AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is entered
into this 13th day of April, 2000, by and among 0XXXXXXX.XXX, INC., an Oklahoma
corporation ("2TM"), 0XXXXXXX.XXX, INC., a Delaware corporation ("2TMD"), and
the "Surviving Corporation"), XXXXXXXXX.XXX, INC., a Delaware corporation
("GTW") and LANGUAGEFORCE, INC., a Colorado corporation ("LF").
RECITALS
A. GTW is a wholly-owned subsidiary of LF and 2TMD is a wholly-owned
subsidiary of 2TM.
B. Subject to and in accordance with the terms and conditions of this
Agreement and pursuant to the Certificate of Merger attached hereto as Exhibit A
("Certificate of Merger"), the parties intend that 2TM will merge with and into
2TMD (the "Initial Merger") and immediately subsequently GTW will merge with and
into 2TMD (the "Subsequent Merger" and, together with the Initial Merger, the
"Mergers"), whereby at the Effective Time of the Initial Merger, all of the 2TM
Common Stock will be converted into shares of 2TMD Common Stock on a one share
for one share basis and at the Effective Time of the Subsequent Merger all of
the GTW Common Stock will be converted into fifty-two million nine hundred
thirty thousand nine hundred and thirty-one (52,930,931) shares of 2TM Common
Stock
C. For federal income tax purposes, it is intended that the Mergers
shall qualify as a tax free reorganization within the meaning of '368(a)(2)(D)
of the Code.
D. The parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Mergers.
AGREEMENT
NOW, THEREFORE, in reliance on the foregoing recitals and in and for the
consideration and mutual covenants set forth herein, the parties agree as
follows:
1 CERTAIN DEFINITIONS.
1.1 "2TM COMMON STOCK" shall mean all of the outstanding shares of
Common Stock of 2TM.
1.2 "2TM DISCLOSURE SCHEDULE" shall mean the disclosure schedule
provided to GTW and LF by 2TM and 2TMD disclosing such items and matters as are
required to be disclosed under this Agreement.
1.3 "2TM FINANCIAL STATEMENTS" shall mean 2TM's audited balance sheet
as of December 31, 1999, and statements of operations, stockholder's equity and
cash flow for the twelve (12) month period then ended.
1.4 "2TM PRODUCTS/SERVICES" shall mean all products or services which
have been, or are being, marketed by 2TM, or are currently under development,
and all patents, patent applications, trade secrets, copyrights, trademarks,
trade names and other proprietary rights related to such products or services.
1.5 "AFFILIATE" shall have the meaning set forth in the rules and
regulations promulgated by the Commission pursuant to the Securities Act.
1.6 "CLOSING" shall mean the closing of the transactions contemplated
by this Agreement.
1.7 "CLOSING DATE" shall mean the date of the Closing.
1.8 "CODE" shall mean the United States Internal Revenue Code of 1986,
as amended.
1.9 "COMMISSION" shall mean the United States Securities and Exchange
Commission.
1.10 "DISSENTING SHARES" shall mean those shares held by holders who
perfect their appraisal rights under the applicable state laws.
1.11 "EFFECTIVE TIME" shall mean the date and time of the effectiveness
of the Initial Merger under Delaware and Oklahoma law and the date and time of
the effectiveness of the Subsequent Merger under Delaware law.
1.12 "GAAP" shall mean generally accepted accounting principles.
1.13 "GTW COMMON STOCK" shall mean all the outstanding shares of common
stock of GTW.
1.14 "GTW DISCLOSURE SCHEDULE" shall mean the disclosure schedule
provided to 2TM and 2TMD by GTW and LF disclosing such items and matters as are
required to be disclosed under this Agreement.
1.15 "GTW FINANCIAL STATEMENTS" shall mean GTW's audited balance sheet
as of December 31, 1999, and statements of operations, stockholders' equity and
cash flow for the twelve (12) month period then-ended.
1.16 "GTW PRODUCTS/SERVICES" shall mean all products or services which
have been, or are being, marketed by GTW or are currently under development, and
all trade secrets, copyrights, trademarks, trade names and other proprietary
rights related to such products or services.
1.17 "MATERIAL ADVERSE EFFECT" shall mean an effect on the operations,
assets or financial condition of an entity considered as a whole which would
lead a reasonable business person to conclude that entering into the Merger
would not be advisable in light of the effect.
1.18 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
1.19 "SUBSIDIARY" OR "SUBSIDIARIES" shall mean all corporations,
trusts, partnerships, associations, joint ventures or other Persons, as defined
below, of which a corporation or any other Subsidiary of such corporation owns
not less than twenty percent (20%) of the voting securities or other equity or
of which such corporation or any other Subsidiary of such corporation possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies, whether through ownership of voting shares, management
contracts or otherwise. "Person" means any individual, corporation, trust,
association, partnership, proprietorship, joint venture or other entity.
1.20 "TRANSACTION DOCUMENTS" shall mean all documents or agreements
attached as an exhibit or schedule hereto, and set forth on the Table of
Contents.
2. PLAN OF REORGANIZATION.
2.1 THE MERGERS. Subject to the terms and conditions of this Agreement
and the Certificate of Merger, 2TM shall be merged with and into 2TMD and
immediately thereafter GTW shall be merged with and into 2TMD in accordance with
the applic-able provisions of the laws of the States of Delaware and Oklahoma,
and with the terms and conditions of this Agreement and the Certificates of
Merger set forth as Exhibits A, B and C, so that:
(A At the Effective Time (as defined in Section 2.5 (below)), 2TM shall
be merged with and into 2TMD and immediately subsequently GTW shall be merged
with and into 2TMD. As a result of the Initial Merger, the separate corporate
existence of 2TM shall cease, and 2TMD shall continue as the surviving
corporation, and shall succeed to and assume all of the rights and obligations
of 2TM in accordance with the laws of Oklahoma and Delaware. As a result of the
Subsequent Merger, the separate corporate existence of GTW shall cease, and 2TMD
shall continue as the surviving corporation, and shall succeed to and assume all
of the rights and obligations of GTW (which shall include the rights and
obligations of 2TM) in accordance with the laws of Delaware.
(B The Certificate of Incorporation and Bylaws of 2TMD in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws, respectively, of the Surviving Corporation after the
Effective Time unless and until further amended as provided by law, provided,
however, that the name of 2TMD shall be changed to "Xxxxxxxxx.xxx, Inc."
(C Subject to the terms of this Agreement, Xxx X. Xxxxxxx shall become
the President, Chief Executive Officer and Chairman of the Board of the
Surviving Corporation and the remaining directors and officers of 2TM
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation after the Effective Time, except that Xxxxxx X. Xxxxxx
shall resign all officer positions with the Surviving Corporation. Such
directors and officers shall hold their position until the election and
qualification of their respective successors or until their tenure is otherwise
terminated in accordance with the Bylaws of the Surviving Corporation. The
parties hereto agree that the Board of Directors of the Surviving Corporation
shall consist of not less than seven members, two of which shall be designated
by 2TMD and two of which shall be designated by GTW, with the remaining three
initially selected by the four designees.
2.2 CONVERSION OF SHARES.
(A Each share of 2TM Common Stock, issued and outstanding immediately
prior to the Effective Time, will, by virtue of the Initial Merger, and at the
Effective Time, and without further action on the part of any holder thereof, be
converted into an equivalent number of shares of fully paid and nonassessable
shares of 2TMD common stock on a one share for one share basis.
(B All of the shares of GTW common stock, issued and outstanding
immediately prior to the Effective Time (all of which are owned by LF as of the
date of this agreement), will, by virture of the Subsequent Merger, and at the
Effective Time, and without further action on the part of LF, be converted into
fifty-two million nine hundred thirty thousand nine hundred and thirty-one
(52,930,931) shares of fully paid and nonassessable shares of 2TMD common stock.
(C) In the event the issued and outstanding shares of 2TM common stock as
set forth in Section 3.2(a) are subsequently reduced by the voluntary
cancellation of any of said shares by the Surviving Company and the respective
shareholder therein, the shares issued to GTW as set forth in Section 2.2(b)
shall be reduced by 62.6333% of the shares so cancelled.
2.3 FRACTIONAL SHARES. No fractional shares of 2TMD common stock will
be issued in connection with the Subsequent Merger.
2.4 THE CLOSING. Subject to termination of this Agreement as provided
in Section 10 (below), the Closing shall take place at the offices of
0XxxXxxx.xxx, Inc., 00000 Xxx Xxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx, XX 00000, as
soon as possible upon the satisfaction or waiver of all conditions set forth in
Sections 8, 9 and 10 hereof, or such other time and place as is mutually
agreeable to the parties. The Closing shall be no later than the time
following the clearance of 2TMD's required time period under the required filing
in accordance with Schedule 14C.
2.5 EFFECTIVE TIME. Simultaneously with the Closing, the Certificate
of Merger for the Initial Merger shall be filed in the office of the Secretary
of State of the State of Delaware and the Secretary of State of the State of
Oklahoma. Immediately upon filing of the Certificate of Merger for the Initial
Merger, the Certificate of Merger for the Subsequent Merger shall be filed in
the office of the Secretary of State of the State of Delaware. The Initial
Merger shall become effective immediately upon the filing of the first
Certificate of Merger with such offices and the Subsequent Merger shall become
effective immediately upon the filing of the second Certificate of Merger with
such office.
2.6 TAX FREE REORGANIZATION. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Mergers in
accordance with the provisions of '368(a)(2)(D) of the Code. Each party agrees
that it will not take or assert any position on any tax return, report or
otherwise which is inconsistent with the qualification of the Mergers as a
reorganization within the meaning of '368(a) of the Code. Except for cash paid
in lieu of fractional shares, no consideration that could constitute "other
property" within the meaning of '356 of the Code is being paid by GTW or 2TM for
the 2TMD Common Stock. In addition, GTW and 2TMD represent now, and as of the
Closing Date, that they presently intend to continue 2TM's historic business or
use a significant portion of 2TM's business assets in a business and 2TM and
2TMD represent now, and as of the Closing Date, that they presently intend to
continue GTW's historic business or use a significant portion of GTW's business
assets in a business.
3. REPRESENTATIONS AND WARRANTIES OF 2TM AND 2TMD. Except as otherwise
set forth in the 2TM Disclosure Schedule attached hereto, 2TM and 2TMD jointly
and severally represent and warrant to GTW and LF as set forth below. No fact
or circumstance disclosed shall constitute an exception to these representations
and warranties unless such fact or circumstance is set forth in the 2TM
Disclosure Schedule or such supplements thereto as may mutually be agreed upon
in writing by 2TM, 2TMD, GTW and LF.
3.1 ORGANIZATION. 2TM and 2TMD are corporations duly organized,
validly existing and in good standing under the laws of the state of
incorporation of such entity and have the corporate power and authority to carry
on their respective businesses as it is now being conducted. 2TM and 2TMD are
duly qualified or licensed to do business and are in good standing in each
jurisdiction in which the nature of their respective businesses or properties
makes such qualification or licensing necessary except where the failure to be
so qualified would not have a Material Adverse Effect on 2TM and 2TMD. The 2TM
Disclosure Schedule contains a true and complete listing of the locations of all
sales offices, and any other offices or facilities of 2TM, and a true and
complete list of all states in which 2TM maintains any employees. The 2TM
Disclosure Schedule contains a true and complete list of all states in which 2TM
is duly qualified to transact business as a foreign corporation. True and
complete copies of 2TM's and 2TMD's Articles of Incorporation and Bylaws, as in
effect on the date hereof and as to be in effect as of the Closing, have been
provided to GTW, LF or their representatives.
3.2 CAPITALIZATION.
(A The authorized capital of 2TM will consist, prior to the Closing, of
50,000,000 shares of Common Stock, of which 29,578,194 shares will be issued and
outstanding. The authorized capital of 2TMD will consist, prior to the Closing,
of 100,000,000 shares of Common Stock, of which 1,000 shares will be issued and
outstanding. 2TM is the record and beneficial owner of all such shares of 2TMD
Common Stock, free and clear of any and all claims, liens, encumbrances or
security interests.
(B Except as set forth in the 2TM Disclosure Schedule, neither 2TM nor
2TMD has outstanding any preemptive rights, subscription rights, options,
warrants, rights to convert or exchange, capital stock equivalents, or other
rights to purchase or otherwise acquire any 2TM or 2TMD capital stock or other
securities.
(C All of the issued and outstanding shares of 2TM and 2TMD capital
stock have been duly authorized, validly issued, are fully paid and
nonassessable, and such capital stock has been issued in full compliance with
all applicable federal and state securities laws. None of 2TM's or 2TMD's
issued and outstanding shares of capital stock are subject to repurchase or
redemption rights.
(D Except for any restrictions imposed by applicable state and federal
securities laws, there is no right of first refusal, option, or other
restriction on transfer applicable to any shares of 2TM's or 2TMD's capital
stock.
(E Except as set forth in the 2TM Xxxxxxxxxx Xxxxxxxx, 0XX is not under
any obligation to register under the Securities Act any shares of its capital
stock or any other of its securities that might be issued in the future if the
Merger were not consummated.
(F 2TM is not a party or subject to any agreement or understanding
(and, to 2TM's and 2TM's actual knowledge, there is no agreement or
understanding between or among any persons) that affects or relates to the
voting or giving of written consent with respect to any security.
3.3 POWER, AUTHORITY AND VALIDITY. 2TM and 2TMD have the corporate
power to enter into this Agreement and the other Transaction Documents to which
they are parties and to carry out their obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Transaction Documents and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Boards of Directors of 2TM and 2TMD and, except for
approval of the shareholders of 2TM, no other corporate proceedings on the part
of 2TM or 2TMD are necessary to authorize this Agreement, the other Transaction
Documents and the transactions contemplated herein and therein. 2TM and 2TMD
are not subject to, or obligated under, any charter, bylaw or contract provision
or any license, franchise or permit, or subject to any order or decree, which
would be breached or violated by or in conflict with its executing and carrying
out this Agreement and the transactions contemplated hereunder and under the
Transaction Documents. Except for (i) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which 2TM is qualified to do
business, (ii) the filing of the Certficate of Merger with the Secretary of
State of the State of Oklahoma, and (ii) filings under applicable securities
laws, no consent of any person who is a party to a contract which is material to
2TM's business, nor consent of any governmental authority, is required to be
obtained on the part of 2TM to permit the transactions contemplated herein and
to permit 2TM to continue the business activities of 2TM as previously conducted
by 2TM without a Material Adverse Effect. This Agreement is, and the other
Transaction Documents when executed and delivered by 2TM and 2TMD shall be, the
valid and binding obligations of 2TM and 2TMD, enforceable in accordance with
their respective terms.
3.4 FINANCIAL STATEMENTS.
(A 2TM has delivered to GTW copies of the 2TM Financial Statements.
(B The 2TM Financial Statements are complete and in accordance with the
books and records of 2TM and present fairly the financial position of 2TM as of
its historical dates. The 2TM Financial Statements have been prepared in
accordance with GAAP, applied on a basis consistent with prior periods. Except
and to the extent reflected or reserved against in such balance sheets
(including the notes thereto), 2TM does not have, as of the dates of such
balance sheets, any liabilities or obligations (absolute or contingent) of a
nature required or customarily reflected in a balance sheet (or the notes
thereto) prepared in accordance with GAAP. The reserves, if any, reflected on
the 2TM Financial Statements are adequate in light of the contingencies with
respect to which they are made.
(C 2TM has no debt, liability, or obligation of any nature, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
that is not reflected or reserved against in the 2TM Financial Statements,
except for those (i) that may have been incurred after the date of the 2TM
Financial Statements; or (ii) that are not required by GAAP to be included in a
balance sheet or the notes thereto, except that 2TM has not established any
reserves with respect to the costs and fees associated with this Agreement, the
other Transaction Documents, and the transactions contemplated hereby and
thereby. All material debts, liabilities, and obligations incurred after the
date of the 2TM Financial Statements were incurred in the ordinary course of
business, and are usual and normal in amount both individually and in the
aggregate.
3.5 TAX MATTERS.
(A 2TM has fully and timely, properly and accurately filed all tax
returns and reports required to be filed by it (or extensions thereof),
including all federal, foreign, state and local tax returns and estimates for
all years and periods (and portions thereof) for which any such returns, reports
or estimates were due. All such returns, reports and estimates were prepared in
the manner required by applicable law. All income, sales, use, occupation,
property or other taxes or assessments due from 2TM have been paid. There are
no pending assessments, asserted deficiencies or claims for additional taxes
that have not been paid. The reserves for taxes, if any, reflected on the 2TM
Financial Statements are adequate and there are no tax liens on any property or
assets of 2TM. There have been no audits or examinations of any tax returns or
reports by any applicable governmental agency. No state of facts exists or has
existed which would constitute grounds for the assessment of any penalty or of
any further tax liability beyond that shown on the respective tax reports,
returns or estimates. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any federal, state or local
income tax return or report for any period.
(B All taxes which 2TM has been required to collect or withhold have
been duly withheld or collected and, to the extent required, have been paid to
the proper taxing authority.
(C 2TM is not a party to any tax-sharing agreement or similar
arrangement with any other party.
(D At no time has 2TM been included in the federal consolidated income
tax return of any affiliated group of corporations.
(E No payment which 2TM is obliged to pay to any director, officer,
employee or independent contractor pursuant to the terms of an employment
agree-ment, severance agreement or otherwise will constitute an excess parachute
payment as defined in '280G of the Code.
(F 2TM is not currently under any contractual obligation to pay any tax
obligations of, or with respect to any transaction relating to, any other person
or to indemnify any other person with respect to any tax.
3.6 TAX-FREE REORGANIZATION.
(A Neither 2TM nor 2TMD has taken or agreed to take any action that
would prevent the Mergers from constituting a reorganization qualifying under
the provi-sions of '368(a) of the Code.
(B Neither 2TM nor 2TMD is an investment company as defined in
''368(a)(2)(F)(iii) and (iv) of the Code.
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999, 2TM
has not:
(A suffered any material adverse change in its financial condition or
in the operations of its business, nor any material adverse changes in its
balance sheet, (with the 2TM Financial Statements and any subsequent balance
sheet analyzed as if each had been prepared according to GAAP), including but
not limited to cash distributions or material decreases in the net assets of
2TM;
(B suffered any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting its properties or business;
(C granted or agreed to make any increase in the compensation payable
or to become payable by it to its officers or employees, except those occurring
in the ordinary course of business;
(D declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of its capital stock or declared any
direct or indirect redemption, retirement, purchase or other acquisition by it
of such shares;
(E issued any shares of its capital stock or any warrants, rights,
options or entered into any commitment relating to its shares except for the
issuance of its shares pursuant to the exercise of outstanding options or
pursuant to its current Private Placement Memorandum;
(F made any change in the accounting methods or practices it follows,
whether for general financial or tax purposes, or any change in depreciation or
amorti-zation policies or rates adopted therein;
(G sold, leased, abandoned or otherwise disposed of any real property
or any machinery, equipment or other operating property other than in the
ordinary course of business;
(H sold, assigned, transferred, licensed or otherwise disposed of any
patent, trademark, trade name, brand name, copyright (or pending application for
any patent, trademark or copyright) invention, work of authorship, process,
know-how, formula or trade secret or interest thereunder or other intangible
asset except in the ordinary course of its business;
(I suffered any labor dispute;
(J engaged in any activity or entered into any material commitment or
transaction (including without limitation any borrowing or capital expenditure)
other than in the ordinary course of business;
(K incurred any liabilities except in the ordinary course of business
and consistent with past practice which would be required to be disclosed in
financial statements prepared in accordance with GAAP;
(L permitted or allowed any of its property or assets to be subjected
to any mortgage, deed of trust, pledge, lien, security interest or other
encumbrance of any kind, except those permitted under Section 3.8 hereof, other
than any purchase money security interests incurred in the ordinary course of
business;
(M made any capital expenditure or commitment for additions to
property, plant or equipment individually in excess of Ten Thousand Dollars
($10,000), or in the aggregate, in excess of Fifty Thousand Dollars ($50,000);
(N paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets to, or entered into any agreement or arrangement
with any of its Affiliates, officers, directors or stockholder or any Affiliate
or associate of any of the foregoing;
(O made any amendment to or terminated any agreement which, if not so
amended or terminated, would be required to be disclosed on the 2TM Disclosure
Schedule; or
(P agreed to take any action outside of its ordinary course of business
or which would constitute a breach of any of the representations contained in
this Agreement.
3.8 TITLE AND RELATED MATTERS. 2TM has good and marketable title to
all the properties, interests in properties and assets, real and personal,
reflected in the 2TM Financial Statements or acquired after the date of the 2TM
Financial Statements (except properties, interests in properties and assets sold
or otherwise disposed of since the date of the 2TM Financial Statements in the
ordinary course of business), free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except the lien of current
taxes not yet due and payable and except for liens which in the aggregate do not
secure more than Ten Thousand Dollars ($10,000) in liabilities and the security
provided pursuant to 2TM's Payment Agreement with IBM dated November 19, 1999.
The equipment of 2TM used in the operation of its business is in good operating
condition and repair. All real or personal property leases to which 2TM is a
party are valid, binding, enforceable obligations of 2TM effective in accordance
with their respective terms. There is not under any of such leases any existing
material default or event of default or event which, with notice or lapse of
time or both, would constitute a material default. The 2TM Disclosure Schedule
contains a description of all real and personal property leased or owned by 2TM,
identifying such property and, in the case of real property, stating the monthly
rental due, term of lease and square feet leased. True and correct copies of
each of 2TM's leases have been provided to GTW, LF or their representatives.
3.9 PROPRIETARY RIGHTS.
(A 2TM owns all right, title and interest in and to, or valid licenses
for use of, all patents, copyrights, technology, software, software tools,
know-how, processes, trade secrets, trademarks, service marks, trade names and
other proprietary rights used in or necessary for the conduct of 2TM's business
as conducted to the date hereof or contemplated, including, without limitation,
the technology and all proprietary rights developed or discovered or used in
connection with or contained in the 2TM Products/Services, free and clear of all
liens, claims and encumbrances (including without limitation distribution
rights) (all of which are referred to as "2TM Proprietary Rights") and 2TM has
the right to transfer all such rights to 2TMD as contemplated hereby. The
foregoing representation as it relates to 2TM Third-Party Technology (as
hereinafter defined) is limited to 2TM's interest pursuant to the 2TM
Third-Party Licenses (as hereinafter defined), all of which are valid and
enforceable and in full force and effect and which grant 2TM such rights to the
2TM Third-Party Technology as are employed in or necessary to the business of
2TM as conducted or proposed to be conducted. The 2TM Disclosure Schedule
contains an accurate and complete description of (i) all patents, trademarks
(with separate listings of registered and unregistered trademarks), trade names,
and registered copyrights in or related to the 2TM Products/ Services, all
applications and registration statements therefor, and a list of all licenses
and other agreements relating thereto; and (ii) a list of all licenses and other
agreements with third parties (the "2TM Third-Party Licenses") relating to any
inventions, technology, know-how, or processes that 2TM is licensed or otherwise
authorized by such third parties to use, market, distribute or incorporate into
products distributed by 2TM (such software, inventions, technology, know-how and
processes are collectively referred to as the "2TM Third-Party Technology").
2TM's trademark or trade name registrations related to the 2TM Products/Services
and all of 2TM's copyrights in any of the 2TM Products/Services are valid and in
full force and effect, and consummation of the transactions contemplated hereby
will not alter or impair any such rights. No claims have been asserted against
2TM (and 2TM is not aware of any claims which are likely to be asserted against
it or which have been asserted against others) by any person challenging 2TM's
use, possession, manufacture, sale, provision or distribution of the 2TM
Products/Services under any patents, trademarks, trade names, copyrights, trade
secrets, technology, know-how or processes utilized by 2TM (including, without
limitation, the 2TM Third-Party Technology) or challenging or question-ing the
validity or effectiveness of any license or agreement relating thereto
(including, without limitation, the 2TM Third-Party Licenses). There is no
valid basis for any claim of the type specified in the immediately preceding
sentence which could in any material way relate to or interfere with the
currently planned continued enhancement and exploitation by 2TM of any of the
2TM Products/Services. None of the 2TM Products/Services nor the use or
exploita-tion of any patents, trademarks, trade names, copyrights, technology,
know-how or processes by 2TM in its current business infringes on the rights of,
constitutes misappro-priation of, or in any way involves unfair competition with
respect to, any proprietary information or intangible property right of any
third person or entity, including without limitation any patent, trade secret,
copyright, trademark or trade name.
(B No employee of 2TM is in violation of any term of any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of any such employee with 2TM or, to 2TM's actual
knowledge, any other party because of the nature of the business conducted by
2TM or proposed to be conducted by 2TM.
(C Each person presently or previously employed by 2TM (including
independent contractors, if any) with access to confidential information has
executed a confidentiality and non-disclosure agreement pursuant to the form of
agreement previously provided to GTW or its representatives. Such
confidentiality and non-disclosure agreements constitute valid and binding
obligations of 2TM and such person, enforceable in accordance with their
respective terms. Neither the execution or delivery of such agreements, nor the
carrying on of their business as employees by such persons, nor the conduct of
their business as currently anticipated, will conflict with or result in a
breach of the terms, conditions or provisions of or constitute a default under
any contract, covenant or instrument under which any of such persons is
obligated.
(D No product or service liability or warranty claims which
individually or in the aggregate could exceed One Thousand Dollars ($1,000)
individually or Ten Thousand ($10,000) in the aggregate have been communicated
to, or threatened against, 2TM nor, to 2TM's actual knowledge, is there any
specific situation, set of facts or occurrence that provides a basis for such
claim.
3.10 EMPLOYEE BENEFIT PLANS. There is no unfunded prior service cost
with respect to any bonus, deferred compensation, pension, profit-sharing,
retirement, stock purchase, stock option, or other employee benefit or fringe
benefit plans, whether formal or informal, maintained by 2TM. Each bonus,
deferred compensation, pension, profit-sharing, retirement, stock purchase,
stock option, and other employee benefit or fringe benefit plans, whether formal
or informal, maintained by 2TM conforms to all applicable requirements of the
Employees Retirement Income Security Act. The 2TM Disclosure Schedule lists and
describes all profit-sharing, bonus, incentive, deferred compensation, vacation,
severance pay, retirement, stock option, group insurance or other plans (whether
written or not) providing employee benefits.
3.11 BANK ACCOUNTS. The 2TM Disclosure Schedule sets forth the names
and locations of all banks, trusts, companies, savings and loan associations,
and other financial institutions at which 2TM maintains accounts of any nature
and the names of all persons authorized to draw thereon or make withdrawals
therefrom.
3.12 CONTRACTS.
(A 2TM has no agreements, contracts or commitments that provide for the
sale, licensing or distribution by 2TM of any of its products, services,
inventions, technology, know-how, trademarks or trade names except in the
ordinary course of its business.
(B Without limiting the provisions of Section 3.9 and except for any
agreements with GTW or LF, 2TM has not granted to any third party any exclusive
rights of any kind with respect to any of the 2TM Products/Services.
(C There is no outstanding sales contract, commitment or proposal of
2TM that is currently expected to result in any loss to 2TM (before allocation
of overhead and administrative costs) upon completion or performance thereof.
(D 2TM has no outstanding agreements, contracts or commitments with
officers, employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not cancelable by it on notice
of not longer than thirty (30) days and without liability, penalty or premium.
(E 2TM has no independent contractor or similar agreement, contract or
commitment that is not terminable on no more than thirty (30) days' notice
without penalty or liability of any type, including without limitation severance
or termination pay.
(F 2TM has no currently effective collective bargaining or union
agreements, contracts or commitments.
(G 2TM is not restricted by agreement from competing with any person or
from carrying on its business anywhere in the world.
(H 2TM has not guaranteed any obligations of other persons or made any
agreements to acquire or guarantee any obligations of other persons.
(I 2TM has no outstanding loan or advance to any person; nor is it
party to any line of credit, standby financing, revolving credit or other
similar financing arrangement of any sort which would permit the borrowing by
2TM of any sum not reflected in the 2TM Financial Statements.
(J All material contracts, agreements and instruments to which 2TM is a
party are valid, binding, in full force and effect, and enforceable by 2TM in
accordance with their respective terms. No such material contract, agreement or
instrument contains any material liquidated-damages, penalty or similar
provision. 2TM has not received any notice from any party to any such material
contract, agreement or instrument that such party intends to cancel, withdraw,
modify or amend such contract, agreement or arrangement.
(K The 2TM Disclosure Schedule lists all material agreements pursuant
to which 2TM has agreed to supply to any third party 2TM Products/Services.
(L 2TM is not in default under or in breach or violation of, nor, to
its actual knowledge, is there any valid basis for any claim of default by 2TM
under, or breach or violation by 2TM of, any contract, commitment or restriction
to which 2TM is a party or to which it or any of its properties is bound, where
such defaults, breaches, or violations would, in the aggregate, have a Material
Adverse Effect on 2TM. To 2TM's actual knowledge, no other party is in default
under or in breach or violation of, nor is there any valid basis for any claim
of default by any other party under or any breach or violation by any other
party of, any material contract, commitment, or restriction to which 2TM is
bound or by which any of its properties is bound, where such defaults, breaches,
or violations would, in the aggregate, have a Material Adverse Effect on 2TM.
(M All agreements, contracts and commitments (the "Material Contracts")
listed or described in the 2TM Disclosure Schedule pursuant to this Section 3.12
are assumable, or will otherwise be the property of, the Surviving Corporation
following the Merger without further action by the Surviving Corporation or GTW.
If any of the Material Contracts are not assumable by or will not be the
property of, the Surviving Corporation following the Merger, then 2TM has
described in the 2TM Disclosure Schedule such actions as is necessary for
assumption of the Material Contract by the Surviving Corporation.
(N True and correct copies of each document or instrument described in
the 2TM Disclosure Schedule pursuant to this Section 3.12 have been made
available to GTW, LF or their representatives.
3.13 INSIDER TRANSACTIONS. No Affiliate of 2TM or 2TMD has any
interest in (i) any material equipment or other property, real or personal,
tangible or intangible, including, without limitation, any item of intellectual
property, used in connection with or pertaining to the business of 2TM; or (ii)
any creditor, supplier, customer, agent or representative of 2TM; provided,
however, that no such Affiliate or other person shall be deemed to have such an
interest solely by virtue of the ownership of less than one percent (1%) of the
outstanding stock or debt securities of any publicly-held company, the stock or
debt securities of which are traded on a recognized stock exchange or quoted on
the National Association of Securities Dealers Automated Quotation System.
3.14 INSURANCE. The 2TM Disclosure Schedule contains a list of the
principal policies of fire, liability and other forms of insurance held by 2TM.
3.15 DISPUTES AND LITIGATION. Except as set forth in the 2TM
Disclosure Schedule, there is no suit, action, litigation, proceeding,
investigation, claim, complaint, or accusation pending, or to its knowledge
threatened against or affecting 2TM or any of its properties, assets or business
or to which 2TM is a party, in any court or before any arbitrator of any kind or
before or by any governmental agency (including, without limitation, any
federal, state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality), and to its knowledge, there is no
basis for such suit, action, litigation, proceeding, investigation, claim,
complaint, or accusation; (b) there is no pending or threatened change in any
environmental, zoning or building laws, regulations or ordinances which affect
or could affect 2TM or any of its properties, assets or businesses; and (c)
there is no outstanding order, writ, injunction, decree, judgment or award by
any court, arbitrator or governmental body against or affecting 2TM or any of
its properties, assets or business. There is no litigation, proceeding,
investigation, claim, complaint or accusation, formal or informal, or
arbitration pending, or any of the aforesaid threatened, or any contingent
liability which would give rise to any right of indemnification or similar right
on the part of any director or officer of 2TM or any such person's heirs,
executors or administrators as against 2TM.
3.16 COMPLIANCE WITH LAWS. 2TM has at all times been, and presently
is, in full compliance with, and has not received notice of any claimed
violation of, any applicable federal, state, local, foreign and other laws,
rules and regulations. 2TM has filed all returns, reports and other documents
and furnished all information required or requested by any federal, state, local
or foreign governmental agency and all such returns, reports, documents and
information are true and complete in all respects. All permits, licenses,
orders, franchises and approvals of all federal, state, local or foreign
governmental or regulatory bodies required of 2TM for the conduct of its
business have been obtained, no violations are or have been recorded in respect
of any such permits, licenses, orders, franchises and approvals, and there is no
litigation, proceeding, investigation, arbitration, claim, complaint or
accusation, formal or informal, pending or threatened, which may revoke, limit,
or question the validity, sufficiency or continuance of any such permit,
license, order, franchise or approval. Such permits, licenses, orders,
franchises and approvals are valid and sufficient for all activities presently
carried on by 2TM.
3.17 SUBSIDIARIES. Other than 2TMD, 2TM has no subsidiaries. 2TM does
not own or control (directly or indirectly) any capital stock, bonds or other
securities of, and does not have any proprietary interest in, any other
corporation, general or limited partnership, firm, association or business
organization, entity or enterprise, and 2TM does not control (directly or
indirectly) the management or policies of any other corporation, partnership,
firm, association or business organization, entity or enterprise.
3.18 ENVIRONMENTAL MATTERS.
(A As of the date hereof, no underground storage tanks are present
under any property that 2TM has at any time owned, operated, occupied or leased.
As of the date hereof except as set forth in the 2TM Disclosure Schedule, no
material amount of any substance that has been designated by any governmental
entity or by applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws
(a "Hazardous Material"), excluding office, janitorial and other immaterial
supplies, are present, as a result of the actions of 2TM or, to 2TM's actual
knowledge, as a result of any actions of any third party or otherwise, in, on or
under any property, including the land and the improvements, ground water and
surface water, that 2TM have at any time owned, operated, occupied or leased.
(B At no time has 2TM transported, stored, used, manufactured, disposed
of, released or exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the Closing Date, nor has 2TM
disposed of, transported, sold, or manufactured any product containing a
Hazardous Material in violation of any rule, regulation, treaty or statute
promulgated by any governmental entity to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activities.
(C 2TM currently holds all environmental approvals, permits, licenses,
clearances and consents necessary for the conduct of its business as such
business is currently being conducted, the absence of which would be reasonably
likely to have a Material Adverse Effect on 2TM.
(D No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending or, to the actual knowledge of 2TM,
threatened concerning any Environmental Permit. 2TM is not aware of any fact or
circumstance which could involve it in any environmental litigation or impose
upon it any environmental liability which would be reasonably likely to have a
Material Adverse Effect on 2TM.
3.19 CORPORATE DOCUMENTS. 2TM and 2TMD have furnished to GTW and LF
for their examination: (i) copies of their Certificates or Articles of
Incorporation and Bylaws; (ii) their Minute Book containing all records required
to be set forth of all proceedings, consents, actions, and meetings of the
stockholders, the board of directors and any committees thereof; (iii) all
permits, orders, and consents issued by any regulatory agency with respect to
2TM or 2TMD, or any securities of 2TM or 2TMD, and all applications for such
permits, orders, and consents; and (iv) their stock transfer books setting forth
all transfers of any capital stock. The corporate minute books, stock
certificate books, stock registers and other corporate records of 2TM and 2TMD
are complete and accurate in all material respects, and the signatures appearing
on all documents contained therein are the true signatures of the persons
purporting to have signed the same. All actions reflected in such books and
records were duly and validly taken in compliance with the laws of the
applicable jurisdiction.
3.20 NO BROKERS. Neither 2TM nor 2TMD is obligated for the payment of
fees or expenses of any broker or finder in connection with the origin,
negotiation or execution of this Agreement or the Certificate of Merger or in
connection with any transaction contemplated hereby or thereby.
3.21 DISCLOSURE. No statements by 2TM or 2TMD contained in this
Agreement and the Exhibits and 2TM Disclosure Schedule attached hereto, any
other Transaction Document or any written statement or certificate furnished or
to be furnished pursuant hereto or in connection with the transactions
contemplated hereby and thereby (when read together) contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made.
4. REPRESENTATIONS AND WARRANTIES OF GTW AND LF. Except as otherwise
set forth in the GTW Disclosure Schedule attached hereto, GTW and LF jointly and
severally represent and warrant to 2TM as set forth below. No fact or
circumstance disclosed to 2TM shall constitute an exception to these
representations and warranties unless such fact or circumstance is set forth in
the GTW Disclosure Schedule or such supplements thereto as may mutually be
agreed upon in writing by GTW and 2TM.
4.1 ORGANIZATION. GTW and LF are corporations duly organized, validly
existing and in good standing under the laws of the state of incorporation of
such entity and have the corporate power and authority to carry on their
respective businesses as it is now being conducted. GTW and LF are duly
qualified or licensed to do business and are in good standing in each
jurisdiction in which the nature of their respective businesses or properties
makes such qualification or licensing necessary except where the failure to be
so qualified would not have a Material Adverse Effect on GTW. The GTW
Disclosure Schedule contains a true and complete listing of the locations of all
sales offices, and any other offices or facilities of GTW, and a true and
complete list of all states in which GTW maintains any employees. The GTW
Disclosure Schedule contains a true and complete list of all states in which GTW
is duly qualified to transact business as a foreign corporation. True and
complete copies of GTW's Articles of Incorporation and Bylaws, as in effect on
the date hereof and as to be in effect as of the Closing, have been provided to
2TM or its representatives.
4.2 CAPITALIZATION.
(A) The authorized capital of GTW will consist, prior to the Closing,
of 1,000,000 shares of Common Stock, of which 100 shares will be issued and
outstanding. LF is the record and beneficial owner of all such shares of GTW
Common Stock, free and clear of any and all claims, liens, encumbrances or
security interests.
(B) Except as set forth in the GTW Disclosure Schedule, neither GTW nor
LF has outstanding any preemptive rights, subscription rights, options,
warrants, rights to convert or exchange, capital stock equivalents, or other
rights to purchase or otherwise acquire any GTW capital stock or other
securities.
(C) All of the issued and outstanding shares of GTW capital stock have
been duly authorized, validly issued, are fully paid and nonassessable, and such
capital stock has been issued in full compliance with all applicable federal and
state securities laws. None of GTW's issued and outstanding shares of capital
stock are subject to repurchase or redemption rights.
(D) Except for any restrictions imposed by applicable state and federal
securities laws, there is no right of first refusal, option, or other
restriction on transfer applicable to any shares of GTW's capital stock.
(E) GTW is not under any obligation to register under the Securities
Act any shares of its capital stock or any other of its securities that might be
issued in the future if the Merger were not consummated.
(F) GTW is not a party or subject to any agreement or understanding
(and, to GTW's and LF's actual knowledge, there is no agreement or understanding
between or among any persons) that affects or relates to the voting or giving of
written consent with respect to any security.
4.3 POWER, AUTHORITY AND VALIDITY. GTW and LF have the corporate power
to enter into this Agreement and the other Transaction Documents to which they
are parties and to carry out their obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Boards of Directors of GTW and LF and no other corporate
proceedings on the part of GTW or LF are necessary to authorize this Agreement,
the other Transaction Documents and the transactions contemplated herein and
therein. GTW and LF are not subject to, or obligated under, any charter, bylaw
or contract provision or any license, franchise or permit, or subject to any
order or decree, which would be breached or violated by or in conflict with its
executing and carrying out this Agreement and the transactions contemplated
hereunder and under the Transaction Documents. Except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which GTW
is qualified to do business, (ii) the filing of the Certficate of Merger with
the Secretary of State of the State of Oklahoma, and (ii) filings under
applicable securities laws, no consent of any person who is a party to a
contract which is material to GTW's business, nor consent of any governmental
authority, is required to be obtained on the part of GTW to permit the
transactions contemplated herein and to permit GTW to continue the business
activities of GTW as previously conducted by GTW without a Material Adverse
Effect. This Agreement is, and the other Transaction Documents when executed
and delivered by GTW and LF shall be, the valid and binding obligations of GTW
and LF, enforceable in accordance with their respective terms.
4.4 FINANCIAL STATEMENTS.
(A) GTW has delivered to 2TM copies of the GTW Financial Statements.
(B) The GTW Financial Statements are complete and in accordance with
the books and records of GTW and present fairly the financial position of GTW as
of its historical dates. The GTW Financial Statements have been prepared in
accordance with GAAP, applied on a basis consistent with prior periods. Except
and to the extent reflected or reserved against in such balance sheets
(including the notes thereto), GTW does not have, as of the dates of such
balance sheets, any liabilities or obligations (absolute or contingent) of a
nature required or customarily reflected in a balance sheet (or the notes
thereto) prepared in accordance with GAAP. The reserves, if any, reflected on
the GTW Financial Statements are adequate in light of the contingencies with
respect to which they are made.
(C) GTW has no debt, liability, or obligation of any nature, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
that is not reflected or reserved against in the GTW Financial Statements,
except for those (i) that may have been incurred after the date of the GTW
Financial Statements; or (ii) that are not required by GAAP to be included in a
balance sheet or the notes thereto, except that GTW has not established any
reserves with respect to the costs and fees associated with this Agreement, the
other Transaction Documents, and the transactions contemplated hereby and
thereby. All material debts, liabilities, and obligations incurred after the
date of the GTW Financial Statements were incurred in the ordinary course of
business, and are usual and normal in amount both individually and in the
aggregate.
4.5 SITE STATISTICS
1. The current active registered users of the Site are 1,800,000
2. The Site receives on average no less than 300,000 unique visitors per day
3. The Site receives on average no less than 10,000,000 banner ad
impressions per day
4. The Site accrues on average no less than $20,000 per day in banner ad
revenue
5. The Site accrues on average approximately $6,000 per day payable to its
web surfers pursuant to the "pay to surf" program
4.6 TAX MATTERS.
(A) GTW has fully and timely, properly and accurately filed all tax
returns and reports required to be filed by it (or extensions thereof),
including all federal, foreign, state and local tax returns and estimates for
all years and periods (and portions thereof) for which any such returns, reports
or estimates were due. All such returns, reports and estimates were prepared in
the manner required by applicable law. All income, sales, use, occupation,
property or other taxes or assessments due from GTW have been paid. There are
no pending assessments, asserted deficiencies or claims for additional taxes
that have not been paid. The reserves for taxes, if any, reflected on the GTW
Financial Statements are adequate and there are no tax liens on any property or
assets of GTW. There have been no audits or examinations of any tax returns or
reports by any applicable governmental agency. No state of facts exists or has
existed which would constitute grounds for the assessment of any penalty or of
any further tax liability beyond that shown on the respective tax reports,
returns or estimates. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any federal, state or local
income tax return or report for any period.
(B) All taxes which GTW has been required to collect or withhold have
been duly withheld or collected and, to the extent required, have been paid to
the proper taxing authority.
(C) GTW is not a party to any tax-sharing agreement or similar
arrangement with any other party.
(D) At no time has GTW been included in the federal consolidated income
tax return of any affiliated group of corporations.
(E) No payment which GTW is obliged to pay to any director, officer,
employee or independent contractor pursuant to the terms of an employment
agree-ment, severance agreement or otherwise will constitute an excess parachute
payment as defined in '280G of the Code.
(F) GTW is not currently under any contractual obligation to pay any
tax obligations of, or with respect to any transaction relating to, any other
person or to indemnify any other person with respect to any tax.
4.7 TAX-FREE REORGANIZATION.
(A) Neither GTW nor LF has taken or agreed to take any action that
would prevent the Mergers from constituting a reorganization qualifying under
the provi-sions of '368(a) of the Code.
(B) Neither GTW nor LF is an investment company as defined in
''368(a)(2)(F)(iii) and (iv) of the Code.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999, GTW
has not:
(A) suffered any material adverse change in its financial condition or
in the operations of its business, nor any material adverse changes in its
balance sheet, (with the GTW Financial Statements and any subsequent balance
sheet analyzed as if each had been prepared according to GAAP), including but
not limited to cash distributions or material decreases in the net assets of
GTW;
(B) suffered any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting its properties or business;
(C) granted or agreed to make any increase in the compensation payable
or to become payable by it to its officers or employees, except those occurring
in the ordinary course of business;
(D) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of its capital stock or declared any
direct or indirect redemption, retirement, purchase or other acquisition by it
of such shares;
(E) issued any shares of its capital stock or any warrants, rights,
options or entered into any commitment relating to its shares except for the
issuance of its pursuant to the exercise of outstanding options;
(F) made any change in the accounting methods or practices it follows,
whether for general financial or tax purposes, or any change in depreciation or
amorti-zation policies or rates adopted therein;
(G) sold, leased, abandoned or otherwise disposed of any real property
or any machinery, equipment or other operating property other than in the
ordinary course of business;
(H) sold, assigned, transferred, licensed or otherwise disposed of any
patent, trademark, trade name, brand name, copyright (or pending application for
any patent, trademark or copyright) invention, work of authorship, process,
know-how, formula or trade secret or interest thereunder or other intangible
asset except in the ordinary course of its business;
(I) suffered any labor dispute;
(J) engaged in any activity or entered into any material commitment or
transaction (including without limitation any borrowing or capital expenditure)
other than in the ordinary course of business;
(K) incurred any liabilities except in the ordinary course of business
and consistent with past practice which would be required to be disclosed in
financial statements prepared in accordance with GAAP;
(L) permitted or allowed any of its property or assets to be subjected
to any mortgage, deed of trust, pledge, lien, security interest or other
encumbrance of any kind, except those permitted under Section 4.8 hereof, other
than any purchase money security interests incurred in the ordinary course of
business;
(M) made any capital expenditure or commitment for additions to
property, plant or equipment individually in excess of Ten Thousand Dollars
($10,000), or in the aggregate, in excess of Fifty Thousand Dollars ($50,000);
(N) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets to, or entered into any agreement or arrangement
with any of its Affiliates, officers, directors or stockholder or any Affiliate
or associate of any of the foregoing;
(O) made any amendment to or terminated any agreement which, if not so
amended or terminated, would be required to be disclosed on the GTW Disclosure
Schedule; or
(P) agreed to take any action outside of its ordinary course of
business or which would constitute a breach of any of the representations
contained in this Agreement.
4.9 TITLE AND RELATED MATTERS. GTW has good and marketable title to
all the properties, interests in properties and assets, real and personal,
reflected in the GTW Financial Statements or acquired after the date of the GTW
Financial Statements (except properties, interests in properties and assets sold
or otherwise disposed of since the date of the GTW Financial Statements in the
ordinary course of business), free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except the lien of current
taxes not yet due and payable and except for liens which in the aggregate do not
secure more than Ten Thousand Dollars ($10,000) in liabilities. The equipment
of GTW used in the operation of its business is in good operating condition and
repair. All real or personal property leases to which GTW is a party are valid,
binding, enforceable obligations of GTW effective in accordance with their
respective terms. There is not under any of such leases any existing material
default or event of default or event which, with notice or lapse of time or
both, would constitute a material default. The GTW Disclosure Schedule contains
a description of all real and personal property leased or owned by GTW,
identifying such property and, in the case of real property, stating the monthly
rental due, term of lease and square feet leased. True and correct copies of
each of GTW's leases have been provided to 2TM or its representatives.
4.10 PROPRIETARY RIGHTS.
(A) GTW owns all right, title and interest in and to, or valid licenses
for use of, all patents, copyrights, technology, software, software tools,
know-how, processes, trade secrets, trademarks, service marks, trade names and
other proprietary rights used in or necessary for the conduct of GTW's business
as conducted to the date hereof or contemplated, including, without limitation,
the technology and all proprietary rights developed or discovered or used in
connection with or contained in the GTW Products/Services, free and clear of all
liens, claims and encumbrances (including without limitation distribution
rights) (all of which are referred to as "GTW Proprietary Rights") and GTW has
the right to transfer all such rights to GTWD as contemplated hereby. The
foregoing representation as it relates to GTW Third-Party Technology (as
hereinafter defined) is limited to GTW's interest pursuant to the GTW
Third-Party Licenses (as hereinafter defined), all of which are valid and
enforceable and in full force and effect and which grant GTW such rights to the
GTW Third-Party Technology as are employed in or necessary to the business of
GTW as conducted or proposed to be conducted. The GTW Disclosure Schedule
contains an accurate and complete description of (i) all patents, trademarks
(with separate listings of registered and unregistered trademarks), trade names,
and registered copyrights in or related to the GTW Products/ Services, all
applications and registration statements therefor, and a list of all licenses
and other agreements relating thereto; and (ii) a list of all licenses and other
agreements with third parties (the "GTW Third-Party Licenses") relating to any
inventions, technology, know-how, or processes that GTW is licensed or otherwise
authorized by such third parties to use, market, distribute or incorporate into
products distributed by GTW (such software, inventions, technology, know-how and
processes are collectively referred to as the "GTW Third-Party Technology").
GTW's trademark or trade name registrations related to the GTW Products/Services
and all of GTW's copyrights in any of the GTW Products/Services are valid and in
full force and effect, and consummation of the transactions contemplated hereby
will not alter or impair any such rights. No claims have been asserted against
GTW (and GTW is not aware of any claims which are likely to be asserted against
it or which have been asserted against others) by any person challenging GTW's
use, possession, manufacture, sale, provision or distribution of the GTW
Products/Services under any patents, trademarks, trade names, copyrights, trade
secrets, technology, know-how or processes utilized by GTW (including, without
limitation, the GTW Third-Party Technology) or challenging or question-ing the
validity or effectiveness of any license or agreement relating thereto
(including, without limitation, the GTW Third-Party Licenses). There is no
valid basis for any claim of the type specified in the immediately preceding
sentence which could in any material way relate to or interfere with the
currently planned continued enhancement and exploitation by GTW of any of the
GTW Products/Services. None of the GTW Products/Services nor the use or
exploita-tion of any patents, trademarks, trade names, copyrights, technology,
know-how or processes by GTW in its current business infringes on the rights of,
constitutes misappro-priation of, or in any way involves unfair competition with
respect to, any proprietary information or intangible property right of any
third person or entity, including without limitation any patent, trade secret,
copyright, trademark or trade name.
(B) No employee of GTW is in violation of any term of any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of any such employee with GTW or, to GTW's actual
knowledge, any other party because of the nature of the business conducted by
GTW or proposed to be conducted by GTW.
(C) Each person presently or previously employed by GTW (including
independent contractors, if any) with access to confidential information has
executed a confidentiality and non-disclosure agreement pursuant to the form of
agreement previously provided to GTW or its representatives. Such
confidentiality and non-disclosure agreements constitute valid and binding
obligations of GTW and such person, enforceable in accordance with their
respective terms. Neither the execution or delivery of such agreements, nor the
carrying on of their business as employees by such persons, nor the conduct of
their business as currently anticipated, will conflict with or result in a
breach of the terms, conditions or provisions of or constitute a default under
any contract, covenant or instrument under which any of such persons is
obligated.
(D) No product or service liability or warranty claims which
individually or in the aggregate could exceed One Thousand Dollars ($1,000)
individually or Ten Thousand ($10,000) in the aggregate have been communicated
to, or threatened against, GTW nor, to GTW's actual knowledge, is there any
specific situation, set of facts or occurrence that provides a basis for such
claim.
(E) GoToWorld has a nonexclusive, royalty-free, perpetual, World wide
license (exclusive of the excluded territories of Spain, Japan and Latin
America) to the GoToWorld branded browser software and plug-ins, all in
executable form only, including all upgrades or new features, if any, to the
browser software and plug-ins, as such upgrades or new features become
available.
4.11 EMPLOYEE BENEFIT PLANS. There is no unfunded prior service cost
with respect to any bonus, deferred compensation, pension, profit-sharing,
retirement, stock purchase, stock option, or other employee benefit or fringe
benefit plans, whether formal or informal, maintained by GTW. Each bonus,
deferred compensation, pension, profit-sharing, retirement, stock purchase,
stock option, and other employee benefit or fringe benefit plans, whether formal
or informal, maintained by GTW conforms to all applicable requirements of the
Employees Retirement Income Security Act. The GTW Disclosure Schedule lists and
describes all profit-sharing, bonus, incentive, deferred compensation, vacation,
severance pay, retirement, stock option, group insurance or other plans (whether
written or not) providing employee benefits.
4.12 BANK ACCOUNTS. The GTW Disclosure Schedule sets forth the names
and locations of all banks, trusts, companies, savings and loan associations,
and other financial institutions at which GTW maintains accounts of any nature
and the names of all persons authorized to draw thereon or make withdrawals
therefrom.
4.13 CONTRACTS.
(A) GTW has no agreements, contracts or commitments that provide for
the sale, licensing or distribution by GTW of any of its products, services,
inventions, technology, know-how, trademarks or trade names except in the
ordinary course of its business.
(B) Without limiting the provisions of Section 4.9 and except for any
agreements with 2TM, GTW has not granted to any third party any exclusive rights
of any kind with respect to any of the GTW Products/Services.
(C) There is no outstanding sales contract, commitment or proposal of
GTW that is currently expected to result in any loss to GTW (before allocation
of overhead and administrative costs) upon completion or performance thereof.
(D) GTW has no outstanding agreements, contracts or commitments with
officers, employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not cancelable by it on notice
of not longer than thirty (30) days and without liability, penalty or premium.
(E) GTW has no employment, independent contractor or similar agreement,
contract or commitment that is not terminable on no more than thirty (30) days'
notice without penalty or liability of any type, including without limitation
severance or termination pay.
(F) GTW has no currently effective collective bargaining or union
agreements, contracts or commitments.
(G) GTW is not restricted by agreement from competing with any person
or from carrying on its business anywhere in the world.
(H) GTW has not guaranteed any obligations of other persons or made any
agreements to acquire or guarantee any obligations of other persons.
(I) GTW has no outstanding loan or advance to any person; nor is it
party to any line of credit, standby financing, revolving credit or other
similar financing arrangement of any sort which would permit the borrowing by
GTW of any sum not reflected in the GTW Financial Statements.
(J) All material contracts, agreements and instruments to which GTW is
a party are valid, binding, in full force and effect, and enforceable by GTW in
accordance with their respective terms. No such material contract, agreement or
instrument contains any material liquidated-damages, penalty or similar
provision. GTW has not received any notice from any party to any such material
contract, agreement or instrument that such party intends to cancel, withdraw,
modify or amend such contract, agreement or arrangement.
(K) The GTW Disclosure Schedule lists all material agreements pursuant
to which GTW has agreed to supply to any third party GTW Products/Services.
(L) GTW is not in default under or in breach or violation of, nor, to
its actual knowledge, is there any valid basis for any claim of default by GTW
under, or breach or violation by GTW of, any contract, commitment or restriction
to which GTW is a party or to which it or any of its properties is bound, where
such defaults, breaches, or violations would, in the aggregate, have a Material
Adverse Effect on GTW. To GTW's actual knowledge, no other party is in default
under or in breach or violation of, nor is there any valid basis for any claim
of default by any other party under or any breach or violation by any other
party of, any material contract, commitment, or restriction to which GTW is
bound or by which any of its properties is bound, where such defaults, breaches,
or violations would, in the aggregate, have a Material Adverse Effect on GTW.
(M) All agreements, contracts and commitments (the "Material
Contracts") listed or described in the GTW Disclosure Schedule pursuant to this
Section 4.12 are assumable, or will otherwise be the property of, the Surviving
Corporation following the Mergers without further action by the Surviving
Corporation or GTW. If any of the Material Contracts are not assumable by or
will not be the property of, the Surviving Corporation following the Mergers,
then GTW has described in the GTW Disclosure Schedule such actions as is
necessary for assumption of the Material Contract by the Surviving Corporation.
(N) True and correct copies of each document or instrument described in
the GTW Disclosure Schedule pursuant to this Section 4.12 have been made
available to 2TM or its representatives.
4.14 INSIDER TRANSACTIONS. No Affiliate of GTW or LF has any interest
in (i) any material equipment or other property, real or personal, tangible or
intangible, including, without limitation, any item of intellectual property,
used in connection with or pertaining to the business of GTW; or (ii) any
creditor, supplier, customer, agent or representative of GTW; provided, however,
that no such Affiliate or other person shall be deemed to have such an interest
solely by virtue of the ownership of less than one percent (1%) of the
outstanding stock or debt securities of any publicly-held company, the stock or
debt securities of which are traded on a recognized stock exchange or quoted on
the National Association of Securities Dealers Automated Quotation System.
4.15 INSURANCE. The GTW Disclosure Schedule contains a list of the
principal policies of fire, liability and other forms of insurance held by GTW.
4.16 DISPUTES AND LITIGATION. Except as set forth in the GTW
Disclosure Schedule, there is no suit, action, litigation, proceeding,
investigation, claim, complaint, or accusation pending, or to its knowledge
threatened against or affecting GTW or any of its properties, assets or business
or to which GTW is a party, in any court or before any arbitrator of any kind or
before or by any governmental agency (including, without limitation, any
federal, state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality), and to its knowledge, there is no
basis for such suit, action, litigation, proceeding, investigation, claim,
complaint, or accusation; (b) there is no pending or threatened change in any
environmental, zoning or building laws, regulations or ordinances which affect
or could affect GTW or any of its properties, assets or businesses; and (c)
there is no outstanding order, writ, injunction, decree, judgment or award by
any court, arbitrator or governmental body against or affecting GTW or any of
its properties, assets or business. There is no litigation, proceeding,
investigation, claim, complaint or accusation, formal or informal, or
arbitration pending, or any of the aforesaid threatened, or any contingent
liability which would give rise to any right of indemnification or similar right
on the part of any director or officer of GTW or any such person's heirs,
executors or administrators as against GTW.
4.17 COMPLIANCE WITH LAWS. GTW has at all times been, and presently
is, in full compliance with, and has not received notice of any claimed
violation of, any applicable federal, state, local, foreign and other laws,
rules and regulations. GTW has filed all returns, reports and other documents
and furnished all information required or requested by any federal, state, local
or foreign governmental agency and all such returns, reports, documents and
information are true and complete in all respects. All permits, licenses,
orders, franchises and approvals of all federal, state, local or foreign
governmental or regulatory bodies required of GTW for the conduct of its
business have been obtained, no violations are or have been recorded in respect
of any such permits, licenses, orders, franchises and approvals, and there is no
litigation, proceeding, investigation, arbitration, claim, complaint or
accusation, formal or informal, pending or threatened, which may revoke, limit,
or question the validity, sufficiency or continuance of any such permit,
license, order, franchise or approval. Such permits, licenses, orders,
franchises and approvals are valid and sufficient for all activities presently
carried on by GTW.
4.18 SUBSIDIARIES. GTW has no subsidiaries. GTW does not own or
control (directly or indirectly) any capital stock, bonds or other securities
of, and does not have any proprietary interest in, any other corporation,
general or limited partnership, firm, association or business organization,
entity or enterprise, and GTW does not control (directly or indirectly) the
management or policies of any other corporation, partnership, firm, association
or business organization, entity or enterprise.
4.19 ENVIRONMENTAL MATTERS.
(A) As of the date hereof, no underground storage tanks are present
under any property that GTW has at any time owned, operated, occupied or leased.
As of the date hereof except as set forth in the GTW Disclosure Schedule, no
material amount of any substance that has been designated by any governmental
entity or by applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws
(a "Hazardous Material"), excluding office, janitorial and other immaterial
supplies, are present, as a result of the actions of GTW or, to GTW's actual
knowledge, as a result of any actions of any third party or otherwise, in, on or
under any property, including the land and the improvements, ground water and
surface water, that GTW have at any time owned, operated, occupied or leased.
(B) At no time has GTW transported, stored, used, manufactured,
disposed of, released or exposed its employees or others to Hazardous Materials
in violation of any law in effect on or before the Closing Date, nor has GTW
disposed of, transported, sold, or manufactured any product containing a
Hazardous Material in violation of any rule, regulation, treaty or statute
promulgated by any governmental entity to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activities.
(C) GTW currently holds all environmental approvals, permits, licenses,
clearances and consents necessary for the conduct of its business as such
business is currently being conducted, the absence of which would be reasonably
likely to have a Material Adverse Effect on GTW.
(D) No action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending or, to the actual knowledge of GTW,
threatened concerning any Environmental Permit. GTW is not aware of any fact or
circumstance which could involve it in any environmental litigation or impose
upon it any environmental liability which would be reasonably likely to have a
Material Adverse Effect on GTW.
4.20 CORPORATE DOCUMENTS. GTW has furnished to 2TM for its
examination: (i) copies of its Certificate or Articles of Incorporation and
Bylaws; (ii) its Minute Book containing all records required to be set forth of
all proceedings, consents, actions, and meetings of the stockholders, the board
of directors and any committees thereof; (iii) all permits, orders, and consents
issued by any regulatory agency with respect to GTW, or any securities of GTW,
and all applications for such permits, orders, and consents; and (iv) their
stock transfer books setting forth all transfers of any capital stock. The
corporate minute books, stock certificate books, stock registers and other
corporate records of GTW are complete and accurate in all material respects, and
the signatures appearing on all documents contained therein are the true
signatures of the persons purporting to have signed the same. All actions
reflected in such books and records were duly and validly taken in compliance
with the laws of the applicable jurisdiction.
4.21 NO BROKERS. Neither GTW nor LF is obligated for the payment of
fees or expenses of any broker or finder in connection with the origin,
negotiation or execution of this Agreement or the Certificate of Merger or in
connection with any transaction contemplated hereby or thereby.
4.22 DISCLOSURE. No statements by GTW or LF contained in this
Agreement and the Exhibits and GTW Disclosure Schedule attached hereto, any
other Transaction Document or any written statement or certificate furnished or
to be furnished pursuant hereto or in connection with the transactions
contemplated hereby and thereby (when read together) contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading in light
of the circumstances under which they were made.
5. PRECLOSING COVENANTS OF 2TM AND 2TMD.
5.1 NOTICES AND APPROVALS. 2TM agrees: (a) to give and to cause 2TMD
to give all notices to third parties which may be necessary or deemed desirable
by GTW in connection with this Agreement and the consummation of the
transactions contemplated hereby; (b) to use its best efforts to obtain and to
cause 2TMD to obtain, all federal and state governmental regulatory agency
approvals, consents, permit, authorizations, and orders necessary or deemed
desirable by GTW in connection with this Agreement and the consummation of the
transaction contemplated hereby; and (c) to use its best efforts to obtain, and
to cause 2TMD to obtain, all consents and authorizations of any other third
parties necessary or deemed desirable by GTW in connection with this Agreement
and the consummation of the transactions contemplated hereby.
5.2 EMPLOYMENT AGREEMENTS, OTHER COMMITMENTS.
(A) Prior to the Closing, all employment agreements to which 2TM is a
party shall be reviewed by 2TM and GTW and assumed by 2TMD as of the Closing
with such modifications as may be acceptable to 2TM, GTW and the employee party
to such agreement.
(B) Prior to the Closing, 2TMD shall enter into an employment agreement
with Xxx X. Xxxxxxx, to serve as 2TMD's President, Chief Executive Officer and
Chairman, which agreement shall provide, among other provisions: (i) a base
annual salary of $200,000 for a three year term, and (ii) a grant of 500,000
options to purchase 2TMD common stock vesting over four years with an exercise
price of $2.00 per share, with 25% of these options vesting as the Effective
Time and 25% of these options vesting on any secondary offering of shares by
2TMD.
(C) Prior to the Closing, 2TMD shall enter into a consulting agreement
with Xxxxxx X. Xxxxxx, which agreement shall provide, among other provisions:
(i) a base annual payment of $200,000, payable not less than monthly for a
three year term, and (ii) a grant of 500,000 options to purchase 2TMD common
stock vesting over four years with an exercise price of $2.00 per share, with
25% of these options vesting as the Effective Time and 25% of these options
vesting on any secondary offering of shares by 2TMD.
(D) Prior to the Closing, 2TMD shall enter into a consulting agreement
with Xxxxxxx X. Xxxxxxxxxxx, which agreement shall provide among other
provisions: (i) a base annual payment of $200,000, payable not less than
monthly, for a three year term, and (ii) a grant of 500,000 options to purchase
2TMD common stock vesting over four years with an exercise price of $2.00 per
share, with 25% of these options vesting as the Effective Time and 25% of these
options vesting on any secondary offering of shares by 2TMD.
(E) Prior to the Closing, 2TMD shall enter into an employment agreement
with Xxxx Xxxxxxx, to serve as 2TMD's Director of Internet Marketing, which
agreement shall provide among other provisions: (i) a base annual salary of
$90,000 for a three year term, and (ii) a grant of 20,000 options to purchase
2TMD common stock vesting over four years with an exercise price of $5.00 per
share.
(F) Prior to the Closing, 2TMD shall enter into an agreement with Yuri
Mordovskoi, who will become a Director of 2TMD post-closing, to issue 100,000
options to purchase 2TMD common stock vesting over four years with an exercise
price of $5.00 per share, with 50% of the options vesting on any secondary
offering of shares by 2TMD. Mr. Mordovskoi shall have no fewer options than any
new director on the Board of Directors of 2TMD.
5.3 ADVICE OF CHANGES. 2TM will promptly advise GTW in writing (i) of
any event occurring subsequent to the date of this Agreement which would render
any representation or warranty of 2TM or 2TMD contained in this Agreement, if
made on or as of the date of such event or the Closing Date, untrue or
inaccurate in any material respect and (ii) of any material adverse change in
2TM's business, taken as a whole.
5.4 INFORMATION FOR GTW'S STATEMENTS AND APPLICATIONS. 2TM and 2TMD
and their employees, accountants and attorneys shall cooperate fully with GTW in
the preparation of any statements or applications made by GTW to any federal or
state governmental regulatory agency in connection with this Agreement and the
transactions contemplated hereby and to furnish GTW with all information
concerning 2TM and 2TMD necessary or deemed desirable by GTW for inclusion in
such statements and applications, including, without limitation, all requisite
financial statements and schedules.
5.5 CONDUCT OF BUSINESS BY 2TM. Until the Closing, 2TM will continue
to conduct its business and maintain its business relationships in the ordinary
and usual course and will not, without the prior written consent of GTW:
(A) borrow any money which borrowings exceed in the aggregate Ten
Thousand Dollars ($10,000) or incur or commit to incur any capital expenditures
in excess of Ten Thousand Dollars ($10,000) in the aggregate;
(B) lease, license, sell, transfer or encumber or permit to be
encumbered any asset, intellectual property right or other property associated
with the business of 2TM (including sales or transfers to Affiliates of 2TM),
except for sales of inventory in the usual and ordinary course of business;
(C) dispose of any of its assets, except in the regular and ordinary
course of business;
(D) enter into any lease or contract for the purchase or sale of any
property, real or personal except in the ordinary course of business;
(E) pay any bonus, increased salary, or special remuneration to any
officer or employee, including any amounts for accrued but unpaid salary or
bonuses (other than amounts not in excess of normal payments made on a regular
basis in prior periods);
(F) change accounting methods;
(G) declare, set aside or pay any cash or stock dividend or other
distribution in respect of capital, or redeem or otherwise acquire any of its
capital stock;
(H) amend or terminate any contract, agreement or license to which it
is a party except in the ordinary course of business;
(I) loan any amount to any person or entity, or guaranty or act as a
surety for any obligation;
(J) issue or sell any shares of its capital stock of any class or any
other of its securities, or issue or create any warrants, obligations,
subscriptions, options, convertible securities, or other commitments to issue
shares of capital stock, other than stock options granted as part of existing
stock option program or pursuant to any recapitalization plan disclosed to and
approved by GTW in its discretion and except for the issuance of up to 2,500,000
shares pursuant to 2TM's current Private Placement Memorandum;
(K) split or combine the outstanding shares of its capital stock of any
class or enter into any recapitalization affecting the number of outstanding
shares of its capital stock of any class or affecting any other of its
securities;
(L) amend its Certificate of Incorporation or Bylaws except as
necessary to carry out a recapitalization plan;
(M) make or change any election, change any annual accounting period,
adopt or change any accounting method, file any amended tax return, enter into
any closing agreement, settle any tax claim or assessment, surrender any right
to claim refund of taxes, consent to any extension or waiver of the limitation
period applicable to any tax claim or assessment, or take any other action or
omit to take any action, if any such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action or omission would have
the effect of increasing the tax liability of 2TM;
(N) do anything that would cause there to be material adverse changes
in its Financial Statements (with such Financial Statements analyzed as if it
had been prepared according to GAAP, and including but not limited to cash
distributions or material decreases in the net assets of 2TM), except as would
occur in the ordinary course of 2TM's business, between the date of the 2TM
Financial Statements and the Closing Date; or
(O) agree to do any of the things described in the preceding clauses
Section 5.5(a) through (n).
6. PRECLOSING COVENANTS OF GTW AND LF.
6.1 NOTICES AND APPROVALS. GTW and LF agree: (a) to give all notices
to third parties which may be necessary or deemed desirable by 2TM in connection
with this Agreement and the consummation of the transactions contemplated
hereby; (b) to use their best efforts to obtain all federal and state
governmental regulatory agency approvals, consents, permit, authorizations, and
orders necessary or deemed desirable by 2TM in connection with this Agreement
and the consummation of the transaction contemplated hereby; and (c) to use
their best efforts to obtain all consents and authorizations of any other third
parties necessary or deemed desirable by 2TM in connection with this Agreement
and the consummation of the transactions contemplated hereby.
6.2 EMPLOYMENT AGREEMENTS, OTHER COMMITMENTS TERMINATED. Prior to the
Closing, all employment agreements to which GTW is a party shall be reviewed by
2TM and GTW and, as agreed between them, either terminated prior to the Closing
or assumed by 2TMD as of the Closing with such modifications as may be
acceptable to 2TM, GTW and the employee party to such agreement.
6.3 ADVICE OF CHANGES. GTW will promptly advise 2TM in writing (i) of
any event occurring subsequent to the date of this Agreement which would render
any representation or warranty of GTW or LF contained in this Agreement, if made
on or as of the date of such event or the Closing Date, untrue or inaccurate in
any material respect and (ii) of any material adverse change in GTW's business,
taken as a whole.
6.4 INFORMATION FOR 2TM'S STATEMENTS AND APPLICATIONS. GTW and LF and
their employees, accountants and attorneys shall cooperate fully with 2TM in the
preparation of any statements or applications made by 2TM to any federal or
state governmental regulatory agency in connection with this Agreement and the
transactions contemplated hereby and to furnish 2TM with all information
concerning GTW and LF necessary or deemed desirable by 2TM for inclusion in such
statements and applications, including, without limitation, all requisite
financial statements and schedules.
6.5 CONDUCT OF BUSINESS BY GTW. Until the Closing, GTW will continue
to conduct its business and maintain its business relationships in the ordinary
and usual course and will not, without the prior written consent of 2TM:
(A) borrow any money which borrowings exceed in the aggregate Ten
Thousand Dollars ($10,000) or incur or commit to incur any capital expenditures
in excess of Ten Thousand Dollars ($10,000) in the aggregate;
(B) lease, license, sell, transfer or encumber or permit to be
encumbered any asset, intellectual property right or other property associated
with the business of GTW (including sales or transfers to Affiliates of GTW),
except for sales of inventory in the usual and ordinary course of business;
(C) dispose of any of its assets, except in the regular and ordinary
course of business;
(D) enter into any lease or contract for the purchase or sale of any
property, real or personal except in the ordinary course of business;
(E) pay any bonus, increased salary, or special remuneration to any
officer or employee, including any amounts for accrued but unpaid salary or
bonuses (other than amounts not in excess of normal payments made on a regular
basis in prior periods);
(F) change accounting methods;
(G) declare, set aside or pay any cash or stock dividend or other
distribution in respect of capital, or redeem or otherwise acquire any of its
capital stock;
(H) amend or terminate any contract, agreement or license to which it
is a party except in the ordinary course of business;
(I) loan any amount to any person or entity, or guaranty or act as a
surety for any obligation;
(J) issue or sell any shares of its capital stock of any class or any
other of its securities, or issue or create any warrants, obligations,
subscriptions, options, convertible securities, or other commitments to issue
shares of capital stock, other than stock options granted as part of existing
stock option program or pursuant to any recapitalization plan disclosed to and
approved by 2TM in its discretion;
(K) split or combine the outstanding shares of its capital stock of any
class or enter into any recapitalization affecting the number of outstanding
shares of its capital stock of any class or affecting any other of its
securities;
(L) amend its Certificate of Incorporation or Bylaws except as
necessary to carry out a recapitalization plan;
(M) make or change any election, change any annual accounting period,
adopt or change any accounting method, file any amended tax return, enter into
any closing agreement, settle any tax claim or assessment, surrender any right
to claim refund of taxes, consent to any extension or waiver of the limitation
period applicable to any tax claim or assessment, or take any other action or
omit to take any action, if any such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action or omission would have
the effect of increasing the tax liability of GTW;
(N) do anything that would cause there to be material adverse changes
in its Financial Statements (with such Financial Statements analyzed as if it
had been prepared according to GAAP, and including but not limited to cash
distributions or material decreases in the net assets of GTW), except as would
occur in the ordinary course of GTW's business, between the date of the GTW
Financial Statements and the Closing Date; or
(O) agree to do any of the things described in the preceding clauses
Section 6.5(a) through (n).
7. MUTUAL COVENANTS.
7.1 NO PUBLIC ANNOUNCEMENT. The parties shall make no public
announcement concerning this Agreement, their discussions or any other memos,
letters or agreements between the parties relating to the Merger until such time
as they agree to the contents of a mutually satisfactory press release which
they intend to publicly-release on the date of this Agreement. Either of the
parties, but only after reasonable consultation with the other, may make
disclosure if required under applicable law.
7.2 OTHER NEGOTIATIONS. Between the date hereof and the Closing, or
such earlier date as GTW and 2TM mutually agree to discontinue discussions of
the Merger, neither GTW nor 2TM will take any action to solicit, initiate, seek,
encourage or support any inquiry, proposal or offer from, furnish any
information to, or participate in any negotiations with, any corporation,
partnership, person or other entity or group (other than discussions pursuant to
this Agreement) regarding any acquisition, any merger or consolidation with or
involving 2TM or GTW, or any acquisition of any material portion of the stock or
assets. 2TM and GTW agree that any such negotiations in progress as of the date
hereof will be terminated or suspended during such period.
7.3 DUE DILIGENCE, INVESTIGATION, AND AUDITS. At such time prior to
the Closing as may be reasonably requested, each party shall make available to
the other party and the other party's employees, agents and representatives all
information concerning the operation, business and prospects of such party as
may be reasonably requested by the other party. Each party will cooperate with
the other party for the purpose of permitting the other party to discuss such
party's business and prospects with such party's customers, creditors, suppliers
and other persons having business dealings with such party, subject to
reasonable confidentiality obligations between the parties.
7.4 REGULATORY FILINGS; CONSENTS; REASONABLE EFFORTS. Subject to the
terms and conditions of this Xxxxxxxxx, 0XX, 0XXX, GTW and LF shall use their
respective best efforts to (i) make all necessary filings with respect to the
Merger and this Agreement under the Securities Act, and applicable blue sky or
similar securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto and shall supply all additional
information requested in connection therewith; (ii) make merger notification or
other appropriate filings with federal, state or local governmental bodies or
applicable foreign governmental agencies and shall use all reasonable efforts to
obtain required approvals and clearances with respect thereto and shall supply
all additional information requested in connection therewith; (iii) obtain all
consents, waivers, approvals, authorizations and orders required in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the Merger; and (iv) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement.
7.5 FURTHER ASSURANCES. Prior to and following the Closing, each party
agrees to cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by any other party to better evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement.
7.6 OUTSTANDING OPTIONS. At the Effective Time, the parties hereto
agree that the Surviving Corporation shall adopt a stock incentive plan that
will authorize the issuance of the lessor of (1) 15,000,000 shares of the
Surviving Corporation's common stock, or (2) generally, twenty percent (20%) of
the outstanding Shares at that time. The Surviving Corporation shall issue
replacement options under the Plan as provided on Schedule A, attached hereto
and incorporated herein by this reference. In no event shall these replacement
options be issued on less than an equivalent and equal basis as those existing
options issued to the GTW and 2TM existing employees. At the Effective Time,
the parties hereto agree that the Surviving Corporation shall immediately deem
vested twenty-five percent (25%) of all unvested options set forth on Schedule
A, on the same terms and conditions, including Exercise Price and Term as set
forth on that Schedule. At, or subsequent to the Effective Time, the parties
hereto agree that the Surviving Corporation shall issue up to 250,000 additional
options to the remaining LF employees under the Plan.
7.7 COMPLETION OF INVESTMENT. At the Effective Time, the parties
hereto agree that Xxxxxx X. Xxxxxx shall be issued an aggregate of 2,000,000
shares of common stock of 2TMD in consideration for his investment of $2,000,000
in 2TM.
8. CLOSING MATTERS.
8.1 FILING OF CERTIFICATES OF MERGER. On the date of the Closing, but
not prior to the Closing, the Certificates of Merger for the Initial Merger
shall be filed with the offices of the Secretary of State of the State of
Delaware and Oklahoma and the merger of 2TM with and into 2TMD shall be
consummated. Immediately after filing of the initial Certificates of Merger,
the Certificate of Merger for the Subsequent Merger shall be filed with the
offices of the Secretary of State of the State of Delaware and the merger of GTW
with and into 2TMD shall be consummated.
8.2 EXCHANGE OF CERTIFICATES. At the Closing, LF shall exchange its
GTW Common Stock certificate(s) for a certificate representing the 2TMD Common
Stock issuable upon execution of the Mergers. At the Effective Time, all
certificates representing 2TM Common Stock shall, without any further action on
the part of the shareholders holding such shares, represent an equivalent number
of shares of 2TMD Common Stock.
8.3 DELIVERY OF DOCUMENTS. On or before the Closing, the parties shall
deliver the documents, and shall perform the acts, which are set forth in
Sections 9 and 10, as specified in such Sections, including delivery of the
counterpart signature pages of the Transaction Documents executed by 2TM, 2TMD,
GTW and/or LF, as the case may be. All documents which 2TM or 2TMD shall
deliver or cause to be delivered shall be in form and substance reasonably
satisfactory to GTW. All documents which GTW or LF shall deliver or cause to be
delivered shall be in form and substance reasonably satisfactory to 2TM.
9. CONDITIONS TO 2TM'S OBLIGATIONS. Unless otherwise provided below,
2TM's and 2TMD's obligations to close the transactions contemplated under this
Agreement are subject to the fulfillment or satisfaction by Closing of each of
the following conditions (any one or more of which may be waived by 2TM, but
only in a writing signed by 2TM):
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of GTW and LF set forth in Section 4 shall be true in all
material respects on and as of the Closing with the same force and effect as if
they had been made at the Closing, and 2TM shall receive a certificate to such
effect executed by the Chairmen and Presidents of GTW and LF.
9.2 COVENANTS. GTW and LF shall have performed and complied with all
of its covenants contained in Sections 6 and 7 on or before the Closing, and 2TM
shall receive a certificate from GTW and LF to such effect executed by the
Presidents of GTW and LF.
9.3 NO LITIGATION. On and as of the Closing, no litigation or
proceeding shall be threatened or pending against GTW with the purpose or with
the probable effect of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement, and 2TM shall receive a certificate
to such effect executed by the Chairmen and Presidents of GTW and LF.
9.4 NO ADVERSE DEVELOPMENT. There shall not have been any material
adverse changes in the financial condition, results of operations, assets,
liabilities, business or prospects of GTW since the date of this Agreement, and
2TM shall receive a certificate to such effect executed by the Chairmen and
President of GTW.
9.5 AUTHORIZATIONS. 2TM shall have received from GTW written evidence
that the execution, delivery and performance of GTW's and LF's obligations under
this Agreement and the Certificate of Merger have been duly and validly approved
and authorized by the Board of Directors of GTW and LF.
9.6 GOVERNMENT CONSENTS. There shall have been obtained at or prior to
the Closing such permits or authorizations, and there shall have been taken such
other action, as may be required by any regulatory authority having jurisdiction
over the parties and the subject matter and the actions herein proposed to be
taken.
9.7 OPINION OF GTW'S COUNSEL. At the Closing, 2TM shall have received
from counsel to GTW an opinion dated as of the Closing Date in substantially the
form attached hereto as Exhibit D.
9.8 FILING OF CERTIFICATE OF MERGER. As of the Closing, the
Certificate of Merger for the Initial Merger shall have been filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Oklahoma and the Certificate of Merger for the Subsequent Merger shall
have been filed with the Secretary of State of the State of Delaware.
10. CONDITIONS TO GTW'S AND LF'S OBLIGATIONS. Unless otherwise
provided below, the obligations of GTW and LF are subject to the fulfillment or
satisfaction by Closing, of each of the following conditions (any one or more of
which may be waived by GTW, but only in a writing signed by GTW):
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of 2TM and 2TMD contained in Section 3 shall be true in all
material respects on and as of the Closing with the same force and effect as if
they had been made at the Closing, and GTW shall receive a certificate from 2TM
and 2TMD to such effect with respect to the representations and warranties of
2TM and 2TMD executed by the Chairmen and Presidents of 2TM and 2TMD.
10.2 COVENANTS. 2TM and 2TMD shall have performed and complied with
all of its covenants contained in Sections 5 and 6 on or before the Closing, and
GTW shall receive a certificate from 2TM and 2TMD to such effect signed by the
Chairmen and Presidents of 2TM and 2TMD.
10.3 NO LITIGATION. On and as of the Closing, no litigation or
proceeding shall be threatened or pending against 2TM or 2TMD for the purpose or
with the probable effect of enjoining or preventing the consummation of any of
the transactions contemplated by this Agreement, and GTW shall receive a
certificate from 2TM and 2TMD to such effect signed by the Chairmen and
Presidents of 2TM and 2TMD.
10.4 AUTHORIZATIONS. GTW shall have received from 2TM written evidence
that the execution, delivery and performance of this Agreement and the
Certificate of Merger have been duly and validly approved and authorized by
2TM's Board of Directors and by 2TMD's Board of Directors. GTW shall have
received a certificate from 2TM and 2TMD to such effect signed by the Chairmen
and Presidents of 2TM and 2TMD.
10.5 NO ADVERSE DEVELOPMENT. There shall not have been any material
adverse changes in the financial condition, results of operations, assets,
liabilities, business or prospects of 2TM since the date of this Agreement. GTW
shall have received a certificate from 2TM to such effect signed by the Chairmen
and President of 2TM.
10.6 GOVERNMENT CONSENTS. There shall have been obtained at or prior
to the Closing such permits or authorizations, and there shall have been taken
such other action, as may be required by any regulatory authority having
jurisdiction over the parties and the subject matter and the actions herein
proposed to be taken
10.7 OPINION OF 2TM'S COUNSEL. At the Closing, GTW shall have received
from counsel to 2TM, an opinion dated the Closing Date in substantially the form
attached hereto as Exhibit C.
10.8 FILING OF CERTIFICATE OF MERGER. As of the Closing, the
Certificate of Merger for the Initial Merger shall have been filed with the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Oklahoma and the Certificate of Merger for the Subsequent Merger shall
have been filed with the Secretary of State of the State of Delaware.
11. TERMINATION OF AGREEMENT.
11.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing by the mutual written consent of each of the parties hereto.
This Agreement may also be terminated and abandoned:
(A) By GTW or LF if any of the conditions precedent to GTW's and LF's
obligations pursuant to Section 10 shall not have been fulfilled at and as of
the Closing.
(B) By 2TM if any of the conditions precedent to 2TM's and 2TM's
obligations pursuant to Section 9 above shall not have been fulfilled at and as
of the Closing.
(C) By 2TM in the event that 5% or more of the shareholders of 2TM
elect to exercise dissenters rights in accordance with applicable Oklahoma
corporate law.
(D) By either 2TM or GTW, if the Merger is not effected by August 30,
2000.
Any termination of this Agreement under this Section 11.1 shall be effected
by the delivery of written notice of the terminating party to the other parties
hereto.
11.2 LIABILITY FOR TERMINATION. Any termination of this Agreement
pursuant to this Section 11 shall be without further obligation or liability
upon any party in favor of any other party hereto; provided, that if such
termination shall result from the willful failure of a party to carry out its
obligations under this Agreement, then such party shall be liable for losses
incurred by the other parties. The provisions of this Section 11.2 shall survive
termination.
11.3 CERTAIN EFFECTS OF TERMINATION. In the event of the termination
of this Agreement as provided in Section 11.1 hereof, each party, if so
requested by the other party, will (i) return promptly every document (other
than documents publicly available) furnished to it by the other party (or any
subsidiary, division, associate or affiliate of such other party) in connection
with the transactions contemplated hereby, whether so obtained before or after
the execution of this Agreement, and any copies thereof which may have been
made, and will cause its representatives and any representatives of financial
institutions and investors and others to whom such documents were furnished
promptly to return such documents and any copies thereof any of them may have
made; or (ii) destroy such documents and cause its representatives and such
other representatives to destroy such documents, and such party shall deliver a
certificate executed by its president or vice president stating to such effect;
and
11.4 REMEDIES. No party shall be limited to the termination right
granted in Section 11.1 hereto by reason of the nonfulfillment of any condition
to such party's closing obligations but may, in the alternative, elect to do one
of the following:
(A) proceed to close despite the nonfulfillment of any closing
condition, it being understood that consummation of the transactions
contemplated hereby shall be deemed a waiver of any misrepresentation or breach
of warranty or covenant and of any party's rights and remedies with respect
thereto to the extent that the other party shall have actual knowledge of such
misrepresentation or breach and the Closing shall nonetheless take place; or
(B) decline to close, terminate this Agreement as provided in Section
11.1 hereof, and thereafter seek damages.
12. INDEMNIFICATION.
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
The representations, warranties, covenants and agreements of the parties
contained in Sections 3 and 4 of this Agreement or in any writing delivered
pursuant to such sections, to the extent that a breach or default in any such
representations, warranties, covenants or agreements is not as a result of
fraud, shall not terminate at, but rather shall survive, the Closing Date and
shall terminate on the date which is 24 months from the Closing; provided,
however, that such representations, warranties, covenants and agreements shall
survive as to any claim or demand made prior to 24 months from the Closing until
such claim or demand is fully paid or otherwise resolved by the parties hereto
in writing or by a court of competent jurisdiction.
12.2 INDEMNIFICATION BY 2TM. 2TM shall indemnify and hold harmless
GTW, LF, their directors and officers, and each other person, if any, who
controls GTW or LF within the meaning of the Securities Act ("Controlling
Persons") in respect of any and all claims, losses, damages, liabilities,
demands, assessments, judgments, costs and expenses (including, without
limitation, settlement costs and any legal or other expenses for investigating,
bringing or defending any actions or threatened actions) reasonably incurred by
GTW or LF, any of their directors, officers or Controlling Persons in connection
with any misrepresentation or breach of any warranty made by 2TM or 2TMD in this
Agreement or in any schedule, exhibit, certificate or other instrument
contemplated by this Agreement.
12.3 INDEMNIFICATION BY GTW AND LF. GTW and LF shall, jointly and
severally, indemnify and hold harmless 2TM in respect of any and all claims,
losses, damages, liabilities, demands, assessments, judgments, costs and
expenses (including, without limitation, settlement costs and any legal or other
expenses for investigating, bringing or defending any actions or threatened
actions) reasonably incurred by 2TM in connection with any misrepresentation or
breach of any warranty made by GTW or LF in this Agreement or in any schedule,
exhibit, certificate or other instrument contemplated by this Agreement.
12.4 CLAIMS FOR INDEMNIFICATION.
(A) Whenever any claim shall arise for indemnification under this
Section 12, the indemnified party shall describe such claim in a Notice of Claim
to the other party and, when known, specify the facts constituting the basis for
such claim and the amount or an estimate of the amount of such claim. Each
Notice of Claim shall (A) be signed by the indemnified party, (B) contain a
description of the claim, (C) specify the amount of such claim, and (D) state
that, in the opinion of the signer thereof, such Notice of Claim is valid under
the terms of Section 12 hereof, and is being given in good faith.
(B) The indemnified party shall give the other party prompt notice of
any claim for indemnification hereunder resulting from, or in connection with,
any claim or Third-Party Claim and, with respect to any Third-Party Claim, the
indemnified party shall undertake the defense thereof by representatives
reasonably satisfactory to the indemnified party and the other partie(s) hereto.
The indemnified party shall not have the right to settle or compromise or enter
into any binding agreement to settle or compromise, or consent to entry of any
judgment arising from, any such claim or proceeding in its sole discretion
without the prior written consent of the other party. Each party shall have the
right to participate in any such defense of a Third-Party Claim with advisory
counsel of its own choosing at its own expense. In the event the indemnified
party, within a reasonable time after notice of any Third-Party Claim, fails to
defend, the other party shall have the right to undertake the defense,
compromise or settlement of such Third-Party Claim on behalf of, and for the
account of, 2TM, GTW or LF, at the expense and risk of all parties to the extent
of their liability set forth in Section 12. No party shall, without the
indemnified party's written consent, settle or compromise any such Third-Party
Claim or consent to entry of any judgment that does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party, or affiliate or affiliates, as the case may be, an
unconditional release from all liability in respect of such Third-Party Claim.
12.5 ARBITRATION. If a party makes a good faith determination that a
breach (or potential breach) of any of the confidentiality, non-competition, or
intellectual property rights provisions of this Agreement by the other party may
result in damages or consequences that will be immediate, severe, and incapable
of adequate redress after the fact, so that a temporary restraining order or
other immediate injunctive relief is necessary for a realistic and adequate
remedy, that party may seek immediate injunctive relief without first seeking
relief through arbitration. After the court has ruled on the request for
injunctive relief, the parties will thereafter proceed with arbitration of the
dispute and stay the litigation pending arbitra-tion. Subject to the foregoing,
any dispute arising out of this Agreement, or its performance or breach, shall
be resolved by binding arbitration conducted by JAMS/Endispute under the
JAMS/Endispute Rules for Complex Arbitration (the "JAMS Rules"). This
arbitration provi-sion is expressly made pursuant to and shall be governed by
the Federal Arbitration Act, 9 U.S.C. Sections 1-14. The parties hereto agree
that pursuant to Section 9 of the Federal Arbitration Act, a judgment of the
United States District Courts for the Central District of California shall be
entered upon the award made pursuant to the arbitration. A single arbitra-tor,
who shall have the authority to allocate the costs of any arbitration initiated
under this paragraph, shall be selected according to the JAMS Rules within ten
(10) days of the submis-sion to JAMS/Endispute of the response to the statement
of claim or the date on which any such response is due, whichever is earlier.
The arbitrator shall conduct the arbitration in accordance with the Federal
Rules of Evidence. The arbitrator shall decide the amount and extent of
pre-hearing discovery which is appropriate. The arbitrator shall have the power
to enter any award of monetary and/or injunctive relief (including the power
issue permanent injunctive relief and also the power to reconsider any prior
request for immediate injunctive relief by either of the parties and any order
as to immediate injunctive relief previously granted or denied by a court in
response to a request therefor by either of the parties), including the power to
render an award as provided in Rule 43 of the JAMS Rules; provided, however,
that the arbitrator shall not have the power to award punitive damages under any
circumstances (whether styled as punitive, exemplary, or treble damages, or any
penalty or punitive type of damages) regardless of whether such damages may be
available under applicable law, the parties hereby waiving their rights to
recover any such damages. The arbitrator shall award the prevailing party its
costs and reasonable attorneys' fees, and the losing party shall bear the entire
cost of the arbitration, including the arbitrator's fees. All arbitration shall
be held in Orange County, California. In addition to the above court, the
arbitration award may be enforced in any court having jurisdiction over the
parties and the subject matter of the arbitra-tion. Notwithstanding the
foregoing, the parties irrevocably submit to the nonexclusive jurisdic-tion of
the state and federal courts situated where the respondent is domiciled or
resides as of the Effective Date in any action to enforce an arbitration award.
With respect to any request for immediate injunctive relief, that state and
federal courts in Orange County, California shall have exclusive jurisdiction
and venue over any such disputes.
12.6 LIMITATION ON INDEMNIFICATION. No indemnified party hereunder
will be entitled to make a claim against any indemnifying party under Section
12.2 or 12.3 unless and until (i) the aggregate amount of losses indemnifiable
by 2TM, GTW or LF exceeds Fifty Thousand Dollars ($50,000).
13. MISCELLANEOUS.
13.1 GOVERNING LAWS. It is the intention of the parties hereto that
the internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto.
13.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained herein shall be binding upon, and inure to
the benefit of, the permitted successors, executors, heirs, representatives,
administrators and assigns of the parties hereto.
13.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
13.4 ENTIRE AGREEMENT. This Agreement, the exhibits hereto, the
documents referenced herein, and the exhibits thereto, constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous agreements
or understandings, inducements or conditions, express or implied, written or
oral, between the parties with respect hereto and thereto. The express terms
hereof control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
13.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
13.6 EXPENSES. Except as provided to the contrary herein, each party
shall pay all of its own costs and expenses incurred with respect to the
negotiation, execution and delivery of this Agreement, the exhibits hereto, and
the other Transaction Documents.
13.7 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default.
13.8 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby notwithstanding any investigation of the parties hereto and shall
terminate on the date one year after the Closing Date.
13.9 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
13.10 ATTORNEYS' FEES. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party shall be entitled to recover,
as an element of the costs of suit and not as damages, reasonable attorneys'
fees to be fixed by the court (including without limitation, costs, expenses and
fees on any appeal). The prevailing party shall be the party entitled to
recover its costs of suit, regardless of whether such suit proceeds to final
judgment. A party not entitled to recover its costs shall not be entitled to
recover attorneys' fees. No sum for attorneys' fees shall be counted in
calculating the amount of a judgment for purposes of determining if a party is
entitled to recover costs or attorneys' fees.
13.11 NOTICES. Any notice provided for or permitted under this
Agreement will be treated as having been given when (a) delivered personally,
(b) sent by confirmed telex or telecopy, (c) sent by commercial overnight
courier with written verification of receipt, or (d) mailed postage prepaid by
certified or registered mail, return receipt requested, to the party to be
notified, at the address set forth below, or at such other place of which the
other party has been notified in accordance with the provisions of this Section
13.11.
2TM or 2TMD:
0XxxXxxx.xxx, Inc.
00000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn. Xxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
With copy to:
M. Xxxxxxx Xxxxxx, Esq.
Xxxxxx Law Group
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
GTW and LF:
Language Force
Xxxxxxxxx.xxx, Inc.
0000 X. Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxx X. Xxxxxxx
Facsimile No.: (000) 000-0000.
With copy to:
Xxxxxxx X. Xxx, Esq.
Xxxxx & Xxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Such notice will be treated as having been received upon actual receipt.
13.12 TIME. Time is of the essence of this Agreement.
13.13 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof shall
not be construed for or against any party. The titles and headings herein are
for reference purposes only and shall not in any manner limit the construction
of this Agreement which shall be considered as a whole.
13.14 NO JOINT VENTURE. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other. No party shall hold itself out as having any authority or
relationship in contravention of this Section 13.14.
13.15 PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
13.16 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
13.17 ABSENCE OF THIRD-PARTY BENEFICIARY RIGHTS. Except for the
agreements provided for in Section 5.2 of this Agreement, no provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any
third-party bene-ficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner of any party hereto or any other
person or entity except employees and stockholders of 2TM specifically referred
to herein, and, except as so provided, all provisions hereof shall be personal
solely between the parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
0XXXXXXX.XXX, INC. XXXXXXXXX.XXX, INC.
an Oklahoma corporation a Delaware corporation
By:/s/ Xxxxxx X. Xxxxxx By: /s/ Xxx X. Xxxxxxx
Xxxxxx X. Xxxxxx, Xxx X. Xxxxxxx,
Chairman and Chief Chairman and President
Executive Officer
0XXXXXXX.XXX, Inc. LANGUAGEFORCE, INC.
a Delaware corporation a Colorado corporation
By:/s/ Xxxxxx X. Xxxxxx By: /s/ Xxx X. Xxxxxxx
Xxxxxx X. Xxxxxx, Xxx X. Xxxxxxx,
Chairman and Chief President
Executive Officer
