Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 21, 2003 (the
"Agreement"), among XXXXX ASSOCIATES, INC., a Massachusetts corporation
("Xxxxx"), XXXXXX X. XXXXX ("Xxxxx") and XXX XXXXXX ("Xxxxxx") (Xxxxx and Xxxxxx
collectively referred to as the "Stockholders") on the one hand, and ADSTAR,
INC., a Delaware corporation ("AdStar") and EDG ACQUISITION CORP., a
Massachusetts corporation ("Newco") on the other hand.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of each of Newco, AdStar and
Xxxxx xxxx it desirable and in the best interests of their respective
corporations and stockholders that Xxxxx merge with and into Newco (the
"Merger");
WHEREAS, the Merger is intended to qualify as a tax-free reorganization
under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of
1986, as amended (the "Code");
WHEREAS, Newco is a wholly owned subsidiary of AdStar; and
WHEREAS, the Stockholders own all of the issued and outstanding shares of
the capital stock of Xxxxx.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
MERGER OF NEWCO WITH AND INTO XXXXX
1.01 Merger and Surviving Corporation.
(a) Pursuant to the applicable law of the Commonwealth of
Massachusetts, on the Effective Date (as hereinafter defined) Xxxxx shall merge
with and into Newco, and Newco shall be the surviving corporation after the
Merger (the "Surviving Corporation"). The name of the Surviving Corporation
shall be Xxxxx Associates, Inc. The separate existence of Xxxxx shall cease upon
the Effective Date (as defined below).
(b) The Certificate of Incorporation of Newco as amended to change
the name of Newco to "Xxxxx Associates, Inc." shall be the Certificate of
Incorporation of the Surviving Corporation, until amended.
(c) The By-Laws of Newco shall, from and after the Effective Date,
be the By-Laws of the Surviving Corporation, until altered or amended.
1.02 Effectiveness of the Merger. In the event that all of the conditions
precedent to the obligations of each of the parties hereto as hereinafter set
forth shall either have been satisfied or waived, (a) Articles of Merger under
the applicable provisions of the Massachusetts Business Corporation Law, chapter
156B of the Massachusetts, General Laws, substantially in the form annexed
hereto as Exhibit A (the "Merger Certificate"), shall be delivered for filing on
the Closing Date (as defined below) to the Secretary of Commonwealth of
Massachusetts and shall become effective upon the acceptance of the filing of
such Merger Certificate by said Secretary of State, which date shall be the
"Effective Date" for purposes of this Agreement; and (b) the Consideration shall
be tendered to the Stockholders in the manner set forth herein, and the
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various agreements and instruments provided for herein to be executed and
delivered at the Closing shall be so executed and delivered by the parties
hereto.
1.03 Conversion of Newco Stock and Xxxxx Stock. The manner and basis of
converting the shares of capital stock of Newco and Xxxxx shall be as follows:
(a) Each of the 100 outstanding shares of common stock of Newco (the
"Newco Stock"), issued and outstanding at the Effective Date and all rights with
respect thereto shall remain outstanding and shall therefore be the sole issued
and outstanding shares of the capital stock of the Surviving Corporation
immediately following the Effective Date.
(b) (i) All of the shares of the common stock of Xxxxx, par value
$0.01 per share (the "Xxxxx Common Stock"), issued and outstanding at the
Effective Date and all rights with respect thereto shall, by reason of and
simultaneous with the Merger and without any action on the part of the holders
thereof be canceled and converted into the right to receive in the aggregate the
Consideration (as defined below).
(ii) Immediately following the Effective Date each Stockholder
shall be entitled, upon the surrender to the Surviving Corporation of his
certificates of Xxxxx Common Stock as shall represent all of his shares of such
stock, to receive that percentage of the Consideration as is set forth next to
such Stockholder's name under the column headed Applicable Percentage Interest
(the "Applicable Percentage Interest") on Exhibit B annexed hereto.
(iii) All rights with respect to shares of Xxxxx Common Stock
shall cease and terminate at the Effective Date, notwithstanding that any
certificates evidencing said shares of Xxxxx Common Stock shall not have been
surrendered to the Surviving Corporation, and the holders of said shares shall
have no interest in or claims against the Surviving
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Corporation, arising out of the ownership of such shares of Xxxxx Common Stock,
except for the right to receive their portion of the Consideration for their
Xxxxx Common Stock in accordance with the terms hereof.
(c) Immediately following the Effective Date, any and all options or
other rights to acquire any shares of the capital stock or other equity
securities of Xxxxx shall be cancelled and shall thereafter be void and of no
further force and effect.
ARTICLE II
CONSIDERATION; CLOSING
2.01 Consideration. The "Consideration" shall be equal to (a) $1,520,000
in cash ($0.563 per share of Xxxxx Common Stock), and (b) 1,311,530 shares
(0.4858 shares of the Common Stock, par value $.0001, of AdStar ("AdStar Stock")
for each share of Xxxxx Common Stock), such 1,311,530 shares of AdStar Stock
being hereinafter called the "Consideration Shares". The cash portion of the
Consideration shall be wired to the respective accounts of the two Stockholders,
in the Applicable Stockholder Percentage set forth on Exhibit B hereto, on the
Closing Date, and within four (4) business days thereafter the Consideration
Shares shall be delivered to the two Stockholders, in the Applicable Stockholder
Percentage set forth on Exhibit B hereto.
2.02 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Xxxxx & Xxxxxxxx, LLP, 000 Xxxxxx
Xxxxxx, Xxxxxx, XX 00000 at 10:00 A.M. on Tuesday, October 21, 2003, or on the
business day following the satisfaction of all of the conditions set forth in
Articles VII and VIII, or at such other place, date or time as shall
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be mutually agreed upon by the parties (such date or such other agreed upon time
and date is called the "Closing Date").
2.03 Documents At the Closing, the parties each shall exchange
certificates attesting to the current satisfaction of the various conditions
thereto set forth in Articles 8 and 9 hereto, as well as the Employment
Agreements (defined in Section 6.05 hereof), the Registration Rights Agreement
(described in Section 9.07 hereof), the cancellation of the current promissory
notes from Xxxxx to the Stockholders and the issuance of the new notes described
in Section 6.04 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder, for himself only, hereby represents and warrants to and
agrees with Newco and AdStar, as follows:
3.01 Ownership. As of the date hereof, such Stockholder is the lawful
owner of record of the number of shares of Xxxxx Common Stock set forth opposite
his name in Exhibit B hereto.
3.02 No Liens. The shares of Xxxxx Common Stock owned by such Stockholder
are free and clear of all liens, charges, encumbrances and restrictions of any
kind and nature whatsoever (other than mutual rights of first refusal held by
each of the two Stockholders on each other's stock, which each Stockholder
hereby waives) and none of such shares is subject to any agreement whatsoever
with respect to the voting, sale or pledge thereof or any like matter, nor has
any proxy been granted to any corporation, company, partnership, joint venture,
other entity or natural person (a "Person") with respect to any such shares of
Xxxxx Common Stock.
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3.03 Authorization of Agreement. This Agreement has been duly and validly
executed and delivered by or on behalf of such Stockholder and constitutes a
valid obligation of such Stockholder, enforceable in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
insolvency, bankruptcy, reorganization or similar laws affecting the enforcement
of creditors' rights generally and by general equity principles.
3.04 Interests in Property or Activities of Xxxxx. Except as set forth on
Schedule 3.04, such Stockholder does not have any (direct or indirect) interest
(a) in any property, real or personal, tangible or intangible used in the
business of Xxxxx, or (b) in any Person which conducts business with Xxxxx. The
parties hereto hereby agree to the exchange of property set forth on Schedule
3.04 hereto.
3.05 Information; Accredited Investor. Each Stockholder has received the
SEC Reports (as defined below) and has had an opportunity to speak to and ask
questions of the officers of AdStar concerning AdStar, its financial condition,
its business and prospects which such Stockholder deems to be adequate in order
for such Stockholder to have executed this Agreement and to have acquired the
shares of AdStar Common Stock to be acquired by such Stockholder hereunder. Such
Stockholder is an "accredited investor" as such term is defined in Rule 501
promulgated under the Securities Act of 1933, as amended (an "Accredited
Investor").
3.06 Investment Intent. All shares of AdStar Common Stock to be acquired
by such Stockholder pursuant to this Agreement are being acquired by such
Stockholder solely for the purpose of investment and not with a view to, or for
sale in connection with, any distribution thereof. Such Stockholder acknowledges
that all such shares of AdStar Common Stock have not been registered under the
Act, or the securities laws of any state or other jurisdiction, and that all
such shares of AdStar Common Stock shall bear a legend in substantially the
following form:
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"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS A REGISTRATION
STATEMENT WITH RESPECT TO THESE SHARES HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR THE CORPORATION HAS BEEN FURNISHED WITH AN OPINION OF
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF XXXXX
AND THE STOCKHOLDERS
Xxxxx and each Stockholder, jointly and severally, hereby represent and
warrant to and agree with Newco and AdStar as follows:
4.01 Organization and Good Standing. Xxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full power and authority to conduct its
business as it is now conducted and to own or lease and operate the assets and
properties now owned or leased and operated by it. Xxxxx is duly qualified to do
business and is in good standing in each jurisdiction in which the nature of its
business or the character of its properties requires such qualification, such
that the failure to be so qualified would have a material adverse effect on the
assets, business or financial condition of Xxxxx, taken as a whole (an "Xxxxx
Material Adverse Effect")
4.02 Capitalization of Xxxxx. The total authorized capital stock of Xxxxx
consists of Three Million (3,000,000) shares of common stock, par value $0.01
per share, of which Two Million Seven Hundred Thousand (2,700,000) shares are
issued and outstanding voting shares, and the remaining 300,000 shares are
Non-Voting Common Stock, none of which are issued.
4.03 Options, Etc. Except as set forth on Schedule 4.03, Xxxxx has no
outstanding (a) options, warrants or other rights to purchase, acquire or
convert into any shares of its capital
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stock or other equity securities, or (b) any other agreement or right
(preemptive, contractual or otherwise) to issue or sell any such shares of its
capital stock or other equity securities. Xxxxx has advised AdStar that it has,
prior to the date hereof, fully vested each of the optionees. At the Closing,
AdStar replace each option set forth on Schedule 4.03(b) with a corresponding
AdStar option on the following basis: (a) each holder of an option to purchase
shares of Xxxxx Common Stock at $0.92 per share shall receive in replacement
therefor an option to purchase that number of shares of AdStar Stock as shall
equal the number of shares of Xxxxx Common Stock which such optionee has a right
to purchase, multiplied by 0.4858, at a price per share of AdStar Stock of
$0.73; (b) each holder of an option to purchase shares of Xxxxx Common Stock at
$1.02 per share shall receive in replacement therefor an option to purchase that
number of shares of AdStar Stock as shall equal the number of shares of Xxxxx
Common Stock which such optionee has a right to purchase, multiplied by 0.4858,
at a price per share of AdStar Stock of $0.94; (c) each holder of an option to
purchase shares of Xxxxx Common Stock at $1.16 per share shall receive in
replacement therefor an option to purchase that number of shares of AdStar Stock
as shall equal the number of shares of Xxxxx Common Stock which such optionee
has a right to purchase, multiplied by 0.4858, at a price per share of AdStar
Stock of $1.23.
4.04 Subsidiaries. Xxxxx does not own any equity interest, directly or
indirectly, in any corporation, company, partnership, trust, joint venture or
other entity.
4.05 Authority and Compliance. Xxxxx has full corporate power and
authority to execute and deliver this Agreement. The consummation and
performance by Xxxxx of the transactions contemplated by this Agreement have
been duly and validly authorized by all necessary corporate and other
proceedings, including, without limitation, the approval of its Stockholders.
This Agreement has been duly and validly executed and delivered on behalf of
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Xxxxx and constitutes a valid obligation of Xxxxx, enforceable against Xxxxx in
accordance with its terms, except to the extent that such enforceability may be
limited by applicable insolvency, bankruptcy, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by general equity
principles. No consent, authorization or approval of, exemption by, or filing
with, any domestic governmental or administrative authority (other than the
filing of the Articles of Merger with the Massachusetts Secretary of State and a
final tax return with the Massachusetts Department of Revenue), or any court, is
required to be obtained or made by Xxxxx in connection with the execution,
delivery and performance of this Agreement by Xxxxx or the consummation of the
transactions contemplated hereby by Xxxxx.
4.06 No Conflict. The performance of this Agreement by Xxxxx and the
consummation of the transactions contemplated hereby will not result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, (i) any material contract or other agreement or instrument to which Xxxxx
is a party or by which Xxxxx or any of its properties or assets is bound, or
(ii) its Articles of Incorporation or By-Laws, or (iii) any law, order, rule,
regulation, writ, injunction or decree applicable to Xxxxx; in each case where
any such breach, violation or default would have an Xxxxx Material Adverse
Effect
4.07 Accounts Receivable.
(a) All accounts receivable reflected on the Financial Statements
(as defined below) and all accounts receivable created after June 30, 2003 to
and including the date hereof (collectively, the "Receivables") arose from bona
fide sales of goods or services in the ordinary course of business are genuine
and are absolutely owing to Xxxxx and are not contingent for any reason, other
than those reserved for on the Financial Statements (defined below) and a
proportionately similar reserve for the period subsequent to that covered
thereby.
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(b) All of the Receivables, net of the reserve described above, will
be collected in full in accordance with their terms.
4.08 Financial Statements. Schedule 4.08 contains copies of the unaudited
financial statements of Xxxxx for each of the two fiscal years June 30, 2003 and
June 30, 2002, respectively (the "Financial Statements"). The Financial
Statements are true, complete and correct and fairly present in all material
respects the financial position of Xxxxx at June 30, 2003 and June 30, 2002
respectively, and the results of operations for each of the years then ended, in
conformity with generally accepted accounting principles applied on a basis
consistent with prior periods.
4.09 Compliance with Law. The operation by Xxxxx of its business and the
use and occupancy of its assets and properties is in compliance with all, and
not in violation of any applicable law or ordinance (federal, state or local),
or any order, rule or regulation of any governmental agency or body to which
Xxxxx or its assets are subject, where such non-compliance or violation would
have an Xxxxx Material Adverse Effect. Xxxxx has obtained and adhered to the
requirements of any government license, permit or authorization necessary to the
operation of its business.
4.10 Absence of Certain Events. Except as set forth on Schedule 4.10,
since June 30, 2003, Xxxxx has not:
(a) changed its authorized capital stock or issued or sold, or
purchased, redeemed or otherwise acquired, or issued any rights to subscribe
for, or warrants to purchase, or entered into any agreement, commitment or
obligation (including, without limitation, any convertible securities) to issue,
sell, purchase, redeem or otherwise acquire, any shares of its capital stock, or
made any declaration or any payment or distribution of any dividend or any other
distribution with respect to its capital stock;
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(b) incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice;
(c) sold, assigned or transferred any of its assets or properties
except in the ordinary course of business consistent with past practice;
(d) created, incurred, assumed or guaranteed any indebtedness for
money borrowed (other than in the ordinary course of business consistent with
past practice), or mortgaged, pledged or subjected to any lien, pledge,
mortgage, security interest, conditional sales contract or other encumbrance any
of its assets or properties;
(e) amended or terminated any material contract, commitment or
agreement to which it is a party or by which it is bound, or canceled, modified
or waived any material debts or claims held by it, in each case other than in
the ordinary course of business consistent with past practice, or waived any
rights of substantial value, whether or not in the ordinary course of business;
(f) increased the salaries or other compensation of, paid any bonus
to, or made any advance or loan to, any of its Stockholders, directors, officers
or employees, or made any increase in, or any additions to, other benefits to
which any of its Stockholders, directors, officers or employees may be entitled;
(g) repaid any amount due to any Stockholder, officer, or director
which was reflected on the Financial Statements; or
(h) entered into any material transaction or operated other than in
the ordinary course of business consistent with past practice.
4.11 Taxes and Tax Returns. The amounts established as liabilities or
reserves for taxes on the Financial Statements are sufficient for the payment of
all federal, state and local
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taxes, and all employment and payroll-related taxes, including any penalties or
interest thereon, whether or not based upon or measured by, in whole or in part,
net income. Xxxxx has not entered into any tax sharing agreement. Except as set
forth in Schedule 4.11, Xxxxx has (i) duly made all deposits required by law to
be made with respect to employee withholding taxes; (ii) duly filed (subject to
any applicable extensions of time to file any tax returns) with all appropriate
governmental agencies and bodies, whether federal, state or local, all income,
sales, license, franchise, excise, gross receipts, employment and
payroll-related and real and personal property tax returns and all other tax
returns which were required to be filed, all of which properly reflect the taxes
owed by it for the periods covered thereby, and it has paid, or established
adequate liabilities or reserves for the payment of, all taxes shown to be due
on such returns; and (iii) not received any notice of assessment or deficiency
or proposed assessment by the Internal Revenue Service or any other taxing
authority in connection with such tax returns which has not been satisfied in
full and there is no pending tax examination of or tax claim asserted against
Xxxxx. Anything to the contrary herein notwithstanding, the parties acknowledge
that the obligation to withhold sales taxes on the products which Xxxxx xxxxx
can vary from state to state, and in fact Xxxxx has done so, and currently does
so, only for sales to customers located in Massachusetts and California, and
makes no representation as to its compliance with the sales and/or use tax
withholding obligation of any other state or jurisdiction. Except as set forth
on Schedule 4.11, none of the federal income tax returns of Xxxxx has ever been
audited by the Internal Revenue Service. No agreement for the extension of time
or waiver of the statute of limitations for the assessment of any tax deficiency
or adjustment for any year is in effect as against Xxxxx. True, correct and
complete copies of all (i) federal, state and local income and/or franchise tax
returns
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and (ii) state and local sales tax returns filed by Xxxxx since June 30, 2000
have previously been made available to AdStar.
4.12 Patents, Trademarks, Copyrights, Etc. Xxxxx owns or validly licenses
all trademarks, trademark applications, trade names, logos, copyrights,
copyrightable works, mask works, computer software (including data and related
documentation), trade secrets, know how, inventions and similar intellectual
property rights (collectively "Rights") utilized in and necessary to the conduct
of its business as currently being conducted (the "Xxxxx Rights"). Schedule 4.12
contains a complete and correct list of all trademarks, trademark applications,
tradenames, logos and copyrights currently owned or used by Xxxxx in the conduct
of its business indicating, where applicable, the registered and beneficial
owner and the expiration date thereof. To the actual knowledge of either
Stockholder, the conduct of the business of Xxxxx as currently conducted does
not infringe upon valid Rights of others in any way. Except as set forth on
Schedule 4.12, neither the validity of the Xxxxx Rights, nor the use thereof by
Xxxxx, is the subject of any pending or threatened action to which Xxxxx is a
party, nor to the actual knowledge of either Stockholder do any facts exist
which may have any material adverse effect on the legal right of use by Xxxxx
of, or the legal validity of, the Xxxxx Rights. Xxxxx does not know of any
material use that has been made or is now being made of any of Xxxxx Rights
except by Xxxxx, other than pursuant to licenses to customers of Xxxxx (of which
all material licenses have been disclosed to AdStar herein or in the Schedules
hereto).
4.13 Legal Proceedings, Etc. Except as set forth on Schedule 4.13, there
are no claims, actions, suits, proceedings, arbitrations or investigations,
either administrative or judicial, pending or, to the actual knowledge of Xxxxx
or the Stockholders, threatened by, or against Xxxxx, or affecting its business
or any of its assets or properties, or specifically relating to the
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transactions contemplated by this Agreement, at law or in equity or otherwise,
before or by any court or governmental agency or body, domestic or foreign, or
before an arbitrator of any kind, which could have an Xxxxx Material Adverse
Effect.
4.14 Real Property Leases. Xxxxx does not own any real property. Schedule
4.14 sets forth all real property leases under which Xxxxx is a lessee. All such
leases are valid and binding, and are in full force and effect; there are no
existing material defaults by Xxxxx thereunder; and no event has occurred which
(whether with or without notice, lapse of time, or both) would constitute a
material default thereunder by Xxxxx. Except as set forth on Schedule 4.14, the
consummation of the transactions contemplated by this Agreement will not require
the consent of the lessor under any such lease (all of such required consents
being hereafter called (the "Required Lease Consents")). Xxxxx has delivered or
made available to AdStar true and complete copies of all such leases.
4.15 Contracts and Commitments. Except as listed on Schedule 4.15, or any
other Schedule annexed hereto, Xxxxx is not a party to any:
(a) Contract or Contracts for the borrowing of money or for a
guarantee, pledge or undertaking of the indebtedness of any other person;
(b) Contract limiting or restraining in any respect Xxxxx or either
of the Stockholders from engaging or competing in any lines of business or with
any person;
(c) any employment or consulting contract;
(d) any Contract to perform services by Xxxxx involving receipt by
Xxxxx of an amount in the aggregate in excess of $25,000;
(e) Lease relating to personal property involving annual payments by
or to Xxxxx in excess of $10,000;
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(f) Contract with any labor union; or
(g) any other Contract material to the operation of the business or
entered into otherwise than in the ordinary course of business.
Any Contract set forth on Schedule 4.15 which requires the consent
of the other party thereto to the assignment thereof is noted on such Schedule
(the "Required Contract Consents").
As used in the Agreement, the term "Contract" includes any mortgage, indenture,
agreement, license, contract, commitment or lease, whether written or oral.
4.16 Employee Benefit Plans. Set forth on Schedule 4.16 is a summary of
each and every bonus, incentive, deferred compensation, profit sharing, pension,
retirement, disability, hospitalization, life insurance, health benefit, medical
reimbursement, vacation, sick pay, severance pay or other plan, program,
arrangement or agreement (whether written or oral) maintained by Xxxxx or any
other person relating to and providing benefits to any of the employees of
Xxxxx.
4.17 Employees. Set forth on Schedule 4.17 is a complete and accurate list
of the names, social security numbers, dates of hire, dates of birth, sex,
annual wages or hourly wage rates, as the case may be, spouses, dependents and
job descriptions of all present employees of Xxxxx who are in active employment
on the date hereof. An employee shall be considered "in active employment" if he
or she performs services or is on vacation or authorized leave on the date
hereof.
4.18 Customers: Suppliers: Adverse Conditions. Except as set forth on
Schedule 4.18, (i) there has not, since January 1, 2002, been any termination or
cancellation of the business relationship of Xxxxx with any of the major
customers or major suppliers of Xxxxx;
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and (ii) to the best of the Stockholder's actual knowledge, there do not exist
any facts or circumstances (except for general economic conditions affecting
business generally) which have materially adversely affected the relationship
with such major customers or major suppliers or which are likely, based solely
upon the Stockholder's current knowledge, to prevent the relationship with such
major customers or major suppliers from being carried on after the Closing Date
in essentially the same manner as is currently carried on.
4.19 Schedules of Customers. Set forth on Schedule 4.19 is a list of
the customers of Xxxxx to which sales in excess of $50,000 were made during the
nine months ended September 30, 2003, and the volume of sales made to each such
customer.
4.20 Finder. There is no firm, corporation, agency or other person or
entity that is entitled to a finder's fee or any type of brokerage commission in
relation to or in connection with the transactions contemplated by this
Agreement as a result of any agreement or understanding with Xxxxx or any of
their directors, officers, employees, stockholders or affiliates.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ADSTAR AND NEWCO
AdStar and Newco hereby jointly and severally represent and warrant to
Xxxxx and the Stockholders as follows:
5.01 Organization and Good Standing. AdStar and Newco are corporations
duly organized, validly existing and in good standing under the laws of the
State of Delaware and the Commonwealth of Massachusetts, respectively, with full
corporate power and authority to conduct their respective businesses as they are
now being conducted and to own or lease and operate the assets and properties
respectively owned or leased and operated by them.
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5.02 Authority and Compliance. Each of AdStar and Newco has full corporate
power and authority to execute and deliver this Agreement. The consummation and
performance by AdStar and Newco of the transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate and
other proceedings. This Agreement has been duly and validly executed and
delivered on behalf of AdStar and Newco and constitutes a valid obligation of
each of AdStar and Newco, enforceable in accordance with its terms, except to
the extent that such enforceability may be limited by applicable insolvency,
bankruptcy, reorganization or similar laws affecting the enforcement of
creditors' rights generally and by general equity principles. Except for filings
and/or approvals under applicable securities laws, no consent, authorization or
approval of, exemption by, or filing with, any domestic governmental or
administrative authority, or any court, is required to be obtained or made by
AdStar or Newco in connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby.
5.03 No Conflict. The performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a breach or violation
of any of the terms or provisions of, or constitute a default under, (i) any
contract or other agreement or instrument to which AdStar or Newco is a party or
by which AdStar or Newco or any of their respective properties or assets is
bound, or (ii) the Articles of Incorporation or By-Laws of AdStar or Newco or
(iii) any law, order, rule, regulation, writ, injunction or decree applicable to
AdStar or Newco.
5.04 SEC Reports; Financial Statements. AdStar has filed all reports
required to be filed by it under the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), for the one year preceding the date hereof (the
foregoing being collectively referred to herein as the "SEC Reports") on a
timely basis or has received a valid extension of such time of filing and has
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filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, and none of the SEC
Reports, when filed, nor the AdStar Private Placement Memorandum provided to the
Stockholders, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Except for notices from NASDAQ regarding the failure to
meet the net worth requirements or minimum bid prices for continued listing of
its common stock on the Nasdaq Small Cap Market, AdStar has not, since January
1, 2002, received any other notice from NASDAQ or any other federal or state
government agency or Self-Regulatory Organization threatening its status as a
publicly traded entity entitled to have its securities traded on the Nasdaq
Small Cap Market. The financial statements of AdStar included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Securities and Exchange Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of AdStar as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal year-end audit
adjustments.
5.05 Material Changes. Since the date of the latest financial statements
included within the SEC Reports, except for continuing losses, there has been no
event, occurrence or
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development that has had a material adverse effect on the assets, business or
financial condition of AdStar.
5.06 AdStar Common Stock. The AdStar Common Stock to be issued pursuant to
the Merger as contemplated by this Agreement will, upon delivery to the
Stockholders be duly authorized, validly issued, fully paid and non-assessable.
5.07 Finder. There is no firm, corporation, agency or other person or
entity that is entitled to a finder's fee or any type of brokerage commission in
relation to or in connection with the transactions contemplated by this
Agreement as a result of any agreement or understanding with AdStar or Newco or
any of their directors, officers, employees, stockholders or affiliates.
ARTICLE VI
COVENANTS OF XXXXX AND THE STOCKHOLDERS
6.01 Conduct of Business Until Closing Date. Xxxxx and the Stockholders
hereby jointly and severally covenant and agree with Newco and AdStar that from
and after the date hereof until the Closing Date, Xxxxx will:
(a) operate its business only in the usual, regular and ordinary
manner and, to the extent consistent with such operation, to (i) preserve its
present business organizations intact, (ii) use its reasonable efforts to keep
available the services of its present officers and significant employees and
(iii) use its reasonable efforts to preserve the present business relationships
with customers, suppliers, and others having business dealings with them;
(b) maintain for Xxxxx the ownership of and/or the right to use the
Xxxxx Rights and maintain in full force and effect insurance with responsible
companies comparable in amount, scope and coverage to that in effect on the date
of this Agreement;
19
(c) maintain its books, records and accounts in the usual, regular
and ordinary manner on a basis consistent with prior periods;
(d) duly comply with all laws known to be applicable to Xxxxx and
material to the conduct of its business;
(e) perform all of its material obligations without default unless
being contested in good faith;
(f) neither (i) amend or change its Articles of Incorporation or
By-Laws; (ii) merge with or into, consolidate or otherwise combine with, or
acquire all or substantially all of the stock or assets of, any other entity;
(iii) sell, lease or otherwise transfer any significant part of its respective
assets other than in the ordinary course of business consistent with past
practice, nor (iv) change the character of its business;
(g) neither (i) increase the number of its shares of capital stock
or other equity securities issued and outstanding nor (ii) grant any option,
warrant, or other right to purchase or to convert any obligation into shares of
its capital stock;
(h) neither (i) declare, pay or make any dividend or other
distribution or payment in respect of its outstanding shares of capital stock,
nor (ii) purchase, redeem or otherwise acquire for consideration any shares of
its capital stock, nor (iii) repay any loan due to any Stockholder, officer or
director;
(i) neither (i) encumber, mortgage, or subject to lien any of its
properties or assets other than in the ordinary course of business or other than
such encumbrances, mortgages or liens which individually or in the aggregate,
would not have a material adverse effect on the business of Xxxxx; (ii) convey,
transfer or acquire any material asset or property other than in the ordinary
course of business; nor (iii) enter into any contract or undertaking relating
to, or pay or
20
promise to pay, any bonus, profit-sharing, or special compensation to any
Stockholder, employee or director or make any increase in the compensation
payable or to become payable to any Stockholder, employee or director;
(j) neither (i) incur any long-term debt nor (ii) modify, change or
terminate any of the Contracts disclosed on any Schedule to this Agreement,
other than in the ordinary course of business except such modifications, changes
or terminations which, individually or in the aggregate, would not have a
material adverse effect on the business of Xxxxx; and
(k) not enter into any employment agreement not terminable by Xxxxx
on thirty (30) days notice or less without cost or liability.
6.02 Access. Xxxxx shall, upon prior notice, afford AdStar and Newco and
their representatives free and full access during regular business hours to all
of its books, records, contracts, documents, key personnel and properties. Xxxxx
will use its commercially reasonable efforts to cause the key employees,
accountants, attorneys and other representatives of Xxxxx to cooperate fully
with AdStar and Newco and to make full disclosure to them of all material facts
affecting the business properties and financial condition of Xxxxx, as AdStar or
Newco shall reasonably request.
6.03 Approval by the Stockholders. Each Stockholder agrees that this
Agreement and the Merger shall be approved and consented to in writing by such
Stockholder in such form as is sufficient to satisfy the requirements of
Stockholder approval under Massachusetts law.
6.04 Stockholder Loans. Xxxxx is indebted to each Stockholder in the
amount of $83,000 (for an aggregate amount of $166,000) (the "Stockholder
Loans"). Each Stockholder agrees that the repayment terms of each Stockholder
Loan of $83,000 shall be as follows: (a) $51,500 shall be repaid on the Closing
Date, and (b) the remaining principal amount of $31,500
21
shall be paid pursuant to a Promissory Note to each Stockholder from Xxxxx,
substantially in the form set forth on Exhibit C hereto (which shall supersede
the existing promissory notes from Xxxxx to each Stockholder, both of which
shall be cancelled at the Closing), which shall provide for interest to accrue
from the Closing Date at the rate of 8% per annum, and for six equal payments of
principal along with all interest accrued to date, with the first payment to be
paid on the six month anniversary of the Closing Date and each of the next four
payments to be paid each six months thereafter, with the final payment to be
made on the third anniversary of the Closing Date.
6.05 Employment Agreements. At Closing, each Stockholder shall enter into
an employment agreement with the Surviving Corporation in substantially the form
annexed hereto as Exhibit D (the "Employment Agreements").
6.06 Covenant Not to Compete. Each Stockholder agrees that for a period of
three (3) years from and after the Closing Date, he will not, directly or
indirectly, in any manner (i) engage in the business of advertising order entry
or the credit card processing business anywhere in the world, or any other
business currently engaged in by Xxxxx to a material extent, or contemplated to
be engaged in by Xxxxx to a material extent pursuant to the business plan
heretofore delivered to AdStar (the "Competitive Business"), other than as an
employee or agent of AdStar, and (ii) will not, directly or indirectly, own,
manage, operate, join, control or participate in the ownership, management,
operation or control of, or be employed by or connected in any manner with any
corporation, firm, entity, or business that is engaged in the Competitive
Business unless duly authorized by written consent of AdStar (provided, however,
that nothing herein shall prohibit each of them from owning not more than three
(3%) percent of the outstanding stock of any publicly held corporation, or from
owning any amount of the stock
22
of Adstar itself). Each Stockholder acknowledges that a violation of any of the
covenants contained in this Section 6.06 may cause irreparable injury to the
Surviving Corporation and AdStar, and that such corporations will be entitled,
in addition to any other rights and remedies they may have, to injunctive
relief. In the event the covenants contained in this Section 6.06 should be held
by any court or other duly constituted judicial authority to be void or
otherwise unenforceable in any particular jurisdiction or with respect to any
particular activity or with respect to the period of restraint, then such
covenants so affected shall be deemed to have been amended and modified so as to
eliminate therefrom the particular jurisdiction or activity as to which such
covenants are so held to be void or otherwise unenforceable or to reduce the
period of restraint, and, as so modified and as to all other jurisdictions and
activities covered hereby, the terms and provisions hereof shall remain in full
force and effect.
ARTICLE VII
COVENANT OF ADSTAR AND NEWCO
7.01 Agreements. AdStar and Newco covenant and agree to execute and
deliver and/or cause the Surviving Corporation to execute and deliver to the
Stockholders, as the case may be, at the Closing, the various documents and
instruments provided for herein, including without limitation the Employment
Agreements and the Registration Rights Agreement described in Section 9.07
hereof., as well as the Consideration and the Promissory Note described in
Section 6.04.
7.02 Durability of Employee Health Insurance Plan. As additional
consideration to be paid to the Stockholders in the Merger, AdStar hereby agrees
to cause the Surviving Corporation to retain the existing employee health
insurance plan currently in place at Xxxxx, until October 31, 2008, so long as
premiums under such plan for the two Stockholders do not
23
exceed $50,000 per year. In the event that, for any reason, the Stockholders are
not eligible to participate in such plan (or such plan no longer is available to
the Surviving Corporation within the maximum premium amounts set forth above),
then the Stockholders may obtain comparable coverage and AdStar shall reimburse
them up to a maximum of $25,000 each per year (or, at their option, may continue
to participate in the Surviving Corporation's new plan, with AdStar reimbursing
each Stockholder for any deductibles in a maximum amount equal to $25,000 less
all premums paid for their participation). Notwithstanding the foregoing, the
Stockholders each shall contribute $10,000 per year toward their premiums or
other payments as set forth above (and, in the event that either Stockholder is
no longer employed by the Surviving Corporation, then such contribution shall be
reduced to $2,500 per year).
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ADSTAR AND NEWCO
The obligations of AdStar and Newco pursuant to this Agreement are subject
to the satisfaction at the Closing of each of the following conditions;
provided, however, that AdStar and Newco may, in their sole discretion, waive
any of such conditions and proceed with the transactions contemplated hereby.
Anything to the contrary notwithstanding, the participation by a party in the
Closing, and the execution by such party at the Closing of all documents calling
for his or its execution, conclusively shall be deemed a waiver by such party of
any remaining conditions to Closing.
8.01 Accuracy of Representations and Warranties. The representations and
warranties of Xxxxx and the Stockholders contained in this Agreement or any
other document delivered by Xxxxx to AdStar or Newco at the Closing in
connection with this Agreement shall be
24
true and correct in all material respects on and as of the Closing Date, as if
made on and as of the Closing Date, except for changes contemplated by this
Agreement and except for those representations and warranties which address
matters only as of a particular date.
8.02 Performance of Agreements. Xxxxx and the Stockholders shall have
performed and complied in all material respects with all covenants, obligations
and agreements to be performed or complied with by any of them on or before the
Closing Date pursuant to this Agreement.
8.03 Litigation, etc.
(a) No claim, action, suit, proceeding, arbitration, or hearing or
notice of hearing shall be pending (and no action or investigation by any
governmental authority shall be threatened) which seeks to enjoin or prevent the
consummation of the transactions contemplated by this Agreement.
(b) No law, regulation or governmental decree shall have been
adopted or promulgated after the date hereof, the enforcement of which would
materially adversely affect the assets, properties, financial condition, results
of operations, properties, business or prospects of Xxxxx; and no law,
regulation or governmental decree shall have been adopted or promulgated after
the date hereof, the enforcement of which would materially adversely affect the
ability of AdStar or Newco to consummate the transactions contemplated by this
Agreement.
8.04 Officers' Certificate. AdStar and Newco shall have received a
certificate of the chief executive officer and the Treasurer of Xxxxx, dated the
Closing Date, certifying as to the fulfillment of the conditions set forth in
Sections 8.01, 8.02 and 8.03.
8.05 Approvals; Consents. All material approvals, consents, waivers,
filings, registrations, permits, authorizations or other actions required in
connection with the Merger or
25
which may be required on account of the change in ownership of Xxxxx, including,
without limitation, the Required Lease Consents and the Required Contract
Consents, shall have been obtained or made. The parties acknowledge and agree
that, for purposes of this Section 8.05, the failure of customers accounting, in
the aggregate, for less than Ten Percent (10%) of Xxxxx'x gross revenues in
Fiscal 2003 and during the first quarter of Fiscal 2004, shall be deemed
immaterial.
8.06 No Material Adverse Change. Between the date hereof and the Closing
Date, there shall not have occurred any changes in the properties, assets,
businesses or prospects of Xxxxx which collectively constitute an Xxxxx Material
Adverse Effect.
8.07 Releases. Each Stockholder shall have executed and delivered to Xxxxx
a general release of all claims that such Stockholder may have against Xxxxx,
except for the repayment of the Stockholder Loans, as provided herein, which
release shall be in the form of Exhibit E.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF XXXXX AND THE STOCKHOLDERS
The obligations of Xxxxx and the Stockholders under this Agreement are
subject to the satisfaction at the Closing of each of the following conditions;
provided, however, that Xxxxx and the Stockholders acting together in their sole
discretion, may waive any of such conditions and proceed with the transactions
contemplated hereby.
9.01 Accuracy of Representations and Warranties. The representations and
warranties of AdStar and Newco contained in this Agreement or any other document
delivered by AdStar or Newco to Xxxxx at the Closing in connection with this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, as if made on and as of the Closing
26
Date, as if made on and as of the Closing Date, except for changes contemplated
by this Agreement and except for those representations and warranties which
address matters only as of a particular date.
9.02 Performance of Agreements. AdStar and Newco shall have performed and
complied in all respects with all covenants, obligations and agreements to be
performed or complied with by any of them on or before the Closing Date pursuant
to this Agreement.
9.03 Litigation, etc.
(a) No claim, action, suit, proceeding, arbitration or hearing or
notice of hearing shall be pending (and no action or-investigation by any
governmental authority shall be threatened) which seeks to enjoin or prevent the
consummation of the transactions contemplated by this Agreement.
(b) No law, regulation or governmental decree shall have been
adopted or promulgated after the date hereof, the enforcement of which would
materially adversely affect the assets, properties, financial condition, results
of operations, properties, business or prospects of AdStar; and no law,
regulation or governmental decree shall have been adopted or promulgated after
the date hereof, the enforcement of which would materially adversely affect the
ability of Xxxxx to consummate the transactions contemplated by this Agreement.
9.04 Officers' Certificate. Xxxxx shall have received a certificate of the
chief executive officer and the chief financial officer of AdStar, dated the
Closing Date, certifying as to the fulfillment of the conditions set forth in
Section 9.01, 9.02 and 9.03.
9.05 No Material Adverse Change. Between the date hereof and the Closing
Date, there shall not have occurred any Xxxxx Material Adverse Effect.
27
9.06 Delisting Notice. Except for the failure to meet the net worth
requirements for continued listing of its common stock on the Nasdaq Small Cap
Market, AdStar will meet all of the other continued listing requirements, and
shall not have received any notice from Nasdaq Small Cap Market or any other
government agency or Self-Regulatory Organization threatening its status as a
publicly traded entity entitled to have its securities traded on the Nasdaq
Small Cap Market which remains unresolved, nor shall have declared bankruptcy or
filed under any insolvency protection statute, nor have incurred any undisclosed
event likely to have a material adverse effect upon AdStar's business, stock
price or prospects.
9.06 Registration Rights Agreement. AdStar shall have executed and
delivered to the Stockholders a Registration Rights Agreement with respect to
all of the Consideration Shares in the form of Exhibit F.
ARTICLE X
INDEMNIFICATION
10.01 Indemnification by the Stockholders. The Stockholders, jointly and
severally, hereby covenant and agree with AdStar and Newco that they shall
reimburse and indemnify AdStar and the Surviving Corporation and their
respective successors and assigns (individually an "Indemnified Party") and hold
them harmless from, against and in respect of any and all costs, losses, claims,
liabilities, fines, penalties, damages and expenses (including reasonable fees
and disbursements of counsel) incurred by any of them due to, arising out of, or
in connection with, a material breach of any of the representations, warranties,
covenants or agreements made by the Stockholders (either individually or jointly
and severally with Xxxxx) in this Agreement ("Losses"); provided, however, that
notwithstanding the provisions of this Section 10.01 with respect to a breach of
the provisions of Section 6.06 hereof, each Stockholder shall only be liable
28
for such Stockholder's breach of such provisions and shall not be jointly and
severally liable for any other Stockholder's breach of such provision. To the
extent that the Stockholders provide indemnification hereunder from claims that
include rights by Xxxxx against third parties, the Stockholders shall be
subrogated to the rights of Xxxxx as against such third parties. For example, if
the Stockholders indemnify AdStar for a failure by Xxxxx, prior to the Closing,
to withhold sales taxes (if and to the extent that such indemnification may be
available under Section 4.11 hereof), in connection with sales made to past
customers who were obligated to pay such taxes, then the Stockholders
automatically would be subrogated to Xxxxx'x rights to collect such taxes from
such past customers).
10.02 Indemnification by AdStar. AdStar hereby covenants and agrees with
the Stockholders that it shall reimburse and indemnify them and their respective
successors and assigns (also individually an "Indemnified Party") and hold them
harmless from, against and in respect of any and all costs, losses, claims,
liabilities, fines, penalties, damages and expenses (including reasonable fees
and disbursements of counsel) incurred by any of them due to, arising out of, or
in connection with, a material breach of any of the representations, warranties,
covenants or agreements made by AdStar or Newco in this Agreement.
10.03 Certain Limitations on Remedies.
(a) Notwithstanding anything to the contrary set forth in this
Agreement (but subject to the proviso set forth in this sentence), the
Stockholders shall not be liable hereunder to AdStar as a result of any breach
in any of the representations or warranties set forth in Section 3.04 or Article
IV of this Agreement, except to the extent that the Losses incurred by AdStar or
the Surviving Corporation as a result of such breach shall exceed in the
aggregate $60,000 (the "Basket Exclusion"), and then only to the extent of such
excess; provided, however, that the
29
Basket Exclusion shall not apply to any breach of the representations and
warranties contained in Sections 4.02 or 4.03.
(b) The aggregate amount required to be paid by the Stockholders
under this Article X shall not exceed $1,000,000.
(c) In the event any payment of the indemnity obligations of the
Stockholders set forth in Section 10.01 is required to be made, the Stockholders
may satisfy all or any part of such payment by delivery to AdStar of shares of
AdStar Common Stock acquired by them pursuant to the Merger, which shares, for
such purpose, shall be valued at the closing price of a share of AdStar Stock on
the day immediately preceding the Closing.
ARTICLE XI
GENERAL PROVISIONS
11.01 Survival of Representations, Warranties, Covenants, and Agreements.
The representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution of this Agreement and the closing of the
transactions contemplated by this Agreement until December 31, 2004; provided,
however, that any representations, warranties, covenants and agreements
contained herein which specifically set forth specific time periods of
effectiveness shall survive for the periods indicated therein and provided
further that therein and provided further that the representations, warranties,
covenants and agreements relating to federal, state and local tax obligations of
Xxxxx shall survive for the period of the applicable statute of limitations with
respect thereto. If any claim for indemnity has been timely made but has not
been resolved by the parties prior to the expiration of the applicable time
period of survival then, and in such event, such claim shall survive until
finally resolved.
30
11.02 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred by AdStar and Newco
in connection with this Agreement and the transactions contemplated hereby
(including all legal fees and finder's fees) shall be paid by AdStar and all
costs and expenses incurred by Xxxxx and the Stockholders in connection with
this Agreement and the transactions contemplated hereby (including all legal
fees and finder's fees) shall be paid by the Stockholders.
11.03 Notices. All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when (a) delivered in
person,(b) the day following dispatch by an overnight courier service (such as
Federal, Express or UPS, etc.) or (c) five (5) days after dispatch by certified
or registered first class mail, postage prepaid, return receipt requested, to
the party to whom the same is so given or made:
If to AdStar or Newco addressed to: AdStar, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, President
with a copy to: Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, Esq.
If to Xxxxx addressed to: Xxxxx Associates, Inc.
00 Xxxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, XX 00000-0000
If to Hopey addressed to: Xxxxxx Xxxxx
0 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
If to Xxxxxx addressed to: Xxxxxxx Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
31
In each case, with a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxxxx, LLP
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
or such other address as any of the parties shall hereafter notify the other
parties in writing.
11.04 Assignability and Amendments. This Agreement and the rights and
obligations created hereunder shall not be assignable by any of the parties.
This Agreement cannot be altered or otherwise amended except pursuant to an
instrument in writing signed by each of the parties. This Agreement shall be
binding upon and inure to the benefit of the parties, their successors, legal
representatives and assigns.
11.05 Entire Agreement. This Agreement and the Exhibits and Schedules
which are a part hereof and the other writings and agreements specifically
identified herein contain the entire agreement between the parties with respect
to the transactions contemplated herein and supersede all previous written or
oral negotiations, commitments and understandings.
11.06 Waivers, Remedies. Any condition to the performance of any party
hereto which legally may be waived on or prior to the Closing Date may be waived
by the party entitled to the benefit thereof. Any waiver must be in writing and
signed by the party to be bound thereby. A waiver of any of the terms or
conditions of this Agreement shall not in any way affect, limit or waive a
party's rights under any other term or condition of this Agreement. All remedies
under this Agreement shall be cumulative and not alternative.
11.07 Counterparts and Headings. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. All headings (including,
without limitation, Article headings and
32
Section titles) are inserted for convenience of reference only and shall not
affect its meaning or interpretation.
11.08 Severability. If and to the extent that any court of competent
jurisdiction holds any provision (or any part thereof) of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity of
the remainder of this Agreement.
11.09 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, except for the Merger which
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
11.10 Binding Effects. This Agreement shall be binding upon and incur to
the benefit of the parties hereto, their successors, legal representatives and
assigns.
11.11 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
11.12 Knowledge. Whenever in this Agreement the term " actual knowledge"
or "best of actual knowledge" is used, it shall mean the actual knowledge of the
person in question at the time such statement is being made, without any
attribution of the knowledge of any employee or other person to the person
making the statement, and without any inference that such person has conducted
or will conduct any special investigation in connection therewith.
11.13 Disclosure Schedules. Any disclosure made in response to any
representation or warranty herein shall be deemed made with respect to any other
representation or warranty herein to which it is responsive, without the
necessity of repeating such disclosure.
33
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the day and year first above written.
XXXXX ASSOCIATES
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
President
/s/ Xxxxxx X. Xxxxx
--------------------------------------
XXXXXX X. XXXXX
/s/ Xxx Xxxxxx
--------------------------------------
XXX XXXXXX
ADSTAR, INC.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxx, President and CEO
EDG ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxx, President and CEO
34
EXHIBIT B
APPLICABLE STOCKHOLDER PERCENTAGE
Number of Applicable
Stockholder Name Shares Percentage Interest
----------------------- ----------- -------------------
Xxxxxx Xxxxx 1,350,000 50%
Xxxxxxx Xxxxxx 1,350,000 50%
35
