EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
Dated as of July 18, 2007
By and Among
XXXXX.XXX CORPORATION,
PREMIERGUIDE, INC.
XXXXX.XXX PG ACQUISITION CORPORATION
and
XXXXXXX XXXXX
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND INTERPRETATIONS................................................ 1
1.1 Defined Terms.............................................................. 1
1.2 Principles of Construction................................................. 6
SECTION 2. REPRESENTATIONS OF THE COMPANY................................................. 7
2.1 Existence and Good Standing................................................ 7
2.2 Power; Binding Effect...................................................... 7
2.3 Capitalization; Power...................................................... 7
2.4 Subsidiaries............................................................... 8
2.5 Financial Statements....................................................... 8
2.6 Books and Records.......................................................... 8
2.7 Title to Properties; Encumbrances.......................................... 9
2.8 Owned Real Property........................................................ 9
2.9 Leases..................................................................... 9
2.10 Material Contracts......................................................... 9
2.11 Restrictive Documents...................................................... 10
2.12 Litigation................................................................. 10
2.13 Taxes...................................................................... 11
2.14 Insurance.................................................................. 12
2.15 Intellectual Properties.................................................... 13
2.16 Compliance with Laws....................................................... 15
2.17 Governmental Licenses...................................................... 15
2.18 Labor Matters.............................................................. 15
2.19 Employee Benefit Plans..................................................... 16
2.20 No Changes Since Balance Sheet Date........................................ 19
2.21 Liabilities................................................................ 20
2.22 Consents and Approvals: No Violations...................................... 20
2.23 Disclosure................................................................. 20
2.24 Broker's or Finder's Fees.................................................. 21
2.25 Copies of Documents........................................................ 21
2.26 Interests in Clients, Suppliers, Etc.; Affiliate Transactions.............. 21
2.27 Bank Accounts and Powers of Attorney....................................... 21
2.28 Appointment of Shareholders' Representative................................ 21
SECTION 3. REPRESENTATIONS OF THE BUYER................................................... 21
3.1 Existence and Good Standing................................................ 21
3.2 Power; Binding Effect...................................................... 22
3.3 Broker's or Finder's Fees.................................................. 22
3.4 Litigation................................................................. 22
3.5 Compliance with Laws....................................................... 22
3.6 Consents and Approvals; No Violations...................................... 00
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Xxxxx xx Xxxxxxxx (xxxx.)
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SECTION 4. THE TRANSACTION................................................................ 23
4.1 The Merger................................................................. 23
4.2 Conversion of Company Stock................................................ 23
4.3 Consideration.............................................................. 24
4.4 Escrow..................................................................... 24
4.5 Exchange of Company Certificates........................................... 25
4.6 Closing.................................................................... 26
4.7 Company Stock Rights; Company Stock Plans.................................. 26
SECTION 5. CERTAIN COVENANTS.............................................................. 26
5.1 Corporate Record Books..................................................... 26
SECTION 6. CONDITIONS PRECEDENT........................................................... 26
6.1 Conditions of all Parties.................................................. 26
6.2 Conditions of the Buyer.................................................... 27
6.3 Conditions of the Company.................................................. 29
SECTION 7. TERMINATION.................................................................... 29
7.1 Intentionally Omitted...................................................... 29
SECTION 8. INDEMNIFICATION................................................................ 29
8.1 Survival of Representations................................................ 29
8.2 Indemnification............................................................ 30
8.3 Special Indemnification.................................................... 31
8.4 Indemnification Procedure.................................................. 31
SECTION 9. TAX MATTERS.................................................................... 33
9.1 Tax Returns................................................................ 33
9.2 Payment of Taxes........................................................... 33
9.3 Controversies.............................................................. 34
9.4 Amended Tax Returns........................................................ 35
9.5 Prior Tax Agreements....................................................... 35
9.6 Adjustments................................................................ 35
SECTION 10. MISCELLANEOUS................................................................. 35
10.1 Knowledge.................................................................. 35
10.2 Expenses................................................................... 35
10.3 Confidentiality............................................................ 35
10.4 Governing Law; Jurisdiction; Disputes...................................... 36
10.5 Notices.................................................................... 36
10.6 Parties in Interest........................................................ 37
10.7 Counterparts............................................................... 37
10.8 Entire Agreement........................................................... 37
10.9 Amendments................................................................. 37
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10.10 Severability............................................................... 37
10.11 Third Party Beneficiaries.................................................. 37
10.12 Shareholders' Representative............................................... 38
EXHIBIT A FORM OF CERTIFICATE OF MERGER
EXHIBIT B FORM OF EMPLOYMENT AGREEMENT
EXHIBIT C FORM OF CONSULTING AGREEMENT
EXHIBIT D FORM OF NON-COMPETITION AGREEMENT
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (as the same may be amended, modified
and supplemented from time to time, this "Agreement") dated as of July 18, 2007
by and among XXXXX.XXX CORPORATION, a Delaware corporation (the "Buyer"),
PREMIERGUIDE, INC., a Delaware corporation (the "Company"), XXXXX.XXX PG
ACQUISITION CORPORATION, a Delaware corporation and a wholly-owned subsidiary of
the Buyer ("Merger Sub"), and Xxxxxxx Xxxxx, an individual (the "Shareholders'
Representative"; the Buyer, the Company, Merger Sub and the Shareholders'
Representative each, a "Party" and, collectively, the "Parties").
W I T N E S S E T H :
WHEREAS, the board of directors of each of the Buyer, the Company and
Merger Sub has approved, and deems it fair, advisable and in the best interests
of its respective companies and stockholders to consummate, the merger of the
Company with and into Merger Sub upon the terms and subject to the conditions
set forth herein (collectively, the "Merger"); and
WHEREAS, in furtherance of the Merger, the board of directors of each of
the Buyer, the Company and Merger Sub has approved this Agreement and the
transactions contemplated herein upon the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
Parties agree as follows:
SECTION 1.
DEFINITIONS AND INTERPRETATIONS
1.1 Defined Terms. In this Agreement the following words and expressions
shall have the following meanings (such meaning to be equally applicable to both
the singular and plural forms of the terms defined):
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with, such
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreed Claims" has the meaning provided in Section 8.4(d).
"Agreement" has the meaning provided in the introductory paragraph.
"Appraisal Rights" means the rights of stockholders of a corporation in
a merger to demand the payment of a fair price for their shares, as determined
independently, as set forth in Section 262 of the DGCL.
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"Balance Sheet" means the unaudited balance sheet of the Company as of
the Balance Sheet Date.
"Balance Sheet Date" means June 30, 2007.
"Business Day" means any day, other than a Saturday, Sunday or a day on
which banks located in Los Angeles, California shall be authorized or required
by law to close.
"Buyer" has the meaning provided in the introductory paragraph.
"Cash and Received Receivables" has the meaning provided in Section 8.3.
"Certificate" has the meaning provided in Section 8.4(a).
"Certificate of Merger" means the certificate of merger in the form
attached as Exhibit A.
"Closing" has the meaning provided in Section 4.6.
"Closing Date" has the meaning provided in Section 4.6.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and the rulings issued thereunder.
"Common Stock" has the meaning provided in Section 2.3(a).
"Company" has the meaning provided in the introductory paragraph.
"Company Certificate" has the meaning provided in Section 4.2.
"Company Intellectual Property" shall mean all Intellectual Property (i)
owned by the Company or (ii) used in connection with the business of the
Company.
"Company Pension Plan" has the meaning provided in Section 2.19(a).
"Company Plan" has the meaning provided in Section 2.19(a).
"Company Shareholders" means the holders of the Common Stock and the
holders of the Preferred Stock.
"Company Stock" means the Common Stock and the Preferred Stock
collectively.
"Company Stock Plans" has the meaning provided in Section 4.7(a).
"Company Stock Rights" has the meaning provided in Section 4.7(a).
"Company Welfare Plan" has the meaning provided in Section 2.19(a).
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement dated as of January 30, 2007 among the Buyer and the Company.
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"Deposit" shall mean the $15,000 in cash advanced by the Buyer to the
Company on July 9, 2007 in accordance with the terms of the Summary of Proposed
Terms dated June 26, 2007.
"DGCL" means the Delaware General Corporation Law.
"Effective Time" has the meaning provided in Section 4.1(b).
"Encumbrances" means all liens, security interests, options, rights of
first refusal, claims, easements, mortgages, charges, indentures, deeds of
trust, rights of way, restrictions on the use of real property, encroachments,
licenses to third parties, leases to third parties, security agreements and any
other encumbrances and other restrictions or limitations on use of real or
personal property or irregularities in title thereto.
"Entity" means any Person that is not a natural person.
"ERISA" has the meaning provided in Section 2.19(a).
"Escrow Agent" has the meaning provided in Section 4.4(a).
"Escrow Agreement" has the meaning provided in Section 4.4(a).
"Escrow Amount" has the meaning provided in Section 4.4(a).
"Escrow Fee" means the escrow fee payable to the Escrow Agent under the
Escrow Agreement.
"Escrow Pro Rata Share" has the meaning provided in Section 4.4(a).
"Final Release Date" has the meaning provided in Section 4.4(b).
"Financial Statements" means for the Company (i) the unaudited balance
sheets and statements of income, cash flows and stockholders' equity for and as
of the periods ending December 31, 2004, 2005 and 2006 and (ii) the Balance
Sheet and the related statement of cash flow as of the Balance Sheet Date.
"GAAP" means United States generally accepted accounting principles
applied on a consistent basis.
"Governmental Entity" means (i) any national government, political
subdivision thereof or local jurisdiction therein, (ii) any instrumentality,
board, commission, court or agency of any of the foregoing, however constituted
and (iii) any association, organization or institution of which any of the
foregoing is a member or to whose jurisdiction any thereof is subject or in
whose activities any of the above is a participant.
"Indemnified Party" has the meaning provided in Section 8.4(a).
"Indemnifying Party" has the meaning provided in Section 8.4(a).
"Indemnity Payment" has the meaning provided in Section 4.4(b).
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"Intellectual Property" shall mean unpatented inventions, invention
disclosures, moral and economic rights of authors and inventors (however
denominated), technical data, customer lists, corporate and business names,
trade names, trade dress, brand names, know-how, show-how, formulae, methods
(whether or not patentable), designs, processes, procedures, technology, source
codes, object codes, computer software programs, databases, data collections and
other proprietary information or material of any type, and all derivatives,
improvements and refinements thereof, howsoever recorded, or unrecorded.
"Intellectual Property Rights" shall mean any of the following rights:
(i) domestic and foreign patents, and applications for either; (ii) registered
and unregistered trademarks, service marks and other indicia of origin, pending
trademark and service xxxx registrations, and intent-to-use registrations or
similar reservations of marks any goodwill associated with any of the foregoing;
(iii) registered copyrights and mask works, applications for registration of
either, and materials eligible for copyright and mask work registration; (iv)
internet domain names, applications and reservations therefor, uniform resource
locators ("URLs") and the corresponding Internet sites (including any content
and other materials accessible and/or displayed thereon, collectively, the
"Sites"); (v) trade secrets and confidential information not otherwise listed in
(i) - (iv) above
"IRS" means the Internal Revenue Service.
"Lease" has the meaning provided in Section 2.9.
"Letter of Transmittal" has the meaning provided in Section 4.5(a).
"Licenses" has the meaning provided in Section 2.17.
"Losses" has the meaning provided in Section 8.2(a).
"Material Adverse Effect" means, with respect to any Person, a material
adverse change in or effect on (i) the validity or enforceability of this
Agreement, (ii) the ability of such Person to perform its obligations under this
Agreement to which such Person is a party or (iii) the business, assets,
conditions (financial or otherwise), results of operations or prospects of such
Person and its Subsidiaries, taken as a whole, other than a material adverse
change resulting from any event, condition, occurrence or consequence
proximately caused by general economic conditions.
"Material Contract" has the meaning provided in Section 2.10(c).
"Merger" has the meaning provided in the first recital.
"Merger Consideration" has the meaning provided in Section 4.3(a).
"Merger Sub" has the meaning provided in the introductory paragraph.
"Ordinary Course" means the ordinary course of commercial operations
customarily engaged in by the Company, consistent with past practices (including
with respect to quantity and frequency).
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"Overlap Period" means a taxable period beginning before the Closing
Date and ending after the Closing Date.
"Party" or "Parties" has the meaning provided in the introductory
paragraph.
"Permitted Encumbrances" has the meaning provided in Section 2.7.
"Person" means and includes any individual, partnership, joint venture,
association, joint stock company, corporation, trust, limited liability company,
unincorporated organization, a group and a government or other department,
agency or political subdivision thereof.
"Pre-Closing Period" has the meaning provided in Section 2.13(b).
"Preferred Stock" has the meaning provided in Section 2.3(a).
"Preferred Shareholders" means the holders of Preferred Stock.
"Preferred Stock Liquidation Value" means $249,999.50.
"Pro Rata Multiplier" means the quotient, expressed as a decimal and
calculated to the fourth decimal place, obtained by dividing the number of
shares of Company Stock owned by a particular Company Shareholder immediately
prior to the Effective Time by the total number of shares of Company Stock
issued and outstanding immediately prior to the Effective Time.
"Registered Intellectual Property" means all patents, registered
copyrights, registered domain names, and registered trademarks and all
applications for any of the foregoing owned by the Company.
"Related Documents" has the meaning provided in Section 6.2(f).
"Remaining Closing Consideration" means (i) the Merger Consideration
minus (ii) the Preferred Stock Liquidation Value.
"Scheduled Liabilities" has the meaning provided in Section 8.3.
"Shareholder Merger Consideration Amount" has the meaning provided in
Section 4.4(b).
"Shareholders' Representative" has the meaning provided in the
introductory paragraph.
"Subsidiary" means, with respect to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any Entity (other than a corporation)
in which such Person and/or one or more Subsidiaries of such Person has more
than a 50% equity interest at the time
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or otherwise controls the management and affairs of such Entity (including the
power to veto any material act or decision).
"Surviving Corporation" has the meaning provided in Section 4.1(a).
"Tax" and "Taxes" means all taxes, assessments, charges, duties, fees,
levies or other governmental charges, including, without limitation, all
Federal, state, local, foreign and other income, franchise, profits, gross
receipts, capital gains, capital stock, transfer, property, sales, use,
value-added, occupation, property, excise, severance, windfall profits, stamp,
license, payroll, social security, withholding and other taxes, assessments,
charges, duties, fees, levies or other governmental charges of any kind
whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Tax Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity.
"Tax Returns" has the meaning provided in Section 2.13(a).
"VEBA" has the meaning provided in Section 2.19(a).
"WARN" has the meaning provided in Section 2.18(b).
1.2 Principles of Construction.
(a) All references to Sections, subsections, Schedules and
Exhibits are to Sections, subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The term "including" is not limiting and means "including without
limitation."
(b) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding"; and the word "through" means "to
and including."
(c) The Section headings herein are for convenience only and
shall not affect the construction hereof.
(d) This Agreement is the result of negotiations among and has
been reviewed by each Party's counsel. Accordingly, this Agreement shall not be
construed against any Party merely because of such Party's involvement in its
preparation.
(e) It is understood and agreed that neither the specification
of any dollar amount in the representations and warranties contained in this
Agreement nor the inclusion of any specific item in the Schedules or Exhibits
hereto is intended to imply that such amounts or higher or lower amounts, or the
items so included or other items, are or are not material, and no Party shall
use the fact of the setting of such amounts or the fact of the inclusion of any
such item in the Schedules or Exhibits hereto in any dispute or controversy
between the Parties as to whether any obligation, item or matter is or is not
material for purposes of this Agreement.
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SECTION 2.
REPRESENTATIONS OF THE COMPANY
The Company represents and warrants, as of the date of this Agreement
and as of the Closing Date, in favor of the Buyer and Merger Sub, as follows
(subject in each to such exceptions as are set forth in the disclosure schedule
delivered by the Company to Buyer on the date hereof):
2.1 Existence and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. The
Company is duly qualified and/or licensed to conduct its business, and is in
good standing, in each jurisdiction in which the character or location of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary. True and correct copies of the
Company's certificate of incorporation and bylaws as of the date of this
Agreement are set forth in Schedule 2.1. The Company is not in violation of any
of the provisions of its certificate of incorporation or bylaws.
2.2 Power; Binding Effect. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this Agreement
and the Related Documents by the Company has been duly authorized and approved
by all necessary corporate action of the Company. This Agreement has been duly
executed and delivered by the Company, and assuming the due authorization,
execution and delivery of the other Parties hereto, constitutes its valid and
binding agreement, enforceable against it in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency or similar laws
and equitable principles relating to or affecting the rights of creditors
generally from time to time in effect.
2.3 Capitalization; Power.
(a) The authorized capital stock of the Company consists of (i)
15,000,000 shares of common stock, $0.001 par value (the "Common Stock"), of
which 8,817,563 shares are issued and outstanding, and 3,000,000 shares of
preferred stock, $0.001 par value (the "Preferred Stock"), of which 1,290,320
shares are issued and outstanding. All issued and outstanding shares of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are not subject to, nor were they issued in violation of, any
preemptive rights. Except as described above, no shares of capital stock of the
Company are authorized, issued, outstanding or reserved for issuance.
(b) Schedule 2.3(b) contains a true and complete list of the
Company Shareholders and their respective stock holdings in the Company, as well
as each Company Shareholder's Escrow Pro Rata Share, and indicates which Company
Shareholders are, to the knoweldge of the Company, Accredited Investors.
(c) There are no outstanding options, warrants, rights
(preemptive or otherwise), calls, commitments, conversion rights, rights of
exchange, plans or other agreements of any character (contingent or otherwise)
providing for the purchase, issuance, transfer or sale
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of any interest in the Company. There are no irrevocable proxies and no voting
agreements with respect to any shares of capital stock of, or other equity or
voting interest in, the Company. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect
to the capital stock of, or other equity or voting interest in, the Company. The
Company has no authorized or outstanding bonds, debentures, notes or other
indebtedness the holders of which have the right to vote (or which are
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire securities having the right to vote) with the Company Shareholders on
any matter. There are no contracts to which the Company is a party to (i)
repurchase, redeem or otherwise acquire any shares of capital stock of, or other
equity or voting interest in, the Company or any other Person or (ii) vote or
dispose of any shares of capital stock of, or other equity or voting interest
in, the Company.
(d) The Company does not own, directly or indirectly, any
capital stock of, or other equity, ownership, proprietary or voting interest in,
any Person.
2.4 Subsidiaries. The Company has no Subsidiaries.
2.5 Financial Statements.
(a) Schedule 2.5(a) contains true, correct and complete copies
of each of the Financial Statements. None of the Financial Statements have been
prepared in accordance with GAAP. The Financial Statements have been prepared on
a basis consistent with that of prior periods and fairly present in all material
respects the financial position of the Company at the dates thereof; provided,
however, that, the Financial Statements are subject to normal recurring year-end
audit adjustments and do not contain footnotes. Each of the Financial Statements
is consistent, in all material respects, with the books and records of the
Company.
(b) Since the Balance Sheet Date, there has been no change in
the assets or liabilities, or in the business or condition, financial or
otherwise, or in the results of operations, of the Company, whether as a result
of any legislative or regulatory change, revocation of any License or right to
do business, fire, explosion, accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation, act of God, public force or otherwise, except for
changes due to the normal operations of the business of the Company in the
Ordinary Course, none of which, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect on the Company.
2.6 Books and Records. The minute books of the Company contain accurate
records of all meetings of, and corporate action taken by (including action
taken by written consent), the Company Shareholders and board of directors of
the Company (the "Company Board"). The stock certificate books and the stock
record books of the Company are correct and complete. The Company does not have
any records, systems, controls, data or information recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) that (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the Company thereof.
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2.7 Title to Properties; Encumbrances. Except for properties and assets
sold or otherwise disposed of in the Ordinary Course, the Company has good and
marketable title to or, in the case of leased assets, a valid leasehold interest
in, (a) all properties and assets (real and personal, tangible and intangible)
reflected in the Financial Statements and (b) all of the properties and assets
purchased by the Company thereof since the Balance Sheet Date, in each case free
and clear of Encumbrances (provided, that, the foregoing representation does not
apply with respect to Intellectual Property, the representations concerning
which are exclusively covered by Section 2.15 below), except for (i)
Encumbrances set forth explicitly in the Financial Statements, (ii) Encumbrances
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto which, individually or in the aggregate, do not materially detract
from the value of, or impair the use of, such property by the Company in the
operation of its business and (iii) Encumbrances for current taxes, assessments
or governmental charges or levies on property not yet due and delinquent
(Encumbrances of the type described in clauses (i), (ii) and (iii) above are
hereinafter sometimes referred to as "Permitted Encumbrances"). The Company owns
or has the exclusive right to use all of the tangible personal properties and
assets necessary for the conduct of its business as currently conducted. All of
the tangible personal property used in the Company is free from defects (patent
and latent), has been maintained in accordance with normal industry practice, is
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 and
is presently proposed to be used.
2.8 Owned Real Property. The Company does not own any real property.
2.9 Leases. The Company is not a party, as lessee or lessor, to any real
or personal property lease (a "Lease").
2.10 Material Contracts.
(a) The Company is not bound by any oral or written (i) contract
relating to the employment of any Person on a full-time, part-time, consulting
or other basis or any bonus, deferred compensation, pension, profit sharing,
stock option, employee stock purchase, retirement, stock appreciation, severance
or other employee benefit plan (including any contract under which the Company
is obligated to make any payment to any Person as a result of a change of
control of the Company, or under which any Person may require the Company to
make a payment to any Person as a result of a change of control of the Company),
(ii) contract that contains restrictions with respect to payment of dividends or
any other distribution in respect of the stock or other equity interests of the
Company, (iii) contract relating to capital expenditures in excess of $10,000
per individual item or $50,000 in the aggregate, (iv) contract under which it
has created, incurred or assumed any indebtedness for borrowed money, or any
capitalized lease obligation or under which it has imposed an Encumbrance on any
of its assets, tangible or intangible, (v) loan or advance to, or investment in,
any Person or any contract relating to the making of any such loan, advance or
investment, (vi) guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person, (vii) management service, consulting
or any other similar type contract, (viii) contract limiting the ability of the
Company to engage in any line of business or to compete with any Person, (ix)
contract involving any joint venture, partnership, strategic alliance,
co-marketing, co-promotion, co-
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packaging, joint development or similar arrangement, (x) shareholders',
buy-sell, put and call or other similar type contract, (xi) contracts involving
data access rights, (xii) contract involving any resolution or settlement of any
actual or threatened litigation, arbitration, claim or other dispute, (xiii)
Lease, (xiv) contract which by its operation or termination would have a
Material Adverse Effect on the Company, (xv) agreement under which it has
granted any Person registration rights (including demand and piggyback
registration rights), (xvi) contract with any customer listed (or required to be
listed) on Schedule 2.10(b) or (xvii) contract not entered into in the Ordinary
Course that is not cancelable without penalty within 30 days.
(b) Part I of Schedule 2.10(b) sets forth each current customer
of the Company. The relationships of the Company with such customers is a good
commercial working relationship and no such customer has canceled, otherwise
terminated, modified or threatened to cancel, otherwise terminate or modify its
relationship with the Company, or has indicated to the Company that it will stop
or decrease the rate of buying services and/or products of the Company. No
customer's usage of the services or products of the Company during the
twelve-month period ended on the Balance Sheet Date has decreased materially
from such customer's usage of the services or products of the Company during the
prior twelve-month period.
(c) Each contract set forth (or required to be set forth) on
Schedule 2.10(a) and Schedule 2.26 (each, a "Material Contract") is legal,
valid, binding and enforceable against the Company and in full force and effect
and will continue to be legal, valid, binding and enforceable against the
Surviving Corporation and in full force and effect immediately following the
consummation of the transactions contemplated hereby. With respect to each
Material Contract, there exists no (i) default or event of default by the
Company or any other party to any such contract with respect to any term or
provision of any such Material Contract or (ii) event, occurrence, condition or
act (including the consummation of the transactions contemplated hereby) which,
with the giving of notice, the lapse of time or the happening of any other event
or condition, would become a default or event of default by the Company or any
other party thereto, with respect to any term or provision of any such contract,
or would permit termination, modification or acceleration under such agreement.
The Company has not violated any of the material terms or conditions of any
Material Contract and all of the material covenants to be performed by any other
party thereto have been fully performed. The Company has delivered to the Buyer
true and complete copies, including all amendments, of each Material Contract.
2.11 Restrictive Documents. The Company is not subject to, or a party
to, any charter, bylaw, mortgage, lien, lease, license, permit, contract,
instrument, law, rule, ordinance, regulation, order, judgment or decree, or any
other restriction of any kind or character that would (a) prevent the
consummation of the transactions (including the Merger) contemplated by this
Agreement to which the Company is a party, (b) restrict the ability of the
Company to acquire any property or conduct any business in any area, or (c)
restrict the ability of the Company to make distributions or pay dividends to
the Company Shareholders.
2.12 Litigation. There is no action, suit, proceeding at law or in
equity, arbitration or administrative, other proceeding by or before or, to the
knowledge of the Company and the Shareholders' Representative, investigation by
any Governmental Entity or other instrumentality or agency, pending, or, to the
knowledge of the Company and the Shareholders' Representative,
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threatened, against or affecting the Company or any of its properties or rights.
The Company is not subject to any judgment, order or decree entered in any
lawsuit or proceeding that may have a Material Adverse Effect on the Company.
2.13 Taxes.
(a) Tax Returns. The Company has timely filed or caused to be
timely filed with the appropriate taxing authorities all material tax returns,
statements, forms and reports (including elections, declarations, disclosures,
schedules, estimates and information tax returns) for Taxes ("Tax Returns") that
are required to be filed by, or with respect to, the Company on or prior to the
Closing Date. Such Tax Returns are and will be true, correct and complete in all
material respects. The Company has prepared or caused to be prepared Tax Returns
for the fiscal year ending December 31, 2006 (such Tax Returns, the "2006 Tax
Returns") and has provided true, correct and complete copies of the 2006 Tax
Returns to the Buyer.
(b) Payment of Taxes. All material Taxes and Tax liabilities due
by or with respect to the income, assets or operations of the Company for all
taxable years or other taxable periods that end on or before the Closing Date
and, with respect to any taxable year or other taxable period beginning on or
before and ending after the Closing Date, the portion of such taxable year or
period ending on and including the Closing Date ("Pre-Closing Period") have been
or will, prior to the Closing, be timely paid in full or (x) with respect to
taxable years or periods (or portions thereof) ending on or prior to the Balance
Sheet Date, accrued and fully provided for on the Balance Sheet Date and (y)
with respect to tax periods (or portions thereof) beginning after Balance Sheet
Date, accrued on the books and records of the Company as of the Closing Date.
(c) Other Tax Matters. Except as set forth on Schedule 2.13(c),
(i) The Company has not been the subject of an audit or
other examination of Taxes by the tax authorities of any nation,
state or locality; (ii) no such audit is contemplated or
pending; and (iii) the Company has not received any written
notices from any taxing authority relating to any issue that
could affect the Tax liability of the Company.
(ii) The Company, as of the Closing Date, is not
contesting the Tax liability of the Company before any court,
tribunal or agency.
(iii) The Company has not been included in any
"consolidated," "unitary" or "combined" Tax Return provided for
under the law of the United States, any foreign jurisdiction or
any state or locality with respect to Taxes for any taxable
period for which the statute of limitations has not expired
(other than a group of which the Company is the only member).
(iv) All Taxes that the Company is (or was) required by
law to withhold or collect in connection with amounts paid or
owing to any employee, independent contractor, creditor,
stockholder or other third party have been duly withheld or
collected, and have been timely paid over to the proper
authorities to the extent due and payable.
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(v) No written claim has ever been made by any taxing
authority in a jurisdiction where the Company does not file Tax
Returns that the Company is or may be subject to taxation by
that jurisdiction.
(vi) There are no tax sharing, allocation,
indemnification or similar agreements in effect as between the
Company or any predecessor or Affiliate thereof and any other
party (including a Company Shareholder and any predecessors or
Affiliates thereof) under which Buyer, the Company could be
liable for any Taxes or other claims of any party after the
Closing Date.
(vii) The Company has not applied for, been granted, or
agreed to any accounting method change for which it will be
required to take into account any adjustment under Section 481
of the Code or any similar provision of the Code or the
corresponding tax laws of any nation, state or locality.
(viii) There is no excess loss account (within the
meaning of Treasury Regulations Section 1.1502-19 with respect
to the stock of the Company) that will or may result in the
recognition of income upon the consummation of the transactions
contemplated by this Agreement.
(ix) No indebtedness of the Company consists of
"corporate acquisition indebtedness" within the meaning of
Section 279 of the Code.
(x) The Company has not been a "United States real
property holding corporation" within the meaning of Section
897(c)(2) of the Code at any time during the five-year period
ending on the Closing Date.
(xi) Notwithstanding anything to the contrary in this
Section 2.13, the Company makes no representation or warranty as
to the amount or utility of any of its net operating loss
carryovers or other carryovers.
2.14 Insurance. Set forth on Schedule 2.14 is an accurate and complete
list of each insurance policy that covers the Company or its business,
properties, assets or employees (including self-insurance). Such policies are
legal, valid, binding, enforceable and in full force and effect, all premiums
thereon have been paid, and the Company is otherwise in compliance with the
terms and provisions of such policies. The Company is not in default under any
of the insurance policies set forth (or required to be set forth) on Schedule
2.14 and there exists no event, occurrence, condition or act (including the
consummation of the transactions contemplated hereby) that, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would become a default thereunder. The Company has not received any notice of
cancellation or non-renewal of any such policy or arrangement nor has the
termination of any such policies or arrangements been threatened, and there
exists no event, occurrence, condition or act (including the consummation of the
transactions contemplated hereby) that, with the giving of notice, the lapse of
time or the happening of any other event or condition, would entitle any insurer
to terminate or cancel any such policies. Such policies, with respect to their
amounts and types of coverage, are adequate to insure fully against risks to
which the Company and their property and assets are normally exposed in the
operation of their
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respective businesses. Since January 1, 2003, there has not been any material
adverse change in the Company's relationship with its insurers or in the
premiums payable pursuant to such policies. Schedule 2.14 also sets forth a list
of all pending claims and the claims history for the Company during the past
three (3) years (including with respect to insurance obtained but not currently
maintained).
2.15 Intellectual Properties.
(a) Schedule 2.15(a) sets forth as of the date of the Agreement
each and every component of Registered Intellectual Property. For each listed
component, Schedule 2.15(a) sets forth the (A) owner, and (B) the jurisdiction
where issued, registered, filed or the equivalent.
(b) Schedule 2.15(b) sets forth as of the date of the Agreement
each and every component of Company Intellectual Property licensed by the
Company as licensor together with the (i) owner, and (ii) the licensee (and any
third party beneficiaries).
(c) Schedule 2.15(c) sets forth as of the date of the Agreement
each and every component of Company Intellectual Property licensed by the
Company as licensee and used or held by the Company for use in its respective
business, together with the (i) owner (and licensor, if different), and (ii) the
licensee (and any third party beneficiaries).
(d) The Company owns or other has, through express or implied
licenses or otherwise, sufficient rights in all Intellectual Property and
Intellectual Property Rights that are necessary or material to the Company to
conduct its business as and where conducted on the Closing Date.
(e) The Registered Intellectual Property listed on Schedule
2.15(a) has been duly and validly registered in, filed in or issued by, the
official governmental registrars and/or issuers (or officially recognized
issuers) of patents, trademarks, copyrights, Internet domain names, in the
various jurisdictions (countries and states, foreign and domestic) indicated on
such Schedules, and except as set forth on Schedule 2.15(e), each such
registration, filing and/or issuance (i) to Company's knowledge has not been
abandoned, or canceled, (ii) has been maintained effective by all required
filings, renewals and payments, and (iii) remains in full force and effect as of
the Closing Date.
(f) Copies of all items of Registered Intellectual Property have
been delivered by the Company to Buyer.
(g) To the extent any Intellectual Property is used under
license in the business of the Company, no written notice of a material default
of such license has been received by the Company. Each such license agreement is
a legal, valid and binding obligation of the Company and each of the other
parties thereto, enforceable in accordance with the terms thereof and the
transactions contemplated by this Agreement will not breach the terms thereof.
(h) The Company owns or is licensed to use, all of the Company
Intellectual Property, free and clear of any liens, security interest, options,
charges, encumbrances and without obligation to pay any royalty or any other
fees with respect thereto other than license fees in the ordinary course. To
Company's knowledge, the Company's use of the Company
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Intellectual Property (including, without limitation, the manufacturing,
marketing, licensing, sale or distribution of products and the general conduct
and operations of the business of the Company) does not violate, infringe,
misappropriate or misuse any Intellectual Property Rights of any third party.
(i) All filings, payments, and other actions required to be made
or taken to maintain each item of Registered Intellectual Property in full force
and effect have been made by the applicable deadline. The Company thereof has
the exclusive right to file, prosecute and maintain all applications and
registrations with respect to the Registered Intellectual Property.
(j) As of the date of the Agreement, the Company has not
received any written notice of any claim from any third party, and no third
party claims are pending, (i) challenging the right of the Company to use any
Company Intellectual Property or indicating that the failure to take a license
would result in such a claim, (ii) alleging any violation, infringement, misuse
or misappropriation by the Company of Company Intellectual Property owned by any
third party, or (iii) asserting any opposition, interference; invalidity,
termination, abandonment, unenforceability, or other infirmity of any Company
Intellectual Property.
(k) The Company has not made any claim in writing of a
violation, infringement, misuse or misappropriation by any third party
(including, without limitation, any employee or former employee of the Company)
of its rights to, or in connection with, any Company Intellectual Property,
which claim is pending as of the date of this Agreement. The Company has not
entered into any agreement to indemnify any other person against any charge of
infringement of any Intellectual Property Right, other than indemnification
provisions contained in purchase orders or license agreements arising in the
Ordinary Course.
(l) The Company has secured valid written assignments from all
consultants, contractors and employees who contributed to the creation or
development of Company Intellectual Property that is owned by Company of the
rights to such contributions that the Company does not already own by operation
of law.
(m) The Company has published reasonable internal policies and
taken other reasonable steps to protect and preserve the confidentiality of all
trade secrets and other proprietary and confidential information material to
Company's business, including without limitation know-how, source codes,
databases, data collections, customer lists, schematics, ideas, algorithms and
processes and all use and/or disclosure of such information to any third party
(other than (i) to competent regulators, accountants and counsel, in each
instance acting in their professional capacities, or (ii) pursuant to competent
judicial or equivalent order) has been pursuant to the terms of a written
agreement between such third party and the Company. To Company's knowledge, the
Company has not breached any agreements of non-disclosure or confidentiality or
is currently alleged or claimed to have done so.
(n) Each of the material computer software programs other than
non-customized or off-the-shelf software used or held for use in the business of
the Company is free from any known material or significant software defect,
error, or virus ("Bugs") consistent with commercially reasonable standards
acceptable for such Bugs, and operates and runs in a commercially reasonable
business manner. The Company has made all documentation in its
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possession relating to the use, maintenance and operation of the material
computer software programs used or held for use in the business of the Company
available to the Buyer, all of which is true and accurate in all material
respects.
(o) For the twelve month period prior to the Closing Date, the
internet domain names and URLs (as defined in the definition of Intellectual
Property) in the Company Intellectual Property direct and resolve to the
appropriate internet protocol addresses and are and have been accessible to
Internet users on those certain computers used by the Company to make the Sites
(as defined in the definition of Intellectual Property) so accessible 99.5% of
the time, and are and have been operational for downloading content from the
those certain computers used by the Company to make the Sites so accessible
99.5% of the time. The Company has fully operational back-up copies of the Sites
(and all related software, databases and other information), made from the
current versions of the Sites (as of the date of the Agreement) as accessible to
Internet users. From the date hereof until the Closing Date, back-up copies have
been made no less frequently than every fourteen days and such back-up copies
have been stored in a safe and secure environment, fit for the back-up such
media, and are not located at the same location of the web server. The Company
has no reason to believe that Company Intellectual Property will cause the Sites
to not operate or will not continue to be accessible to internet users on
substantially a 24/7 basis prior to, at the time of, and after the Closing Date.
2.16 Compliance with Laws. The Company is and has been in material
compliance with all applicable laws, regulations, orders, judgments and decrees,
including regulations promulgated under the Fair Credit Reporting Act, 15 U.S.C.
1681, et seq., the Fair Housing Act, 42 U.S.C. 3601, et seq. and all similar
laws; provided, however, that the foregoing shall not be deemed to cover any
violations of law, regulations, orders, judgments and decrees that are
explicitly covered in another representation or warranty of the Company. The
Company has not received any notice or information that any violation of the
foregoing is being or may be alleged.
2.17 Governmental Licenses. The Company has all governmental licenses,
permits, franchises, approvals, permits and other authorizations of, and has
made all registrations and or filings with, all Governmental Entities
("Licenses"), necessary to own, lease and operate its properties and to enable
it to carry on its respective business as presently conducted. All Licenses held
by the Company are in full force and effect. Each such License can be renewed or
transferred in the Ordinary Course by the Company. Any applications for the
renewal of any such License which are due prior to the Closing Date will be
timely made or filed by the Company prior to the Closing Date. The Company has
not received notice of any proceeding for suspension or revocation of, or
similar proceedings with respect to, any such License and no fact or
circumstance exists that could form the basis for any such proceedings. No
jurisdiction has demanded or requested that the Company qualify or become
licensed as a foreign corporation.
2.18 Labor Matters.
(a) The Company has been and is in material compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and has not and is not engaged in
any unfair labor practice. No union is currently certified, and there is no
union representation question and no union or other organizational activity that
would be subject to the National Labor Relations Act (20 U.S.C. Section
-15-
151 et. seq.) existing or threatened with respect to the operations of the
Company. The Company is not subject to or bound by any collective bargaining or
labor union agreement applicable to any Person employed by the Company and no
collective bargaining or labor union agreement is currently being negotiated by
the Company. The Company has not experienced any material labor difficulty or
work stoppage during the last three years.
(b) Since the enactment of the Worker Adjustment and Retraining
Notification Act ("WARN"), the Company has not effectuated either (i) a "plant
closing" (as defined in WARN) affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of the
Company or (ii) a "mass layoff' (as defined in WARN) affecting any site of
employment or facility of the Company. The Company has not been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar law and none of the employees of
the Company has suffered an "employment loss" (as defined in WARN) during the
six months prior to the date hereof.
2.19 Employee Benefit Plans.
(a) List of Plans. Set forth in Schedule 2.19(a) is an
accurate and complete list of all (i) "employee welfare benefit plans" ("Company
Welfare Plans"), within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
thereunder ("ERISA"); (ii) "employee pension benefit plans" ("Company Pension
Plans"), within the meaning of Section 3(2) of ERISA; (iii) bonus, stock option,
stock purchase, restricted stock, incentive, fringe benefit, "voluntary
employees' beneficiary associations" ("VEBAs"), under Section 501(c)(9) of the
Code, profit-sharing, pension or retirement, deferred compensation, medical,
life insurance, disability, accident, salary continuation, severance, accrued
leave, vacation, sick pay, sick leave, supplemental retirement and unemployment
benefit plans, programs, arrangements, commitments and/or practices (whether or
not insured); and (iv) employment, consulting, termination, and severance
contracts or agreements, in each case for active, retired or former employees or
directors, whether or not any such plans, programs, arrangements, commitments,
contracts, agreements and/or practices (referred to in (i), (ii), (iii) or (iv)
above) are in writing or are otherwise exempt from the provisions of ERISA, that
are maintained or contributed to (or with respect to which an obligation to
contribute has been undertaken) or with respect to which any potential liability
is borne by the Company (including, for this purpose and for the purpose of all
of the representations in this Section 2.19, all employers (whether or not
incorporated) that would be treated together with the Company as 'a single
employer within the meaning of Section 414 of the Code (all of the foregoing
plans, programs, arrangements, commitments, practices, contracts and agreements
referred to in (i), (ii), (iii) and (iv) above are collectively referred to as
"Company Plans").
(b) Status of Plans. Each Company Plan (including any related
trust) complies in form with the requirements of all applicable laws, including
ERISA and the Code, and has at all times been maintained and operated in
compliance with its terms and the requirements of all applicable laws, including
ERISA and the Code. No complete or partial termination of any Company Pension
Plan has occurred or is expected to occur. The Company has not any commitment,
intention or understanding to create, modify or terminate any Company
-16-
Plan. No condition or circumstance exists that would prevent the amendment or
termination of any Company Plan. The Company has not caused any condition or
circumstance that would reasonably be expected to result in a material increase
in the benefits under or the expense of maintaining any Company Plan from the
level of benefits or expense incurred for the most recent fiscal year ended
thereof.
(c) No Company Plan owns or has owned any real property. No
Company Plan owns assets in any form other than in cash, cash equivalents or
other liquid, equity investments.
(d) No Pension Plans. No Company Pension Plan is an "employee
pension benefit plan" (within the meaning of Section 3(2) of ERISA) subject to
Section 412 of the Code or Section 302 or Title IV of ERISA. The Company does
not maintain or contribute to, or has any obligation to contribute to any
"multiple employer plan" (within the meaning of the Code or ERISA) or any
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA).
(e) Liabilities. The Company does not maintain any Company
Plan which is a "group health plan" (as such term is defined in Section 607(1)
of ERISA or Section 5000(b)(1) of the Code) that has not been administered and
operated in all respects in compliance with the applicable requirements of Part
6 of Subtitle B of Title I of ERISA and Section 4980B of the Code, except to the
extent such noncompliance would not result in material liability, and the
Company is not subject to any material liability, including additional
contributions, fines, taxes, penalties or loss of tax deduction as a result of
such administration and operation. No Company Welfare Plan which is such a group
health plan is a "multiple employer welfare arrangement," within the meaning of
Section 3(40) of ERISA. Each Company Welfare Plan that is intended to meet the
requirements of Section 125 of the Code meets such requirements, and each
program of benefits for which employee contributions are provided pursuant to
elections under any Company Plan meets the requirements of the Code applicable
thereto. The Company does not maintain any Company Welfare Plan that has
provided any "disqualified benefit" (as such term is defined in Section 4976(b)
of the Code) with respect to which an excise tax could be imposed.
(f) Except as required by Part 6 of Subtitle B of Title I of
ERISA and Section 4980B of the Code, the Company does not maintain any Company
Welfare Plan (whether qualified or non-qualified under Section 401(a) of the
Code) providing for post-employment or retiree health, life insurance and/or
other welfare benefits and having unfunded liabilities, and the Company does not
have any obligation to provide any such benefits to any retired or former
employees or active employees following such employees' retirement or
termination of service. The Company does not have any unfunded liabilities
pursuant to any Company Pension Plan that is not intended to be qualified under
Section 401(a) of the Code. No Company Plan holds as an asset any interest in
any annuity contract, guaranteed investment contract or any other investment or
insurance contract, policy or instrument issued by an insurance company that, to
the knowledge of the Company and the Shareholders' Representative, is or is
likely to be the subject of bankruptcy, conservatorship, insolvency,
liquidation, rehabilitation or similar proceedings.
(g) The Company has not incurred any material liability for
any tax or excise tax arising under Chapter 43 of the Code, and no event has
occurred and no condition or circumstance has existed that is likely to give
rise to any such material liability.
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(h) There are no actions, suits, claims or disputes pending,
or threatened, anticipated or expected to be asserted against or with respect to
any Company Plan or the assets of any such plan (other than routine claims for
benefits and appeals of denied routine claims). No civil or criminal action
brought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is
pending, or threatened, anticipated or expected to be asserted against the
Company or any fiduciary of any Company Plan, in any case with respect to any
Company Plan. No Company Plan or any fiduciary thereof is the direct or indirect
subject of an audit, investigation or examination by any governmental or
quasi-governmental agency.
(i) Contributions. Full payment has been timely made of all
amounts which the Company is required, under applicable law or under any Company
Welfare Plan or Company Pension Plan or any agreement relating to any Company
Welfare Plan or Company Pension Plan to which the Company is a party, to have
paid as contributions or premiums thereto as of the last day of the most recent
fiscal year of such Company Plan ended prior to the date hereof. All such
contributions and/or premiums have been fully deducted for income tax purposes
and no such deduction has been challenged or disallowed by any governmental
entity and no event has occurred and no condition or circumstance has existed
that could give rise to any such challenge or disallowance. The Company has made
adequate provision for reserves to meet contributions and premiums and any other
liabilities that have not been paid or satisfied because they are not yet due
under the terms of any Company Plan, applicable law or related agreements.
Benefits under the Company Plans are as represented and have not been increased
subsequent to the date as of which documents have been provided.
(j) Tax Qualification. Each Company Pension Plan intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS regarding the qualified status of such plan
under Section 401(a) of the Code and the exempt status of the trust established
in connection therewith under Section 501 (a) of the Code (or has submitted, or
is within the remedial amendment period for submitting, an application for a
determination with the IRS, and is awaiting a response). Each VEBA has been
determined by the IRS to be exempt from Federal income tax under Section
501(c)(9) of the Code. Since the date of each most recent determination letter
or submission referred to in this paragraph (j), no event has occurred and no
condition or circumstance has existed that resulted or is likely to result in
the revocation of, or failure to issue, any such determination letter or that
could adversely affect the qualified status of any such Company Plan or the
exempt status of any such VEBA.
(k) Transactions. Neither the Company nor any of its
directors, officers, employees or other persons who participate in the operation
of any Company Welfare Plan or Company Pension Plan or related trust or funding
vehicle, has engaged in any transaction with respect to any Company Plan or
breached any applicable fiduciary responsibilities or obligations under Title I
of ERISA that would subject the Company to a tax, penalty or liability for
prohibited transactions or breach of any obligations under ERISA or the Code or
would result in any material claim being made under, by or on behalf of any such
Company Plan by any party with standing to make such claim.
(l) Triggering Events. Except as set forth on Schedule
2.19(l), the execution of this Agreement and the consummation of the
transactions contemplated hereby, do not constitute a triggering event under any
Company Plan, policy, arrangement, statement,
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commitment or agreement, whether or not legally enforceable, which (either alone
or upon the occurrence of any additional or subsequent event) will or may result
in any payment (whether of severance pay or otherwise), "parachute payment" (as
such term is defined in Section 280G of the Code), acceleration, vesting or
increase in benefits to any employee or former employee or director of the
Company. No Company Plan provides for the payment of severance, termination,
change in control or similar-type payments or benefits.
(m) Documents. The Company has delivered or caused to be
delivered, or made available, to Buyer and its counsel true and complete copies
of all material documents in connection with each Company Plan, including (where
applicable): (i) all Company Plans as in effect on the date hereof, together
with all amendments thereto, including, in the case of any Company Plan not set
forth in writing, a written description thereof; (ii) all current summary plan
descriptions and summaries of material modifications and material
communications; (iii) all current trust agreements, declarations of trust and
other documents establishing other funding arrangements (and all amendments
thereto and the latest financial statements thereof); (iv) the most recent IRS
determination letter obtained with respect to each Company Pension Plan intended
to be qualified under Section 401(a) of the Code or exempt under Section 501(a)
or 501(c)(9) of the Code; (v) the annual report on IRS Form 5500-series or 990
for each of the last three years for each Company Plan required to file such
form; (vi) the most recently prepared financial statements for each Company Plan
for which such statements are required; and (vii) all contracts relating to each
Company Plan, including service provider agreements, insurance contracts,
annuity contracts, investment management agreements, subscription agreements,
participation agreements and recordkeeping agreements and collective bargaining
agreements..
2.20 No Changes Since Balance Sheet Date. Except as expressly permitted
or contemplated by this Agreement, since the Balance Sheet Date, the Company has
not (a) incurred any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except in the Ordinary Course, (b) permitted
any of its assets, tangible or intangible, to be subjected to any Encumbrance
(other than Permitted Encumbrances), (c) entered into any agreement, contract,
lease or license (or series of related agreements, contracts, leases and
licenses) outside the Ordinary Course, (d) has been party to any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) that has been accelerated, terminated, modified or cancelled, (e)
sold, leased, assigned, transferred or otherwise disposed of any assets,
tangible or intangible, except for fair consideration in the Ordinary Course,
(f) made any capital expenditure or commitment therefor, (g) made any
distribution to its stockholders or declared or paid any dividend or made any
distribution on any shares of its capital stock (whether in cash or in kind),
(h) redeemed, purchased or otherwise acquired any shares of its capital stock,
(i) granted or issued any option, warrant or other right to purchase or acquire
(including upon conversion, exchange or exercise) any shares of its capital
stock, (j) made any bonus or profit sharing distribution or payment of any kind,
(k) issued any note, bond, or other debt security or created, incurred, assumed
or guaranteed any indebtedness for borrowed money or capitalized lease
obligations, or made any capital investment in, any loan to, or any acquisition
of the securities or assets of, any other Person (or series of related capital
investments, loans and acquisitions), (1) written off as uncollectible any notes
or accounts receivable, except write-offs in the Ordinary Course charged to
applicable reserves, none of which individually or in the aggregate is material,
(m) delayed or postponed the payment of accounts payable and other liabilities
outside the Ordinary Course, (n) transferred, assigned, or granted any license
or
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sublicense of any rights under or with respect to any Intellectual Property, (o)
changed or caused to be changed its charter or bylaws, (p) experienced any
damage, destruction, or loss (whether or not covered by insurance) to its
property, (q) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement, (r) granted any increase in the rate of wages, salaries, bonuses
or other remuneration of any employee, director or officer, except in the
Ordinary Course, (s) adopted, amended, modified, or terminated any bonus, profit
sharing, incentive, severance, or other plan, contract, or commitment for the
benefit of any of its directors, officers and employees (or taken any such
action with respect to any Company Plan), (t) made any other change in
employment terms for any of its directors, officers and employees outside the
Ordinary Course, (u) canceled, compromised, waived or released any claims or
rights, (v) made or pledged to make any charitable or other capital contribution
outside the Ordinary Course, (w) discharged a material liability or Encumbrance
outside the Ordinary Course (x) made any loans or advances of money, (y)
disclosed any confidential information (other than to employees and members of
the Company Board or pursuant to a nondisclosure agreement), (z) been involved
in any other occurrence, event, incident, action, failure to act or transaction
outside the Ordinary Course, (aa) made any change in any method of accounting or
auditing practice, (bb) otherwise conducted its business or entered into any
material transaction, except in the Ordinary Course or (cc) agreed, whether or
not in writing, to do any of the foregoing.
2.21 Liabilities. To the knowledge of the Company and the Shareholders'
Representative, the Company does not have any liabilities or indebtedness,
whether absolute, accrued, contingent or otherwise that are required to be
reflected in financial statements prepared in accordance with GAAP except for
(i) liabilities identified as such on the Financial Statements; (ii) liabilities
that have been incurred since the Balance Sheet Date in the Ordinary Course; and
(iii) liabilities incurred in connection with the execution of this Agreement.
2.22 Consents and Approvals: No Violations. The execution and delivery
of this Agreement and the other instruments and agreements to be executed and
delivered by the Company in connection herewith and the consummation of the
transactions contemplated hereby and thereby by the Company will not (a) violate
any provision of the certificate of incorporation or bylaws (or other
organizational documents) of the Company, (b) violate any statute, ordinance,
rule, regulation, order or decree of any court or any Governmental Entity
applicable to the Company, (c) require any filing with, or permit, consent or
approval of, or the giving of any notice to, any Governmental Entity having
authority over the Company or (d) result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of the Company under, any of the terms, conditions or
provisions of any contract to which the Company is a party, or by which it or
any of its properties or assets may be bound.
2.23 Disclosure. None of this Agreement, the Schedules, Exhibits and
certificates attached or provided hereto by the Company contains any untrue
statement of a material fact, or omits any statement of a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances in which they were made, not misleading.
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2.24 Broker's or Finder's Fees. No Company Shareholder and no agent,
broker, person or firm acting on behalf of any Company Shareholder, the
Shareholders' Representative or the Company is, or will be, entitled to any
commission or broker's or finder's fees from Buyer or any of its Affiliates
(including, following the Closing, the Company) in connection with any of the
transactions contemplated by this Agreement.
2.25 Copies of Documents. The Company has caused and will cause to be
made available for inspection and copying by the Buyer and its advisers, true,
complete and correct copies of all documents referred to in this Section 2 or in
any Schedule or Exhibit attached hereto by the Company.
2.26 Interests in Clients, Suppliers, Etc.; Affiliate Transactions. (a)
There are no contracts, liabilities or obligations between the Company and any
Company Shareholder, on the other hand (except with respect to obligations in
connection with a Company Shareholder's employment with the Company), and (b)
none of the officers or members of the Company Board or, to the knowledge of the
Company and the Shareholders' Representative, the Company Shareholders possess,
directly or indirectly, any financial interest in, or is a director, officer or
employee of, any Person that is a client, supplier, customer, lessor, lessee or
competitor of the Company. Ownership of securities of a company whose securities
are registered under the Securities Exchange Act of 1934, as amended, of 1% or
less of any class of such securities shall not be deemed to be a financial
interest for purposes of this Section 2.26. The Company is not indebted to any
Company Shareholder, director, officer, employee or agent of the Company (except
for amounts due as employment compensation and in reimbursement of ordinary
expenses) and no such person is indebted to Company.
2.27 Bank Accounts and Powers of Attorney. Set forth on Schedule 2.27 is
an accurate and complete list showing (a) the name and address of each bank in
which the Company has an account or safe deposit box, the number of any such
account or any such box and the names of all Persons authorized to draw thereon
or to have access thereto and (b) the names of all Persons, if any, holding
powers of attorney from the Company, including a summary statement of the terms
thereof.
2.28 Appointment of Shareholders' Representative. The Company
Shareholders (and each of them) have duly appointed the Shareholders'
Representative as their representative for purposes of this Agreement, with the
authority to act on behalf of such Company Shareholders as contemplated by this
Agreement and in connection therewith to act as their agent, to take all actions
called for by this Agreement on their individual and collective behalf, in
accordance with the terms of this Agreement.
SECTION 3.
REPRESENTATIONS OF THE BUYER
The Buyer represents and warrants, as of the date of this Agreement and
as of the Closing Date, in favor of the Company as follows:
3.1 Existence and Good Standing. Each of the Buyer and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of
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Delaware. The Buyer has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. The
Buyer is duly qualified and/or licensed to conduct its business, and is in good
standing, in each jurisdiction in which the character or location of the
property owned, leased or operated by it or the nature of the business conducted
by it makes, such qualification necessary. Merger Sub was formed solely for the
purpose of effecting the Merger and has not engaged in any business activities
or conducted any operations other than in connection with the transactions
contemplated hereby.
3.2 Power; Binding Effect. Each of the Buyer and Merger Sub has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform its respective obligations hereunder. The execution, delivery and
performance of this Agreement and the Related Documents to which Buyer and
Merger Sub are a party has been duly authorized and approved by all necessary
corporate action of the Buyer and Merger Sub. This Agreement has been duly
executed and delivered by the Buyer and Merger Sub, and constitutes a valid and
binding agreement, enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency or
similar laws and equitable principles relating to or affecting the rights of
creditors generally from time to time in effect.
3.3 Broker's or Finder's Fees. No agent, broker, person or firm acting
on behalf of the Buyer or any Affiliate thereof is, or will be, entitled to any
commission or broker's or finder's fees from the Buyer in connection with any of
the transactions contemplated by this Agreement.
3.4 Litigation. There is no action, suit, proceeding at law or in
equity, arbitration or administrative or other proceeding by or before or, to
the knowledge of the Buyer, any investigation by any Governmental Entity or
other instrumentality or agency, pending, or, to the knowledge of the Buyer,
threatened, against or affecting the Buyer that could materially and adversely
affect the right or ability of the Buyer to enter into this Agreement and to the
knowledge of the Buyer, no fact or circumstance exists that could reasonably be
expected to form the basis therefor. The Buyer is not subject to any judgment,
order or decree entered in any lawsuit or proceeding which may, individually or
in the aggregate, materially and adversely affect the right or ability of the
Buyer to enter into this Agreement.
3.5 Compliance with Laws. The Buyer is and has been in full compliance
with all applicable laws, regulations, orders, judgments and decrees, except
where the failure to so comply would not, individually or in the aggregate,
materially and adversely affect the right or ability of the Buyer to enter into
this Agreement. The Buyer has not received any notice or information that any
material violation of the foregoing is being or may be alleged.
3.6 Consents and Approvals; No Violations. The execution and delivery of
this Agreement by the Buyer and the consummation of the transactions
contemplated hereby and thereby by the Buyer will not (a) violate any provision
of the certificate of incorporation or bylaws of the Buyer or Merger Sub, (b)
violate any statute, ordinance, rule, regulation, order or decree of any court
or any Governmental Entity applicable to the Buyer or Merger Sub, (c) require
the Buyer or Merger Sub to make any filing with, or permit, consent or approval
of, or the giving of any notice to, any Governmental Entity or regulatory body,
agency or authority having authority over the Buyer or Merger Sub or (d) result
in a violation or breach of, conflict
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with, constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of the Buyer or Merger Sub under any of the terms,
conditions or provisions of any Contract to which the Buyer or Merger Sub is a
party, or by which the Buyer or Merger Sub or any of their respective properties
or assets may be bound.
SECTION 4.
THE TRANSACTION
4.1 The Merger.
(a) At the Effective Time, and subject to and upon the terms
and conditions of this Agreement, the Certificate of Merger and the applicable
provisions of the DGCL, the Company shall be merged with and into Merger Sub and
the separate corporate existence of the Company shall cease, and Merger Sub
shall continue as the surviving corporation under the laws of the State of
Delaware (the "Surviving Corporation").
(b) The Merger shall become effective when (i) the Closing has
occurred and (ii) the Certificate of Merger, executed in accordance with the
DGCL, is duly filed by Buyer promptly following the Closing with the Secretary
of State of Delaware (such time of effectiveness, the "Effective Time").
(c) From and after the Effective Time, the Merger shall have
the effects provided for in Section 259 of the DGCL.
(d) From and after the Effective Time, (i) the certificate of
incorporation of the Company, 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 law and such certificate of
incorporation, (ii) the bylaws of the Company, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by law, by the certificate of incorporation of
the Company or by such bylaws and (iii) the directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Corporation, each of such directors and officers
to hold office, subject to the applicable provisions of the certificate of
incorporation and bylaws of the Surviving Corporation, until their respective
successors shall be duly elected or appointed and qualified.
4.2 Conversion of Company Stock. At the Effective Time, by virtue of the
Merger and without any further action on the part of the Parties, the Surviving
Corporation or the Company Shareholders, the shares of Company Stock issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive the Merger Consideration as set forth in Section 4.3, upon
surrender of the certificate formerly representing such share of Company Stock
(each a "Company Certificate"). All such converted shares of Company Stock, when
so converted at the Effective Time, shall no longer be outstanding and shall be
deemed to be cancelled and retired and shall cease to exist, and each holder of
any share of Company Stock shall cease to have any rights with respect to any
Company Certificate except the right to receive
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the Merger Consideration, without interest, upon the surrender of such Company
Certificate in accordance with Section 4.5.
4.3 Consideration.
(a) Merger Consideration. The total consideration for which
all of the Company Stock shall be exchanged shall be equal to (i) $2,000,000 in
cash ($15,000 of which has been paid as the Deposit) and (ii) $40,000 in cash as
a credit for working capital (the "Merger Consideration"), required to be paid
in accordance with the terms of this Section 4.
(b) Company Stock Consideration.
(i) Each share of Preferred Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive (x) such amount in cash (by bank check or wire transfer) determined by
dividing the Preferred Stock Liquidation Value by the aggregate number of shares
of Preferred Stock outstanding immediately prior to the Effective Time (rounded
to the nearest whole cent) plus (y) the amounts specified in subsection (ii)
below; and
(ii) Each share of Company Stock outstanding immediately
prior to the Effective Time shall be converted into the right to receive such
amount in cash (by bank check or wire transfer) determined by dividing the
Remaining Closing Consideration by the aggregate number of shares of Company
Stock outstanding immediately prior to the Effective Time (rounded to the
nearest whole cent).
4.4 Escrow.
(a) Within five (5) Business Days following the Closing Date,
the Buyer shall deliver, or shall cause to be delivered, directly to an escrow
agent reasonably acceptable to the Shareholders' Representative (the "Escrow
Agent"), a portion of the Merger Consideration in an amount equal to $299,500 in
cash (collectively with all interest and earnings thereon, the "Escrow Amount").
Each Company Shareholder shall be deemed to have contributed to the Escrow
Amount pro rata in an amount equal to the product of (x) $299,500 and (y) the
Pro Rata Multiplier for such Company Shareholder ("Escrow Pro Rata Share"),
pursuant to the terms set forth herein and in an escrow agreement to be entered
into by and among the Shareholders' Representative, the Buyer and the Escrow
Agent, in a form reasonably acceptable to the Shareholders' Representative (the
"Escrow Agreement"). The Buyer shall pay the Escrow Fee to the Escrow Agent
pursuant to the terms of the Escrow Agreement. Each Company Shareholder's Escrow
Pro Rata Share shall be deducted from the Merger Consideration payable to such
Company Shareholder at the Effective Time under Section 4.3.
(b) The Escrow Amount shall be available from time to time
prior to distribution as provided in Section 4.5(c) to satisfy any
indemnification obligations of the Company Shareholders pursuant to Section 8
for Losses (each, an "Indemnity Payment") on or prior to the last day of the one
year anniversary of the Closing Date (such day, the "Final Release Date"). Any
Indemnity Payments from the Escrow Amount shall be satisfied by reducing each
Company Shareholder's Escrow Pro Rata Share deposited with the Escrow Agent on a
pro rata basis. Any Specified Indemnity Payments shall be satisfied (i) first,
from the Escrow Amount on
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a pro rata basis; and (ii) second, if the Escrow Amount has been exhausted in
full, then the Company Shareholders shall be liable for such excess amount up to
the aggregate amount of Merger Consideration received by each Company
Shareholder on a pro rata basis (the "Shareholder Merger Consideration Amount").
The Buyer and Shareholders' Representative shall, within 5 days after
determination of any Agreed Claims in accordance with the provisions of Section
8, cause the Escrow Agent to deliver to Buyer a portion of the Escrow Amount
equal to the amount of Losses pursuant to such Agreed Claims as determined in
accordance with Section 8.
(c) Subject to the foregoing, the Escrow Amount shall be
distributed as follows: on the later to occur of (i) final determination of all
Certificates delivered in accordance with Section 8.3 and (ii) the Final Release
Date (or, if such day is not a Business Day, on the next succeeding Business
Day), the Buyer shall cause the Escrow Agent to release to the Company
Shareholders the remaining Escrow Amount of each such Company Shareholder's
Escrow Pro Rata Share as of such date, if any, after satisfaction of any
indemnification obligations of such Company Shareholder pursuant to Section 8.
(d) As promptly as possible following the distribution in
Section 4.4(c) above, the escrow shall be terminated as provided in the Escrow
Agreement. Notwithstanding anything else in this Agreement, in the event of a
conflict between the terms of the Escrow Agreement and the terms hereof, the
terms of this Agreement shall be controlling.
4.5 Exchange of Company Certificates.
(a) As soon as reasonably practicable following the Closing
Date, the Buyer shall mail, fax, send electronically or send by overnight
courier to each holder of record of one or more Company Certificates
representing Company Stock, (i) a letter of transmittal (a "Letter of
Transmittal"), which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates representing Company Stock shall
pass, only upon delivery of the Company Certificates representing Company Stock
and (ii) instructions for use in effecting the surrender of Company Certificates
representing Company Stock in exchange for payment of the Merger Consideration
upon consummation of the Merger.
(b) Upon surrender of a Company Certificate representing
Company Stock for cancellation to the Buyer, together with a Letter of
Transmittal, duly executed, the holder of the shares of Company Stock
represented by such Company Certificate shall be entitled to receive in exchange
therefor the portion of the Merger Consideration, payable in accordance with
Section 4.3, for each share of Company Stock formerly represented by such
Company Certificate into which such Company Stock shall have been converted
pursuant to Section 4.3, and the Company Certificate so surrendered shall be
cancelled. If payment of such portion of the Merger Consideration is to be made
to a Person other than the Person in whose name such Company Certificate is
registered, it shall be a condition of payment that the Company Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the Person requesting such payment shall have paid any
transfer and other Taxes required by reason of the payment of the portion of the
Merger Consideration to a Person other than the registered holder of the Company
Certificate or shall have established to the satisfaction of the Surviving
Corporation that such Tax either has been paid or is not applicable.
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(c) At the Effective Time, the stock transfer books of the
Company shall be closed, and thereafter there shall be no further registration
of transfers of the Company Stock on the records of the Company.
4.6 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place 12:01 a.m. local time at the offices
of Xxxxx & Xxxxxx LLP at 000 Xxxxx Xxxx, 00xx Xxxxx, Xxxxx Xxxx, XX 00000, on
the date hereof (the date of the Closing is referred to herein as the "Closing
Date").
4.7 Company Stock Rights; Company Stock Plans.
(a) Prior to the Effective Time, the board of directors of the
Company (or, if appropriate, any committee thereof) shall adopt appropriate
resolutions and take all other actions necessary to provide that effective at
the Effective Time all the outstanding stock options, stock issuance rights,
stock appreciation rights, limited stock appreciation rights and stock purchase
rights (the "Company Stock Rights") heretofore granted under any stock option,
incentive or similar plan, agreement or arrangement of the Company (the "Company
Stock Plans"), shall be converted or exercised by the holders of such Company
Stock Rights.
(b) The Company shall take all actions so that following the
Effective Time no holder of a Company Stock Right under or any participant in
any of the Company Stock Plans shall have any right thereunder to acquire
capital stock of the Company or the Surviving Corporation. The Company shall
take all actions so that, as of the Effective Time, neither the Company nor the
Surviving Corporation or any of their respective Subsidiaries is or will be
bound by any Company Stock Rights, any stock rights under options, warrants,
rights or agreements which would entitle any Person, other than Merger Sub or
its Affiliates, to own any capital stock of the Company, the Surviving
Corporation or any of their respective Subsidiaries or to receive any payment in
respect thereof, except as otherwise provided herein.
SECTION 5.
CERTAIN COVENANTS
5.1 Corporate Record Books. Promptly following the Closing, the
Surviving Corporation shall deliver to the Buyer the Company's original
corporate record books and stock record books.
5.2 Escrow Arrangement. Within five (5) days following the Closing, the
Buyer will deliver, or cause to be delivered, the Escrow Amount to the Escrow
Agent pursuant to the terms of the Escrow Agreement.
SECTION 6.
CONDITIONS PRECEDENT
6.1 Conditions of all Parties. The obligation of each of the Parties to
consummate the transactions contemplated hereby is subject to the satisfaction
or waiver by such Party on or before the Closing, of the following conditions
precedent:
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(a) Injunction. No preliminary or permanent injunction or
other order shall have been issued by any court or by any Governmental Entity
that prohibits the consummation of the transactions contemplated by this
Agreement and the other Related Documents and which is in effect on the Closing
Date.
(b) Statutes; Governmental Approvals. No statute, rule,
regulation, executive order, decree or order of any kind shall have been
enacted, entered, promulgated or enforced by any court or other Governmental
Entity which prohibits the consummation of the transactions contemplated by this
Agreement and the other Related Documents; all governmental and other consents
and approvals necessary to permit the consummation of the transactions
contemplated by the Related Documents shall have been received.
(c) No Litigation. As of the Closing Date, no action or
proceedings shall have been instituted before a court or other government body
or by any public authority to restrain or prohibit the consummation of the
transactions contemplated by this Agreement and the other Related Documents, and
no such action or proceeding that does not reasonably constitute a frivolous
claim shall have been threatened.
(d) Approval of the Company's Shareholders. This Agreement and
the Merger shall have been approved and adopted by the written consent of the
Company's Shareholders.
6.2 Conditions of the Buyer. The obligation of the Buyer to consummate
the transactions contemplated hereby and in the other Related Documents is
additionally subject to the satisfaction or waiver on or before the Closing Date
of the following conditions precedent:
(a) Truth of Representations and Warranties. The
representations and warranties of the Company contained herein shall be true and
accurate in all material respects, in each case at and as of the date of this
Agreement and as of the Closing Date (except to the extent a representation or
warranty speaks specifically as of an earlier date or as expressly provided for
in this Agreement), and the Company shall have delivered to the Buyer a
certificate dated the Closing Date, to such effect.
(b) Performance of Agreements. All of the agreements of the
Company and the Shareholders' Representative to be performed pursuant to this
Agreement at or prior to the Closing shall have been duly performed in all
material respects, and each of the Company and the Shareholders' Representative
shall have delivered to the Buyer a certificate, dated the Closing Date, to such
effect.
(c) Certificate of Incorporation and Bylaws. The Company shall
have delivered to the Buyer (i) a copy of its certificate of incorporation,
including all amendments thereto, certified by the jurisdiction of its
organization as being true and correct and in effect within five (5) days of the
Closing Date; (ii) a copy of its bylaws, including all amendments thereto,
certified by the Secretary of the Company as being true and correct and in
effect on the Closing Date; and (iii) a certificate from the Secretary of State
or other appropriate official in Delaware and each other State or country in
which the Company is qualified to do business to the effect that the Company is
in good standing or validly existing in such State or country.
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(d) No Material Adverse Effect. As of the Closing Date, there
shall have been no Material Adverse Effect and there shall not have occurred any
change or development that would have a Material Adverse Effect on the Company.
(e) Proceedings. As of the Closing Date, all corporate
proceedings of the Company, if any, to be taken in connection with the
transactions contemplated by this Agreement, the other Related Documents and all
documents incident hereto and thereto (including the adoption by the Company's
board of directors of a resolution approving this Agreement and the Merger and a
resolution authorizing the termination of any 401(k) or profit sharing plan of
the Company) shall be reasonably satisfactory in form and substance to the
Buyer, and the Buyer shall have received copies of all such documents and other
evidences as it may reasonably request in order to establish the consummation of
such transactions and the taking of all corporate proceedings in connection
therewith.
(f) Related Documents. Each of the following agreements (such
agreements, together with this Agreement, the "Related Documents") shall have
been duly executed and delivered by the parties thereto (other than the Buyer):
(i) an employment agreement between Buyer and Xxxxxxx
Xxxxx in the form attached hereto as Exhibit B;
(ii) a consulting agreement between Buyer and Xxxxx
Xxxxxxx in the form attached hereto as Exhibit C; and
(iii) a non-competition agreement between Buyer and
Xxxxxxx Xxxxx in the form attached hereto as Exhibit D;
(iv) a non-competition agreement between Buyer and Xxxxx
Xxxxxxx in the form attached hereto as Exhibit D.
(g) Consents and Approvals. All third party consents, waivers
and approvals necessary to permit the consummation of the transactions
contemplated by this Agreement and the operation of the Company in the Ordinary
Course following the Closing shall have been obtained and written evidence
thereof shall have been delivered to the Buyer.
(h) Resignation Letters. The Company shall have delivered to
the Buyer the resignation letters of all members of the Company Board and/or any
officer of the Company as the Buyer shall have requested at or prior to the
Closing, together with an acknowledgment that they have no prior or present
claim whatsoever against the Company in connection with so acting as directors
and/or officers.
(i) Approval of the Company Shareholders. The Buyer shall have
received written evidence of the approval and adoption of this Agreement and the
Merger by the Company Shareholders in compliance with the Company's Certificate
of Incorporation, Bylaws, and the DGCL.
(j) No Dissenting Shares. As of the Closing Date, no Company
Shareholder shall have exercised its, his or her Appraisal Rights with respect
to the Merger.
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6.3 Conditions of the Company. The obligation of the Company and the
Shareholders' Representative to consummate the transactions contemplated hereby
and in the other Related Documents are additionally subject to the satisfaction
or waiver on or before the Closing Date of the following conditions precedent:
(a) Truth of Representations and Warranties. The
representations and warranties of the Buyer contained herein shall be true and
accurate in all material respects, in each case at and as of the date of this
Agreement and as of the Closing Date (except to the extent a representation or
warranty speaks specifically as of an earlier date or as expressly provided for
in this Agreement), and the Buyer shall have delivered to the Company a
certificate dated the Closing Date, to such effect.
(b) Performance of Agreements. All of the agreements of the
Buyer to be performed pursuant to this Agreement at or prior to the Closing
shall have been duly performed in all material respects, and the Buyer shall
have delivered to the Company a certificate dated the Closing Date to such
effect.
(c) Proceedings. As of the Closing Date, all corporate
proceedings of the Buyer, if any, to be taken in connection with the
transactions contemplated by this Agreement, the Related Documents and all
documents incident thereto (including the adoption by the Buyer's board of
directors of a resolution approving this Agreement and the Merger) shall be
reasonably satisfactory in form and substance to the Company, and the Company
shall have received copies of all such documents and other evidences as it may
reasonably request in order to establish the consummation of such transactions
and the taking of all corporate proceedings in connection therewith.
(d) Related Agreements. The Related Agreements shall have been
duly executed and delivered by the Buyer.
SECTION 7.
TERMINATION
7.1 Intentionally Omitted.
SECTION 8.
INDEMNIFICATION
8.1 Survival of Representations. The representations and warranties of
the Parties contained in this Agreement (and in any Schedule or Exhibit attached
hereto or certificate delivered in connection with the Closing) are made only as
of the date of this Agreement and as of the Closing Date. Such representations
and warranties shall survive the Closing for a period of one year following the
Closing Date, except for the representations and warranties of the Company
contained in Sections 2.3, 2.4, and 2.12, each of which shall expire for all
purposes 90 days after the expiration of the applicable statutes of limitations,
and except further for the representations and warranties contained in Section
2.21, which shall expire for all purposes on the third anniversary of the
Closing Date.
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8.2 Indemnification.
(a) The Company Shareholders shall indemnify and hold harmless
the Buyer and its Affiliates (including, after the Closing, the Surviving
Corporation) and their respective officers, directors, stockholders, employees,
agents and any successors thereto, on an after-tax basis, from any and all
losses, liabilities, obligations, damages, costs and expenses (including
reasonable attorney fees) (collectively, "Losses") incurred or paid as a result
of or arising out of (i) the failure of any representation or warranty made by
the Company in Section 2 to be true and correct as of the date hereof and as of
the Closing Date, (ii) the failure of the Company to perform any of its
covenants contained in this Agreement, (iii) any Taxes imposed on or with
respect to the properties, income and operations of the Company for all
Pre-Closing Periods, including the portion of the Overlap Period up to and
including the Closing Date, except Taxes that are reserved for on the Company's
Financial Statements, (iv) any Taxes imposed on the Company as a result of the
provisions of Treasury Regulations Section 1.1502-6 or the analogous provisions
of any state, local or foreign law, and (v) the special indemnification matters
set forth in Section 8.3.
(b) The Buyer shall indemnify and hold harmless the Company
Shareholders and any successors thereto, on an after-tax basis, from any and all
Losses incurred or paid as a result of or arising out of (i) the failure of any
representation or warranty made by the Buyer in Section 3 to be true and correct
as of the date hereof and as of the Closing Date or (ii) the failure of the
Buyer to perform any of its covenants contained in this Agreement.
(c) The Buyer and Company Shareholders' respective rights to
be indemnified and held harmless pursuant to Sections 8.2(a) and (b) shall
survive the consummation of the transactions contemplated by this Agreement for
the time periods set forth in Section 8.1, except for claims for indemnification
asserted prior to the end of such periods, which claims shall survive until
final resolution thereof.
(d) The obligations to indemnify and hold harmless pursuant to
Sections 8.2(a) (other than Section 8.2(a)(ii)), 8.2(b)(i), and 8.3 shall, in
each case, be limited to an aggregate amount equal to the Escrow Amount and the
Escrow Amount shall be the sole source of recovery; provided that liability for
Losses that arise from a breach of any of the representations and warranties
contained in Sections 2.3, 2.4, 2.12 and 2.21 shall, in each case, be limited to
an aggregate amount equal to the Merger Consideration (the "Specified Indemnity
Payments").
(e) The obligations to indemnify and hold harmless pursuant to
Sections 8.2(a) (other than Section 8.2(a)(ii)), 8.2(b)(i), and 8.3 shall not
apply except if and to the extent that the aggregate Losses incurred by the
Indemnified Party as a result of all Losses that would otherwise be subject to
indemnification under Section 8.2(a) or Section 8.2(b), as the case may be,
exceeds the sum of $10,000 (the "Threshold Amount"), and then such Indemnified
Party shall be entitled to indemnification for all of its Losses, including the
Threshold Amount.
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8.3 Special Indemnification.
(a) Subject to the limitations in Section 8.2(d) and (e), the
Company Shareholders shall indemnify and hold harmless the Buyer from any amount
by which (i) the liabilities of the Company existing as of the Closing Date and
specifically set forth on Schedule 8.3 (the "Scheduled Liabilities") are greater
than, (ii) the sum of: (A) the aggregate amount of cash on the Company's balance
sheet as of the Closing Date and as set forth on Schedule 8.3, plus, (B) the
aggregate amount of accounts receivable collected by the Surviving Corporation
during the ninety day period beginning on the Closing Date (the "Cash and
Received Receivables").
(b) Buyer shall deliver to the Shareholders' Representative a
detailed calculation of the Cash and Received Receivables and the amount owed,
if any, by any of the Parties within 10 Business Days of the expiration of the
90 day period beginning on the Closing Date. If the Scheduled Liabilities as of
the Closing Date exceed the Cash and Received Receivables then Buyer will send
the Shareholders Representative a Certificate in accordance with Section 8.4.
8.4 Indemnification Procedure.
(a) Promptly after the discovery of Losses by any Party or
other Person entitled to indemnification under this Section 8 (each, an
"Indemnified Party"), including notice of any claim by a third party described
in Section 8.3(c) that might give rise to indemnification hereunder, the
Indemnified Party shall promptly deliver a certificate (a "Certificate") to
Buyer or the Shareholders' Representative (as applicable, the "Indemnifying
Party"). Such Certificate shall:
(i) state that the Indemnified Party may have incurred,
or reasonably anticipates that it will incur, liability for
Losses for which such Indemnified Party is entitled to
indemnification pursuant to this Agreement; and
(ii) specify in reasonable detail each individual item
of Losses included in the amount so stated, the date such item
was discovered, the basis for any anticipated liability and the
nature of the misrepresentation, inaccuracy or claim to which
each such item is related and the computation of the amount to
which such Indemnified Party claims to be entitled under Section
8.2 of this Agreement.
(b) In case the Indemnifying Party shall object to the
indemnification of an Indemnified Party in respect of any claim or claims
specified in any Certificate, the Indemnifying Party shall, within 30 days after
receipt of such Certificate, deliver to the Indemnified Party a written notice
to such effect and the Indemnifying Party shall, within the 30-day period
beginning on the date of receipt by the Indemnified Party of such written
objection, attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims to which the Indemnifying Party
shall have so objected. If the Indemnified Party and
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the Indemnifying Party succeed in reaching agreement on their respective rights
with respect to any of such claims, the Indemnified Party and Indemnifying Party
shall promptly prepare and sign a memorandum setting forth such agreement.
Should the Indemnified Party and Indemnifying Party be unable to agree as to any
particular item or items or amount or amounts, then such dispute shall be
settled by arbitration in Los Angeles, California in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect. There shall be three arbitrators, one to be chosen by Buyer and the
Shareholders' Representative directly at will, and the third arbitrator to be
selected by the two arbitrators so chosen. Each arbitrator shall be an attorney
(i) whose primary practice area comprises buyouts and takeovers, (ii) with at
least fifteen years of practice experience and (iii) that is a partner of a law
firm consisting of at least 100 attorneys. The losing party shall pay all fees
and costs associated with the arbitration. Judgment on any award rendered by the
arbitrators may be entered in any court having jurisdiction and no Party shall
object to the entry of such award.
(c) Promptly after the assertion by any third party of any
claim against any Indemnified Party that, in the judgment of such Indemnified
Party, may result in the incurring by such Indemnified Party of Losses for which
such Indemnified Party would be entitled to indemnification pursuant to this
Agreement, such Indemnified Party shall deliver to the Indemnifying Party a
written notice describing in reasonable detail such claim and the Indemnifying
Party may, at its option, assume the defense of the Indemnified Party against
such claim (including the employment of counsel, who shall be reasonably
satisfactory to such Indemnified Party) and the payment of expenses. An
Indemnified Party shall have the right to employ separate counsel in any such
action or claim and to participate in the defense thereof, but the fees and
expenses of such counsel shall not be at the expense of the Indemnifying Party
unless (x) the Indemnifying Party shall have failed, within a reasonable time
after having been notified by the Indemnified Party of the existence of such
claim as provided in the preceding sentence, to assume the defense of such
claim, (y) the employment of such counsel has been specifically authorized in
writing by the Indemnifying Party or (z) the named parties to any such action
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party and such Indemnified Party shall have been advised in writing
by such counsel that there may be one or more legal defenses available to the
Indemnified Party which are not available to the Indemnifying Party, or
available to the Indemnifying Party, but the assertion of which would be adverse
to the interests of the Indemnified Party. No Indemnifying Party shall be liable
to indemnify any Indemnified Party for any settlement of any such action or
claim effected without the written consent of the Indemnifying Party, but if
settled with the written consent of the Indemnifying Party, or if there be a
final judgment for the plaintiff in any such action, the Indemnifying Party
shall indemnify and hold harmless each Indemnified Party from and against any
loss or liability by reason of such settlement or judgment.
(d) Claims for Losses specified in any Certificate to which an
Indemnifying Party shall not object in writing within 30 days of receipt of such
Certificate, claims for Losses covered by a memorandum of agreement of the
nature described in Section 8.3(b), claims for Losses the validity and amount of
which have been the subject of judicial determination as described in Section
8.3(b), claims for Losses the validity and amount of which shall have been the
subject of a final judicial determination, or shall have been settled with the
consent of the Indemnifying party, as described in Section 8.3(c), and claims
for Losses that are determined in accordance with Section 8.3(c) are hereinafter
referred to as "Agreed Claims". Within thirty (30) Business Days after the
determination of the amount of any Agreed Claims that are not paid pursuant to
Section 4.4, the Buyer or Company Shareholders, as applicable, shall, subject to
the provisions of Section 8.2, pay to the Indemnified Party an amount equal to
the Agreed Claim by
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wire transfer in immediately available funds to the bank account or accounts
designated in writing by the Indemnified Party not less than three Business Days
prior to such payment.
8.5 Exclusivity of Indemnification Remedies. This Section 8 shall
provide the sole and exclusive remedy with respect to any and all claims by an
Indemnified Party relating to the subject matter of this Agreement, except for
claims of fraud.
SECTION 9.
TAX MATTERS
9.1 Tax Returns.
(a) The Shareholders' Representative shall have the exclusive
authority and obligation to prepare on behalf of the Company and timely file, or
cause to be prepared and timely filed, all Tax Returns of the Company that are
due with respect to any taxable year or other taxable period ending on or prior
to the Closing Date and shall pay any Taxes due in respect of such Tax Returns,
except for Taxes that are reserved for on the Company's Financial Statements and
any Taxes resulting from the Merger failing to qualify as a reorganization under
Section 368(a)(1), which shall be paid by Buyer. Such authority shall include,
but not be limited to, the determination of the manner in which any items of
income, gain, deduction, loss or credit arising out of the income, properties
and operations of the Company shall be reported or disclosed in such Tax
Returns; provided, however, that such Tax Returns shall be prepared by treating
items on such Tax Returns in a manner consistent with the past practices of the
Company with respect to such items; and provided further that the Shareholders'
Representative shall permit Buyer to review and comment on each such Tax Return
described in the preceding sentence prior to filing. All such Tax Returns shall
not be filed without the prior written consent of Buyer, which consent shall not
be unreasonably withheld or delayed.
(b) Except as provided in Section 9.1(a) above, Buyer shall
have the exclusive authority and obligation to prepare and timely file, or cause
to be prepared and timely filed, all Tax Returns of the Company; provided,
however, Buyer shall provide the Shareholders' Representative with draft Tax
Returns for the Company required to be prepared by Buyer pursuant to this
Section 9.1(b) that include any period or portion thereof ending on or prior to
the Closing Date. Buyer shall provide the Shareholders' Representative with an
opportunity to review and comment on such Tax Returns that include any period or
portion thereof ending on or prior to the Closing Date and Buyer shall in good
faith take into account such comments in its preparation of such Tax Returns.
9.2 Payment of Taxes.
(a) The Company Shareholders shall be responsible and liable
for the timely payment of any and all Taxes imposed on or with respect to the
properties, income and operations of the Company for all Pre-Closing Periods,
including the portion of the Overlap Period up to and including the Closing
Date, except for Taxes that are reserved for on the Company's Financial
Statements and any Taxes resulting from the Merger failing to qualify as a
reorganization under Section 368(a)(1), which shall be paid by Buyer. In
addition, the
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Shareholders shall pay Buyer the amount of any Taxes allocated to the Company
Shareholders pursuant to Section 9.2(b) below (to the extent that the
Shareholders are liable therefor and to the extent not already paid by the
Company Shareholders or the Company on or before the Closing Date) five (5)
Business Days prior to the due date of such Taxes.
(b) All Taxes and Tax liabilities with respect to the income,
property or operations of the Company that relate to the Overlap Period shall be
apportioned between the Company Shareholders and the Buyer as follows: (i) in
the case of Taxes other than income, sales and use and withholding Taxes, on a
per diem basis, and (ii) in the case of income, sales and use and withholding
Taxes, as determined from the books and records of the as though the taxable
year of the Company terminated at the close of business on the Closing Date.
(c) All transfer, sales and use, value added, registration,
documentary, stamp and similar Taxes imposed in connection with the transactions
contemplated by this Agreement shall be borne equally by Buyer and the Company
Shareholders.
9.3 Controversies.
(a) The Buyer shall notify the Shareholders' Representative
upon receipt by the Buyer or any Affiliate of the Buyer (including the Company
after the Closing Date) of written notice of any inquiries, claims, assessments,
audits or similar events with respect to Taxes relating to a taxable period
ending on or prior to the Closing Date for which Company Shareholders may be
liable under this Agreement (any such inquiry, claim, assessment, audit or
similar event, a "Tax Matter"). The Shareholders' Representative, at its sole
expense, shall have the authority to represent the interests of the Company with
respect to any Tax Matter before the IRS, any other taxing authority, any other
governmental agency or authority or any court and shall have the sole right to
control the defense, compromise or other resolution of any Tax Matter, including
responding to inquiries, filing Tax Returns and contesting, defending against
and resolving any assessment for additional Taxes or notice of Tax deficiency or
other adjustment of Taxes of, or relating to, a Tax Matter; provided, however,
that neither the Shareholders nor any of their Affiliates shall enter into any
settlement of or otherwise compromise any Tax Matter that adversely affects or
may adversely affect the Tax liability of Buyer, the Company or any Affiliate of
the Company for any period ending after the Closing Date, including the portion
of the Overlap Period that is after the Closing Date, without the prior written
consent of Buyer, which consent shall not be unreasonably withheld or delayed.
The Shareholders' Representative shall keep the Buyer fully and timely informed
with respect to the commencement, status and nature of any Tax Matter. The
Shareholders shall, in good faith, allow Buyer, to make comments to
Shareholders' Representative, regarding the conduct of or positions taken in any
such proceeding.
(b) Except as otherwise provided in Section 9.3(a) above,
Buyer shall have the sole right to control any audit or examination by any
taxing authority, initiate any claim for refund or amend any Tax Return, and
contest, resolve and defend against any assessment for additional Taxes, notice
of Tax deficiency or other adjustment of Taxes of, or relating to, the income,
assets or operations of the Company for all taxable periods; provided, however,
that Buyer shall not, and shall cause its Affiliates (including the Company) not
to, enter into any settlement of any contest or otherwise compromise any issue
with respect to the portion of the
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Overlap Period ending on or prior to the Closing Date without the prior written
consent of Shareholders' Representative, which consent shall not be unreasonably
withheld or delayed.
9.4 Amended Tax Returns. Neither the Company Shareholders nor the
Company shall file or cause to be filed any amended Tax Return or claims for
refund without the prior written consent of Buyer, which consent shall not be
unreasonably withheld or delayed.
9.5 Prior Tax Agreements. The Company shall terminate or cause to be
terminated any and all of the tax sharing, allocation, indemnification or
similar agreements, arrangements or undertakings in effect, written or
unwritten, on the Closing Date as between the Shareholders or any predecessor or
Affiliate thereof, on the one hand, and the Company, on the other hand, for all
Taxes imposed by any government or taxing authority, regardless of the period in
which such Taxes are imposed, and there shall be no continuing obligation to
make any payments under any such agreements, arrangements or undertakings.
9.6 Adjustments. All amounts paid by the Shareholders to Buyer pursuant
to Section 8.2(a)(iii), (iv) and (v) shall, to the extent permitted by
applicable law, be treated as adjustments to the Merger Consideration for all
Tax purposes.
SECTION 10.
MISCELLANEOUS
10.1 Knowledge. Where any representation or warranty contained in this
Agreement is expressly qualified by reference to the knowledge of the Company or
the Shareholders' Representative, "knowledge" shall mean the actual knowledge of
Xxxxxxx Xxxxx, after having conducted a reasonable review of the terms of this
Agreement and the Related Documents and any information reasonably determined by
him to be necessary in order to evaluate the accuracy of the matter in question.
10.2 Expenses. Except as expressly provided herein, each Party shall
bear its own (i) costs incurred as a result of the consummation of the
transactions contemplated herein, including payments to third parties, if any,
to obtain their consent to such transfer and (ii) professional fees and related
costs (including fees and costs of accountants, attorneys, benefits specialists,
tax advisors, tax return preparers and appraisers) incurred by it in connection
with the preparation, execution and delivery of this Agreement and the Related
Documents and the transactions contemplated hereby or thereby.
10.3 Confidentiality. Subject to the requirements of applicable law and
regulations, each Party shall maintain in confidence (x) the provisions of this
Agreement and (y) all information received from another Party as a result of any
due diligence investigation conducted relative to the execution of this
Agreement. The obligation of confidentiality and non-use shall not apply to any
information that (i) is or becomes generally available to the public through no
fault of the receiving party, (ii) is independently developed by the receiving
party or (iii) is received in good faith from a third party who is lawfully in
possession of such information and has the lawful right to disclose or use it.
No Party shall issue any such press release or make any such public statement
with respect to the transactions contemplated hereby without the written consent
of the other Parties, unless required by applicable law. The Parties agree that
the
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Confidentiality Agreement is hereby amended to provide that any provision
therein which in any manner would be inconsistent with this Agreement or the
transactions contemplated hereby shall terminate as of the date hereof.
10.4 Governing Law; Jurisdiction; Disputes.
(a) THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, AND
ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE APPLICABLE TO AGREEMENTS EXECUTED AND TO BE PERFORMED SOLELY WITHIN
SUCH STATE, EXCLUSIVE OF CONFLICTS OF LAWS PRINCIPLES.
(b) Any judicial proceeding brought against any of the Parties
or any dispute arising out of this Agreement or any matter related hereto shall
be brought in a state or federal court of competent jurisdiction located in Los
Angeles, California, and, by execution and delivery of this Agreement, each of
the Parties accepts the exclusive jurisdiction of such court, irrevocably agrees
to be bound by any judgment rendered thereby in connection with this Agreement
and waives any objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out of or in
connection with this Agreement in the court referred to above and hereby further
irrevocably waives and agrees not to plead or claim in such court that any such
action or proceeding brought in such court has been brought in an inconvenient
forum. The foregoing submission to jurisdiction shall not be deemed to confer
rights on any person other than the respective Parties.
10.5 Notices. Any notice or other communication required or permitted
under this Agreement shall be sufficiently given if delivered in person or sent
by facsimile or by registered or certified mail, postage prepaid, addressed as
follows:
if to the Buyer or Merger Sub, to:
Xxxxx.xxx Corporation
Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxx LLP
Xxxxx Xxxx., 00xx Xxxxx
Xxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
if to the Shareholders' Representative, to:
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Xxxxxxx Xxxxx
00000 XX, 00xx Xxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
with a copy to:
Cooley Godward Kronish LLP
5 Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
or such other address or number as shall be furnished in writing by any such
Party, and such notice or communication shall, if properly addressed, be deemed
to have been given as of the date so delivered, sent by facsimile or three
Business Days after deposit into the U.S. mail.
10.6 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any Party hereto, other than by operation
of law, except that the Buyer may assign any of its rights, benefits and
obligations hereunder to any of its Affiliates. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and permitted assigns.
10.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
10.8 Entire Agreement. This Agreement, including the other Related
Documents and the other documents referred to herein and Schedules hereto which
form a part hereof, contains the entire understanding of the parties hereto with
respect to the subject matter contained herein and therein. This Agreement
supersedes all prior agreements and understandings between the Parties with
respect to such subject matter.
10.9 Amendments. This Agreement may not be amended or modified orally,
but only by an agreement in writing signed by the Parties.
10.10 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
10.11 Third Party Beneficiaries. Each Party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the Parties hereto except that each Company
Shareholder will be, for all purposes, treated as a third party beneficiary of
Section 8 of this Agreement, and shall be entitled to the benefits of such
Section; provided, that none of the Company Shareholders may assign such
benefits other than to an Affiliate without the written consent of Buyer.
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10.12 Shareholders' Representative.
(a) The Company Shareholders (by virtue of the approval of the
Merger and the adoption of this Agreement) hereby irrevocably nominate,
constitute and appoint Xxxxxxx Xxxxx as the agent and true and lawful
attorney-in-fact of the Company Shareholders, with full power of substitution,
to act in the name, place and stead of the Company Shareholders for purposes of
executing any documents and taking any actions that the Shareholders'
Representative may, in his sole discretion, determine to be necessary, desirable
or appropriate in all matters relating to or arising out of this Agreement,
including in connection with any claim for indemnification under Section 8.
Xxxxxxx Xxxxx hereby accepts his appointment as the Shareholders'
Representative.
(b) The Company Shareholders (by virtue of the approval of the
Merger and the adoption of this Agreement) grant to the Shareholders'
Representative full authority to execute, deliver, acknowledge, certify and file
on behalf of the Company Shareolders (in the name of any or all of the Company
Shareholders or otherwise) any and all documents that the Shareholders'
Representative may, in his sole discretion, determine to be necessary, desirable
or appropriate, in such forms and containing such provisions as the
Shareholders' Representative may, in his sole discretion, determine to be
appropriate, in performing its duties as contemplated by Section 10.12(a).
Notwithstanding anything to the contrary contained in this Agreement or in any
other contract executed in connection with the transactions contemplated by this
Agreement, Buyer shall be entitled to deal exclusively with the Shareholders'
Representative on all matters relating to Section 8 and shall be entitled to
rely conclusively (without further evidence of any kind whatsoever) on any
document executed or purported to be executed on behalf of any Company
Shareholders by the Shareholders' Representative and on any other action taken
or purported to be taken on behalf of any Company Shareolders by the
Shareholders' Representative, as fully binding upon such Company Shareolders.
(c) The power of attorney granted in Section 10.12(a): (i) is
coupled with an interest and is irrevocable; (ii) may be delegated by the
Shareholders' Representative; and (iii) shall survive the dissolution, death or
incapacity of each of the Company Shareholders.
(d) If the Shareholders' Representative shall die, become
disabled or otherwise be unable to fulfill his responsibilities as agent of the
Company Shareholders, then a majority in interest of the other Company
Shareholders shall, within 10 days after such death or disability, appoint a
successor agent for the Company Shareholders and, promptly thereafter, shall
notify Buyer of the identity of such successor. Any such successor shall become
the "Shareholders' Representative" for purposes of this Agreement.
(e) The Shareholders' Representative shall not be liable to
any Company Shareholder for any act done or omitted hereunder as the
Shareholders' Representative while acting in good faith (and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith) and without gross negligence or willful misconduct. All losses,
liabilities and expenses incurred by the Shareholders' Representative in
connection with the performance of its duties as Shareholders' Representative
shall be borne and paid exclusively by the Company Shareholders. If not paid
directly to the Shareholders' Representative by the Company Shareholders, such
losses, liabilities and expenses may be recovered by the
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Shareholders' Representative from the Escrow Amount otherwise distributable to
the Company Shareholders (and not distributed or distributable to an Indemnified
Party). All of the indemnities, immunities and powers granted to the
Shareholders' Representative under this Agreement shall survive the termination
of this Agreement.
* * *
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IN WITNESS WHEREOF, each of the Buyer, Merger Sub and the Company has
caused its name to be hereunto subscribed by its duly authorized signatory, and
the Shareholders' Representative has hereunto subscribed his name, as of the day
and year first above written.
XXXXX.XXX CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: CEO
PREMIERGUIDE, INC.
By: /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: CEO
XXXXX.XXX PG ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
SHAREHOLDERS' REPRESENTATIVE
/s/ Xxxxxxx Xxxxx
----------------------------------------
Xxxxxxx Xxxxx
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