AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
Introduction
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "Agreement") is
entered into as of the 30th day of September 1999 by and among
XxxxxxxXxxxxx.xxx, Inc., a Delaware corporation (the "Parent"), BOL Acquisition
Co. I, Inc., a Massachusetts corporation ("BOL"), Infoboard, Inc., a
Massachusetts corporation, (the "Company"), and Xxxxxxx Xxxxxxx, the sole
stockholder of the Company (the "Stockholder").
Background
A. The Parent, BOL and the Company intend to effect a merger of the Company into
BOL in accordance with this Agreement and the Massachusetts Business Corporation
Law (the "Merger"). Upon consummation of the Merger, the Company will cease to
exist, and BOL will continue to exist as the surviving corporation of the
Merger.
B. It is intended that the Merger qualify as a tax-free reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code") and that this Agreement constitute a plan of reorganization for
such purposes.
C. This Agreement has been adopted and approved by the respective boards of
directors of the Parent, BOL and the Company, and the shareholders of BOL and
the Stockholder have each unanimously approved this Agreement by written
consent.
Agreement
NOW, THEREFORE, in consideration of the mutual and dependent promises and
the representations and warranties hereinafter contained, the parties hereto
agree as follows:
Section 1. Description of the Merger Transaction.
1.1 Merger of the Company into BOL. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.2), the Company shall be merged with and into BOL, and the separate
existence of the Company shall cease.
1.2 Effective Time. The effective time of the Merger (the "Effective
Time") shall occur at the time properly executed articles of merger for the
merger of the Company into BOL, conforming to the requirements of the
Massachusetts Business Corporation Law (the "Merger Certificate") have been
delivered and accepted for filing by the Secretary of State for the Commonwealth
of Massachusetts. At the Effective Time, the Company shall be merged with and
into BOL in accordance with the Merger Certificate and the separate existence of
the
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Company shall cease and BOL shall continue as the surviving corporation (the
"Surviving Corporation").
1.3 Articles of Organization, By-Laws, Board of Directors, Officers,
Purpose, Authorized Capital and Name of the Surviving Corporation. At the
Effective Time:
(a) The Articles of Organization of BOL shall become the Articles of
Organization of the Surviving Corporation; and, subsequent to the Effective
Time, such Articles of Organization shall be the Articles of Organization of the
Surviving Corporation until changed as provided by law.
(b) The bylaws of BOL shall become the bylaws of the Surviving
Corporation; and, subsequent to the Effective Time, such bylaws shall be the
bylaws of the Surviving Corporation until they shall thereafter be duly amended.
(c) The Board of Directors of the Surviving Corporation shall be set
forth on Exhibit 1.3 hereto and shall hold office subject to the provisions of
the laws of the Massachusetts Business Corporation Law and of the Articles of
Organization and bylaws of the Surviving Corporation.
(d) The officers of the Surviving Corporation shall be set forth on
Exhibit 1.3 hereto, each of such officers to serve, subject to the provisions of
the Articles of Organization and bylaws of the Surviving Corporation, until his
or her successor is elected and qualified.
(e) The purpose of the Surviving Corporation shall be the ownership,
operation and management of an internet service provider company, and in
general, the transaction of any and all other lawful business for which
corporations may be incorporated under the Massachusetts general laws.
(f) The Surviving Corporation is authorized to issue 200,000 shares
of common stock, $0.01 par value per share.
(g) The name of the Surviving Corporation shall be "Infoboard, Inc."
1.4 Effect of Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the Massachusetts Business
Corporation Law. Except as herein specifically set forth, the identity,
existence, purposes, powers, objects, franchises, privileges, rights and
immunities of BOL shall continue unaffected and unimpaired by the Merger and the
corporate franchises, existence and rights of the Company shall be merged with
and into BOL, and BOL, as the Surviving Corporation, shall be fully vested
therewith. At the Effective Time, the separate existence of the Company shall
cease and, in accordance with the terms of this Agreement, the Surviving
Corporation shall possess all the rights, privileges, immunities and franchises,
of a public as well as of a private nature, and all property, real,
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personal and mixed, and all debts due on whatever account, including
subscriptions to shares, and all taxes, including those due and owing and those
accrued, and all other choses in action, and all and every other interest of or
belonging to or due to the Company and BOL shall be taken and deemed to be
transferred to, and vested in, the Surviving Corporation without further act or
deed; and all property, rights and privileges, powers and franchises and all and
every other interest shall be thereafter as effectually the property of the
Surviving Corporation as they were of the Company and BOL; and the title to any
real estate, or interest therein, whether by deed or otherwise, vested in the
Company and BOL, shall not revert or be in any way impaired by reason of the
Merger. Except as otherwise provided herein, the Surviving Corporation shall
thenceforth be responsible and liable for all the liabilities and obligations of
the Company and BOL and any claim existing, or action or proceeding pending, by
or against the Company or BOL may be prosecuted as if the Merger had not taken
place, or the Surviving Corporation may be substituted in its place. Neither the
rights of creditors nor any liens upon the property of the Company or BOL shall
be impaired by the Merger, and all debts, liabilities and duties of the Company
and BOL shall attach to the Surviving Corporation, and may be enforced against
the Surviving Corporation to the same extent as if said debts, liabilities and
duties had been incurred or contracted by the Surviving Corporation.
1.5 Merger Consideration; Conversion of Shares.
(a) As of the Effective Time, all of the shares of Common Stock of
the Company, no par value per share ("Company Stock"), issued and outstanding
immediately prior to the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, shall be automatically converted to,
in the aggregate, shares of Common Stock of the Parent, par value $.01 per share
("Parent Stock") and cash, as follows (collectively, the "Merger
Consideration"):
(1) $1,380,000 in U.S. currency delivered by check, wire
transfer or other immediately available funds, and
(2) $1,650,000 in unregistered shares of the Parent Stock. The
actual number of shares of common stock to be delivered hereunder shall equal
$1,650,000 divided by the average NASDAQ National Market price (as defined
below) of the Parent's common stock for the twenty (20) business days ending on
the second business day immediately preceding the Closing date, provided,
however, that (i) in the event that the last price at which Parent's shares
traded between parties unaffiliated to the parties hereto on the day preceding
the Closing date (the "Last Price") is less than 90% of such twenty (20) day
average NASDAQ price, the Parent shall increase the actual number of shares to
be delivered hereunder to the amount equal to $1,485,000 divided by the Last
Price, and (ii) in the event that the Last Price is greater than 110% of such
twenty (20) day average NASDAQ price, the Parent shall reduce the actual number
of shares to be delivered hereunder to the amount equal to $1,815,000 divided by
the Last Price. By way of illustration, without giving effect to the purchase
price adjustments and escrow conditions described below, assume the average
NASDAQ National Market price for the twenty (20) business day period is $10 per
share. If the Last Price is: (x) between $9.00 and
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$11.00 per share, the Parent would deliver 165,000 shares of its common stock to
the Stockholder under this subsection; (y) $8.00 per share, the Parent would
deliver 185,625 shares of its common stock to the Stockholder under this
subsection; and (z) $12.00 per share, the Parent would deliver 151,250 shares of
its common stock to the Stockholder under this Subsection.
(b) The "average NASDAQ National Market price" shall mean the
average of the closing sales prices or, in case no such reported sale takes
place on any given day, the average of the reported closing bid and asked prices
for such day. In either case, the prices would be as reported by The Nasdaq
Stock Market, Inc.
1.6 Delivery of Merger Consideration/Escrow of Shares/Set-Off.
(a) At the Closing as defined below, the Stockholder shall deliver
his certificate(s) representing all outstanding shares of Company Stock to
counsel for the Parent to hold in escrow until the Effective Time. At the
Effective Time, the Stockholder shall receive the aggregate Merger Consideration
set forth in Section 1.5 above provided, however, that a number of shares of
Parent Stock included in the aggregate Merger Consideration with a value of
$275,000 (the "Escrow Shares") shall be delivered into escrow with the Parent's
counsel (the "Escrow Agent") for a period of ten (10) months from the Closing
Date pursuant to the Escrow Agreement attached hereto as Exhibit 1.6. In
addition to all other rights and remedies of the Parent, BOL and the Surviving
Corporation for breach by the Company or the Stockholder of the representations
and warranties of the Company and the Stockholder herein, both at law and in
equity, the Parent shall have the right to set-off against the Escrow Shares for
any claims of the Parent or the Surviving Corporation arising under the
post-Closing adjustment provisions of Section 2 below and/or the indemnity
provisions of Section 12 below.
(b) The Stockholder shall deliver to counsel for the Parent at the
Closing the certificates representing Company Stock, duly endorsed in blank by
the Stockholder or accompanied by duly executed stock powers, to hold in escrow
until the Effective Time. The Stockholder shall cure any deficiencies with
respect to the endorsement of the certificates or other documents of conveyance
with respect to Company Stock or with respect to the stock powers accompanying
any Company Stock.
(c) At the Effective Time, counsel for the Parent shall release the
certificates representing shares of Company Stock to the Parent and such
certificates shall be canceled. As of the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration
of transfers of shares of the Company thereafter.
(d) No certificates representing fractional shares of Parent Stock
shall be issued upon the surrender of certificates which, prior to the Effective
Time, represented shares of Company Stock. In lieu of any such fractional
shares, the Stockholder will be paid an amount in cash based on the average
NASDAQ National Market Price (as defined above) of Parent Stock
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for the 20 business days ending on the second business day preceding the Closing
Date or, if the Last Price has been applied pursuant to Section 1.5, the Last
Price.
1.7 Closing. The closing of the Merger (the "Closing") shall occur
on the third business day after satisfaction or waiver of all of the conditions
set forth in Section 6 hereof at the offices of Xxxxx & Xxxxxxx, LLP, 000 Xxxxx
Xxxx Xxxxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000; at 10:00 a.m., or at such other
place and time or date as may be mutually agreed upon by the parties hereto. The
actual date of the Closing is referred to herein as the "Closing Date". At the
Closing, Parent, BOL and the Company shall take all actions necessary to effect
the Merger (including filing the Merger Certificate which shall become effective
at the Effective Time) and to effect the conversion and delivery of shares
referred to in Section 1.6 hereof.
Section 2. Post Closing Adjustments
2.1 Post-Closing Net Equity Adjustment based on the Closing Date Balance
Sheet Within sixty (60) days after the Closing, the Parent shall engage an
accounting firm to audit a balance sheet, prepared in accordance with generally
accepted accounting principles ("GAAP"), of the Company as of 5:00 PM (EDT) on
the day of the Closing (the "Closing Date Balance Sheet"). The Closing Date
Balance Sheet will utilize the accrual method of accounting notwithstanding any
other accounting method(s) that the Company may have been using in connection
with its financial statements and taxes. If the aggregate stockholders' equity
as shown on the Closing Date Balance Sheet (which shall mean total assets,
exclusive of any doubtful accounts receivable, less total liabilities, inclusive
of any contingent liabilities) is less than $100,000 (the amount of such
shortfall being hereafter known as the "Net Equity Deficiency"), the Stockholder
shall pay to BOL, within 10 days of the date of determination of the Net Equity
Deficiency (subject to the dispute resolution procedure set forth in Section 2.3
below) (i) 45% of the Net Equity Deficiency in cash, by certified check or by
wire transfer of immediately available funds, and (ii) 55% of the Net Equity
Deficiency in shares of common stock of the Parent which shall be valued at the
"average Nasdaq National Market value" as defined above for the twenty (20)
business day period immediately preceding the date the parties reach agreement
as to any Net Equity Deficiency. Notwithstanding the foregoing or any language
to the contrary in the Escrow Agreement attached hereto, the Parent shall have
the option, at its sole discretion, to receive shares of Parent Stock necessary
to satisfy all or a portion of the Net Equity Deficiency from the Escrow Shares
(provided that such action would not reduce the stock portion of the Merger
Consideration below 40% or otherwise impair the intended tax-free reorganization
structure of the Merger) or from the Stockholder directly (i.e. not from the
Escrow Shares), with any balance due to be paid in cash by the Stockholder as
provided above.
2.2 Post-Closing Adjustment for Excess or Deficiency in 1999 Revenues . To
the extent that (i) the Surviving Corporation's aggregate audited revenues for
the fiscal year ended December 31, 1999, are less than $1,200,000, the Merger
Consideration shall be reduced by an amount equal to $2.50 for each One Dollar
($1.00) in revenue less than $1,200,000, and (ii) the Surviving Corporation's
aggregate audited revenues for the fiscal year ended December 31, 1999
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are greater than $1,200,000, the Merger Consideration shall be increased by an
amount equal to $2.50 for each One Dollar ($1.00) in revenue greater than
$1,200,000. For example, in the event the Surviving Corporation's aggregate
revenues for the fiscal year ended December 31, 1999, are $1,150,000, the Merger
Consideration payable to the Stockholder shall be reduced by $125,000 (i.e. the
$50,000 shortfall multiplied by 2.50). Alternatively, in the event the Surviving
Corporation's aggregate revenues for the fiscal year ended December 31, 1999 are
$1,250,000, the Merger Consideration payable to the Stockholder shall be
increased by $125,000. Any such adjustment shall be based on an income statement
prepared by the Parent's accountants on or before April 30, 2000, showing the
Surviving Corporation's audited revenues for the year ended December 31, 1999.
To the extent any adjustment in the Merger Consideration shall be required under
this Section 2.2, (i) in the event of a reduction in the Merger Consideration,
the Surviving Corporation , in its sole discretion, shall be entitled to receive
all or a portion of such payment from the Escrow Shares (provided that such
action would not reduce the stock portion of the Merger Consideration below 40%
or otherwise impair the intended tax-free reorganization structure of the
Merger), or, using the stock/cash percentages described in section 2.1 above,
from the Stockholder directly within ten (10) days of delivery of the final
income statement for 1999 as audited by the Surviving Corporation's accountants
(subject to the dispute resolution procedure set forth in Section 2.3 below), or
(ii) in the event of an increase in the Merger Consideration, the Surviving
Corporation shall pay the Stockholder 55% of the amount of such increase in
Parent Stock and 45% in cash within ten (10) days of the delivery of the final
income statement for 1999 as audited by the Surviving Corporation's accountants
(subject to the dispute resolution procedure set forth in Section 2.3 below).
Any payments made in Parent Stock under this subsection in connection with 1999
revenues shall be based on the average NASDAQ National Market price of Parent
Stock for the twenty (20) business days preceding the later of the date of
delivery of the final income statement for 1999 or the resolution of any
disputes relating to such statement.
2.3 Dispute Resolution Procedure for Adjustments based on Closing Date
Balance Sheet and 1999 Revenues. Notwithstanding anything in this Section 2 to
the contrary, if the Stockholder disputes any item contained on the Closing Date
Balance Sheet or the audited 1999 revenues of the Surviving Corporation, the
Stockholder shall notify the Surviving Corporation in writing of each disputed
item (collectively, the "Disputed Amounts"), and specify the amount thereof in
dispute within thirty (30) business days after the delivery of the Closing Date
Balance Sheet or the final income statement for 1999, as the case may be. If the
Surviving Corporation and the Stockholder cannot resolve any such dispute, then
such dispute shall be resolved by an independent nationally recognized
accounting firm which is reasonably acceptable to the Surviving Corporation and
the Stockholder (the "Independent Accounting Firm"). The determination of the
Independent Accounting Firm shall be made as promptly as practical and shall be
final and binding on the parties, absent manifest error which error may only be
corrected by such Independent Accounting Firm. Any expenses relating to the
engagement of the Independent Accounting Firm shall be allocated between the
Surviving Corporation and the Stockholder so that the Stockholder's aggregate
share of such costs shall bear the same proportion to the total costs that the
Disputed Amounts unsuccessfully contested by the
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Stockholder (as finally determined by the Independent Accounting Firm) bear to
the total of the Disputed Amounts so submitted to the Independent Accounting
Firm.
Section 3. Representations and Warranties of the Company and the Stockholder.
3.1 Making of Representations and Warranties. As a material inducement to
the Parent and BOL to enter into this Agreement and consummate the transactions
contemplated hereby, the Company and the Stockholder hereby jointly and
severally make to the Parent and BOL the representations and warranties
contained in this Section 3.
3.2 Organization and Qualification of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts with full corporate power and authority to
own or lease its properties and to conduct its business in the manner and in the
places where such properties are owned or leased and where such business is
currently conducted or proposed to be conducted. The copies of the Articles of
Organization of the Company as amended to date, certified by the Secretary of
State for the Commonwealth of Massachusetts and the bylaws certified by the
Clerk of the Company and heretofore delivered to the Parent's counsel, are
complete and correct, and no amendments thereto are pending. The stock records
and minute books of the Company which have heretofore been delivered to the
Parent's counsel are correct and complete. The Company is duly qualified to do
business as a foreign corporation in each other jurisdiction in which it owns,
operates or leases real property and in each other jurisdiction in which the
failure to be so qualified or registered would have a material adverse effect on
the properties, assets, business, financial condition and prospects of the
Company.
3.3 Subsidiaries; Investments. Except as set forth in Schedule 3.3, the
Company has no direct or indirect subsidiaries and owns no securities issued by
any other business organization or governmental authority, except U.S.
Government securities, bank certificates of deposit and money market accounts
acquired as short-term investments in the ordinary course of its business.
Except as set forth in Schedule 3.3, neither the Company nor the Stockholder
owns or has any direct or indirect interest in or control over any corporation,
partnership, joint venture or entity of any kind which is a Competitor (as
defined below). For purposes of this Agreement, the term "subsidiary" means,
with respect to any person, any corporation 20% or more of the outstanding
voting securities of which, or any partnership, joint venture or other entity
20% or more of the total equity interest of which, is directly or indirectly
owned by such person.
3.4 Capital Stock. The total authorized capital stock of the Company
consists of 200,000 shares of common stock, no par value, of which 200 shares
are issued and outstanding. All of the issued and outstanding shares of the
Company Common Stock are duly authorized and validly issued, are fully paid and
nonassessable, are owned of record and beneficially by the Stockholder free and
clear of any liens, claims, encumbrances, restrictions, security interests,
mortgages, pledges or other demands, and all such shares were offered, issued,
sold and delivered by the Company in compliance with all applicable state and
federal laws concerning the issuance of securities. Further, none of such shares
were issued in violation of the
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preemptive rights of any past or present stockholder. No shares of the Company
Stock are held in the treasury of the Company. There are no outstanding
subscriptions, options, warrants, commitments, preemptive rights, agreements,
arrangements or commitments of any kind for or relating to the issuance, sale,
registration or voting of, or outstanding securities convertible into or
exchangeable for, any shares of capital stock of any class or other equity
interests of the Company. The Company has never acquired any treasury stock.
3.5 Authority of the Company and the Stockholder
(a) The Company has full right, power and authority to enter into
this Agreement and each agreement, document and instrument to be executed and
delivered by it pursuant to or as contemplated by this Agreement and to carry
out the transactions contemplated hereby and thereby. The execution, delivery
and performance by the Company of this Agreement and each such other agreement,
document and instrument have been duly authorized by the Company's Board of
Directors, and have been approved by the Stockholder by a unanimous written
consent vote. This Agreement and each agreement, document and instrument to be
executed and delivered by the Company pursuant to or as contemplated by this
Agreement (to the extent it contains obligations to be performed by the Company)
constitutes, or when executed, delivered and approved by the Company and the
Stockholder will constitute, the valid and binding obligations of the Company,
enforceable in accordance with its respective terms. The execution, delivery and
performance by the Company of this Agreement and each such other agreement,
document and instrument:
(i) do not and will not violate any provision of the Articles of
Organization or bylaws of the Company;
(ii) do not and will not violate any laws of the United States, or
any state or other jurisdiction applicable to the Company or require the
Company to obtain any court, regulatory body, administrative agency or
other approval, consent or waiver, or make any filing with, any federal,
state, local or foreign governmental body, agency or official
("Governmental Entity") that has not been obtained or made, other than the
filing of the Articles of Merger in accordance with the laws of the
Commonwealth of Massachusetts and except for any other approvals,
consents, waivers and filings that, if not obtained or made, individually
or in the aggregate, would not have a material adverse effect on the
properties, assets, business, financial condition or prospects of the
Company; and
(iii) except as otherwise indicated on Schedule 3.5 hereto, do not
and will not result in a breach of, constitute a default under, accelerate
any obligation under, or give rise to a right of termination of any
indenture or loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award, whether
written or oral, to which the Company is a party or by which the property
of the Company is bound or affected, or result in the creation or
imposition of any mortgage, pledge, lien, security interest or other
charge or encumbrance on any of the assets of the Company, except where
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such breach, default, acceleration or right of termination would not have
a material adverse effect on the properties, assets, business, financial
condition or prospects of the Company, and would not result in the
creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the assets of the Company.
(b) The Stockholder has full right, authority and power to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by or on behalf of it pursuant to or as contemplated by this
Agreement and to carry out the transactions contemplated hereby and thereby.
This Agreement and each agreement, document and instrument to be executed and
delivered by the Stockholder pursuant to or as contemplated by this Agreement
(to the extent it contains obligations to be performed by such Stockholder)
constitutes, or when executed and delivered will constitute, valid and binding
obligations of the Stockholder enforceable in accordance with their respective
terms, subject to the terms hereof. The execution, delivery and performance by
the Stockholder of this Agreement and each such agreement, document and
instrument:
(i) do not and will not violate any provision of the Articles
of Organization or bylaws of the Company;
(ii) do not and will not violate any laws of the United
States, or any state or other jurisdiction applicable to the Stockholder
or require the Stockholder to obtain any approval, consent or waiver of,
or make any filing with, any Governmental Entity that has not been
obtained or made; and
(iii) do not and will not result in a breach of, constitute a
default under, accelerate any obligation under or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Stockholder is a party or by which the
property of such Stockholder is bound or to which the property of the
Stockholder is subject or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or encumbrance
on any of the assets or properties of the Company. Except as disclosed on
Schedule 3.05, there are no stockholder agreements with respect to the
ownership or operation of the Company, and any such agreements shall be
terminated prior to the Closing.
3.6 Status of Property Owned or Leased.
(a) Real Property. The real property identified as being owned or
leased by the Company on Schedule 3.6(a) is collectively referred to herein as
the "Real Property". The Real Property constitutes all the real property owned
and leased by the Company.
(i) Commissions. There are no brokerage or leasing fees or
commissions or other compensation owed or payable by the Company on an
absolute or
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contingent basis to any person, firm, corporation, or other entity with
respect to or on account of any of the Encumbrances or the Real Property,
and no such fees, commissions or other compensation shall, by reason on
any existing agreement, become due after the date hereof.
(ii) Physical Condition. Except as set forth on Schedule
3.6(a), the Company has no knowledge of any material defect in the
physical condition, any material improvements located on or constituting a
part of any of the Real Property, including, without limitation, the
structural elements thereof, the mechanical systems therein, the roofs or
the parking and loading areas (collectively, the "Improvements").
(iii) Utilities. The Company has not received any written
notice of any termination or impairment of the furnishing of, or any
material increase in rates for, services to any of the Real Property of
water, sewer, gas, electric, telecommunication, drainage or other utility
services, except ordinary and usual rate increases applicable to all
customers (or all customers of a certain class) of a utility provider. The
Company has not entered into any agreement requiring it to pay to any
utility provider rates which are less favorable than rates generally
applicable to customers of the same class as the Company.
(iv) Compliance. Except as set forth on Schedule 3.6(a), the
Company has not received any written notice from any municipal, state,
federal or other governmental authority with respect to any violation of
any zoning, building, fire, water, use, health, environmental or other
statute, ordinance, code or regulation issued in respect of any of the
Real Property that has not been heretofore corrected, and except in either
case as set forth in Schedule 3.6(a) hereto.
(v) Government Approvals. The Company has not received any
notice of any plan, study or effort by any Governmental Entity which would
adversely affect the present use, zoning or value to the Company of any of
the Real Property or which would modify or realign any adjacent street or
highway in a manner materially adverse to the Company.
(vi) Zoning. The Company has not received any notice of any
zoning violations. All buildings and improvements situated on the Real
Property were built pursuant to validly issued building permits.
Certificates of occupancy were issued for all such structures as built,
and all such structures have been maintained as built since such
certificates were issued.
(vii) Service Contracts. A complete list of all material
existing service, management, supply or maintenance or equipment lease
contracts and other contractual agreements to which the Company is a party
affecting the Real Property or any portion thereof (the "Service
Contracts") is set forth on Schedule
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3.6(a). All such Service Contracts are terminable upon no more than thirty
(30) days written notice, at no cost, except as specified in Schedule
3.6(a).
(b) Personal Property. A list of each item of the machinery,
equipment and other fixed assets owned or leased by the Company having a fair
market value of at least $5,000 (the "Equipment"), is contained in Schedule
3.6(b) hereto. All of the Equipment and other machinery, equipment and personal
property of the Company is located on the Real Property or used in the operation
of the Company. Except as specifically disclosed in Schedule 3.6(b) or in the
Company Financial Statements (as hereinafter defined), the Company has good and
marketable title to all of the personal property owned by it. None of such
personal property or assets is subject to any mortgage, pledge, lien,
conditional sale agreement, security title, encumbrance or other charge except
as specifically disclosed in any Schedule hereto or in the Financial Statements.
The Company Financial Statements reflect all personal property of the Company,
subject to dispositions and additions in the ordinary course of business
consistent with this Agreement. Except as otherwise specified in Schedule 3.6(b)
hereto, all leasehold improvements, furnishings, machinery and equipment of the
Company are in generally good repair, normal wear and tear excepted, have been
well maintained, and conform in all material respects with all applicable
ordinances, regulations and other laws.
3.7. Financial Statements; Undisclosed Liabilities.
(a) The Company has delivered to the Parent the following financial
statements, copies of which are attached hereto as Schedule 3.7:
(i) Compiled, reviewed or management-prepared balance sheets
of the Company dated December 31, 1996, December 31, 1997, and December
31, 1998, and compiled, reviewed or management-prepared statements of
income, stockholders' equity and cash flows for each of the three (3)
years ended December 31, 1996, 1997 and 1998, certified by the Treasurer
of the Company (the "Year-End Company Financial Statements");
(ii) Draft balance sheets of the Company as of June 30, 1999
(herein the "Company Balance Sheet Date") and statements of income,
stockholders' equity and cash flows for the six months then ended,
certified by the Treasurer of the Company (the "Interim Company Financial
Statements", together with the Year-End Company Financial Statements, the
"Company Financial Statements");
The Company Financial Statements have been prepared in accordance with GAAP
applied consistently during the periods covered thereby (except that the Interim
Company Financial Statements are subject to normal year-end audit adjustments
and do not include footnotes), and present fairly in all respects the financial
condition of the Company at the dates of said statements and the results of
their operations for the periods covered thereby.
-11-
(b) As of the Company Balance Sheet Date, the Company had no
material liabilities of any nature, whether accrued, absolute, contingent or
otherwise (including without limitation liabilities as guarantor or otherwise
with respect to obligations of others or contingent liabilities arising prior to
the Company Balance Sheet Date), except liabilities stated or adequately
reserved for on the Company Financial Statements or reflected in Schedules
furnished to Parent hereunder as of the date hereof.
(c) As of the date hereof, the Company has no material liabilities
of any nature, whether accrued, absolute, contingent or otherwise (including
without limitation liabilities as guarantor or otherwise with respect to
obligations of others, or liabilities for taxes due or then accrued or to become
due or contingent liabilities arising prior to the date hereof or the Closing,
as the case may be), except liabilities (i) stated or adequately reserved
against on the appropriate Company Financial Statement or the notes thereto,
(ii) reflected in Schedules furnished to Parent hereunder on the date hereof or
(iii) incurred in the ordinary course of business of the Company consistent with
prior practices.
3.8 Taxes.
(a) The Company has paid or caused to be paid all federal, state,
local, foreign and other taxes, including without limitation income taxes,
estimated taxes, alternative minimum taxes, excise taxes, sales taxes, use
taxes, value-added taxes, gross receipts taxes, franchise taxes, capital stock
taxes, employment and payroll-related taxes, withholding taxes, stamp taxes,
transfer taxes and property taxes, whether or not measured in whole or in part
by net income, and all deficiencies, or other additions to tax, interest, fines
and penalties owed by it (collectively, "Taxes"), in the amounts indicated on
tax returns filed by the Company through the date hereof or in correspondence
received from any federal, state, local or foreign government taxing authority,
whether disputed or not (other than current taxes the liability for which is
adequately reserved for on the financial statements provided to the Parent
pursuant to Section 3.7 hereof).
(b) The Company has in accordance with applicable law filed all
federal, state, local and foreign tax returns required to be filed by it through
the date hereof and all such returns correctly and accurately set forth the
amount of any Taxes relating to the applicable period. For every taxable period
of the Company, the Company has delivered or made available to Parent complete
and correct copies of all federal, state, local and foreign income tax returns,
examination reports and statements of deficiencies assessed against or agreed to
by the Company. Schedule 3.8 attached hereto sets forth all federal tax
elections under the Internal Revenue Code of 1986, as amended (the "Code"), that
are in effect with respect to the Company or for which an application by the
Company is pending.
(c) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting in writing or to the Company's
knowledge, threatening to assert against the Company any deficiency or claim for
additional Taxes or a claim that the Company is or may be subject to taxation by
that jurisdiction. There are no security interests on any of the assets of the
Company that arose in connection with any failure (or alleged failure) to pay
any
-12-
Tax. The Company has not entered into a closing agreement pursuant to Section
7121 of the Code.
(d) Except as set forth in Schedule 3.8 attached hereto, there has
not been any audit of any tax return filed by the Company, no audit of any tax
return of the Company is in progress, and the Company has not been notified by
any tax authority that any such audit is contemplated or pending. Except as set
forth in Schedule 3.8, no extension of time with respect to any date on which a
tax return was or is to be filed by the Company is in force, and no waiver or
agreement by the Company is in force for the extension of time for the
assessment or payment of any Taxes.
(e) (i) The Company has not consented to have the provisions of
Section 341(f)(2) of the Code applied to it, (ii) the Company has not agreed to,
and has not been requested by any governmental authority to, make any
adjustments under Section 481(a) of the Code by reason of a change in accounting
method or otherwise and (iii) the Company has never made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances would obligate it to make any payments, that will not be
deductible under Section 280G of the Code. The Company has disclosed on its
federal income tax returns all positions taken therein that could give rise to a
penalty for underpayment of federal Tax under Section 6662 of the Code. The
Company has never had any liability for unpaid Taxes because it is a member of
an "affiliated group" (as defined in Section 1504(a) of the Code). The Company
has never filed, nor has it ever been required to file, a consolidated, combined
or unitary tax return with any entity. The Company is not a party to any tax
sharing agreement.
(f) The Company computes its federal taxable income under the cash
basis method of accounting.
(g) For purposes of this Section 3.8, all references to Sections of
the Code shall include any predecessor provisions to such Sections.
3.9 Accounts Receivable. All accounts receivable of the Company as of the
respective balance sheet dates in the Company Financial Statements and all
accounts receivable arising thereafter or hereafter to the Closing Date, arose
or will arise from valid sales in the ordinary course of business. Except as set
forth in Schedule 3.9, the Company has no accounts or loans receivable from any
person, firm or corporation which is affiliated with the Company. For purposes
hereof, "affiliate" means any Stockholder, or any business entity which
controls, or is controlled by, or is under common control with the Company.
3.10 Inventories. The Company maintains no inventory.
3.11 Absence of Certain Changes.
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Since December 31, 1998, the Company has conducted its business only in
the ordinary course and consistent with past practices and except as disclosed
in Schedule 3.11 there has not been:
(a) Any change in the properties, assets, liabilities, business,
operations, financial condition or prospects of the Company which change by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has been materially adverse with respect to the
Company;
(b) Except for the endorsement of checks in the ordinary course of
business any material contingent liability incurred by the Company as guarantor
or otherwise with respect to the obligations of others or any cancellation of
any material debt or claim owing to, or waiver of any material right of, the
Company;
(c) Any mortgage, encumbrance or lien placed on any of the
properties of the Company which remains in existence on the date hereof or will
remain on the Closing Date except for liens permitted by any current agreement
of the Company with respect to borrowed money;
(d) Any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any capital
assets of the Company costing more than $10,000;
(e) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting any of the properties, assets or
business of the Company;
(f) Any declaration, setting aside or payment of any dividend by the
Company, or the making of any other distribution in respect of the capital stock
of the Company, any direct or indirect redemption, purchase or other acquisition
by the Company of its own capital stock, any issuance or sale of any securities
convertible into or exchangeable for debt or equity securities of the Company or
any grant, issuance or exercise of options, warrants, subscriptions, preemptive
rights, agreements, arrangements or commitments of any kind for or relating to
the issuance, sale, registration or voting of any shares of capital stock of any
class or other equity interests of the Company;
(g) Any claim of unfair labor practices asserted against the
Company; any change in the compensation (in the form of salaries, wages,
incentive arrangements or otherwise) payable or to become payable by the Company
to any of its officers, employees, agents or independent contractors other than
customary merit or cost of living increases in accordance with its usual
practices, or any bonus payment or arrangement made to or with any of such
officers, employees, agents or independent contractors; any entering into any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any officer, director or employee of the
Company except for employment arrangements
-14-
providing for salary or wages of less than $20,000 per annum and any oral
agreement terminable at will by the Company;
(h) Any change with respect to the officers or senior management of
the Company or any grant of any severance or termination pay to any officer or
employee of the Company;
(i) Any payment or discharge of a material lien or liability of the
Company which was not shown on the Company Financial Statements or incurred in
the ordinary course of business thereafter;
(j) Any obligation or liability incurred by the Company to any of
its officers, directors or stockholders, or any loans or advances made by the
Company to any of its officers, directors, stockholders, except normal
compensation and expense allowances payable to officers or employees;
(k) Any change in accounting methods or practices other than to
comply with new accounting pronouncements, credit practices or collection
policies used by the Company;
(l) Any other material transaction entered into by the Company other
than transactions in the ordinary course of business; or
(m) Any agreement or understanding whether in writing or otherwise,
that would result in any of the transactions or events, or require the Company
to take any of the actions, specified in paragraphs (a) through (l) above.
3.12 Banking Relations. All of the arrangements which the Company has with
any banking institution are described in Schedule 3.12 attached hereto,
indicating with respect to each of such arrangements the type of arrangement
maintained (such as checking account, borrowing arrangements, safe deposit box,
etc.), the names in which the accounts are held, the account number, and the
name of each person, corporation, firm or other entity authorized in respect
thereof.
3.13 Patents, Trade Names, Trademarks, Copyrights and Proprietary Rights.
All patents, patent applications, trademark registrations, trademark
registration applications, copyright registrations, copyright registration
applications and all material trade names, trademarks, copyrights and other
material proprietary rights owned by or licensed to the Company (other than
off-the-shelf software licensed to the Company) or used in its respective
business as presently conducted (the "Proprietary Rights") are listed in
Schedule 3.13 attached hereto. All of the material patents, registered
trademarks and copyrights of the Company and all of the material patent
applications, trademark registration applications and copyright registration
applications of the Company have been duly registered in, filed in or issued by
the United States Patent and Trademark Office, the United States Register of
Copyrights or the corresponding offices of other countries identified on said
schedule. To the Company's knowledge, except as
-15-
set forth in Schedule 3.13: (a) use of said patents, trade names, trademarks,
copyrights or other proprietary rights in the ordinary course of business as
presently conducted does not require the consent of any other person and (b) the
Company has sufficient title or adequate rights or licenses to use all material
patents, trade names, trademarks, copyrights, or other proprietary rights used
by it in its business as presently conducted free and clear of any attachments,
liens, encumbrances or adverse claims. The Company has not received written
notice that its present or contemplated activities or products infringe any such
patents, trade names, trademarks or other proprietary rights of others. Except
as set forth in Schedule 3.13: (i) no other person has an interest in or right
or license to use, or the right to license others to use, any of said patents,
patent applications, trade names, trademarks, copyrights or other proprietary
rights; (ii) there are no written claims or demands of any other person
pertaining thereto and no proceedings have been instituted, or are pending or
threatened, which challenge the rights of the Company in respect thereof; (iii)
none of the patents, trade names, trademarks, copyrights or other proprietary
rights listed in said schedule is subject to any outstanding order, decree,
judgment or stipulation, or is being infringed by others; and (iv) no proceeding
charging the Company with infringement of any adversely held patent, trade name,
trademark or copyright has been filed or is threatened to be filed.
3.14 Trade Secrets and Customer Lists. The Company has the right to use in
the ordinary course of its business as presently conducted, free and clear of
any claims or rights of others, all trade secrets, inventions, customer lists
and secret processes required for or incident to the manufacture or marketing of
all products presently sold, manufactured, licensed, under development or
produced by it, including products licensed from others. Any payments required
to be made by the Company for the use of such trade secrets, inventions,
customer lists and secret processes are described in Schedule 3.14. The Company
is not using or in any way making use of any confidential information or trade
secrets of any third party, including without limitation, a former employer of
any present or past employee of the Company or any of the predecessors of the
Company.
3.15 Contracts.
(a) Except for contracts, commitments, plans, agreements and
licenses described in Schedule 3.15 (complete and accurate copies of which have
been delivered to the Parent), the Company is neither a party to nor subject to:
(i) any plan or contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments, profit
sharing, severance or termination pay, collective bargaining or the like, or any
contract or agreement with any labor union;
(ii) any employment contract or contract for services which
requires the payment of $20,000 or more annually or which is not terminable
within thirty (30) days by the Company without liability for any penalty or
severance payment other than pursuant to the Company's severance policies
existing on the date hereof;
-16-
(iii) any contract or agreement for the purchase of any
commodity, material or equipment except purchase orders in the ordinary course
for less than $10,000 each;
(iv) any other contracts or agreements creating any obligation
of the Company of $10,000 or more with respect to any such contract;
(v) any contract or agreement providing for the purchase of
all or substantially all of its requirements of a particular product from a
supplier;
(vi) any contract or agreement which by its terms does not
terminate or is not terminable by the Company or any successor or assign within
six months after the date hereof without payment of a penalty;
(vii) any contract or agreement for the sale or lease of its
products or services not made in the ordinary course of business;
(viii) any contract with any sales agent or distributor of
products of the Company or any subsidiary;
(ix) any contract containing covenants limiting the freedom of
the Company to compete in any line of business or with any person or entity;
(x) any contract or agreement for the purchase of any fixed
asset for a price in excess of $10,000 whether or not such purchase is in the
ordinary course of business;
(xi) any license agreement (as licensor or licensee);
(xii) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for the borrowing of money
and any related security agreement;
(xiii) any contract or agreement with any officer, employee,
director or stockholder of the Company or with any persons or organizations
controlled by or affiliated with any of them;
(xiv) any partnership, joint venture, or other similar
contract, arrangement or agreement; or
(xv) any registration rights agreements, warrants, warrant
agreements or other rights to subscribe for securities, any voting agreements,
voting
-17-
trusts, shareholder agreements or other similar arrangements or any stock
purchase or repurchase agreements or stock restriction agreements.
(b) Each material contract, agreement, lease and instrument to which
the Company is a party or by which the Company is duly authorized on the part of
the Company and is in full force and effect and constitute legal, valid and
binding obligations of the Company and, to the Company's knowledge, the other
parties thereto, enforceable in accordance with their respective terms. Neither
the Company nor to the Company' knowledge any other party to any contract,
agreement, lease or instrument of the Company is in default in complying with
any provisions thereof, and no condition or event or facts exists which, with
notice, lapse of time or both would constitute a default thereof on the part of
either of the Company or to the Company's knowledge or on the part of any other
party thereto in any such case that could have a material adverse effect on the
properties, assets, financial condition or prospects of either of the Company.
Schedule 3.15 indicates whether any of the agreements, contracts, commitments or
other instruments and documents described therein requires consent or approval
to be transferred to the Surviving Corporation as a result of the transactions
contemplated herein.
3.16 Litigation. Schedule 3.16 hereto lists all currently pending and to
the Company's knowledge threatened litigation and governmental or administrative
proceedings or investigations to which the Company is or would be a party.
Except for matters described in Schedule 3.16, there is no litigation or
governmental or administrative proceeding or investigation pending or to the
Company's knowledge threatened against the Company which may have a material
adverse effect on the properties, assets, business, financial condition or
prospects of the Company or which would prevent or hinder the consummation of
the transactions contemplated by this Agreement.
3.17 Compliance with Laws. The Company has not received notice of a
violation or alleged violation of applicable statutes, ordinances, orders, rules
and regulations promulgated by any federal, state, municipal or other
governmental authority, which violation or alleged violation would have a
material adverse effect on the business of the Company, and except as set forth
in Schedule 3.17 hereto, the Company is currently in compliance in all material
respects with all such statutes, ordinances, orders, rules or regulations, and
to the Company's knowledge there is no valid basis for any claim that the
Company is not in compliance with any such statute, ordinance, order, rule or
regulation.
3.18 Insurance. The Company has delivered or made available to the Parent
true and complete copies of each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five (5)
years. With respect to each such insurance policy to which the Company is a
party on the date hereof: (i) to the Company's knowledge, the policy is legal,
valid, binding, enforceable, and in full force and effect; (ii) the policy will
continue to be in full force and effect on identical terms following the
consummation of the transactions contemplated hereby;, (iii) neither the Company
nor to the Company's knowledge any other party to the policy is in breach
-18-
or default (including with respect to the payment of premiums or the giving of
notices), and to the Company's knowledge no event has occurred which, with
notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy; and (iv) no
party to the policy has repudiated any provision thereof. The Company has been
covered during the past five (5) years by insurance in scope and amount
customary and reasonable for the businesses in which it has engaged during the
aforementioned period. Schedule 3.18 describes any self-insurance arrangements
affecting the Seller.
3.19 Warranty and Related Matters. The Company has not received notice of
any product liability, warranty or other similar claims against the Company
alleging that any of its products or services are defective or fail to meet any
product or service warranties except as disclosed in Schedule 3.19 hereto. The
Company has not received notice of any statements, citations, correspondence or
decisions by any Governmental Entity stating that any product manufactured,
marketed or distributed at any time by the Company (the "Company Products") is
defective or unsafe or fails to meet any product warranty or any standards
promulgated by any such Governmental Entity. There have been no recalls ordered
by any such Governmental Entity with respect to any Company Product. There is no
(i) fact relating to any Company Product that may impose upon the Company a duty
to recall any Company Product or a duty to warn customers of a defect in any
Company Product, (ii) latent or overt design, manufacturing or other defect in
any Company Product, or (iii) liability for warranty or other claim or return
with respect to any Company Product except in the ordinary course of business
consistent with the past experience of the Company for such kind of claims and
liabilities.
3.20 Finder's Fees. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Company or the Stockholder.
3.21 Permits; Burdensome Agreements. Schedule 3.21 lists all material
permits, registrations, licenses, franchises, certifications and other approvals
required from Governmental Entities in order for the Company to conduct its
business (collectively, the "Approvals"). The Company has obtained all the
Approvals, which are valid and in full force and effect. Except as disclosed on
Schedule 3.21, none of the Approvals is subject to termination by their express
terms as a result of the execution of this Agreement by the Company or the
consummation of the Merger, and no further Approvals will be required in order
to continue to conduct the business currently conducted by the Company
subsequent to the Closing. Except as disclosed in Schedule 3.21 or in any other
schedule hereto, the Company is neither subject to nor bound by any agreement,
judgment, decree or order which may materially and adversely affect its
properties, assets, business, financial condition or prospects.
3.22 Transactions with Interested Persons. Except as set forth in Schedule
3.22 hereto, no Stockholder, officer, employee or director of the Company and
none of their respective parents, grandparents, spouses, children, siblings or
grandchildren owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director or in another similar
capacity of, any competitor, supplier or customer of the Company or any
-19-
organization, person or entity with whom the Company is doing business other
than investment in stock or other securities listed on a national securities
exchange which represents no more than 2% of all issued and outstanding stock or
securities of such competitor.
3.23 Employee Benefit Programs.
(a) Schedule 3.23 sets forth a list of every Employee Program (as
defined below) that has been maintained (as such term is further defined below)
by the Company at any time during the three-year period ending on the date
hereof.
(b) Each Employee Program which has been maintained by a Company and
which has at any time been intended to qualify under Section 401(a) or 501(c)(9)
of the Code, has received a favorable determination or approval letter from the
IRS regarding its qualification under such section and has, in fact, been
qualified under the applicable section of the Code from the effective date of
such Employee Program through and including the Closing (or, if earlier, the
date that all of such Employee Program's assets were distributed). No event or
omission has occurred which would cause any such Employee Program to lose such
qualification under the applicable Code section.
(c) Except as otherwise disclosed on Schedule 3.23, there has not
been any failure of any party to comply with any laws applicable to or the terms
of any Employee Programs that have been maintained by the Company, except for
any failures to comply that, individually or in the aggregate, would not have a
material adverse effect on the properties, assets, business, financial condition
or prospects of the Company. With respect to any Employee Program now or
heretofore maintained by the Company, there has occurred no "prohibited
transaction," as defined in Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code, or
breach of any duty under ERISA or other applicable law (including, without
limitation, any health care continuation requirements or any other tax law
requirements, or conditions to favorable tax treatment, applicable to such
plan), which could result, directly or indirectly (including without limitation
through any obligation of indemnification or contribution) in any taxes,
penalties or other liability to the Company or any Affiliate (as defined below).
No litigation, arbitration, or governmental administrative proceeding or
investigation or other proceeding (other than those relating to routine claims
for benefits) is pending or threatened with respect to any such Employee
Program.
(d) Neither the Company nor any Affiliate has ever maintained any
Employee Program subject to Title IV of ERISA.
(e) Except as otherwise disclosed on Schedule 3.23, with respect to
each Employee Program maintained by the Company within the three years preceding
the date hereof, complete and correct copies of the following documents (if
applicable to such Employee Program) have previously been delivered to the
Parent: (i) all documents embodying or governing such Employee Program, and any
funding medium for the Employee Program (including, without limitation, trust
agreements) as they may have been amended to the date
-20-
hereof; (ii) the most recent IRS determination or approval letter with respect
to such Employee Program under Code Section 401 or 501(c)(9), and any
applications for determination or approval subsequently filed with the IRS;
(iii) the three most recently filed IRS forms 5500, with all applicable
schedules and accountants' opinions attached thereto; (iv) the summary plan
description for such Employee Program (or other descriptions of such Employee
Program provided to employees) and all modifications thereto; (v) any insurance
policy (including any fiduciary liability insurance policy) related to such
Employee Program; and (vi) any documents evidencing any loan to an Employee
Program that is a leveraged employee stock ownership plan.
(f) Each Employee Program maintained by the Company as of the date
hereof is subject to amendment or termination by the Board of Directors of the
Company without any further liability or obligation on the part of the Company
to make further contributions to any trust maintained under any such Employee
Program following such termination and the Company has not made any written or
oral representations to the contrary to its employees.
(g) For purposes of this Section 3.23:
(i) "Employee Program" means (a) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(40)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; and (b) all stock option plans, bonus or incentive award
plans, severance pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, and all other employee benefit
plans, agreements, and arrangements not described in subsection (a) above. In
the case of an Employee Program funded through an organization described in Code
Section 501(c)(9), each reference to such Employee Program shall include a
reference to such organization;
(ii) an entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise covers
employees of such entity (or their spouses, dependents, or beneficiaries);
(iii) an entity is an "Affiliate" of the Company for purposes
of this Section 3.23 if it would have ever been considered a single employer
with the Company under ERISA Section 4001(b) or part of the same "controlled
group" as the Company for purposes of ERISA Section 302(d)(8)(c); and
(iv) "Multiemployer Plan" means a (pension or non-pension)
employee benefit plan to which more than one employer contributes and which is
maintained pursuant to one or more collective bargaining agreements.
-21-
3.24 Environmental Matters.
(a) Except as used in connection with routine maintenance and as set
forth in Schedule 3.24 hereto, (i) the Company has never generated, transported,
used, stored, treated, disposed of, or managed any Hazardous Waste (as defined
below); (ii) to the Company's knowledge no Hazardous Material (as defined below)
has ever been or is threatened to be spilled, released, or disposed of at any
site presently or formerly owned, operated, leased, or used by the Company, or
has ever come to be located in the soil or groundwater at any such site; (iii)
to the Company's knowledge no Hazardous Material has ever been transported from
any site presently or formerly owned, operated, leased, or used by the Company
for treatment, storage, or disposal at any other place; (iv) to the Company's
knowledge the Company does not presently own, operate, lease, or use, nor has it
previously owned, operated, leased, or used any site on which underground
storage tanks are or were located; and (v) to the Company's knowledge no lien
has ever been imposed by any Governmental Entity on any property, facility,
machinery, or equipment owned, operated, leased, or used by the Company in
connection with the presence of any Hazardous Material.
(b) Except as set forth in Schedule 3.24 hereto, (i) to the
Company's knowledge the Company has no liability under, nor has the Company ever
violated in any material respect, any Environmental Law (as defined below); (ii)
to the Company's knowledge any property owned, operated, leased, or used by the
Company and any facilities and operations thereon are presently in compliance in
all material respects with all applicable Environmental Laws; (iii) to the
Company's knowledge the Company has never entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with respect
to any environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law (as defined below);
and (iv) neither the Company nor the Stockholder has, to its or his knowledge,
any reason to believe that any of the items enumerated in clause (iii) of this
paragraph will be forthcoming.
(c) Except as set forth in Schedule 3.24 hereto, to the Company's
knowledge, no site owned, operated, leased, or used by the Company contains any
asbestos or asbestos-containing material, any polychlorinated biphenyls
("pcb's") or equipment containing pcb's, or any urea formaldehyde foam
insulation.
(d) For purposes of this Section 3.24, (i) "Hazardous Material"
shall mean and include any hazardous waste, hazardous material, hazardous
substance, petroleum product, oil, toxic substance, pollutant, or contaminant,
as defined or regulated under any Environmental Law or any other substance which
may pose a threat to the environment or to human health or safety; (ii)
"Hazardous Waste" shall mean and include any hazardous waste as defined or
regulated under any Environmental Law; (iii) "Environmental Law" shall mean any
environmental laws, regulation, rule, ordinance, or by-law at the foreign,
federal, state, or local
-22-
level, existing as of the date hereof; and (iv) the Company shall mean and
include the Company, its predecessors and all other entities for whose conduct
the Company is or may be held responsible under any Environmental Law.
3.25 Lists of Certain Employees and Suppliers.
(a) Schedule 3.25 hereto contains a list of all current directors
and officers of the Company and a list of all managers, employees and
consultants of the Company who, individually, have received or are scheduled to
receive base salary from the Company during the current fiscal year of $20,000
or more. In each case such schedule includes the current job title and current
base salary of each such individual.
(b) Schedule 3.25 sets forth a true and complete list of all
suppliers of the Company to whom the Company made payments aggregating $25,000
or more during the most recent complete fiscal year, showing, with respect to
each, the name, address and dollar volume involved.
3.26 Employees; Labor Matters. As of the date hereof, the Company employed
the number of full-time employees and part-time employees described on Schedule
3.26. The Company is not delinquent in payments to any of its employees for any
wages, salaries, commissions, bonuses or other direct compensation for any
services performed for it to the date hereof or amounts required to be
reimbursed to such employees. Except as set forth in Schedule 3.26, upon
termination of the employment of any of said employees, the Company will not by
reason of the Merger be liable to any of said employees for so-called "severance
pay" or any other payments. Except as set forth in Schedule 3.26 attached
hereto, the Company has no policy, practice, plan or program of paying severance
pay or any form of severance compensation in connection with the termination of
employment. The Company is in compliance in all material respects with all
applicable laws and regulations respecting labor, employment, fair employment
practices, terms and conditions of employment, and wages and hours. The Company
has not received any notices or claims of any charges of employment
discrimination or unfair labor practices, nor are there any strikes, slowdowns,
stoppages of work, or any other concerted interference with normal operations
existing, pending or threatened against or involving the Company. There are no
grievances, complaints or charges that have been filed against the Company under
any dispute resolution procedure (including, but not limited to, any proceedings
under any dispute resolution procedure under any collective bargaining
agreement). No collective bargaining agreements are in effect or are currently
being or are about to be negotiated by the Company. The Company has not received
written notice of pending or threatened changes with respect to the senior
management or key supervisory personnel of the Company.
3.27 Customers. Schedule 3.27 sets forth the mane of each of the customers
who accounted for more than 5% of the sales of the Company for the most recent
complete fiscal year of the Company (collectively, the "Customers"). No Customer
has given notice to the Company of its intention to terminate, to cancel or
otherwise materially and adversely modify its
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relationship with the Company or to decrease materially or limit its usage or
purchase of the services or products of the Company.
3.28 Y2K. The Company has taken all commercially reasonable action to
assess, evaluate and correct all of the hardware, software, embedded microchips
and other processing capabilities of computer and telecommunication systems it
uses to ensure that such systems will be able to function accurately and without
interruption or ambiguity using date and time data (including, but not limited
to, calculating, comparing and sequencing) from, into and between the years 1999
and 2000 and the twentieth century, including leap year calculations. With
respect to the computer systems of third-party suppliers of the Company or with
which the computer systems of the Company interface, the Company has no reason
to expect a failure so to process which would have a material adverse effect
upon its business.
3.29 Tax-free Reorganization. Neither the Company nor the Stockholder has
taken any action which would violate any requirement, including but not limited
to the continuity-of-business-enterprise requirement of 26 C.F.R. ss.1.368-1(d),
for tax-free reorganization status under Section 368(a) of the Code with respect
to the Merger.
3.30 Disclosure. This Agreement, including the Schedules hereto prepared
by the Company, together with the other information furnished to the Parent by
the Company and the Stockholder in connection herewith, does not contain an
untrue statement of material fact or omit to state a material fact necessary to
make the statements herein and therein, in light of the circumstances under
which they were made, not misleading.
Section 4. Covenants of the Company and the Stockholder.
4.1 Making of Covenants and Agreements. The Company and the Stockholder
covenant and agree as set forth in this Section 4.
4.2 Conduct of Business. Between the date of this Agreement and the
Effective Time, the Stockholder will cause the Company to do and the Company
will do the following, unless Parent shall otherwise consent in writing:
(a) conduct its business only in the ordinary course consistent with
past practices, refrain from changing or introducing any method of management or
operations except in the ordinary course of business and in a manner consistent
with past practices and maintain levels of working capital consistent with past
practices;
(b) refrain from making any purchase, sale or disposition of any
asset or property other than in the ordinary course of business, from purchasing
or selling any capital asset costing more than $5,000 and from mortgaging,
pledging, subjecting to a lien or otherwise encumbering any of its properties or
assets;
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(c) refrain from incurring or modifying any contingent liability as
a guarantor or otherwise with respect to the obligations of others, and from
incurring or modifying any other contingent or fixed obligations or liabilities
except in the ordinary course of business and in a manner consistent with past
practices;
(d) refrain from making any change in its incorporation documents,
by-laws or authorized or issued capital stock or from acquiring any securities
issued by any other business organization other than short-term investments in
the ordinary course of business;
(e) refrain from declaring, setting aside or paying any dividend,
making any other distribution in respect of its capital stock, making any direct
or indirect redemption, purchase or other acquisition of its capital stock,
issuing, granting, awarding, selling, pledging, disposing of or encumbering or
authorizing the issuance, grant, award, sale, pledge, disposition or encumbrance
of any shares of, or securities convertible or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of
capital stock of any class of the Company or entering into any agreement or
commitment with respect to any of the foregoing;
(f) refrain from making any change in the compensation payable or to
become payable to any of its officers, employees or agents, except for scheduled
increases in salary or wages in the ordinary course of business that are
consistent with past practices, or granting any severance or termination pay to,
or establishing, adopting or entering into any agreement or arrangement
providing for severance or termination pay to, or entering into or amending any
employment, or other agreement or arrangement with, any director, officer or
other employee of the Company or any Stockholder or establishing, adopting or
entering into or amending any collective bargaining, bonus, incentive, deferred
compensation, profit sharing, stock option or purchase, insurance, pension,
retirement or other employee benefit plan;
(g) refrain from making any change in its borrowing arrangements or
modifying, amending or terminating any of its contracts except in the ordinary
course of business, or waiving, releasing or assigning any material rights or
claims;
(h) use reasonable efforts to prevent any change with respect to its
management and supervisory personnel or banking arrangements;
(i) use reasonable efforts to keep intact its business organization
and to preserve the goodwill of and business relationships with all suppliers,
customers and others having business relations with it, and to maintain its
properties and facilities, including those held under leases, in as good a
working order and condition as on the date hereof, ordinary wear and tear
excepted;
(j) use reasonable efforts to have in effect and maintain at all
times all insurance of the kind, in the amount and with the insurers set forth
in Schedule 3.18 or equivalent insurance with any substitute insurers approved
by Parent;
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(k) refrain from changing accounting policies or procedures
(including, without limitation, procedures with respect to the payment of
accounts payable and collection of accounts receivable) or from making any tax
election or settling or compromising any federal, state, local or foreign income
tax liability;
(l) refrain from entering into any executory agreement, commitment
or undertaking to do any of the activities prohibited by the foregoing
provisions; and
(m) permit Parent and its authorized representatives (including
without limitation Parent's attorneys, accountants, and pension and
environmental consultants) to have full access to all of its properties, assets,
books, records, business files, executive personnel, tax returns, contracts and
documents and furnish to Parent and its authorized representatives such
financial and other information with respect to its business or properties as
Parent may from time to time reasonably request.
4.3 Consents and Approvals. Each of the Company and the Stockholder shall
use its best efforts to obtain or cause to be obtained prior to the Closing Date
all necessary consents and approvals to the performance of the obligations of
the Company and the Stockholder under this Agreement, including, without
limitation, the consents and authorizations described in Schedule 3.15 or
Schedule 4.3 and such other authorizations, waivers, consents and permits as may
be necessary to transfer to Parent and/or to retain in full force and effect
without penalty subsequent to the Effective Time all material contracts,
permits, licenses and franchises of or applicable to the businesses of the
Company.
4.4 Action By Written Consent of Stockholder. On the date hereof the Clerk
of the Company shall deliver a certificate of a consent vote of the sole
stockholder authorizing the transactions contemplated hereby.
4.5 Exclusive Dealing. Unless and until the earlier to occur of the
Closing Date or the termination of this Agreement pursuant to Section 9, neither
the Company nor the Stockholder shall, nor shall any of them permit any
director, officer, employee or agent of either of them to, directly or
indirectly, (i) take any action to solicit, initiate submission of or encourage,
proposals or offers from any person relating to any acquisition or purchase of
all or (other than in the ordinary course of business) a portion of the assets
of, or any equity interest in, the Company or any merger or business combination
with the Company (an "Acquisition Proposal"), (ii) participate in any
discussions or negotiations regarding an Acquisition Proposal with any person or
entity other than Parent and BOL and their representatives, or (iii) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do any of the foregoing.
4.6 No Sales of Capital Stock. Between the date of this Agreement and the
Effective Time, the Stockholder shall neither sell, exchange, deliver, assign,
pledge, encumber nor otherwise transfer or dispose of any Company Stock owned
beneficially or of record by the
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Stockholder, nor grant any right of any kind to acquire, dispose of, vote or
otherwise control in any manner such shares of Company Stock; provided, however,
that notwithstanding anything to the contrary stated herein, any transferee,
executor, heir, legal representative, successor or assign of the Stockholder
shall be bound by this Agreement.
4.7 Notification of Certain Matters. Upon becoming aware thereof prior to
the Closing, the Stockholder and the Company shall give prompt notice to the
Parent of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
of the Company or the Stockholder contained herein to be untrue or inaccurate in
any material respect at or prior to the Closing and (ii) any material failure of
the Stockholder or the Company to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by such person hereunder. The
delivery of any notice pursuant to this Section 4.7 shall not be deemed to (i)
modify the representations or warranties hereunder of the party delivering such
notice, (ii) modify the conditions set forth in Section 7 or elsewhere or (iii)
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
4.8 Amendment of Schedules. The Company and the Stockholder agree that,
with respect to the representations and warranties contained in this Agreement,
the Company and the Stockholder shall have the continuing obligation until the
Closing Date to supplement or amend promptly the Schedules hereto with respect
to any matter hereafter arising or discovered which, if existing or known at the
date of this Agreement, would have been required to be set forth or described on
the Schedules. Notwithstanding the foregoing sentence, no amendment or
supplement to a Schedule prepared by the Company or the Stockholder that
constitutes or reflects an event or occurrence that would be reasonably likely
to have a material adverse effect may be made unless the Parent consents to such
amendment or supplement.
4.9 Further Assurances. The Company and the Stockholder agree to execute
and deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or convenient
to carry out the transactions contemplated hereby.
Section 5. Representations and Warranties of the Parent and BOL.
5.1 Making of Representations and Warranties. As of the date hereof, the
Parent and BOL hereby represent and warrant to the Stockholder and the Company
as set forth in this Section 5.
5.2 Organization of the Parent and BOL. Each of the Parent and BOL is a
corporation duly organized, validly existing and in good standing under the laws
of its respective state of incorporation with full corporate power and authority
to conduct its respective businesses in the manner as now conducted.
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5.3 Authority. All necessary corporate action has been taken by each of
the Parent and BOL to authorize the execution, delivery and performance of this
Agreement and each agreement, document and instrument to be executed and
delivered by it pursuant to this Agreement. This Agreement and each agreement,
document and instrument to be executed and delivered by the Parent and/or BOL
pursuant to this Agreement (to the extent it contains obligations to be
performed by the Parent and/or BOL) constitutes, or when executed and delivered
by the Parent and/or BOL will constitute, valid and binding obligations of the
Parent and/or BOL enforceable in accordance with its respective terms.
5.4 No Conflicts. The execution, delivery and performance by the Parent
and BOL of this Agreement and each such other agreement, document and
instrument: (i) do not and will not violate any provision of the Certificate of
Incorporation or bylaws of the Parent or BOL; (ii) does not and will not violate
any laws of any state or other jurisdiction applicable to the Parent or BOL or
require the Parent or BOL to obtain any approval, consent or waiver or make any
filing with any governmental entity, other than the filing of Articles of Merger
in accordance with the laws of the Commonwealth of Massachusetts; and (iii) will
not result in a breach of, constitute a default under, accelerate any obligation
under, or give rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award, whether written or oral, to which the Parent or BOL is a
party or by which the property of the Parent or BOL is bound or affected, or
result in the creation or imposition of any mortgage, pledge, lien, security
interest or other charge or encumbrance on any of the assets of the Parent or
BOL, except where such breach, default, acceleration or right of termination
would not have a material adverse effect on the properties, assets, business,
financial condition or prospects of the Parent or BOL, and would not result in
the creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the assets of the Parent or BOL.
5.5 Parent Stock. The Parent Stock to be delivered to the Stockholder at
the Closing, when delivered in accordance with the terms of this Agreement, will
constitute valid and legally issued shares of the Common Stock of the Parent,
fully paid and non-assessable. The Parent Stock will constitute restricted
securities and will be subject to the lock-up provisions and other transfer
restrictions imposed under this Agreement and under applicable federal and state
securities laws as described in Section 9 below.
5.6 Litigation. There is no litigation or governmental or administrative
proceeding or investigation pending or threatened against the Parent or BOL
which may have an adverse effect on the properties, assets, business, financial
condition or prospects of the Parent or BOL or which would prevent or hinder the
consummation of the transactions contemplated by this Agreement.
5.7 Compliance with Laws. Neither the Parent nor BOL has received notice
of a violation or alleged violation of applicable statutes, ordinances, orders,
rules and regulations
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promulgated by any federal, state, municipal or other governmental authority,
which violation or alleged violation would have a material adverse effect on the
business of the Parent or BOL.
5.8 Finders Fee. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Parent or BOL.
Section 6. Conditions Precedent to the Obligations of the Parent and BOL.
6.1 Introduction. The obligations of the Parent and BOL to consummate this
Agreement and the transactions contemplated hereby are subject to the
fulfillment, prior to or at the Closing, of the conditions set forth in this
Section 6.
6.2 Examination of Financial Statements. Prior to the Closing Date, the
Parent shall have had sufficient time to review the unaudited balance sheets of
the Company as of the last day of the month ended immediately prior to the
Closing Date and the unaudited statements of income, cash flow and stockholder's
equity for the period then ended, disclosing no material change in the financial
condition of the Company or the results of its operations from the financial
statements originally furnished by the Company as set forth in Schedule 3.7.
6.3 No Material Adverse Change. No material adverse change in the results
of operations, financial position or business of the Company shall have occurred
and the Company shall not have suffered any material loss or damages to any of
its properties or assets, whether or not covered by insurance, since the Company
Balance Sheet Date, which change, loss or damage materially affects or impairs
the ability of the Company to conduct its business; and the Parent shall have
received on the Closing Date a certificate signed by the President of the
Company and the Stockholder to such effect.
6.4 Due Diligence and Regulatory Review. The Parent shall have completed
to its satisfaction a due diligence investigation of the Company and its
prospects, business, assets, contracts, rights, liabilities and obligations,
including a review of the practices and procedures of the Company with respect
to compliance with contracts and federal, state and local laws and regulations
governing the operations of the Company. Such review shall be satisfactory in
all respects to the Parent, in its sole reasonable discretion.
6.5 Opinion of Counsel. The Parent shall have received an opinion from
Landay & Xxxxxxx counsel to the Company and the Stockholder, dated the Closing
Date, in form and substance satisfactory to the Parent, to the effect that with
respect to the Company:
(a) the Company has been duly organized and is validly subsisting in
good standing under the laws of the Commonwealth of Massachusetts.
(b) the authorized and outstanding capital stock of the Company is
as represented by the Stockholder in this Agreement and each share of such stock
has been duly and
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validly authorized and issued, is fully paid and nonassessable and to the
knowledge of such counsel (after review of the Company's minute book, stock
ledger and other Company records) was not issued in violation of the preemptive
rights of any stockholder;
(c) to the knowledge of such counsel, the Company does not have any
outstanding options, warrants, calls, conversion rights or other commitments of
any kind to issue or sell any of its capital stock;
(d) this Agreement has been duly authorized, executed and delivered
by the Company and the Stockholder and constitutes a valid and binding agreement
of the Company and the Stockholder enforceable against them in accordance with
its terms except as such enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement and other similar laws
relating to or affecting the rights of creditors and except (i) as the same may
be subject to the effect of general principles of equity and (ii) that no
opinion need be expressed as to the enforceability of indemnification provisions
included herein;
(e) except to the extent set forth on Schedule 3.16, to the
knowledge of such counsel, there are no claims, actions, suits or proceedings
pending, or threatened against or affecting the Company, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality wherever located;
(f) to the knowledge of such counsel after reasonable investigation
and supported by a certificate from the Stockholder, no notice to, consent,
authorization, approval or order of any court or governmental agency or body or
of any other third party is required in connection with the execution, delivery
or consummation of this Agreement by the Stockholder or for the merger of the
Company with and into the Parent,
(g) the execution of this Agreement and the performance of the
obligations hereunder will not violate or result in a breach or constitute a
default under any of the terms or provisions of the Company's Articles of
Organization or the bylaws of the Company or, to the knowledge of such counsel
after reasonable investigation and supported by a certificate from the
Stockholder, of any lease, instrument, license, permit or any other agreement to
which the Company is a party or by which the Company or the Stockholder is
bound; and
(h) any other matters incident to the matters set forth herein as
reasonably required by the Parent.
6.6 Additional Liabilities and Obligations. The Stockholder shall have
delivered to the Parent a certificate dated the Closing Date, setting forth (i)
all liabilities and obligations of the Company arising since the Company Balance
Sheet Date and (ii) showing all material contracts and agreements, together with
copies thereof, entered into by the Company since the Company Balance Sheet
Date.
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6.7 Good Standing Certificates; Certified Copy of the Certificate of
Incorporation. The Company shall have delivered to the Parent certificates,
dated as of a date no earlier than twenty days prior to the Closing Date, duly
issued by the Secretary of State and the Department of Revenue of the
Commonwealth of Massachusetts and of any other state in which the Company is
authorized to do business, showing that the Company is in good standing and
authorized to do business and that all state franchise and/or income tax returns
and taxes for the Company for all periods prior to the dates of such
certificates have been filed and paid. The Company shall also have delivered to
the Parent prior to the Closing a recent copy of its Articles of Organization
and all amendments thereto duly certified by the Secretary of the Commonwealth
of Massachusetts.
6.8 Representations; Warranties; Covenants. Each of the representations
and warranties of the Company and the Stockholder contained in Section 3 and
elsewhere in this Agreement shall be true and correct on and as of the Closing
Date, with the same effect as though made on and as of the Closing Date; the
Company and the Stockholder shall, on or before the Closing Date, have performed
and satisfied all agreements and conditions hereunder which by the terms hereof
are to be performed and satisfied by the Company or the Stockholder on or before
the Closing Date; and the Company and the Stockholder shall have delivered to
the Parent a certificate dated the Closing Date signed by the Company's
President and by the Stockholder to the foregoing effect.
6.9 Approvals and Consents. The Company and the Stockholder shall have
made all filings with and notifications of governmental authorities, regulatory
agencies and other entities required to be made by them in connection with the
execution and delivery of this Agreement, the performance of the transactions
contemplated hereby and the continued operation of the businesses of the Company
subsequent to the Effective Time, and the Company and the Parent shall have
received all required authorizations, waivers, consents and permits to permit
the consummation of the transactions contemplated by this Agreement, in form and
substance reasonably satisfactory to the Parent, from all third parties,
including, without limitation, approvals required under federal and state
securities laws and/or the securities and Exchange Commission, state "Blue Sky"
laws, other applicable governmental authorities and regulatory agencies,
lessors, lenders and contract parties, required in connection with the Merger or
the Company's permits, leases, licenses and franchises, to avoid a breach,
default, termination, acceleration or modification of any material agreement,
contract, instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award as a result of
the execution or performance of this Agreement, or otherwise in connection with
the execution and performance of this Agreement.
6.10 No Actions or Proceedings. No action or proceeding by any court,
administrative body or governmental agency shall have been instituted or
threatened which would enjoin, restrain or prohibit, or would likely result in
substantial damages in respect of, this Agreement or the complete consummation
of the transactions contemplated by this Agreement, and which would in the
reasonable judgment of the Parent or BOL make it inadvisable to consummate such
transactions, and no law or regulation shall be in effect and no court order
shall have been
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entered in any action or proceeding instituted by any party which enjoins,
restrains or prohibits this Agreement or the complete consummation of the
transactions as contemplated by this Agreement.
6.11 Proceedings Satisfactory to BOL and the Parent. All proceedings to be
taken by the Company and the Stockholder in connection with the consummation of
the Closing on the Closing Date and the other transactions contemplated hereby
and all certificates, opinions, instruments and other documents required to
effect the transaction contemplated hereby reasonably requested by BOL and the
Parent shall be reasonably satisfactory in form and substance to BOL and the
Parent and their counsel.
6.12 Employment Agreement. The Stockholder shall have executed and
delivered an individual employment agreement with BOL in the form attached
hereto as Exhibit 6.12.
6.13 Escrow Agreement. The Stockholder shall have executed and delivered
an escrow agreement with BOL in the form attached hereto as Exhibit 1.6.
Section 7. Conditions Precedent to the Obligations of the Company and the
Stockholder.
7.1 Introduction. The obligations of the Company and the Stockholder to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing Date, of the following conditions
(any one or more of which may be waived in whole or in part by the Company and
the Stockholder):
7.2 Representations; Warranties; Covenants. Each of the representations
and warranties of the Parent and BOL contained in Section 5 shall be true and
correct in all material respects on and as of the Closing Date, with the same
effect as though made on and as of the Closing Date; the Parent and BOL shall,
on or before the Closing Date, have performed and satisfied all agreements and
conditions hereunder which by the terms hereof are to be performed and satisfied
by the Parent and BOL on or before the Closing Date; and the Parent and BOL
shall have delivered to the Company a certificate signed by the President of the
Parent and of BOL and dated as of the Closing Date certifying to the foregoing
effect.
7.3 No Actions or Proceedings. No action or proceeding by any court,
administrative body or governmental agency shall have been instituted or
threatened which would enjoin, restrain or prohibit, or would likely result in
substantial damages in respect of, this Agreement or the complete consummation
of the transactions as contemplated by this Agreement, and which would in the
reasonable judgment of the Company make it inadvisable to consummate such
transactions, and no law or regulation shall be in effect and no court order
shall have been entered in any action or proceeding instituted by any party
which enjoins, restrains or prohibits this Agreement or the complete
consummation of the transactions as contemplated by this Agreement.
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7.4 Employment and other Agreements. BOL shall have executed and delivered
an individual employment agreement with the Stockholder in the form attached
hereto as Exhibit 6.12.
7.5 Escrow Agreement. BOL shall have executed and delivered an Escrow
Agreement with the Stockholder in the form attached hereto as Exhibit 1.6.
7.6 Secretary and Clerk's Certificates; Good Standing Certificate. The
execution and delivery of this Agreement by the Parent and BOL will have been
duly authorized by all necessary corporate action and the Company and
Stockholder will have received copies of all votes pertaining to that
authorization certified by the secretary and clerk of the Parent and BOL
respectively. The Parent shall have delivered to the Company a certificate,
dated as of a date no earlier than twenty days prior to the Closing Date, duly
issued by the Secretary of State of Delaware showing that the Parent is in good
standing.
7.7 Legal Opinion. The Company shall have received an opinion from Xxxxx &
Xxxxxxx, LLP counsel to the Parent and BOL, dated the Closing Date, to the
effect that:
(a) Each of the Parent and BOL is a corporation duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation with full corporate power and authority to conduct its respective
businesses in the manner as now conducted.
(b) The Parent Stock to be delivered to the Stockholder at the
Closing, when delivered in accordance with the terms of this Agreement, will
constitute valid and legally issued shares of the Common Stock of the Parent,
fully paid and non-assessable.
(c) This Agreement has been duly authorized, executed and delivered
by the Parent and BOL and constitutes a valid and binding agreement of the
Parent and BOL enforceable against them in accordance with its terms except as
such enforceability may be subject to bankruptcy, moratorium, insolvency,
reorganization, arrangement and other similar laws relating to or affecting the
rights of creditors and except (i) as the same may be subject to the effect of
general principles of equity and (ii) that no opinion need be expressed as to
the enforceability of indemnification provisions included herein;
(d) The execution of this Agreement and the performance of the
obligations hereunder will not violate or result in a breach or constitute a
default under any of the terms of BOL's or the Parent's Certificate of
Incorporation or their respective bylaws, or, to the knowledge of such counsel
after reasonable investigation and supported by a certificate from BOL and the
Parent, of any lease, instrument, license, permit or any other agreement by
which the Company or BOL is bound.
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Section 8 - Parent Stock - Transfer Restrictions.
8.1 Lock-Up. In addition to applicable federal and state securities laws
restricting the public sale of the Parent Stock to be issued to the Stockholder
hereunder, the Stockholder hereby irrevocably agrees that (i) for a period of
one year after the Closing Date he will not offer, pledge, sell, assign or
otherwise transfer directly or indirectly, any of the Parent Stock or enter into
any agreement that transfers or assigns, in whole or in part, any of the
economic consequences of ownership of the shares of Parent Stock received
hereunder (such restrictions adjusted for any stock splits, recapitalizations,
mergers or other similar events). The Stockholder agrees that the foregoing
shall be binding upon Stockholder and his respective successors, assigns, heirs,
and personal representatives.
8.2 Unregistered Stock; Investment Intent. The Stockholder acknowledges
and agrees that the shares of Parent Stock to be delivered to the Stockholder
pursuant to this Agreement have not been and will not be registered under the
Securities Act of 1933, as amended (the "Act") and therefore may not be resold
without compliance with the Act. The Stockholder represents and warrants that
the Parent Stock to be acquired by Stockholder pursuant to this Agreement is
being acquired solely for his own account, for investment purposes only, and
with no present intention of distributing, selling or otherwise disposing of it
in connection with a distribution. The Stockholder covenants, warrants and
represents that none of the shares of Parent Stock issued to such Stockholder
will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Act and the rules and regulations of the Securities and Exchange
Commission and applicable state securities laws.
8.3 Able to Bear Risk; Sophisticated Investors; Information. The
Stockholder represents and warrants that he is able to bear the economic risk of
an investment in Parent Stock acquired pursuant to this Agreement and can afford
to sustain a total loss of such investment. He further represents and warrants
that he (i) fully understands the nature, scope and duration of the limitations
on transfer contained in this Agreement, (ii) has received a copy of the
Company's information statement dated within 5 business days of the date of this
Agreement (the "Information Statement"); and (iii) has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of the proposed investment and therefore has the capacity
to protect his own interests in connection with the acquisition of the Parent
Stock. The Stockholder represents and warrants that he has had an adequate
opportunity to ask questions and receive answers from the officers of the Parent
concerning any and all matters relating to the acquisition of Parent Stock as
contemplated by this Agreement including, without limitation, the background and
experience of the officers and directors of the Parent, the plans for the
operations of the business of the Parent and information disclosed in the
Information Statement. The Stockholder has asked any and all questions in the
nature described in the preceding sentence and all questions have been answered
to his satisfaction.
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8.4 Restrictive Legends. The certificates evidencing the Parent Stock to
be received by the Stockholder hereunder will bear legends substantially in the
form set forth below and containing such other information as the Parent may
deem appropriate. References in such legend to "THE COMPANY" shall refer to the
Parent.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR ANY STATE
SECURITIES OR BLUE SKY LAWS. SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE 1933 ACT
AND ANY STATE SECURITIES OR BLUE SKY LAWS, UNLESS, IN THE OPINION (WHICH
SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY) OF COUNSEL
SATISFACTORY TO THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE FURTHERMORE SUBJECT TO A
LOCK-UP AGREEMENT WITH THE COMPANY DATED AS OF _____________, A COPY OF
WHICH MAY BE OBTAINED BY CONTACTING THE SECRETARY OF THE COMPANY
In addition, such certificates shall also bear such other legends as
counsel for the Parent reasonably determines are required under the applicable
laws of any state.
Section 9. Termination of Agreement; Effect of Termination.
9.1 Termination. This Agreement may be terminated any time prior to the
Closing Date solely by:
(a) mutual consent of the boards of directors of the Parent and the
Company;
(b) either the Stockholder and the Company, on the one hand, or by
the Parent and BOL, on the other hand, if
(i) the transactions contemplated by this Agreement to take
place at the Closing shall not have been consummated by October 31, 1999,
unless the failure of such transactions to be consummated is due to the
willful failure of the party seeking to terminate this Agreement to
perform any of its obligations under this Agreement to the extent required
to be performed by it prior to or on the Closing Date; or
(ii) if a material breach or default shall be made by the
other party in the observance of or in the due and timely performance of
any of the covenants or
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agreements contained herein, and the curing of such default shall not have
been made on or before the Closing Date.
9.2 Liabilities in the Event of Termination. The termination of this
Agreement will in no way limit any obligation or liability of any party based on
or arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this Agreement
including, but not limited to, legal and audit costs and out of pocket expenses.
Section 10. Non-competition. For a period of three (3) years from and after the
Closing Date, the Stockholder shall not directly or indirectly, (i) seek, obtain
or accept a "Competitive Position" in the "Restricted Territory" with a
"Competitor" of the Company (as such terms are hereafter defined), or (ii)
solicit, directly or indirectly, any customers, clients, accounts, officers,
employees, agents or representatives of the Company, BOL, the Parent, or its
affiliates.. For purposes of this Agreement, a "Competitor" of the Company means
any business, individual, partnership, joint venture, association, firm,
corporation or other entity engaged, wholly or partly, in the business of
selling internet access service and/or web site hosting services as provided by
Infoboard or the Surviving Corporation (a) as of the date hereof or (b) at any
time during the Stockholder's term of employment with BOL, the Parent and/or
their affiliates, the "Restricted Territory" means the United States of America;
a "Competitive Position" means any employment with any Competitor of the Company
or self-employment whereby Stockholder will use or is likely to use any
Confidential Information (as defined herein), or whereby Stockholder has duties
for such Competitor that are the same or substantially similar to those actually
performed by Stockholder under the terms of his employment agreement with the
Surviving Corporation. Nothing contained in this Section 10 is intended to
prevent Employee from investing in stock or other securities listed on a
national securities exchange or actively traded on the over the counter market
or any corporation engaged, wholly or partly, in the sale of telecommunications
products or services; provided, however, that Employee and members of his
immediate family shall not, directly or indirectly, hold more than a total of
two percent (2%) of all issued and outstanding stock or other securities of any
such corporation. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section is invalid or unenforceable,
the parties hereto agree that the court making the determination of invalidity
or unenforceability shall have the power to reduce the scope, duration, or area
of the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
Section 11. Nondisclosure of Confidential Information.
11.1 The Stockholder. The Stockholder recognizes and acknowledges that he
has had in the past, currently has and in the future may have access to certain
confidential information relating to the Company, the Parent and BOL
(collectively "Confidential Information"), including, but not limited to,
operational policies, customer lists, and pricing and cost policies,
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that are valuable, special and unique assets of the Company, the Parent and BOL.
The Stockholder agrees that he will not use or disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) prior to the Closing to authorized
representatives of the Parent and BOL who need to know such information in
connection with the transactions contemplated hereby, who have been informed by
the Parent and BOL of the confidential nature of such information and who have
agreed to keep such information confidential, and (b) following the Closing,
such information may be disclosed by the Stockholder as is required in the
course of performing his duties for the Parent or the Surviving Corporation.
Information shall not be confidential hereunder if (i) such information becomes
known to the public generally through no breach by the Stockholder of this
covenant, (ii) disclosure thereof is required by law or the order of any
governmental authority under color of law or is necessary in order to secure a
consent or approval to consummate the transactions contemplated hereby,
provided, that prior to disclosing any information pursuant to this clause (ii),
the Stockholder shall, to the extent reasonably possible, give prior written
notice thereof to the Parent and provide the Parent with the opportunity to
contest such disclosure, (iii) the disclosing party reasonably believes that
such disclosure is required in connection with the defense of a lawsuit against
the disclosing party and the same prior disclosure set forth immediately above
is given, or (iv) such information is obtained from a third party other than in
breach of a duty of confidentiality to the Parent or its affiliates. In the
event of a breach or threatened breach by the Stockholder of the provisions of
this section, the Parent shall be entitled to an injunction restraining the
Stockholder from disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting the Parent from pursuing any
other available remedy for such breach or threatened breach, including the
recovery of damages. In the event that the transactions contemplated herein are
not consummated, the Stockholder shall return to the Parent within a reasonable
time all documents containing confidential information about the Parent.
11.2 The Parent and BOL. The Parent and BOL recognize and acknowledge that
they had in the past and currently have access to certain confidential
information relating to the Company, such as operational policies, customer
lists, and pricing and cost policies, that are valuable, special and unique
assets of the Company. The Parent and BOL agree that, prior to the Closing, or
if the transactions contemplated by this Agreement are not consummated, they
will not use or disclose such confidential information to their own benefit
except in furtherance of the transactions contemplated by this Agreement or
disclose such confidential information to any person, firm, corporation,
association or other entity for any purpose or reason whatsoever, except (a) to
the Stockholder and to authorized representatives of the Company or the Parent
or BOL who need to know such information in connection with the transactions
contemplated hereby, who have been informed of the confidential nature of such
information and who have agreed to keep such information confidential as
provided hereby. Information shall not be confidential hereunder if (i) such
information becomes known to the public generally through no breach by the
Parent or BOL of this covenant, (ii) disclosure thereof is required by law or
the order of any governmental authority under color of law or is necessary in
order to secure a consent or approval to consummate the transactions
contemplated hereby, provided, that prior to disclosing any information pursuant
to this clause (ii), the Parent and BOL shall, to the extent
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reasonably possible, give prior written notice thereof to the Company and the
Stockholder and provide the Company and the Stockholder with the opportunity to
contest such disclosure, (iii) the disclosing party reasonably believes that
such disclosure is required in connection with the defense of a lawsuit against
the disclosing party and the same prior disclosure set forth immediately above
is given, or (iv) such information is obtained from a third party other than in
breach of a duty of confidentiality to the Company. In the event of a breach or
threatened breach by the Parent or BOL of the provisions of this Section, the
Company and the Stockholder shall be entitled to an injunction restraining the
Parent and BOL from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting the Company and
the Stockholder from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages. In the event that the
transactions contemplated herein are not consummated, the Parent and BOL shall
return to the Company within a reasonable time all documents containing
confidential information about the Company.
11.3 Damages. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Sections 11.1 and 11.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced by the other parties by injunctions and restraining orders.
11.4 Survival. The obligations of the parties under this Article 11 shall
survive notwithstanding either the termination of this Agreement or the
consummation of the transactions contemplated herein on the Closing Date.
Section 12. Indemnification.
12.1 Indemnification by the Stockholder. The Stockholder, on behalf of
himself and his respective successors, executors, administrators, estates, heirs
and permitted assigns, agrees subsequent to the Effective Time to indemnify and
hold harmless the Parent, the Surviving Corporation and their respective
officers, directors, employees and agents (individually, a "Parent Indemnified
Party" and collectively, the "Parent Indemnified Parties") from and against and
in respect of all losses, liabilities, obligations, damages, deficiencies,
actions, suits, proceedings, demands, assessments, orders, judgments, fines,
penalties, costs and expenses (including the reasonable fees, disbursements and
expenses of attorneys, accountants and consultants) of any kind or nature
whatsoever (whether or not arising out of third-party claims and including all
amounts paid in investigation, defense or settlement of the foregoing)
sustained, suffered or incurred by or made against any Parent Indemnified Party
(a "Loss" or "Losses"), arising out of, based upon or in connection with:
(a) any breach of any representation or warranty made by the Company
or the Stockholder in this Agreement or in any schedule, exhibit, certificate,
agreement or other instrument delivered under or in connection with this
Agreement, or by reason of any claim,
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action or proceeding asserted or instituted arising out of any matter or thing
covered by any such representations or warranties (collectively, "Parent
Representation and Warranty Claims");
(b) any breach of any covenant or agreement made by the Company or
the Stockholder in this Agreement or in any schedule, exhibit, certificate,
agreement or other instrument delivered under or in connection with this
Agreement, or by reason of any claim, action or proceeding asserted or
instituted arising out of any matter or thing covered by any such covenant or
agreement; or
(c) with respect to taxes of the Company incurred with respect to
any Pre-Closing Tax Period (as defined below) to the extent such liability
exceeds the amounts accrued therefor and disclosed to the Parent in Schedule 3.7
hereto (it being understood that such Schedule shall be updated as of the
Closing to reflect tax accruals as of such date consistent with the Company's
past practices); the term "Pre-Closing Tax Period" shall mean all taxable
periods ending on or before the Closing Date and the portion (ending on the
Closing Date) of any taxable period that includes (but does not end on) the
Closing Date.
Claims under clauses (a) through (c) of this Section 12.1 are hereinafter
collectively referred to as "Parent Indemnifiable Claims". The rights of Parent
Indemnified Parties to recover indemnification in respect of any occurrence
referred to in clauses (b) and (c) of this Section 12.1 shall not be limited by
the fact that such occurrence may not constitute an inaccuracy in or breach of
any representation or warranty referred to in clause (a) of this Section 12.1.
The Stockholder's indemnification obligations hereunder shall be limited to the
Merger Consideration of $3,030,000, as adjusted pursuant to Section 2 of this
Agreement. After payment of such amount, the Stockholder's indemnification
obligations hereunder shall terminate.
12.2 Indemnification by the Parent. Subsequent to the Effective Time, the
Parent and its successors and assigns agrees to indemnify and hold harmless the
Stockholder and its successors, heirs and assigns (individually and
collectively, the "Stockholder Indemnified Party") from and against and in
respect of all losses, liabilities, obligations, damages, deficiencies, actions,
suits, proceedings, demands, assessments, orders, judgments, fines, penalties,
costs and expenses (including the reasonable fees, disbursements and expenses of
attorneys, accountants and consultants) of any kind or nature whatsoever
(including all amounts paid in investigation, defense or settlement of the
foregoing) sustained, suffered or incurred by or made against the Stockholder,
arising out of, based upon or in connection with a breach by the Parent or BOL
of any of their respective representations, warranties, covenants or agreements
made in this Agreement or in any schedule, exhibit, certificate, agreement or
other instrument delivered under or in connection with this Agreement. The
Parent's indemnification obligations hereunder shall be limited to the Merger
Consideration of $3,030,000 as adjusted pursuant to Section 2 of this Agreement.
After delivery of the same, the Parent's indemnification obligations hereunder
shall terminate.
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12.3 Notice; Defense of Claims.
Promptly after receipt by a Parent Indemnified Party or a Stockholder
Indemnified Party of notice of any claim, liability or expense to which the
indemnification obligations hereunder would apply, the Indemnified Party shall
give notice thereof in writing to the Indemnifying Party, but the omission to so
notify the Indemnified Party promptly will not relieve the Indemnifying Party
from any liability except to the extent that the Indemnifying Party shall have
been prejudiced as a result of the failure or delay in giving such notice. Such
notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the liability or obligation is
asserted. If within twenty (20) days after receiving such notice the
Indemnifying Party gives written notice to the Indemnified Party stating that
(i) it would be liable under the provisions hereof for indemnity in the amount
of such claim if such claim were successful and (ii) that it disputes and
intends to defend against such claim, liability or expense at its own cost and
expense, then counsel for the defense shall be selected by the Indemnifying
Party (subject to the consent of the Indemnified Party which consent may not be
unreasonably withheld) and the Indemnifying Party shall not be required to make
any payment with respect to such claim, liability or expense as long as the
Indemnifying Party is conducting a good faith and diligent defense at its own
expense; provided, however, that the assumption of defense of any such matters
by the Indemnifying Party shall relate solely to the claim, liability or expense
that is subject or potentially subject to indemnification. The Indemnifying
Party shall have the right, with the consent of the Indemnified Party, which
consent shall not be unreasonably withheld, to settle any Indemnified Claims by
third parties which are susceptible to being settled provided its obligation to
indemnify the Indemnified Party therefor will be fully satisfied. The
Indemnifying Party shall keep the Indemnified Party apprised of the status of
the claim, liability or expense and any resulting suit, proceeding or
enforcement action, shall furnish the Indemnified Party with all documents and
information that the Indemnified Party shall reasonably request and shall
consult with the Indemnified Party prior to acting on major matters, including
settlement discussions. Notwithstanding anything herein stated, the Indemnified
Party shall at all times have the right to fully participate in such defense at
its own expense directly or through counsel; provided, however, if the named
parties to the action or proceeding include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate under applicable standards of professional conduct, the expense
of separate counsel for the Indemnified Party shall be paid by the Indemnifying
Party. If no such notice of intent to dispute and defend is given by the
Indemnifying Party, or if such diligent good faith defense is not being or
ceases to be conducted, the Indemnified Party shall, at the expense of the
Indemnifying Party, undertake the defense of (with counsel selected by the
Indemnified Party), and shall have the right to compromise or settle (exercising
reasonable business judgment), such claim, liability or expense. If such claim,
liability or expense is one that by its nature cannot be defended solely by the
Indemnifying Party, then the Indemnified Party shall make available all
information and assistance that the Indemnifying Party may reasonably request
and shall cooperate with the Indemnifying Party in such defense.
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Section 13. Miscellaneous.
13.1 Law Governing. This Agreement shall be construed under and governed
by the internal laws of the Commonwealth of Massachusetts without regard to its
conflict of laws provisions.
13.2 Notices. Any notice, request, demand other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given
(i) if delivered or sent by facsimile transmission, upon receipt, or (ii) if
sent by registered or certified mail upon the sooner of receipt or the
expiration of three days after deposit in United States Post Office facilities
properly addressed with postage prepaid. all notices will be sent to the
addresses set forth below or to such other address as such party may designate
by notice to each other party hereunder:
To Parent or BOL:
c/o XxxxxxxXxxxxx.xxx, Inc.
0000 Xxxxx 00
Xxxx, Xxx Xxxxxx, 00000
ATTN: Xxxx X. Xxxxx, President and Chief Executive Officer
Phone: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
To the Company and the Stockholder:
Infoboard, Inc.
Xxxxx 000
000 Xxxxxx Xx.
Xxxx, XX 00000
ATTN: Xxxxxxx Xxxxxxx, President
Phone:
Fax:
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with a copy to:
Landay & Xxxxxxx
00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
ATTN: Xxxxx Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
Any notice given hereunder may be given on behalf of any party by its counsel or
other authorized representative.
13.3 Entire Agreement. This Agreement, including any schedules, annexes
and/or exhibits referred to herein and the other writings specifically
identified herein or contemplated hereby or delivered in connection with the
transactions contemplated hereby, is complete, reflects the entire agreement of
the parties with respect to its subject matter, and supersedes all previous
written or oral negotiations, commitments and writings.
13.4 Assignability. This Agreement may not be assigned or delegated by any
party hereto without the prior written consent of all parties hereto. The
Stockholder may not assign his rights or delegate his obligations hereunder
without the prior written consent of the Parent. This Agreement and the
obligations of the parties hereunder shall be binding upon and enforceable by,
and shall inure to the benefit of, the parties hereto and their respective
successors, executors, administrators, estates, heirs and permitted assigns, and
no others.
13.5 Arbitration; Jurisdiction; Venue; Attorney's Fees. Each party hereto
agrees that any dispute regarding this Agreement shall be submitted to
arbitration to and shall be resolved in accordance with the rules of the
JAMS/Endispute for expedited cases then in effect. The arbitrator(s) shall be
mutually selected by the parties or in the event the parties cannot mutually
agree, then appointed by JAMS/Endispute. Any arbitration shall be held within a
thirty (30) mile radius of Boston, Massachusetts and the arbitrator(s) shall
apply Massachusetts law. Judgment upon any award rendered by the arbitrator(s)
shall be final and may be entered in any court of competent jurisdiction.
Notwithstanding the foregoing, each party shall have the absolute right to
obtain equitable remedies as provided herein in any state court of competent
jurisdiction in the Commonwealth of Massachusetts or in the United States
District Court for the District of Massachusetts. Each party irrevocably submits
to and accepts the exclusive jurisdiction of each of such courts and waives any
objection (including any objection to venue or any objection based upon the
grounds of forum non conveniens) which might be asserted against the bringing of
any such action, suit or other legal proceeding in such courts. The court and/or
arbitrator(s) shall award costs and expenses (including reasonable attorney's
fees) to the prevailing party and/or parties in any litigation or arbitration.
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13.6 Captions and Gender. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter
pronoun, as the context may require.
13.7 Certain Definitions. for purposes of this Agreement, the term:
(a) "Affiliate" of a person shall mean a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
(b) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise; and
(c) "person" means an individual, corporation, partnership,
association, trust or any unincorporated organization.
13.8 Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same document.
13.9 Amendments; Waivers. This Agreement may not be amended or modified,
nor may compliance with any condition or covenant set forth herein be waived,
except by a writing duly and validly executed by the Parent, BOL, the Company
(prior to the Effective Time) and the Stockholder, or, in the case of a waiver,
the party waiving compliance. 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,
or 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.
13.10 Survival. All representations, warranties, agreements, covenants and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, or opinion provided for in it, shall survive the Closing (even if
the damaged party knew or had reason to know of any misrepresentation or breach
of warranty at the time of Closing) and continue in full force and effect for a
period of two (2) years thereafter (subject to any applicable statutes of
limitation or repose).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
PARENT
XxxxxxxXxxxxx.xxx, Inc.
ATTEST:
By: /s/ Xxxx X. Xxxxx
------------------------ -----------------------------
Xxxx X. Xxxxx, President
and Chief Executive Officer
ATTEST: BOL
BOL Acquisition Co. I, Inc.
By: /s/ Xxxx X. Xxxxx
------------------------ -----------------------------
Xxxx X. Xxxxx, President
and Chief Executive Officer
WITNESS: COMPANY
Infoboard, Inc.
By: /s/ Xxxxxxx Xxxxxxx
------------------------ -----------------------------
Xxxxxxx Xxxxxxx, President
WITNESS: STOCKHOLDER
/s/ Xxxxxxx Xxxxxxx
------------------------ ---------------------------------
Xxxxxxx Xxxxxxx
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