 000-0000
With a copy to: Xxxxxx Entertainment Inc.
Attn: General Counsel
Xxx Xxxxxx Xxxx.
Xx Xxxxxx, XX 00000
Facsimile (000) 000-0000
To SI at: SpeedServe Inc.
Attn: President
Xxx Xxxxxx Xxxx.
Xx Xxxxxx, XX 00000
Facsimile (000) 000-0000
To BC or Merger Sub at: Buy Corp.
Attn: Chief Financial Officer
00 Xxxxxxxxx
Xxxxx Xxxxx, XX 00000
Facsimile (000) 000-0000
Any party may change its address for purposes of this paragraph by giving notice
of the new address to each of the other parties in the manner set forth above.
Rejection or other refusal to accept, or the inability to deliver because of a
changed address of which no notice was given, shall not affect the date of such
notice sent in accordance with the foregoing provisions.
11.10 Attorneys' Fees. If any party to this Agreement shall bring any
---------------
action, suit, counterclaim or appeal for any relief against the other,
declaratory or otherwise, to enforce the terms hereof or to declare rights
hereunder (collectively, an "Action"), the Prevailing Party (as defined herein)
------
shall be entitled to recover as part of any such Action its reasonable
attorneys' fees and costs, including any fees and costs incurred in bringing and
prosecuting such Action and/or enforcing any order, judgment, ruling or award
granted as part of such Action. "Prevailing Party" within the meaning of this
Section 11.10 includes the party whose prayer for
34
relief is granted by the tribunal, or which obtains a judgment or equitable
relief, and includes, without limitation, a party who agrees to dismiss an
Action upon the other party's payment of all or a portion of the sums allegedly
due or performance of the covenants allegedly breached, or a party which obtains
substantially the relief sought by the party.
11.11 Governing Law. The terms of this Agreement shall be governed by
-------------
and construed in accordance with the laws of the State of Delaware without
reference to the choice of law principles thereof.
11.12 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
11.13 Severability. All provisions contained herein are severable and
------------
in the event that any of them shall be held to be to any extent invalid or
otherwise unenforceable by any court of competent jurisdiction, such provision
shall be construed as if it were written so as to effectuate to the greatest
possible extent the parties' expressed intent; and in every case the remainder
of this Agreement shall not be affected thereby and shall remain valid and
enforceable, as if such affected provision were not contained herein.
11.14 Publicity. None of the parties shall issue or make, or cause to
---------
have issued or made, any press release or announcement concerning, or otherwise
disclose to any third person, the terms of the transactions contemplated hereby
(including the existence of the Merger and the transactions contemplated hereby)
without the advance approval in writing of the form and substance thereof by the
other parties, unless otherwise required by applicable law, it being understood
that the parties will use their best efforts not to disclose the terms or
existence of the transaction prior to the Closing. Further, prior to and
following the Closing none of the parties shall disclose the material terms of
this Agreement or the Merger to any third party other than a third party which
must have such information in rendering financial, business, or tax advice to
such party, as required by law, or with the written consent (not, following the
Closing, to be unreasonably withheld) of each other party hereto.
11.15 Schedules. All schedules, exhibits, appendices and documents
---------
referred to in or attached to this Agreement are integral parts of this
Agreement as if fully set forth herein, and all statements appearing therein
shall be deemed disclosed for all purposes and not only in connection with the
specific representation to which they are explicitly referenced.
[Signature Page to Follow]
35
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
and Plan of Merger and Reorganization as of the date first above written.
THE SELLERS
XXXXXX ENTERTAINMENT INC.
By: ______________________________________
Xxxx X. Xxxxxxxx
Vice President and General Counsel
__________________________________________
Xxxxx X. Xxxxx
__________________________________________
Xxxxxxx X. Xxxxx
SPEEDSERVE INC.
By: ______________________________________
Xxxx X. Xxxxxxxx
Vice President and General Counsel
BUY CORP.
By: ______________________________________
Xxxxx X. Xxxx
President/CEO
XXXXXXXXXX.XXX INC.
By: ______________________________________
Xxxxxx Xxxxxxxx
Chief Financial Officer
Signature Page For Agreement And Plan Of Merger And Reorganization
