EXCHANGE AGREEMENT
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EXCHANGE AGREEMENT (the "Agreement") dated as of February 10, 2000, by and
among NETWOLVES CORPORATION., a New York corporation, ("Netwolves") and
COMPUTER CONCEPTS CORP., a Delaware corporation ("CCC") and COMPUTERCOP CORP.,
a New York corporation (the "Company")
WHEREAS, CCC owns ONE HUNDRED (100) shares of common stock of the Company,
representing all of the issued and outstanding shares of the Company (the
"Company Shares").
WHEREAS, the Company is a newly-formed corporation whose assets consist
primarily of the assets of "Xx Xxxxx'x Computer Cop" and $20.5 million (the
"Business); and
WHEREAS, NetWolves is a public corporation engaged, among other things, in
the sale of internet connectivity devices called "FoxBoxes"); and
WHEREAS, the transactions contemplated by this Agreement are intended to be
a tax free exchange of stock between Computercop Shareholders and Netwolves
under either or both of sections 351 and 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended. In furtherance thereof the Computercop Shareholders
shall exchange with Netwolves at the closing of this Agreement, as defined in
Section 1.2 hereof (the "Closing"), 100% of Computercop's issued and outstanding
stock (the "Computercop Shares"). At the Closing, Netwolves will issue to the
Computercop Shareholders, a total of 1,775,000 shares of voting common stock of
Netwolves (the "Netwolves Shares") in exchange for all of the Computercop
Shares, there being no additional shares of stock issuable upon the exercise or
conversion of options, warrants, convertible debt or equity, or any other
convertible securities Computercop has outstanding. The exchange of the
Computercop Shares for Netwolves Shares shall occur simultaneously.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions, and covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 Agreement to Exchange Stock. Subject to the terms and
conditions of this Agreement and in reliance upon the representations,
warranties, covenants and agreements contained herein, at the Closing, CCC shall
,as the sole Computercop Shareholder, exchange with Netwolves 100% of
Computercop's issued and outstanding stock (the "Computercop Shares") for a
total of 1,775,000 shares of voting restricted common stock of Netwolves (the
"Netwolves Shares") free and clear of all liens, encumbrances or rights of third
parties.
SECTION 1.2 Closing. The closing (the "Closing" or "Closing Date") shall
take place at the offices of Blau, Kramer, Wactlar & Xxxxxxxxx, P. C. at such
time or place as the parties hereto shall agree. At the Closing, CCC and the
NetWolves shall deliver the documents required pursuant to Sections 4.5 through
4.12 and unless specifically otherwise provided herein, all documents to be
delivered by one party to the other party pursuant to this Agreement shall be in
form and substance reasonably satisfactory to such other party and its counsel.
SECTION 1.3 Tax Treatment. It is intended by the parties hereto that this
transaction shall be treated as an exchange of stock under the provisions of
Section 368(a)(1)(B) the Internal Revenue Code of 1986, as amended (the "Code")
and NetWolves will not make any elections under the Code which would require the
Company and/or CCC to treat this transaction as a sale of assets.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CCC AND THE COMPANY
CCC and the Company, jointly and severally, represent and warrant to
NetWolves that:
SECTION 2.1 Corporate Existence and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, and has all requisite powers and all material permits
required to own, lease and operate its properties and to conduct its business as
currently conducted. The Company is duly licensed or qualified as a foreign
corporation and is in good standing in each jurisdiction in which the Company
does business in which the failure to be so qualified could have a material
adverse effect on the business, assets, or results of operations of the Company.
As of the date of this Agreement, the authorized capital stock of the Company
consists of TWO HUNDRED (200) shares without par value of which ONE HUNDRED
(100) shares are issued and outstanding. There are no outstanding options,
warrants, commitments, agreements or any other rights of any character entitling
any person to acquire the shares or any of the capital stock or other interest
in the Company or any proxy, agreement, arrangement or understanding of any kind
which affects the right to vote any shares of the Company. The Company Shares
have been duly authorized and validly issued and are fully paid and non-
assessable.
SECTION 2.2 Authority and Ownership of Shares.
(A) CCC and the Company have full power, capacity and authority to execute
and deliver this Agreement and each of the other documents to which it is a
party and to consummate the contemplated transactions. No other proceedings are
necessary to authorize the execution and delivery of this Agreement or the other
transaction documents to which they are a party or the consummation of the
contemplated transactions. This Agreement and the other documents to which the
CCC and the Company are a party have been duly and validly executed and
delivered by the CCC and the Company and (assuming the valid execution and
delivery thereof by NetWolves) constitute the legal, valid and binding
agreements of the CCC and the Company, enforceable against each of them in
accordance with their respective terms, except as such obligations and their
enforceability may be limited by applicable bankruptcy and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.
(B) All outstanding capital stock and any other outstanding securities of
the Company were issued in compliance with all federal and state securities
laws. CCC is the lawful, registered and beneficial owners of ONE HUNDRED (100)
shares of common stock of the Company representing all of the issued and
outstanding capital stock of the Company, CCC has and will convey to NetWolves
good title to the Company Shares, free and clear of any security interest,
claim, lien, pledge, option, warrant, encumbrance or restriction whatsoever.
There are no rights, subscriptions, warrants, options, conversion rights,
commitments or agreements of any kind authorized or outstanding to purchase or
otherwise acquire from the CCC, the Company or any other person, any shares of
stock, or securities or obligations of any kind convertible into or exchangeable
for any shares of stock, of any class of the Company or any other equity
interest in the Company. There is no proxy, or any agreement, arrangement or
understanding of any kind authorized or outstanding which restricts, limits or
otherwise affects the right to vote any of the Company Shares or other
securities of the Company.
SECTION 2.3 No Conflicts; Consents. Neither the execution, delivery and
performance of this Agreement and each other document to which they are a party,
nor the consummation of the contemplated transactions (i) violates any provision
of the Certificate of Incorporation or by-laws (or comparable instruments) of
CCC or the Company; (ii) requires CCC or the Company to obtain any consent,
approval, permit or action of or waiver from, or make any filing with, or give
any notice to, any governmental body or any other person; (iii) with or without
the giving of notice or the passage of time or both violates, conflicts with or
results in a breach or default under, or permits or results in the termination
or suspension of, any contract, right, other obligation or restriction relating
to or which affects CCC or the Company or to which CCC or the Company is a
party, or by which CCC or the Company or its assets may be bound or subject, or
results in the creation of any lien upon the assets of CCC or the Company
pursuant to the terms of any such contract; or (iv) violates any law or order of
any governmental body against, or binding upon, CCC and/or the Company.
SECTION 2.4 Corporate Records. The Certificate of Incorporation, By-Laws,
stock and transfer books (or comparable documents) and minutes of the board of
directors and shareholders meetings of the Company have been made available to
NetWolves for inspection and are true and complete.
SECTION 2.5 Financial Information. (a) CCC has delivered its financial
statements at and for the year ended December 31, 1998 and for the nine month
period ended September 30, 1999 (the "Financial Statements") ; (b) attached
hereto as Exhibit 2.5(b)is a balance sheet of the Company as at February 10,
2000 (Balance Sheet"). The Financial Statements and Balance Sheet were prepared
from the books and records of the Company and present fairly the financial
position of the Company as of its date, and its earnings and cash flow for the
periods then ended.
SECTION 2.6 Liabilities. Except as and to the extent reflected in the
Financial Statements, Balance Sheet or in Schedule 2.6, neither CCC nor the
Company has any liabilities or obligations of any nature, whether absolute,
contingent or otherwise (other than obligations entered into in the ordinary
course of business) affecting the Business or assets of the Company; and neither
CCC nor the Company has incurred any liabilities since the September 30, 1999
Financial Statement affecting the Business or assets of the Company, except
current liabilities for trade or business obligations incurred in connection
with the purchase of goods or services in the ordinary course of business.
SECTION 2.7 Absence of Certain Changes. Since the Financial Statements and
Balance Sheet, except as set forth in this Agreement, the Company has conducted
business in the ordinary course consistent with past practices and there has not
been:
(A) Any material adverse change in the Business, or the assets, financial
condition, prospects or the results of operations of the Company or any event,
occurrence or circumstance that could reasonably be expected to cause such a
material adverse change;
(B) Any transaction or contract with respect to the purchase, acquisition,
lease, disposition or transfer of any assets or to any capital expenditure (in
each case, other than in the ordinary course of business in accordance with past
practice) or creation of any lien on any asset;
(C) Any declaration, setting aside or payment of any dividend or other
distribution with respect to any interest in the Company;
(D) Any damage, destruction or other casualty loss (whether or not covered
by insurance), condemnation or other taking affecting the assets of the Company.
SECTION 2.8 Properties; Title.
(A) Schedule 2.8(A) Sets forth a complete list and general description of
all real property leased by the Company (the "Leased Property"). Said leases
shall terminate at the Closing with the Company having no further liability
thereunder. The Company does not own any real property of any kind, nor does it
have any interests in real property, of record or beneficially.
(B) The Company has good, valid, marketable, legal and beneficial title to
(or valid leasehold interest in) all of its assets and is the lawful owner of
its assets, free and clear of all security interests, restrictions, liens and
encumbrances, except where the failure to have such title does not have a
material adverse effect on the Company. The machinery, equipment and other
tangible personal property constituting part of the Company's assets (whether
owned or leased) (i) have been maintained in accordance with industry standards;
(ii) are in good condition and repair (subject to normal wear and tear); (iii)
are adequate in quantity and quality to carry on the business of the Company as
it is now being conducted and for the continued operation of the business as
presently conducted; and (iv) comply with all applicable federal, state and
local laws, ordinances, rules and regulations.
SECTION 2.9 Intangible Property. Schedule 2.9 sets forth a true, correct
and complete list of all trademarks, registered copyrights, service marks or
trade names (and all applications for any of the foregoing), permits, grants and
licenses and all other intangible assets, properties and rights running to or
from, or used by, the Company in the conduct of the Business, and there are no
other trademarks, copyrights, service marks, trade names or other intangible
assets, properties or rights that are material to the Business (the
"Intellectual Property Rights").
(A) The Company owns all right, title and interest, or possesses adequate
rights, in and to the Intellectual Property Rights necessary to conduct its
business and there are no agreements, arrangements, claims or any other rights
of any character entitling any person other than the Company to any interest in
the Intellectual Property Rights;
(B) The Intellectual Property Rights do not infringe on or conflict with
the rights or intellectual property of third parties, and the Company has not
received any notice contesting the Company's right to use any such Intellectual
Property Rights;
(C) The Intellectual Property Rights have not been and are not the subject
of any pending or threatened litigation or claim of infringement;
(D) The Company has not granted any license or agreed to pay or receive any
royalty in respect of any Intellectual Property Rights; and
(E) The contemplated transactions will not adversely affect the right,
title and interest of the Company in and to the Intellectual Property Rights.
(F) All of such Intellectual Property Rights are valid, enforceable and in
good standing and sufficient and appropriate for the conduct of the company's
business as conducted currently.
SECTION 2.10 Claims and Proceedings. There are no outstanding orders of any
governmental body against or involving the Company or the business or assets of
the Company. There are no actions, suits, claims or counterclaims or legal,
administrative or arbitration proceedings or investigations (collectively,
"Claims") pending or, to CCC's knowledge, threatened on the date hereof, against
or involving the Company or the Company's Business or assets. There exists on
the date hereof, and there will exist as of the Closing, no fact, event or
circumstance known to CCC that would give rise to any Claim that, if pending or
threatened on the date hereof or on the Closing Date, could reasonably be
expected to have an adverse effect on the condition of the Company or on its
business, prospects, reputation, earnings or assets or result in any liability
on the part of the Company or prevent, hinder or delay the execution and
performance of this Agreement or any of the transactions contemplated hereby, or
could declare this Agreement unlawful or cause the rescission of any of the
transactions hereunder. Neither CCC nor the Company have not been charged with
or received notice of any violation of any applicable federal, state, local or
foreign law, rule, regulation, ordinance, order or decree relating to it, or the
operation of its business, and neither CCC nor the Company is aware of any
threatened claim of such violation.
SECTION 2.11 Taxes. As of the date hereof:
(A) In all jurisdictions in which CCC or the Company is required to do so,
CCC and the Company have timely filed or, if not yet due will timely file, all
tax returns required to be filed by it for all taxable periods ending on or
before the Closing Date and all such tax returns are, or will be when filed,
true, correct and complete;
(B) There are no tax liens on or pending against CCC, the Company or any of
their respective properties;
(C) CCC and the Company have complied with all applicable laws, rules and
regulations relating to the withholding and payment of taxes and has timely
withheld and paid to the proper governmental authorities all amounts required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor or shareholder;
(D) CCC is not a person other than a United States person within the
meaning of the Internal Revenue Code; and
(E) CCC and the Company have collected and remitted to the appropriate tax
authority all sales and use or similar taxes required to have been collected on
or prior to the Closing Date, including any interest and any penalty.
The U.S. federal income tax returns and state and local income tax returns
of CCC and the Company have not been audited by the Internal Revenue Service or
other taxing authority within the past five years. Neither the Internal Revenue
Service nor any state, local or other taxing authority has proposed any
additional taxes, interest or penalties with respect to CCC or the Company or
any of their respective operations or business; there are no pending or
threatened tax claims or assessments against CCC or the Company; and there are
no pending or threatened tax examinations against CCC or the Company by any
taxing authorities.
Neither CCC nor the Company have given any waivers or rights (which are
currently in effect) under applicable statutes of limitations with respect to
the federal income tax returns for any fiscal year. Neither CCC nor the Company
have consented to the application of Section 341(f) of the Code.
SECTION 2.12 Employees.
There are no employees of the Company. The Company has not at any time
maintained, contributed to or participated in, (ii) has or had at any time any
obligation to maintain, contribute to or participate in, or (iii) have any
liability or contingent liability, direct or indirect, with respect to any
employee benefit plan, retirement or deferred compensation plan, incentive
compensation plan, stock plan, severance plan, bonus plan, stock compensation
plan or any other type or form of employee-related arrangement, program, policy,
plan or agreement (collectively referred to herein as the "Employee Benefit
Plans").
SECTION 2.13 Employee-Related Matters.
(A) Schedule 2.13 contains a true and correct list of all directors and
officers of the Company.
(B) (i) Neither CCC nor the Company is a party to any contract with any
labor organization or other representative of its employees; (ii) there is no
unfair labor practice charge or complaint pending or, to the knowledge of CCC or
the Company, threatened against CCC or the Company; (iii) neither CCC nor the
Company has experienced any labor strike, slowdown, work stoppage or similar
labor controversy within the past three (3) years; (iv) no representation
question has been raised respecting any of CCC or the Company employees working
within the past three (3) years, nor, to the knowledge of CCC or the Company are
there any campaigns being conducted to solicit authorization from CCC or the
Company's employees to be represented by any labor organization; (v) no claim
before any governmental body brought by or on behalf of any employee, labor
organization or other representative of CCC or the Company's employees, is
pending or, to the knowledge of CCC or the Company, threatened against the CCC
or Company; (vi) neither CCC nor the Company is a party to, or otherwise bound
by, any order relating to its employees or employment practices; and (vii)
except with respect to ongoing disputes of a routine nature involving
individually or in the aggregate immaterial amounts, CCC and the Company have
paid in full to all of its employees all wages, salaries, commissions, bonuses,
benefits and other compensation due and payable to such employees.
SECTION 2.14 Insurance. True and complete copies of all insurance policies
covering the operations of the Company's business have been made available to
NetWolves. There is no claim by CCC or the Company pending under any of such
insurance policies as to which coverage has been questioned, denied or disputed
by the underwriters of such insurance policies or requirement by any insurer to
perform work which has not been satisfied. All premiums due under all insurance
policies have been paid and CCC and the Company are otherwise in compliance with
the terms and conditions of all such insurance policies. All insurance policies
are in full force and effect and no notice has been received canceling or
threatening to cancel or refusing to renew any such insurance.
SECTION 2.15 Compliance with Laws. Neither CCC nor the Company are in
violation of any order, judgment, injunction, award, citation, decree, consent
decree or writ (collectively, "Orders"), or any law, statute, code, ordinance,
rule, regulation or other requirement (collectively, "Laws"), of any government
or political subdivision thereof, whether federal, state, local or foreign, or
any agency or instrumentality of any such government or political subdivision,
or any court or arbitrator affecting the Company's assets or its Business.
SECTION 2.16 Permits. CCC and the Company have obtained all licenses,
permits, certificates, certificates of occupancy, orders, authorizations and
approvals of all governmental bodies (collectively, "Permits") and have made all
required registrations and filings with, any governmental body that are required
for the conduct of the Company's Business. All Permits that are required for the
conduct of the business are in full force and effect; no violations are or have
been recorded in respect of any Permit; and no proceeding is pending or
threatened to revoke or limit any Permit. No Permit will terminate by reason of
the contemplated transactions.
SECTION 2.17 Environmental Matters. To the best of their knowledge:
(A) CCC, the Company, and all of the properties and assets owned and
operated by the Company are in full compliance with all Environmental Laws;
(B) There have been no reportable Releases of Hazardous Substances on or
from any of the assets or properties currently or formerly owned, leased or
operated by CCC or the Company or violations of Environmental Laws alleged by
regulatory authorities or any third-party against CCC or the Company;
(C) There are no outstanding or threatened Environmental Actions against
CCC or the Company. Neither CCC nor the Company have not received notice of a
violation or of a claim of potential or actual liability by any regulatory
authority or third-party against CCC or the Company under Environmental Laws,
nor are any such potential claims known to CCC or the Company;
(D) None of the sites or facilities leased or operated by CCC or the
Company are or have been used by CCC or the Company to generate, manufacture,
process, refine, store, handle, use or dispose of any Hazardous Substances;
(E) "Environmental Laws" means any and all Laws (including common law),
orders, permits, agreements or any other requirement or restriction promulgated,
imposed, enacted or issued by any federal, state, local and/or foreign
governmental bodies relating to human health or the environment, including the
emission, discharge or Release of pollutants, contaminants, Hazardous Substances
or wastes into the environment, and the remediation thereof, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation thereof.
(F) "Hazardous Substances" means any dangerous, toxic, radioactive, caustic
or otherwise hazardous material, pollutant, contaminant, chemical, waste or
substance defined, listed or described as any of such in or governed by any
Environmental Law, including but not limited to, urea- formaldehyde,
polychlorinated biphenyls, asbestos or asbestos-containing materials, radon,
explosives, known carcinogens, and petroleum and its derivatives.
(G) "Release" means the intentional or unintentional, spilling, leaking,
disposing, discharging or disturbance of, or emitting, depositing, injecting,
leaching, escaping or any other release or threatened release of any Hazardous
Substance.
(H) "Environmental Actions" refers to any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other communication from any federal, state, local or
municipal agency, department, bureau, office or other authority or any third
party involving a Hazardous Discharge or any violation of any order, permit or
Environmental laws.
SECTION 2.18 Conduct of Business.
Except as set forth in the Company's Form 8-K with respect to its tender to
EMC Corp. of its common stock in Softworks, Inc., since September 30, 1999,
neither CCC nor the Company have, with respect to the Business and/or assets of
the Company: (i) created or incurred any liability (absolute, accrued,
contingent or otherwise) except unsecured current liabilities incurred in the
ordinary course of business consistent with past practice; (ii) mortgaged,
pledged or subjected to any lien or otherwise encumbered any of its assets,
tangible or intangible; (iii) discharged or satisfied any lien or encumbrance or
paid any obligation or liability (absolute, accrued, contingent or otherwise);
(iv) waived, released or compromised any claims or rights of substantial value,
or experienced any labor trouble (including without limitation any actual or
threatened strike or lock-out) or lost, or been threatened with the loss of, any
key employees or any substantial number of employees; (v) entered into any
settlement, compromise or consent with respect to any claim, proceeding or
investigation; (vi) sold, assigned, transferred, leased or otherwise disposed of
any of its assets, tangible or intangible, or canceled any debts or claims
except, in each case, for fair consideration in the ordinary course of business;
(vii) declared or paid any dividends, or made any other distribution on or in
respect of, or directly or indirectly purchased, retired, redeemed or otherwise
acquired any shares of its capital stock, paid any notes or open accounts or
paid any amount or transferred any asset to any of the Company's stockholders or
any member of any stockholder's families; (viii) other than in the ordinary
course of business, made or become a party to, or become bound by, any contract
or commitment or renewed, extended, amended, modified or terminated any contract
or commitment which in any one case involved an amount in excess of $25,000 (or
in the aggregate an amount in excess of $100,000); (ix) made or announced any
change in the form or manner of distribution of any of its products or services;
(x) changed any of its accounting methods or principles used in recording
transactions on its books or records or in preparing the Financial Statements or
Balance Sheet; or (xi) entered into any contract or commitment to do any of the
foregoing.
SECTION 2.19 Material/Service Agreements; Other Contracts.
(A) The Company is not a party to or bound by any oral or written
contracts, obligations or commitments with respect to or relating to the
Business or assets of the Company, including, but not limited to, the following:
(i) contract, commitment or arrangement involving, in any one case, $10,000
or more;
(ii) contract with a term of, or requiring performance, more than six
months from its date;
(iii) lease or lease purchase agreement, mortgage, conditional sale or
title retention agreement, indenture, security agreement, credit agreement,
pledge or option with respect to any property, real or personal (tangible or
intangible), in any capacity;
(iv) commitment, contract or undertaking for the purchase or use of
services, materials, supplies, inventory, machinery or equipment and involving
more than $10,000;
(v) employment contract, undertaking, understanding or arrangement;
(vi) note, loan, credit or financing agreement or other contract for money
borrowed, and all related security agreements and collateral documents,
including any agreement for any commitment for future loans, credit or
financing;
(vii) guarantees;
(viii) contract or understanding regarding any capital expenditures in
excess of $10,000;
(ix) agency (sales or otherwise), distribution, brokerage (including,
without limitation, any brokerage or finder's agreement or arrangement with
respect to any of the transactions contemplated by this Agreement) or
advertising agreement;
(x) contract with investment bankers, accountants, attorneys, consultants
or other independent contractors, including those relating to this Agreement;
(xi) shareholder agreement or contract with or among the stockholders of
the Company (or family member thereof), directors or officers of the Company or
any affiliate of such persons which would survive this Agreement;
(xii) contract, commitment or arrangement which would restrain the Company
from engaging or competing in any business or to maintain the confidentiality of
any matter;
(xiii) license, franchise or royalty agreement.
(B) Except as specifically set forth on Schedule 2.19(A) (the "Scheduled
Contracts")consummation of the transactions contemplated by this Agreement are
not a violation of or grounds for the modification or cancellation of any of the
Scheduled Contracts or for the imposition of any penalty or security interests
thereunder. CCC and/or the Company enjoys good working relationships under all
Scheduled Contracts, and no unresolved disputes are pending or, to the best of
CCC and the Company's knowledge, threatened under or in respect of any such
Scheduled Contracts. The consideration to be received or paid by CCC or the
Company under each of the Scheduled Contracts has been determined in accordance
with its established policies. Neither CCC nor the Company has any outstanding
power of attorney other than routine power of attorney relating to
representation before governmental agencies or given in connection with
qualification to do business in another jurisdiction.
Except as described in Schedule 2.19(A), all Scheduled Contracts
described in such Schedules are valid and enforceable in accordance with their
respective terms, except as the enforcement thereof may be subject to or limited
by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights generally now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies; and there is not, under any of such documents or agreements
or any obligation, or covenant or condition contained therein, any existing
default by CCC or the Company, or to CCC or the Company's knowledge, by any
other party, or any event which with notice, lapse of time, or both, would
constitute a default and which would have a material adverse effect on the
continued operation of the Company or its business.
SECTION 2.20 Warranties. There are no claims in excess of $10,000
concerning product liability or arising from services provided which have been
made against the Company during the past three years.
SECTION 2.21 Finders' Fees. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of CCC or the Company who might be entitled to any fee or commission from
NetWolves upon consummation of the contemplated transactions.
SECTION 2.22 Depositories; Powers of Attorney, Etc. Schedule 2.22 sets
forth (i) the name of each bank or similar entity in which CCC or the Company
has an account, lock box or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto, and (ii) the name of each
person holding a general or special power of attorney from the Company and a
description of the terms thereof.
SECTION 2.23. Investment. CCC represents that it is acquiring the NetWolves
shares for its own account for investment and not with a view to or for sale in
connection with any distribution thereof, nor with any present intention of the
distributing or selling the NetWolves stock. It is understood and agreed that
the following restrictive legend will be placed on the NetWolves stock:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT OF 1933 OR
AN OPINION OF THE COMPANY'S COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT."
SECTION 2.24 Disclosure. Neither this Agreement, the Schedules hereto, nor
any documents or certificates furnished or to be furnished to NetWolves or any
of their representatives or affiliates by or on behalf of CCC or the Company
pursuant to this Agreement or in connection with the contemplated transactions
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NETWOLVES
NetWolves represents and warrants to the CCC that:
SECTION 3.1 Corporate Existence and Power. NetWolves is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, and has all requisite powers and all material permits required to own,
lease and operate its properties and to conduct its business as currently
conducted. NetWolves is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary.
SECTION 3.2 Authority. NetWolves has full power, capacity and authority to
execute and deliver this Agreement and each of the other documents to which it
is a party and to consummate the contemplated transactions. No other proceedings
on the part of NetWolves are necessary to authorize the execution and delivery
by NetWolves of this Agreement or the other transaction documents to which they
are a party or the consummation of the contemplated transactions. This Agreement
and the other documents to which NetWolves is a party have been duly and validly
executed and delivered by NetWolves and (assuming the valid execution and
delivery thereof by CCC and the Company) constitute the legal, valid and binding
agreements of NetWolves, enforceable against it in accordance with its
respective terms, except as such obligations and their enforceability may be
limited by applicable bankruptcy and other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 3.3 No Conflicts; Consents. Neither the execution, delivery and
performance by NetWolves of this Agreement and such other documents to which it
is a party, nor the consummation of the contemplated transactions (i) violates
any provision of the Certificate of Incorporation or by-laws (or comparable
instruments) of NetWolves; (ii) requires NetWolves to obtain any consent,
approval, permit or action of or waiver from, or make any filing with, or give
any notice to, any governmental body or any other person; (iii) requires the
approval of the shareholders of NetWolves; (iv) violates, conflicts with or
results in a breach or default under (after the giving of notice or the passage
of time or both), or permits the termination of, any contract, right, other
obligation or restriction relating to or which affects NetWolves or to which
NetWolves is a party, or by which it or its assets may be bound or subject, or
results in the creation of any lien upon any of the assets of NetWolves pursuant
to the terms of any such contract; or (v) violates any law or order of any
governmental body against, or binding upon, NetWolves or upon its respective
assets.
SECTION 3.4 Financial Information. Attached as Schedule 3.4 are true and
complete copies of NetWolves's audited financial statements at and for the year
ended June 30, 1999 and Financial Statements for the additional three (3) months
period ending September 30, 1999 (the "NetWolves Financial Statements").
NetWolves's Financial Statements have been prepared in accordance with GAAP
consistently applied as set forth in the notes thereto and were audited by the
Company's accountants. For the relevant periods, NetWolves's Financial
Statements: (1) are complete and correct in all material respects; (2) present
fairly the financial position of NetWolves at such dates and the results of
operations and cash flows for the respective periods ended on such dates; and
(3) are in accordance with the books and records maintained by NetWolves, with
no differences between such Financial Statements and the financial records
maintained and accounting methods applied by NetWolves for tax purposes, except
as disclosed in the notes to the Financial Statements. Notwithstanding the
foregoing, CCC and the Company have been made aware that adjustments may be
required as a result of comment letters received from the Securities and
Exchange Commission and acknowledge that they have been provided with copies of
such comment letters.
SECTION 3.5 Claims and Proceedings. There are no outstanding orders of any
governmental body against or involving NetWolves. There are no Claims pending
or, to NetWolves's knowledge, threatened on the date hereof, against or
involving NetWolves. There exists on the date hereof, and there will exist as of
the Closing, no fact, event or circumstance known to NetWolves that would give
rise to any Claim that, if pending or threatened on the date hereof or on the
Closing Date, could reasonably be expected to prevent, hinder or delay the
execution and performance of this Agreement or any of the transactions
contemplated hereby, or could declare this Agreement unlawful or cause the
rescission of any of the transactions hereunder. NetWolves has not been charged
with or received notice of any violation of any applicable federal, state, local
or foreign law, rule, regulation, ordinance, order or decree relating to it, or
the operation of its business, and NetWolves is not aware of any threatened
claim of such violation.
SECTION 3.6 Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of NetWolves who might be entitled to any fee or commission from CCC or the
Company upon consummation of the contemplated transactions.
SECTION 3.7 Disclosure. Neither this Agreement, the Exhibits hereto, nor
any documents or certificates furnished or to be furnished to the CCC or the
Company or any of their representatives by or on behalf of NetWolves pursuant to
this Agreement or in connection with the contemplated transactions contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
ARTICLE IV
CONDITIONS TO EFFECTIVENESS OF SALE
SECTION 4.1 Conditions to the Obligations of CCC and NetWolves. The
obligations of CCC and NetWolves to consummate the contemplated transactions are
subject to the satisfaction of the following conditions on or prior to the
Closing Date:
SECTION 4.2 No Injunction. No provision of any applicable law and no order
shall prohibit the consummation of the contemplated transactions.
SECTION 4.3 No Proceeding or Litigation. No claim instituted by any person
shall have been commenced or be pending against CCC, the Company or NetWolves or
any of their officers or directors which claim seeks to restrain, prevent,
change or delay in any material respect the contemplated transactions or seeks
to challenge any of the material terms or provisions of this Agreement or seeks
material damages in connection with any of such transactions.
SECTION 4.4 Representations and Warranties, Performance. The
representations and warranties of the parties contained in this Agreement and in
any certificate or other writing delivered by any of the parties pursuant hereto
shall be true in all material respects at and as of the Closing Date as if made
at and as of such time except as affected by the transactions contemplated
hereby. The parties shall have duly performed and complied with all covenants,
agreements, and conditions respectively required of them by this Agreement to be
performed or complied with on or prior to the Closing Date.
SECTION 4.5 Delivery of Shares. There shall have been delivered to
NetWolves the Company Shares properly endorsed by CCC and there shall have been
delivered to CCC the NetWolves shares.
SECTION 4.6 Registration Rights Agreement. NetWolves shall have executed a
registration rights agreement in the form annexed hereto on Schedule 4.6.
SECTION 4.7 Voting Trust Agreement. CCC shall have executed a Voting Trust
Agreement in the form annexed hereto on Schedule 4.7.
SECTION 4.8 Intellectual Property Agreement. CCC and NetWolves shall have
executed an Intellectual Property Agreement in the form annexed hereto on
Schedule 4.8.
SECTION 4.9 Legal Opinions. CCC and NetWolves shall each have received
opinions from counsel addressed to the other party substantially in the form
annexed hereto on Schedule 4.9.
SECTION 4.10 Documentation. There shall have been delivered to the
respective parties at the Closing the following:
(A) To CCC, a certificate, dated the Closing Date, of the Secretary of
NetWolves certifying to all corporate actions taken by NetWolves, including
resolutions of its board of directors authorizing the consummation of the
contemplated transactions and the execution, delivery and performance of this
Agreement and each other transaction document to be delivered by NetWolves
pursuant hereto.
(B) To CCC good standing certificates of NetWolves from the Secretary of
State of the states of New York and Florida.
(C) To NetWolves a certificate, dated the Closing Date, of the Secretary of
CCC certifying to all corporate actions taken by CCC, including resolutions of
its board of directors authorizing the consummation of the contemplated
transactions and the execution, delivery and performance of this Agreement and
each other transaction document to be delivered by CCC pursuant hereto.
(D) To NetWolves, good standing certificates of CCC from the Secretary of
State of the states of New York and Delaware.
(E) To NetWolves, written resignations effective as of the Closing Date of
all directors, officers, trustees and bank signatories of the Company as well as
written instructions to each bank at which the Company has an account or credit
facility or at which the Company rents a safe deposit box informing such bank of
the said resignations and revoking the authority of said persons to act with
respect to said account, credit facility or trust and to have access to said
safe deposit box. In addition, there shall also be delivered to NetWolves
effective the Closing Date the written surrender of all persons holding powers
of attorney from the Company of their authority and power to act under such
powers of attorney.
(F) To NetWolves, the minute books, certificate of incorporation, by-laws,
stock certificate and transfer books, stock ledgers, financial and other
corporate records and the corporate seal of the Company.
ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES
SECTION 5.1 Confidentiality. Each of the Parties for themselves, and each
of their respective Representatives and affiliates, covenants and agrees that it
shall treat and safeguard as confidential and secret and shall not use or
disclose to others any proprietary or confidential information (the "Protected
Information") disclosed to it, its agents, representatives, officers, directors,
employees or advisors with respect to the transactions contemplated herein. Each
of the parties and their affiliates shall return to the others all Protected
Information furnished to any of them or any of their agents, representatives,
officers, directors, employees or advisors by the others or their agents,
representatives, officers, directors, employees or advisors and shall maintain
such confidentiality until the Closing Date, except as required by applicable
legal requirements. For purposes of this Section 5.1, Protected Information
shall not include any information which is, at the time of its disclosure, in
the public domain or otherwise becomes available to a party on a non-
confidential basis from an independent source which is not prohibited from
revealing such information.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES,
COVENANTS AND AGREEMENT
SECTION 6.1 Survival of Representations and Warranties.
Except as expressly provided in this Agreement, all representations,
warranties and covenants made hereunder or pursuant hereto or in connection with
the transactions contemplated hereby shall not terminate, but shall survive the
Closing and continue in effect until the expiration of three (3) years following
the Closing Date, at which time they shall expire; provided, however, that any
such representation or warranty as to which a claim shall have been asserted
during such survival period shall continue in effect until such time as such
claim shall have been resolved or settled. Any representation and warranty given
or made herein or in any other document or agreement shall be deemed to have
been relied upon by the recipient notwithstanding any investigation or
inspection made by or on behalf of such recipient and/or the knowledge obtained
or possessed by such recipient as of the Closing Date as a result of such
inspection or investigation or otherwise.
ARTICLE VII
INDEMNIFICATION
SECTION 7. Indemnification.
7.1 Obligation of CCC to Indemnify. CCC hereby agrees to indemnify,
defend and hold harmless NetWolves (and their respective directors, officers,
employees, affiliates, successors and assigns) from and against all claims,
losses, liabilities, damages, deficiencies, judgments, settlements, costs of
investigation or other expenses (including interest, penalties and reasonable
attorneys' fees and disbursements and expenses incurred in enforcing this
indemnification or in any litigation between the parties or with third parties)
(collectively, the "Losses") suffered or incurred by NetWolves or any of the
foregoing persons arising out of any breach of the representations, warranties,
covenants and agreements of CCC contained in this Agreement or the exhibits
hereto.
7.2 Obligation of NetWolves to Indemnify. NetWolves hereby agrees to
indemnify, defend and hold harmless CCC from and against any Losses suffered by
CCC by reason of any breach of the representations and warranties, covenants,
and agreements of NetWolves contained in this agreement or the schedules hereto.
7.3 Notice and Opportunity to Defend Third-Party Claims.
(A) Promptly after receipt by any party hereto (the "Indemnitee")
of notice of any demand, claim, or circumstance which would or might give rise
to a claim or the commencement (or threatened commencement) of any action,
proceeding or investigation (an "Asserted Liability") that may result in a Loss,
the Indemnitee shall give notice thereof (the "Claims Notice") to the party or
parties obligated to provide indemnification pursuant to Section 7.1 or 7.2 (the
"Indemnifying Party"). The Claims Notice shall describe the Asserted Liability
in reasonable detail and shall indicate the amount (estimated, if necessary, and
to the extent feasible) of the Loss that has been or may be suffered by the
Indemnitee. The failure to notify the Indemnifying Party timely or in the manner
described hereunder shall preclude indemnification otherwise available only if
and to the extent that the Indemnifying Party is actually prejudiced thereby.
(B) The Indemnifying Party may elect to defend, at its own
expense and with its own counsel, any Asserted Liability. If the Indemnifying
Party elects to defend such Asserted Liability, it shall within thirty (30) days
(or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the defense of such Asserted Liability. If
the Indemnifying Party elects not to defend the Asserted Liability, fails to
notify the Indemnitee of its election as herein provided or contests its
obligation to indemnify under this Agreement with respect to such Asserted
Liability, the Indemnitee may pay, compromise or defend such Asserted Liability
at the sole cost and expense of the Indemnifying Party. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim without the consent or approval of the other, which consent
or approval shall not be unreasonably withheld or delayed. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability. If the Indemnifying Party chooses to
defend any Asserted Liability, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its control that
are necessary or appropriate for such defense. Any expenses of any Indemnitee
for which indemnification is available hereunder shall be paid upon written
demand therefor.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices.
(A) Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered by recognized overnight courier, or mailed
(by registered or certified mail, postage prepaid) as follows:
(i) If to NetWolves:
NetWolves Corporation
000 Xxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Xx., Chairman of the Board
with copy to:
Blau Xxxxxx Xxxxxxx & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxxx, Esq.
(ii) If to the CCC:
Computer Concepts Corp.
00 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. XxxXxxxxx, President
with copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
(B) Each such notice or other communication shall be effective when
delivered at or mailed to the address specified in Section 8.1(A). Any party by
notice given in accordance with this Section 8.1 to the other party may
designate another address or person for receipt of notices hereunder. Notices by
a party may be given by counsel to such party.
SECTION 8.2 Entire Agreement. This Agreement (including the Schedules
hereto) and the collateral agreements executed in connection with the
consummation of the contemplated transactions contain the entire agreement
between the parties with respect to the subject matter hereof and related
transactions and supersede all prior agreements, written or oral, with respect
thereto.
SECTION 8.3 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended only by a written instrument signed by
the parties hereto. The provisions hereof may be waived in writing by the
parties hereto. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
Except as otherwise provided herein, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
SECTION 8.4 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State, without regard to the
conflict of laws rules thereof.
SECTION 8.5 Consent to Jurisdiction and Service of Process. For all matters
not covered by Section 8.10, the parties hereto irrevocably: (a) agree that any
suit, action or other legal proceeding arising out of this Agreement may be
brought in the courts of the State of New York or the courts of the United
States located in the State of New York (b) consent to the jurisdiction of each
court in any such suit, action or proceeding, (c) waive any objection which
they, or any of them, may have to the laying of venue of any such suit, action
or proceeding in any of such courts, and (d) waive the right to a trial by jury
in any such suit, action or other legal proceeding.
SECTION 8.6 Binding Effect; No Assignment. This Agreement and all of its
provisions, rights and obligations shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs and legal
representatives. This Agreement may not be assigned and any purported
assignment, unless consented to by the non-assigning parties, shall be void and
without effect. Nothing herein express or implied is intended or shall be
construed to confer upon or to give anyone other than the parties hereto and
their respective heirs, legal representatives and successors any rights or
benefits under or by reason of this Agreement and no other party shall have any
right to enforce any of the provisions of this Agreement.
SECTION 8.7 Schedules. All Schedules attached hereto are hereby
incorporated by reference into, and made a part of, this Agreement.
SECTION 8.8 Severability. If any provision of this Agreement for any reason
shall be held to be illegal, invalid or unenforceable, such illegality shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such illegal, invalid or unenforceable provision had never been
included herein.
SECTION 8.9 Counterparts. The Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
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 the signatories.
SECTION 8.10 Arbitration Clause. All disputes or controversies (whether of
law of fact) of any nature whatsoever arising from or relating to this Agreement
and the transactions contemplated hereby shall be decided by arbitration by the
American Arbitration Association (the "Association") in accordance with the
rules and regulations of the Association, except that either party shall have
the right to seek equitable relief independently, including, but not limited to,
temporary restraining orders, provisional and/or permanent injunctive relief,
specific performance or any other equitable remedy as may be appropriate to
enforce or prevent the violation of, any of the terms and conditions of this
Agreement.
In the event a dispute or controversy arises, either party may
submit the dispute to the American Arbitration Association in Garden City, New
York for arbitration in accordance with and subject to the rules of the American
Arbitration Association then in effect. The parties agree that the arbitration
shall be conducted before three (3) arbitrators. Additionally, the parties agree
that prior to the conduct of hearings, they will cooperate in the exchange of
documents, exhibits and information pursuant to detailed demands therefor, and
such other discovery as they may agree upon or the arbitrators may deem
appropriate in the circumstances. The decision of a majority of the arbitrators
shall be rendered within sixty (60) days after the close of hearings and shall
be binding upon all parties, and a judgment or decree upon the decision rendered
by the arbitrators may be entered in any court of competent jurisdiction. Each
party required to participate shall be responsible for its or his pro rata share
of the fees and costs of arbitration, including, but not limited to, the cost of
a full stenographic record of the proceedings which the parties hereby agree in
advance will be required; provided, however, that the arbitrators shall be
authorized to award legal fees and costs to the prevailing party, based upon
their consideration of the merits of the claims, the merits of the defenses, and
the results obtained from the arbitration.
At the request of any party, arbitration proceedings shall be
conducted confidentially; in which case all documents, testimony and records
shall be received, heard and maintained by the arbitrators in confidence under
seal, available for inspection only by the Association, the parties and their
respective attorneys and experts, each of whom shall agree in writing to receive
such information confidentially and to maintain such information in confidence.
Hearings in the arbitration proceeding shall commence within sixty (60) days
after the selection of the arbitrators.
SECTION 8.11 Fees and Expenses. NetWolves shall pay its own fees, costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, but not limited to, the fees, costs and expenses
of its accountants and counsel. CCC shall pay the fees, costs and expenses
incurred by them in connection with this Agreement and the transactions
contemplated hereby, including, but not limited to, the fees, costs and expenses
of its accountants and counsel.
SECTION 8.12 Reasonable Efforts. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use its reasonable
best efforts to take promptly, or cause to be taken, all actions, and to do
promptly, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings and to remove
any injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement.
SECTION 8.13 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning and
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, on the
day and year first above written.
NETWOLVES CORPORATION
/s/ Xxxxxx X. Xxxxxxx
By: Xxxxxx X. Xxxxxxx
Chairman of the Board
COMPUTER CONCEPTS CORP.
/s/ Xxxxxx X. XxxXxxxxx
By: Xxxxxx X. XxxXxxxxx
President
COMPUTERCOP, INC.
/s/ Xxxxxx X. XxxXxxxxx
By: Xxxxxx X. XxxXxxxxx
President
