EXHIBIT 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF MARCH 5, 2001
AMONG
XXXXXXXXXXX.XXX, INC.,
NRI MERGER CORPORATION,
NET RESEARCH, INC.
AND
XXX X. XXXXXX
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER.............................................................................................1
1.1 The Merger............................................................................1
1.2 Effective Time........................................................................1
1.3 Effect of the Merger..................................................................2
1.4 Articles of Incorporation and Bylaws; Directors and Officers..........................2
1.5 Effect on Capital Stock/Merger Consideration..........................................2
1.6 Surrender of Certificates.............................................................3
1.7 Lost, Stolen or Destroyed Certificates................................................5
1.8 Dissenting Shares.....................................................................5
1.9 Escrow................................................................................5
1.10 No Further Rights.....................................................................6
1.11 Shareholder Representative............................................................6
1.12 Securities Laws Compliance............................................................6
1.13 The Closing...........................................................................6
1.14 Additional Action.....................................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF NRI.................................................................7
2.1 Organization, Qualification and Corporate Power.......................................7
2.2 Capitalization........................................................................7
2.3 Authorization of Merger...............................................................8
2.4 Noncontravention......................................................................9
2.5 Subsidiaries..........................................................................9
2.6 Financial Statements..................................................................9
2.7 Absence of Certain Changes...........................................................10
2.8 Undisclosed Liabilities..............................................................11
2.9 Tax Matters..........................................................................11
2.10 Title to Assets......................................................................12
2.11 Real Property........................................................................12
2.12 Intellectual Property................................................................13
2.13 Contracts............................................................................14
2.14 Accounts Receivable..................................................................15
2.15 Powers of Attorney...................................................................15
2.16 Insurance............................................................................16
2.17 Litigation...........................................................................16
2.18 Warranties...........................................................................16
2.19 Employees............................................................................16
2.20 Employee Benefits....................................................................17
2.21 Environmental Matters................................................................19
2.22 Legal Compliance.....................................................................20
2.23 Customers and Suppliers..............................................................20
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2.24 Permits..............................................................................20
2.25 Certain Business Relationships With Affiliates.......................................20
2.26 Brokers' Fees........................................................................21
2.27 Books and Records....................................................................21
2.28 Disclosure...........................................................................21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASEPRO AND THE MERGER SUBSIDIARY.............................21
3.1 Organization, Qualification and Corporate Power......................................21
3.2 Capitalization.......................................................................21
3.3 Validity of Shares...................................................................22
3.4 Authorization of Transaction.........................................................22
3.5 Noncontravention.....................................................................22
3.6 Reports and Financial Statements.....................................................22
3.7 Litigation...........................................................................23
3.8 Interim Operations of the Merger Subsidiary..........................................23
3.9 Brokers' Fees........................................................................23
3.10 Disclosure...........................................................................23
ARTICLE IV COVENANTS............................................................................................23
4.1 Closing Efforts......................................................................23
4.2 Governmental and Third-Party Notices and Consents....................................24
4.3 Operation of Business................................................................24
4.4 Access to Information................................................................25
4.5 Notice of Breaches...................................................................26
4.6 Exclusivity..........................................................................26
4.7 Termination of Derivative Securities and Vesting of NRI Common Stock.................26
4.8 Approval of NRI Common Shareholders..................................................26
4.9 Approval by Principal Shareholder....................................................27
4.10 Cash as of the Closing Date..........................................................27
4.11 NRI Employee Plans and Benefit Arrangements..........................................27
4.12 Tax-Free Reorganization..............................................................27
4.13 Customer Transition..................................................................27
4.14 NRI Contract Terminations............................................................27
ARTICLE V CONDITIONS TO CONSUMMATION OF MERGER..................................................................28
5.1 Conditions to Obligations of PurchasePro and the Merger Subsidiary...................28
5.2 Conditions to Obligations of NRI.....................................................29
ARTICLE VI INDEMNIFICATION......................................................................................30
6.1 Indemnification by the Principal Shareholder.........................................30
6.2 Indemnification by PurchasePro.......................................................31
6.3 Indemnification Claims...............................................................31
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6.4 Survival of Representations and Warranties...........................................34
6.5 Limitations..........................................................................34
ARTICLE VII TERMINATION.........................................................................................35
7.1 Termination of Agreement.............................................................35
7.2 Effect of Termination................................................................36
ARTICLE VIII DEFINITIONS........................................................................................36
8.1 Definitions..........................................................................36
ARTICLE IX MISCELLANEOUS........................................................................................38
9.1 Public Announcements.................................................................38
9.2 No Third Party Beneficiaries.........................................................38
9.3 Entire Agreement.....................................................................38
9.4 Succession and Assignment............................................................38
9.5 Counterparts and Facsimile Signature.................................................38
9.6 Headings.............................................................................38
9.7 Notices..............................................................................39
9.8 Governing Law........................................................................39
9.9 Amendments and Waivers...............................................................40
9.10 Severability.........................................................................40
9.11 Submission to Jurisdiction...........................................................40
9.12 Standstill...........................................................................40
9.13 Construction.........................................................................40
9.14 Further Assurances...................................................................41
9.15 Confidentiality......................................................................41
9.16 Expense..............................................................................41
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SCHEDULES AND EXHIBITS
SCHEDULES
Disclosure Schedule
EXHIBITS
EXHIBIT A Escrow Agreement
EXHIBIT B Shareholder Representative Agreement
EXHIBIT C Investment Representation Letter
EXHIBIT D Registration Rights Agreement
EXHIBIT E NRI Certificate
EXHIBIT F Opinion of Counsel to NRI
EXHIBIT G NRI Secretary Certificate
EXHIBIT H Employment Agreement
EXHIBIT I Shareholder Waiver Agreement
EXHIBIT J Employee Proprietary Information and Inventions Agreement
EXHIBIT K PurchasePro Certificate
EXHIBIT L PurchasePro Secretary Certificate
EXHIBIT M Opinion of Counsel to PurchasePro
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of March 5, 2001
(this "Agreement") is entered into by and among XxxxxxxxXxx.xxx, Inc., a Nevada
corporation ("PurchasePro"), NRI Merger Corporation, a Florida corporation and
wholly-owned subsidiary of PurchasePro (the "Merger Subsidiary"), Net Research,
Inc. (d/b/a BayBuilder), a Florida corporation ("NRI"), and Xxx X. Xxxxxx, the
majority shareholder of NRI (the "Principal Shareholder"). PurchasePro, the
Merger Subsidiary, NRI and the Principal Shareholder are collectively referred
to herein as the "Parties."
RECITALS
A. Upon the terms and subject to the conditions of this Agreement
and in accordance with the Florida Business Corporation Act ("FBCA"),
PurchasePro, the Merger Subsidiary and NRI will enter into a business
combination transaction pursuant to which NRI will merge with and into the
Merger Subsidiary (the "Merger").
B. The Boards of Directors of each of PurchasePro, the Merger
Subsidiary and NRI (i) have each determined that the Merger is consistent with
and in furtherance of the long-term business strategy of their respective
companies and fair to, and in the best interest of, their respective companies
and stockholders and (ii) have each approved this Agreement, the Merger and the
other transactions contemplated by this Agreement.
C. For federal income tax purposes, the Parties intend that (i)
the Merger qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) this Agreement
be and is adopted as a plan of reorganization within the meaning of Section 368
of the Code.
D. PurchasePro, the Merger Subsidiary and NRI desire to make
certain representations and warranties and other agreements in connection with
the Merger.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows.
ARTICLE I.
THE MERGER
1.1 THE MERGER. Upon and subject to the terms and conditions of this
Agreement and the applicable provisions of the FBCA, NRI shall merge with and
into the Merger Subsidiary at the Effective Time (as defined in SECTION 1.2
below). From and after the Effective Time, the separate corporate existence of
NRI shall cease and the Merger Subsidiary shall continue as the surviving
corporation in the Merger (the "Surviving Corporation").
1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, the
parties hereto shall cause the Merger to be consummated by filing the Articles
of Merger (the "Articles of Merger") with the Florida Department of State in
accordance with the relevant provisions of the
FBCA (the time of such filing (or such later time as may be agreed in writing
by the Parties and specified in the Articles of Merger) being the "Effective
Time") as soon as practicable on the Closing Date (as defined in SECTION 1.13
below). Unless the context otherwise requires, the term "Agreement" as used
herein refers collectively to this Agreement and the Articles of Merger.
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the FBCA. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time all the property, rights, privileges, powers and
franchises of NRI and the Merger Subsidiary shall vest in the Surviving
Corporation, and all debts, liabilities and duties of NRI and the Merger
Subsidiary shall become the debts liabilities and duties of the Surviving
Corporation.
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
(a) At the Effective Time, the Articles of Incorporation of
the Merger Subsidiary, as in effect immediately prior to the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation, except that
Article I thereof shall be amended to read in its entirety as follows: "The name
of the corporation is "Net Research, Inc."
(b) At the Effective Time, the Bylaws of the Merger
Subsidiary, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation until thereafter amended as provided by law,
except that the Bylaws shall be amended to reflect that the name of the
Surviving Corporation shall be "Net Research, Inc."
(c) At the Effective Time, the directors of the Merger
Subsidiary immediately prior to the Effective Time shall become the directors,
and the officers of the Merger Subsidiary immediately prior to the Effective
Time shall become the officers, of the Surviving Corporation, each to hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation and applicable law.
1.5 EFFECT ON CAPITAL STOCK/MERGER CONSIDERATION. At the Effective
Time, by virtue of the Merger and without any action on the part of any Party or
the holders of any of the following securities:
(a) CONVERSION OF NRI COMMON STOCK. Subject to the provisions
of SECTION 1.8 below, each share of Common Stock, par value $0.001 per share, of
NRI (the "NRI Common Stock") issued and outstanding immediately prior to the
Effective Time (other than any share held in NRI's treasury) (the "Outstanding
NRI Common Stock") shall be canceled and extinguished and automatically
converted into and represent the right to receive (i) a pro rata portion of
Three Million Dollars ($3,000,000) (the "Cash Consideration") less the Escrow
Cash (as defined in SECTION 1.9 below), and (ii) that number of shares of Common
Stock, par value $0.01 per share, of PurchasePro ("PurchasePro Common Stock")
equal to the Exchange Ratio (as defined below) less the Escrow Shares (as
defined in SECTION 1.9 below), upon the surrender of the certificates
representing such shares of NRI Common Stock in the manner provided in SECTION
1.6 below (or in the case of a lost, stolen or destroyed certificate, in the
manner provided in SECTION 1.7 below). The "Exchange Ratio" means the quotient
obtained by dividing (x) the
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quotient obtained by dividing Twelve Million Dollars ($12,000,000) by the
Outstanding NRI Common Stock by (y) the average of the closing prices per
share of PurchasePro Common Stock as quoted on the Nasdaq National Market and
reported in The Wall Street Journal for the five (5) trading days immediately
preceding (but not including) the Closing Date (the "Closing Share Price").
(b) CANCELLATION OF CERTAIN SHARES. Each share of NRI Common
Stock held in NRI's treasury immediately prior to the Effective Time shall be
canceled and retired without payment of any consideration therefor.
(c) DERIVATIVE SECURITIES AND VESTING NRI COMMON STOCK. As of
the Effective Time, all options, warrants, notes, evidence of indebtedness,
stock and other security that entitles the holder thereof the right to convert,
purchase or otherwise acquire any NRI capital stock or any other security
convertible into NRI capital stock (collectively, the "Derivative Securities")
shall not be assumed by PurchasePro and shall all have been either converted
into NRI Common Stock or terminated. All of the NRI Common Stock subject to
vesting shall have fully vested or such vesting rights shall have been
terminated prior to the Closing pursuant to the terms of the agreements
providing for such vesting.
(d) CAPITAL STOCK OF THE MERGER SUBSIDIARY. Each share of
common stock, $.01 par value per share, of the Merger Subsidiary issued and
outstanding immediately prior to the Effective Time shall be converted into and
thereafter evidence one share of common stock, $.01 par value per share, of the
Surviving Corporation.
(e) ADJUSTMENT TO THE EXCHANGE RATIO. The Exchange Ratio shall
be subject to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split, reorganization, merger or similar event affecting
PurchasePro Common Stock between the date hereof and the Effective Time. The
shares of PurchasePro Common Stock into which NRI Common Stock is converted
pursuant to this SECTION 1.5 are collectively referred to herein as the "Merger
Shares."
(f) FRACTIONAL SHARES. No certificates or scrip representing
fractional Merger Shares shall be issued to former holders of NRI Common Stock
upon the surrender for exchange of certificates that, immediately prior to the
Effective Time, represented NRI Common Stock converted into Merger Shares
pursuant to SECTION 1.5(a) ("Certificates"), and such former holders of NRI
Common Stock shall not be entitled to any voting rights, rights to receive any
dividends or distributions or other rights as a stockholder of PurchasePro with
respect to any fractional Merger Shares that would have otherwise been issued to
such former holders of NRI Common Stock. In lieu of any fractional Merger Shares
that would have otherwise been issued, each former holder of NRI Common Stock
that would have been entitled to receive a fractional Merger Share shall, upon
proper surrender of such person's Certificate, receive cash equal to the product
of (i) the applicable fraction multiplied by (ii) the Closing Share Price.
1.6 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. PurchasePro's transfer agent shall act as
the exchange agent (the "Exchange Agent") in the Merger.
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(b) PURCHASEPRO TO PROVIDE COMMON STOCK. Immediately after the
Effective Time, PurchasePro shall deliver to the Exchange Agent for exchange the
Merger Shares (less the Escrow Shares) issuable pursuant to SECTION 1.5 in
exchange for shares of Outstanding NRI Common Stock, the Cash Consideration
(less the Escrow Cash) and cash in an amount sufficient for payment in lieu of
fractional shares pursuant to SECTION 1.5.
(c) EXCHANGE PROCEDURES. Immediately after the Effective Time,
the Surviving Corporation shall cause to be mailed to each holder of record of
outstanding shares of NRI Common Stock whose shares were converted into the
right to receive the Merger Shares and the Cash Consideration pursuant to
SECTION 1.5(a), (i) a letter of transmittal and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Merger Shares (less the Escrow Shares) and Cash
Consideration (less the Escrow Cash). Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holder of such Certificate shall be entitled to receive in exchange therefor
and PurchasePro shall promptly cause to be issued, a certificate representing
the number of whole shares of Merger Shares (less the Escrow Shares), cash
payment in lieu of fractional shares which such holder has the right to receive
pursuant to SECTION 1.5, and such holder's pro rata portion of the Cash
Consideration (less the Escrow Cash), and the Certificate so surrendered shall
forthwith be canceled. Until so surrendered, each outstanding Certificate that,
prior to the Effective Time, represented shares of NRI Common Stock will be
deemed from and after the Effective Time, for all corporate purposes, other than
the payment of dividends, to evidence the ownership of the number of full shares
of Merger Shares (less the Escrow Shares), the pro rata portion of the Cash
Consideration (less the Escrow Cash) into which such shares of PurchasePro
Common Stock shall have been so converted and the right to receive an amount in
cash in lieu of the issuance of any fractional shares in accordance with SECTION
1.5.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Merger Shares with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with respect to
the shares of Merger Shares represented thereby until the holder of record of
such Certificate shall surrender such Certificate. After the surrender of a
Certificate in accordance with this Section, the record holder thereof shall be
entitled to receive any such dividends or other distributions, without interest
thereon, which theretofore had become payable with respect to the Merger Shares.
Subject to applicable law, following surrender of any such Certificate, there
shall be paid to the record holder of the certificates representing whole shares
of Merger Shares issued in exchange therefor, without interest, at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time payable with respect to such whole shares of
Merger Shares.
(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of
Merger Shares and any portion of the Cash Consideration are to be issued in a
name other than that in which the certificate surrendered in exchange therefor
is registered, it will be a condition of the issuance thereof that the
certificate so surrendered will be properly endorsed and otherwise in proper
form for transfer and that the person requesting such exchange will have paid to
PurchasePro or any agent designated by it any transfer or other taxes required
by reason of the issuance of a certificate for shares of Merger Shares in any
name other than that of the registered holder of the
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certificate surrendered, or established to the satisfaction of PurchasePro or
any agent designated by it that such tax has been paid or is not payable.
(f) NO LIABILITY. Notwithstanding anything to the contrary in
this SECTION 1.6, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to a holder of shares of Merger Shares or NRI
Common Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.7 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of Merger
Shares (less the Escrow Shares), such pro rata amount of the Cash Consideration
(less the Escrow Cash) and cash for fractional shares, if any, as may be
required pursuant to SECTION 1.5; PROVIDED, HOWEVER, that PurchasePro may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against PurchasePro or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.8 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, the shares of any holder of NRI Common Stock who has demanded and
perfected appraisal rights for such shares in accordance with the of the FBCA
and who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Dissenting Shares"), shall not be converted into or represent
a right to receive PurchasePro Common Stock pursuant to SECTION 1.5, but the
holder thereof shall only be entitled to such rights as are granted by the of
the FBCA.
(b) Notwithstanding the provisions of Subsection (a) above, if
any holder of shares of NRI Common Stock who demands appraisal of such shares
under the FBCA shall effectively withdraw the right to appraisal, then, as of
the later of the Effective Time or the occurrence of such event, such holder's
shares shall automatically be converted into and represent only the right to
receive Merger Shares and Cash Consideration, without interest thereon, upon
surrender of the certificate representing such shares.
(c) NRI shall give PurchasePro (i) prompt notice of any
written demands for appraisal of any shares of NRI Common Stock, withdrawals of
such demands, and any other instruments served pursuant to the FBCA and received
by NRI which relate to any such demand for appraisal and (ii) the opportunity to
participate in all negotiations and proceedings which take place prior to the
Effective Time with respect to demands for appraisal under the FBCA. NRI shall
not, except with the prior written consent of PurchasePro, voluntarily make any
payment with respect to any demands for appraisal of NRI Common Stock or offer
to settle or settle any such demands.
1.9 ESCROW. On the Closing Date, PurchasePro shall deliver to the
Escrow Agent: (i) Five Hundred Thousand Dollars ($500,000) of the Cash
Consideration (the "Escrow Cash") and (ii) that number of shares of PurchasePro
Common Stock equal to One Million Dollars
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($1,000,000), based on the Closing Share Price (the "Escrow Shares" and
together with the Escrow Cash, the "Escrow Fund") for the purpose of securing
the indemnification obligations of the NRI Common Shareholders (as defined
hereinafter) set forth in this Agreement. The Escrow Cash and the Escrow
Shares shall be held by the Escrow Agent pursuant to the terms of the
Indemnity Escrow Agreement substantially in the form of EXHIBIT A attached
hereto (the "Escrow Agreement") by and among PurchasePro, the Escrow Agent
and the Shareholder Representative (as defined in SECTION 1.11 below).
1.10 NO FURTHER RIGHTS. Immediately after the Effective Time, no NRI
Common Stock shall be deemed to be outstanding, except as otherwise contemplated
by , and holders of Certificates shall cease to have any rights with respect
thereto, except as provided herein or by law.
1.11 SHAREHOLDER REPRESENTATIVE. By their approval of the Merger, each
of the NRI Shareholders will be conclusively deemed to have consented to,
approved and agreed to be personally bound by: (i) the indemnification
provisions of ARTICLE VI; (ii) the Escrow Agreement; (iii) the appointment of
the Principal Shareholder as the representative of the NRI Common Shareholders,
(the "Shareholder Representative") and as the attorney-in-fact and agent for and
on behalf of each NRI Common Shareholder as provided in this Agreement, the
Escrow Agreement and the Shareholder Representative Agreement in the form
attached hereto as EXHIBIT B (the "Representative Agreement") and (iv) the
taking by the Shareholder Representative of any and all actions and the making
of any decisions required or permitted to be taken by the Shareholder
Representative under this Agreement and under the Escrow Agreement. The
Shareholder Representative will have authority and power to act on behalf of
each NRI Common Shareholder with respect to the disposition, settlement or other
handling of (a) indemnity claims under ARTICLE VI, (b) all claims governed by
the Escrow Agreement, and all rights or obligations arising under the Escrow
Agreement and (c) such other matters as provided in the Representative
Agreement. Each NRI Common Shareholder will be bound by all actions taken by the
Shareholder Representative in connection with indemnity claims under ARTICLE VI
and the Escrow Agreement, and PurchasePro will be entitled to rely on any action
or decision of the Shareholder Representative in connection therewith.
1.12 SECURITIES LAWS COMPLIANCE. PurchasePro will issue the shares of
PurchasePro Common Stock to be issued in the Merger pursuant to SECTION 1.5 of
this Agreement pursuant to the exemption(s) from registration under Section 4(2)
and/or Regulation D promulgated under the Securities Act of 1933, as amended
(the "Securities Act") and applicable exemptions under applicable state
securities laws. Concurrently with execution of this Agreement, each NRI Common
Shareholder shall execute and deliver to PurchasePro an Investment
Representation Letter in the form of EXHIBIT C attached hereto (the "Investment
Representation Letter"), which shall, among other things, evidence such NRI
Common Shareholder's understanding and acknowledgement that the shares of
PurchasePro Common Stock to be issued to NRI Common Shareholders pursuant to
SECTION 1.5 will be "restricted securities" within the meaning of Rule 144 under
the 1933 Act.
1.13 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP in San Diego, California commencing at 9 A.M. on the date that is
five (5) business days after all
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the obligations set forth in ARTICLE V are complied with or have been waived,
or at such time and in such manner as the Parties mutually agree (the
"Closing Date").
1.14 ADDITIONAL ACTION. The Surviving Corporation may, at any time
after the Effective Time, take any action, including executing and delivering
any document, in the name and on behalf of either NRI or the Merger Subsidiary,
in order to consummate the transactions contemplated by this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF NRI
NRI represents and warrants to PurchasePro as of the date hereof and as
of the Closing Date, except as set forth in the disclosure schedule attached
hereto (the "Disclosure Schedule") furnished to PurchasePro specifically
identifying the relevant subparagraph hereof, which exceptions shall be deemed
to be representations and warranties as if made hereunder, as follows:
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. NRI is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of Florida. NRI is duly qualified to conduct business
and is in corporate and tax good standing under the laws of each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
requires such qualification, except where the failure to be so qualified or in
good standing, individually or in the aggregate, has not had and would not
reasonably be expected to have a NRI MAE (as defined below). NRI has all
requisite corporate power and authority to carry on the business in which it is
engaged and to own and use the properties owned and used by it. NRI has
furnished to PurchasePro complete and accurate copies of its Articles of
Incorporation and Bylaws. NRI is not in default under or in violation of any
provision of its Articles of Incorporation or Bylaws. For purposes of this
Agreement, "NRI MAE" means a material adverse effect on the assets, business,
condition (financial or otherwise), results of operations or future prospects of
NRI, but shall not include any of the foregoing related to (i) the economy or
financial markets in general, or (ii) the industries in general in which NRI
operates and not specifically related to (or having the effect of specifically
relating to or having a materially disproportionate effect (relative to most
other industry participants) on) NRI.
2.2 CAPITALIZATION. The authorized capital stock of NRI consists of
7,500,000 shares of NRI common stock, par value $.001, of which, as of the date
of this Agreement, 7,500,000 shares were issued and outstanding and no shares
are held in the treasury of NRI. NRI has no shares of preferred stock authorized
or issued. The NRI Common Shareholders (as defined below) own all the shares of
NRI Common Stock as of the date of this Agreement. SECTION 2.2 of the Disclosure
Schedule sets forth a complete and accurate list specifying (i) all of the
holders of NRI capital stock (the "NRI Common Shareholders") and the number of
shares of NRI Common Stock held by each NRI Common Shareholder, (ii) all
outstanding Derivative Securities indicating (A) the holder thereof, (B) the
number of shares of NRI Common Stock subject thereto, (C) the exercise price,
date of grant, vesting schedule and expiration date therefor, and (D) any terms
regarding the acceleration of vesting thereof, and (iii) all stock option plans
and other stock or equity-related plans of NRI. All of the issued and
outstanding shares of NRI Common Stock are, and all shares of NRI Common Stock
that may be issued upon exercise
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of Derivative Securities will be duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. Other than the Derivative
Securities listed in SECTION 2.2 of the Disclosure Schedule, there are no
outstanding or authorized options, warrants, rights, other convertible
securities or instruments, agreements or commitments to which NRI is a party
or that are binding upon NRI providing for the issuance or redemption of any
of its capital stock. All of the Derivative Securities listed in SECTION 2.2
of the Schedule shall be converted into NRI common stock or terminated prior
to Closing and all preferred stock of NRI shall be converted into common
stock of NRI prior to the Closing. There are no outstanding or authorized
stock appreciation, phantom stock or similar rights with respect to NRI. All
of the NRI Common Stock subject to vesting shall have fully vested or such
vesting rights shall have been terminated prior to the Closing pursuant to
the terms of the agreements providing for such vesting. There are no
agreements to which NRI is a party or by which it is bound with respect to
the voting (including voting trusts or proxies), registration under the
Securities Act, or sale or transfer (including agreements relating to
pre-emptive rights, rights of first refusal, co-sale rights or "drag-along"
rights) of any securities of NRI. To the "Knowledge of NRI," there are no
agreements among other parties, to which NRI is not a party and by which it
is not bound, with respect to the voting (including voting trusts or proxies)
or sale or transfer (including agreements relating to rights of first
refusal, co-sale rights or "drag-along" rights) of any securities of NRI. All
of the issued and outstanding shares of NRI Common Stock were issued in
compliance with applicable federal and state securities laws. For purposes of
this ARTICLE II, the "Knowledge of NRI" or any phrase of similar import shall
be deemed to refer to the knowledge of any executive officers or director of
NRI after reasonable inquiry and investigation by such executive officer or
director with respect to the matter in question.
2.3 AUTHORIZATION OF MERGER. NRI has all requisite power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The Principal Shareholder has all requisite power and authority to execute and
deliver this Agreement and to perform his obligations hereunder. The execution
and delivery by NRI of this Agreement and the consummation by NRI of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of NRI. Without limiting the generality
of the foregoing:
(a) the Board of Directors of NRI, at a meeting duly called
and held or by written consent, unanimously (i) determined that the Merger is
fair and in the best interests of NRI and its shareholders, (ii) adopted this
Agreement in accordance with the provisions of the FBCA and (iii) directed that
this Agreement and the Merger be submitted to the shareholders of NRI, for their
adoption and approval and resolved to recommend that the shareholders of NRI,
vote in favor of the adoption of this Agreement and the approval of the Merger;
(b) this Agreement has been duly and validly executed and
delivered by NRI and constitutes a valid and binding obligation of NRI,
enforceable against NRI in accordance with its terms; and
(c) the affirmative vote of the holders of: (a) more than
fifty percent (50%) of the shares of NRI Common Stock that are issued and
outstanding on the Record Date (as defined below) is the only vote of the
holders of any of the shares of NRI's capital stock, that is necessary to
approve this Agreement, the Merger, the Articles of Merger, the Escrow Agreement
8
and the other transactions contemplated by this Agreement under applicable law,
NRI's Articles of Incorporation, Bylaws and other charter documents, and under
any agreement or contract regarding the voting of shares of NRI's capital stock.
As used in this SECTION 2.3, the term "Record Date" means the record date for
determining those shareholders of NRI who are entitled to vote.
2.4 NONCONTRAVENTION. Except for (i) the filing of the Articles of
Merger as required by the FBCA and (ii) the third party consents required and
set forth in SECTION 2.4 of the Disclosure Schedule, neither the execution and
delivery by NRI of this Agreement nor the consummation by NRI of the
transactions contemplated hereby will:
(a) conflict with or violate any provision of the Articles of
Incorporation or Bylaws of NRI;
(b) require on the part of NRI any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity");
(c) conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of obligations under, create in any party the right to terminate,
modify or cancel, or require any notice, consent or waiver under, any contract
or instrument to which NRI is a party or by which NRI is bound or to which any
of its assets is subject;
(d) result in the imposition of any Security Interest (as
defined below) upon any assets of NRI;
(e) violate any order, writ, injunction or decree applicable
to NRI or any of its properties or assets; or
(f) violate any statute, rule or regulation applicable to NRI
or any of its properties or assets which violation would have a NRI MAE.
For purposes of this Agreement, (i) "Security Interest" means any
mortgage, pledge, security interest, encumbrance, charge or other lien (whether
arising by contract or by operation of law), other than (A) mechanic's,
materialmen's, and similar liens, (B) liens arising under worker's compensation,
unemployment insurance, social security, retirement, and similar legislation,
and (C) liens on goods in transit incurred pursuant to documentary letters of
credit, in each case arising in the Ordinary Course of Business (as defined
below) of NRI and not material to NRI and (ii) "Ordinary Course of Business"
means the ordinary course of NRI's business consistent with past custom and
practice (including with respect to frequency and amount).
2.5 SUBSIDIARIES. NRI does not control directly or indirectly or have
any direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business association.
2.6 FINANCIAL STATEMENTS. NRI has provided to PurchasePro its balance
sheets and statements of income, changes in shareholders' equity and cash flows
since inception. Such
9
financial statements (collectively, the "Financial Statements") (i) have been
prepared using Quickbook accounting software and have been prepared on a
consistent basis throughout the periods covered thereby, (ii) fairly present
the financial condition, results of operations and cash flows of NRI as of
the dates thereof and for the periods referred to therein, (iii) are
consistent with the books and records of NRI and (iv) are true, correct and
complete in all material respects.
2.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 2000, (a) there has
occurred no event or development that has had, or could reasonably be expected
to have in the future, a NRI MAE, and (b) NRI has not:
(a) issued any stock, bonds or other corporate securities or
any right, options or warrants with respect thereto;
(b) borrowed any amount, obtained any letters of credit or
incurred or become subject to any liabilities in excess of Twenty Thousand
Dollars ($20,000) in the aggregate;
(c) discharged or satisfied any Security Interest or other
encumbrance or paid any obligation or liability, other than current liabilities
paid in the Ordinary Course of Business and other than current federal income
Tax liabilities;
(d) declared or made any payment or distribution of cash or
other property to shareholders with respect to its stock, or purchased or
redeemed any shares of its capital stock;
(e) mortgaged or pledged any of its assets or properties, or
subjected them to any Security Interest or any other encumbrance;
(f) sold, leased, subleased, assigned or transferred any of
its assets or properties, except in the Ordinary Course of Business, or
cancelled any debts or claims; (g) made any changes in any employee
compensation, severance or termination agreement, commitment or transaction
other than routine salary increases consistent with past practice or offer
employment to any individuals;
(h) entered into any material transaction, or modified any
existing transaction (the aggregate consideration for which is in excess of
Twenty Thousand Dollars ($20,000));
(i) made any capital expenditures, additions or improvements
or commitments for the same, except those made in the Ordinary Course of
Business which in the aggregate do not exceed Twenty Thousand Dollars ($20,000);
(j) entered into any transaction or operated NRI's business,
not in the Ordinary Course of Business;
(k) made any change in its accounting methods or practices or
ceased making accruals for Taxes, obsolete inventory, vacation and other
customary accruals;
(l) ceased from reserving cash to pay Taxes, principal and
interest on borrowed funds, and other customary expenses and payments;
10
(m) caused to be entered into any amendment or termination of
any lease, customer or supplier contract or other material contract or agreement
to which it is a party, other than in the Ordinary Course of Business;
(n) made any material change in any of its business policies;
(o) terminated or failed to renew, or received any written
threat (that was not subsequently withdrawn) to terminate or fail to renew, any
contract or other agreement that is or was material to NRI's business or its
financial condition; or
(p) entered into any agreement to do any of the foregoing.
2.8 UNDISCLOSED LIABILITIES. NRI does not have any liability (whether
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated, and whether due or to become due), except for (a) liabilities that
have arisen since December 31, 2000 in the Ordinary Course of Business, (b)
contractual and other liabilities incurred in the Ordinary Course of Business
that are not required by GAAP to be reflected on a balance sheet, (c)
liabilities reflected in the Financial Statements, or (d) liabilities for fees
and costs of NRI related to the Merger.
2.9 TAX MATTERS.
(a) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Taxes" means (A) all taxes, charges, fees, levies or
other similar assessments or liabilities, including
net income, gross income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding,
employment, unemployment insurance, social security,
business license, business organization,
environmental, workers compensation, payroll,
profits, license, lease, service, service use,
severance, stamp, occupation, windfall profits,
customs, duties, franchise and other taxes imposed by
the United States of America or any state, local or
foreign government, or any agency thereof, or other
political subdivision of the United States or any
such government, and any interest, fines, penalties,
assessments or additions to tax resulting from,
attributable to or incurred in connection with any
tax or any contest or dispute thereof, (B) any
liability for the payment of any amounts of the type
described in (A) as a result of being a member of an
affiliated, consolidated, combined or unitary group
for any taxable period and (C) any liability for the
payment of any amount of the type described in (A) or
(B) as a result of any express or implied obligation
to indemnify any other person.
(ii) "Tax Returns" means all reports, returns,
declarations, statements or other information
(including, without limitation, estimated Tax
11
Returns and reports, withholding Tax Returns and
reports and information reports and returns)
required to be supplied to a taxing authority in
connection with Taxes.
(b) NRI has qualified and continued to so qualify as a S
Corporation for federal and state tax purposes since the date of its
incorporation and will continue to so qualify up to and including the Closing
Date. NRI has or will have filed with the appropriate federal, state, local and
foreign taxing authorities all Tax Returns required to be filed by or with
respect to it on or before the Closing Date, and such Tax Returns are or will be
true, correct and complete in all material respects. NRI has paid in full or has
made provision in the Financial Statements for all taxes which are due or
claimed to be due from it by any taxing authority. The reserves for Taxes
reflected in the Financial Statements are sufficient for payment in full of all
unpaid Taxes (whether or not currently known or disputed) through the date
thereof. NRI has not incurred any liability for Taxes other than in the Ordinary
Course of Business since December 31, 2000. There are no liens for Taxes upon
the assets of NRI. NRI has not received any notice of deficiency or assessment
from any federal, state, local or foreign taxing authorities with respect to
liabilities for Taxes which have not been fully paid or finally settled. No
state of facts exists or has existed which would constitute grounds for the
assessment of any liability for Taxes with respect to the periods prior to the
Closing Date which have not been audited by any taxing authority. Neither NRI,
its officers or directors nor shareholders are aware of any information which
has caused or should cause them to believe that an audit by any Tax authority
may be forthcoming. NRI has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder, or other third party.
2.10 TITLE TO ASSETS. NRI has good and valid title to, or valid
leasehold interest in, all tangible assets and properties, real, personal and
mixed, used or held for use in NRI's business as presently conducted and as
presently proposed to be conducted. Each such tangible asset is free from
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. No asset
of NRI (tangible or intangible) is subject to any Security Interest or any other
encumbrances.
2.11 REAL PROPERTY. NRI does not own, and has never owned, any real
property. SECTION 2.11 of the Disclosure Schedule lists the only real property
leased by or subleased to NRI ( the "Leased Property"). NRI has delivered to
PurchasePro a complete and accurate copy of the lease (the "RP Lease") for the
Leased Property. The RP Lease is legal, valid, binding, enforceable and in full
force and effect and will continue to be legal, valid, binding, enforceable and
in full force and effect immediately following the Closing in accordance with
the terms thereof as in effect immediately prior to the Closing. Neither NRI,
nor to the Knowledge of NRI, the other party to the RP Lease, is in breach or
violation of, or default under, the RP Lease, and no event has occurred, is
pending or, to the Knowledge of NRI, is threatened, that, after the giving of
notice, with lapse of time, or otherwise, would constitute a breach or default
by NRI or, to the Knowledge of NRI, the other party to the RP Lease under such
lease.
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2.12 INTELLECTUAL PROPERTY.
(a) NRI owns, is licensed or otherwise possesses legally
enforceable rights to use all of its Intellectual Property (as defined below)
that is (i) required or necessary for the conduct of the business of NRI as
currently conducted or (ii) under development for such business, in either case
the absence of which, individually or in the aggregate, would have a NRI MAE
(collectively, the "NRI Intellectual Property"). Each item of NRI Intellectual
Property will be owned or available for use by the Surviving Corporation
immediately following the Closing on substantially identical terms and
conditions as it was immediately prior to the Closing. NRI has taken all
commercially reasonable measures to protect the proprietary nature of each item
of NRI Intellectual Property. To the Knowledge of NRI, (a) no other person or
entity has any rights to any of the NRI Intellectual Property owned by NRI
(except pursuant to agreements or licenses specified in SECTION 2.12(c) of the
Disclosure Schedule), and (b) no other person or entity is infringing, violating
or misappropriating any of the NRI Intellectual Property. For purposes of this
Agreement, "Intellectual Property" means all (i) patents and patent
applications, (ii) copyrights and registrations thereof, (iii) mask works and
registrations and applications for registration thereof, (iv) computer software,
data and documentation, (v) trade secrets and confidential business information,
whether patentable or unpatentable and whether or not reduced to practice,
know-how, manufacturing and production processes and techniques, research and
development information, copyrightable works, financial, marketing and business
data, pricing and cost information, business and marketing plans and customer
and supplier lists and information, and (vi) trademarks, service marks, trade
names, domain names and applications and registrations therefor. SECTION 2.12(a)
of the Disclosure Schedule lists each patent, patent application, copyright
registration or application therefor, mask work registration or application
therefor, and trademark, service xxxx, trade name and domain name, registration
or application therefor, software or copyrightable works owned by NRI. NRI (i)
is the sole and exclusive owner of, with right, title and intent in and to (free
and clear of any Security Interest and any other encumbrances), the NRI
Intellectual Property, including without limitation the NRI Software (as defined
in SECTION 2.12(e) below) or (ii) is a licensee of the NRI Intellectual Property
under valid and binding license agreements listed in SECTION 2.12(c) of the
Disclosure Schedule.
(b) None of the NRI Intellectual Property infringes or
violates, or constitutes a misappropriation of, any Intellectual Property rights
of any person or entity. SECTION 2.12(b) of the Disclosure Schedule lists any
complaint, claim or notice, or written threat thereof, received by NRI alleging
any such infringement, violation or misappropriation. NRI has provided to
PurchasePro complete and accurate copies of all written documentation in NRI's
possession relating to (i) any such complaint, claim, notice or threat or (ii)
claims or disputes known to NRI concerning any NRI Intellectual Property.
(c) SECTION 2.12(c) of the Disclosure Schedule identifies each
license or other agreement (or type of license or other agreement) pursuant to
which NRI has licensed, distributed or otherwise granted any rights to any third
party with respect to, any NRI Intellectual Property.
(d) SECTION 2.12(d) of the Disclosure Schedule identifies each
item of NRI Intellectual Property that is owned by a party other than NRI, and
the license or agreement
13
pursuant to which NRI uses it (excluding off-the-shelf software programs
licensed by NRI pursuant to "shrink wrap" licenses).
(e) NRI has not disclosed the source code for any of the
software owned by it, including without limitation the source code for the
software underlying the Provisional Application for Patent entitled "Baybuilder
dynamic commerce technology" as described in SECTION 2.12(a) of the Disclosure
Schedule (collectively, the "NRI Software") or other confidential information
constituting, embodied in or pertaining to the NRI Software to any person or
entity, except to the Principal Shareholder and Xxxxxx Xxxx, and NRI has taken
commercially reasonable measures to prevent disclosure of such source code. The
NRI Software has not been altered by anyone other than the Principal Shareholder
and no derivative product has been derived from the NRI Software that is not
owned exclusively by NRI without any Security Interest or other encumbrances.
(f) The execution and delivery of this Agreement by NRI and
the consummation of the transactions contemplated hereby, will neither cause NRI
to be in violation or default under any license, sublicense or agreement listed
in SECTIONS 2.12(c) and (d) of the Disclosure Schedule or entitle any other
party to any such license, sublicense or agreement to terminate or modify such
license, sublicense or agreement.
(g) All of the copyrightable materials owned by NRI (including
the NRI Software) have been created by employees of NRI within the scope of
their employment by NRI or by independent contractors of NRI who have executed
agreements expressly assigning all right, title and interest in such
copyrightable materials to NRI. No portion of such copyrightable materials was
jointly developed with any third party.
2.13 CONTRACTS.
(a) SECTION 2.13 of the Disclosure Schedule lists the
following agreements (written or oral) to which NRI is a party:
(i) any agreement (or group of related
agreements) for the lease of personal
property from or to third parties providing
for lease payments in excess of Twenty
Thousand Dollars ($20,000) per annum;
(ii) any agreement (or group of related
agreements) for the purchase or sale of
products or for the furnishing or receipt of
services (A) that calls for performance over
a period of more than one year, (B) that
involves more than the sum of Twenty
Thousand Dollars ($20,000), or (C) in which
NRI has granted manufacturing rights, "most
favored nation" pricing provisions or
marketing or distribution rights relating to
any products or territory or has agreed to
purchase a minimum quantity of goods or
services or has agreed to purchase goods or
services exclusively from a certain party;
(iii) any agreement establishing a partnership or
joint venture;
14
(iv) any agreement (or group of related
agreements) under which it has created,
incurred, assumed or guaranteed (or may
create, incur, assume or guarantee)
indebtedness (including capitalized lease
obligations) involving more than Twenty
Thousand Dollars ($20,000) or under which it
has imposed (or may impose) a Security
Interest on any of its assets, tangible or
intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any employment or consulting agreement;
(vii) any agreement involving any officer,
director or shareholder of NRI or any other
affiliate (an "Affiliate"), as defined in
Rule 12b-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), of
NRI;
(viii) any agreement under which the consequences
of a default or termination would reasonably
be expected to have a NRI MAE;
(ix) any agreement that contains any provisions
requiring NRI to indemnify any other party
thereto (excluding indemnities contained in
agreements for the purchase, sale or license
of products entered into in the Ordinary
Course of Business); and
(x) any other agreement (or group of related
agreements) either involving more than
Twenty Thousand Dollars ($20,000) or not
entered into in the Ordinary Course of
Business.
(b) NRI has delivered to PurchasePro a complete and accurate
copy of each agreement listed in SECTIONS 2.12 and 2.13 of the Disclosure
Schedule. With respect to each agreement so listed: (i) the agreement is legal,
valid, binding and enforceable and in full force and effect; (ii) the agreement
will continue to be legal, valid, binding and enforceable and in full force and
effect immediately following the Closing in accordance with the terms thereof as
in effect immediately prior to the Closing; and (iii) neither NRI nor, to the
Knowledge of NRI, any other party is in breach or violation of, or default
under, any such agreement, and no event has occurred, is pending or, to the
Knowledge of NRI, is threatened, that, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by NRI or, to the
Knowledge of NRI, any other party under such contract.
2.14 ACCOUNTS RECEIVABLE. All accounts receivable of NRI reflected in
the Financial Statements are valid receivables subject to no setoffs or
counterclaims, have arisen in the ordinary course of business and, to the
Knowledge of NRI, are current and collectible (within a reasonable period of
time after the date on which they first became due and payable), net of the
applicable reserve for bad debts in the Financial Statements.
2.15 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of NRI.
15
2.16 INSURANCE. SECTION 2.16 of the Disclosure Schedule lists each
insurance policy (including fire, theft, casualty, general liability, workers
compensation, business interruption, environmental, product liability and
automobile insurance policies and bond and surety arrangements) to which NRI is
a party. There is no material claim pending under any such policy as to which
coverage has been questioned, denied or disputed by the underwriter of such
policy. All premiums due and payable under all such policies have been paid, NRI
may not be liable for retroactive premiums or similar payments, and NRI is
otherwise in compliance in all material respects with the terms of such
policies. NRI has no Knowledge of any threatened termination of, or material
premium increase with respect to, any such policy.
2.17 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation (a "Legal Proceeding") that is pending or, to the
Knowledge of NRI, has been threatened against NRI or affecting the NRI Common
Stock or the transactions contemplated by this Agreement. To the Knowledge of
NRI, there is no basis for any such Legal Proceeding.
2.18 WARRANTIES. No product or service manufactured, sold, leased,
licensed or delivered by NRI is subject to any guaranty, warranty, right of
return, right of credit or other indemnity other than (i) the applicable
standard terms and conditions of sale or lease of NRI, which are set forth in
SECTION 2.18 of the Disclosure Schedule, and (ii) manufacturers' warranties for
which NRI has no liability. SECTION 2.18 of the Disclosure Schedule sets forth
the aggregate expenses incurred by NRI in fulfilling its obligations under its
guaranty, warranty, right of return and indemnity provisions during each of the
fiscal years and the interim period covered by the Financial Statements; and NRI
does not know of any reason why such expenses should significantly increase as a
percentage of sales in the future.
2.19 EMPLOYEES.
(a) SECTION 2.19 of the Disclosure Schedule contains a list of
all employees of NRI along with the position and the annual rate of compensation
of each such person. Each such employee has entered into a
confidentiality/assignment of inventions agreement with NRI, a copy of which has
previously been delivered to PurchasePro. SECTION 2.19 of the Disclosure
Schedule contains a list of each employee of NRI, who is a party to a
non-competition agreement or an employment agreement with NRI, and copies of
such agreements have previously been delivered to PurchasePro. To the Knowledge
of NRI, no key employee or group of employees has any plans to terminate
employment with NRI before or after the Merger.
(b) NRI is not a party to or bound by any collective
bargaining agreement, nor has either experienced any strikes, grievances, claims
of unfair labor practices or other collective bargaining disputes. NRI has no
Knowledge of any organizational effort made or threatened, either currently or
within the past two years, by or on behalf of any labor union with respect to
its employees.
(c) NRI has complied with all applicable laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining, discrimination against race, color,
national origin, religious creed, physical or mental disability, sex, age,
ancestry, medical condition, marital status or sexual orientation, and the
withholding and payment of social security and other taxes. There is no
investigation of NRI's
16
employment policies or practices by any governmental or regulatory authority
pending or to the Knowledge of NRI, threatened.
2.20 EMPLOYEE BENEFITS.
(a) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Employee Benefit Plan" means any "employee
pension benefit plan" (as defined in Section
3(2) of ERISA), any "employee welfare
benefit plan" (as defined in Section 3(1) of
ERISA), and any other written or oral plan,
agreement or arrangement involving direct or
indirect compensation, including insurance
coverage, severance benefits, disability
benefits, deferred compensation, bonuses,
stock options, stock purchase, phantom
stock, stock appreciation or other forms of
incentive compensation or post-retirement
compensation.
(ii) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(iii) "ERISA Affiliate" means any entity that is,
or at any applicable time was, a member of
(A) a controlled group of corporations (as
defined in Section 414(b) of the Code), (B)
a group of trades or businesses under common
control (as defined in Section 414(c) of the
Code), or (D) an affiliated service group
(as defined under Section 414(m) of the Code
or the regulations under Section 414(o) of
the Code), any of which includes or included
NRI.
(b) SECTION 2.20(b) of the Disclosure Schedule contains a
complete and accurate list of all Employee Benefit Plans maintained, or
contributed to, by NRI or any ERISA Affiliate. Complete and accurate copies of
(i) all Employee Benefit Plans that have been reduced to writing, (ii) written
summaries of all unwritten Employee Benefit Plans, (iii) all related trust
agreements, insurance contracts and summary plan descriptions, and (iv) all
annual reports filed on IRS Form 500, 5500C or 5500R and (for all funded plans)
all plan financial statements for the last five plan years for each Employee
Benefit Plan, have been delivered to PurchasePro. Each Employee Benefit Plan has
been administered in all material respects in accordance with its terms and each
of NRI and the ERISA Affiliates has in all material respects met its obligations
with respect to such Employee Benefit Plan and has made all required
contributions thereto. NRI, each ERISA Affiliate and each Employee Benefit Plan
are in compliance in all material respects with the currently applicable
provisions of ERISA and the Code and the regulations thereunder (including
Section 4980B of the Code, Subtitle K, Chapter 100 of the Code, and Sections 601
through 608 and Section 701 ET SEQ. of ERISA). All filings and reports as to
each Employee Benefit Plan required to have been submitted to the Internal
Revenue Service or to the United States Department of Labor have been duly
submitted.
17
(c) There are no Legal Proceedings (except claims for benefits
payable in the normal operation of the Employee Benefit Plans and proceedings
with respect to qualified domestic relations orders) against or involving any
Employee Benefit Plan or asserting any rights or claims to benefits under any
Employee Benefit Plan that could give rise to any material liability.
(d) All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination letters
from the Internal Revenue Service to the effect that such Employee Benefit Plans
are qualified and the plans and the trusts related thereto are exempt from
federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, no such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended or operated since
the date of its most recent determination letter or application therefor in any
respect, and no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost. Each Employee Benefit Plan that
is required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has
been tested for compliance with, and satisfies the requirements of, Section
401(k)(3) and Section 401(m)(2) of the Code for each plan year ending prior to
the Closing Date.
(e) Neither NRI nor any ERISA Affiliate has ever maintained an
Employee Benefit Plan subject to Section 412 of the Code or Title IV of ERISA.
(f) At no time has NRI or any ERISA Affiliate been obligated
to contribute to any "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA).
(g) There are no unfunded obligations under any Employee
Benefit Plan providing benefits after termination of employment to any employee
of NRI (or to any beneficiary of any such employee), including retiree health
coverage and deferred compensation, but excluding continuation of health
coverage required to be continued under Section 4980B of the Code or other
applicable law and insurance conversion privileges under state law. The assets
of each Employee Benefit Plan that is funded are reported at their fair market
value on the books and records of such Employee Benefit Plan.
(h) No act or omission has occurred and no condition exists
with respect to any Employee Benefit Plan maintained by NRI or any ERISA
Affiliate that would subject NRI or any ERISA Affiliate to (i) any material
fine, penalty, tax or liability of any kind imposed under ERISA or the Code or
(ii) any contractual indemnification or contribution obligation protecting any
fiduciary, insurer or service provider with respect to any Employee Benefit
Plan.
(i) No Employee Benefit Plan is funded by, associated with or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code.
(j) Each Employee Benefit Plan is amendable and terminable
unilaterally by NRI at any time without liability to NRI as a result thereof and
no Employee Benefit Plan, plan documentation or agreement, summary plan
description or other written communication
18
distributed generally to employees by its terms prohibits NRI from amending
or terminating any such Employee Benefit Plan.
(k) SECTION 2.20(k) of the Disclosure Schedule discloses each:
(i) agreement with any shareholder, director,
executive officer or other key employee of
NRI (A) the benefits of which are
contingent, or the terms of which are
materially altered, upon the occurrence of a
transaction involving NRI of the nature of
any of the transactions contemplated by this
Agreement, (B) providing any term of
employment or compensation guarantee or (C)
providing severance benefits or other
benefits after the termination of employment
of such director, executive officer or key
employee;
(ii) agreement, plan or arrangement under which
any person may receive payments from NRI
that may be subject to the tax imposed by
Section 4999 of the Code or included in the
determination of such person's "parachute
payment" under Section 280G of the Code; and
(iii) agreement or plan binding NRI, including any
stock option plan, stock appreciation right
plan, restricted stock plan, stock purchase
plan, severance benefit plan or Employee
Benefit Plan, any of the benefits of which
will be increased, or the vesting of the
benefits of which will be accelerated, by
the occurrence of any of the transactions
contemplated by this Agreement or the value
of any of the benefits of which will be
calculated on the basis of any of the
transactions contemplated by this Agreement.
(l) SECTION 2.20(l) of the Disclosure Schedule sets forth
the policies of NRI with respect to accrued vacation, accrued sick time and
earned time-off and the amount of such liabilities as of December 31, 2000.
2.21 ENVIRONMENTAL MATTERS. NRI has complied with all applicable
Environmental Laws (as defined below), except for violations of Environmental
Laws that, individually or in the aggregate, have not had and would not
reasonably be expected to have a NRI MAE. There is no pending or, to the
Knowledge of NRI, threatened civil or criminal litigation, written notice of
violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law involving NRI, except for litigation, notices of violations, formal
administrative proceedings or investigations, inquiries or information requests
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a NRI MAE. For purposes of this Agreement, "Environmental Law"
means any federal, state or local law, statute, rule or regulation or the common
law relating to the environment or occupational health and safety, including any
statute, regulation, administrative decision or order pertaining to: (i)
treatment, storage, disposal, generation and transportation of industrial, toxic
or hazardous materials or substances or solid or hazardous
19
waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous materials or substances, or solid or hazardous
waste, including emissions, discharges, injections, spills, escapes or
dumping of pollutants, contaminants or chemicals; (v) the protection of wild
life, marine life and wetlands, including all endangered and threatened
species; (vi) storage tanks, vessels, containers, abandoned or discarded
barrels, and other closed receptacles; (vii) health and safety of employees
and other persons; and (viii) manufacturing, processing, using, distributing,
treating, storing, disposing, transporting or handling of materials regulated
under any law as pollutants, contaminants, toxic or hazardous materials or
substances or oil or petroleum products or solid or hazardous waste. As used
above, the terms "release" and "environment" shall have the meaning set forth
in the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA").
2.22 LEGAL COMPLIANCE. NRI is, and the conduct and operations of its
business is, in compliance with each applicable law (including rules and
regulations thereunder) of any federal, state, local or foreign government, or
any Governmental Entity, except for any violations or defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a NRI MAE.
2.23 CUSTOMERS AND SUPPLIERS. SECTION 2.23 of the Disclosure Schedule
sets forth a list of (a) each customer that accounted for more than one percent
of the revenues of NRI during the last full fiscal year and the amount of
revenues accounted for by such customer during each such period and (b) each
supplier that is the sole supplier of any significant product to NRI. No such
customer or supplier has indicated within the past year that it will stop, or
decrease the rate of, buying products or supplying products, as applicable, to
NRI. No unfilled customer order or commitment obligating NRI to process,
manufacture or deliver products or perform services will result in a loss to
NRI, upon completion of performance. No purchase order or commitment of NRI is
in excess of normal requirements, nor are prices provided therein in excess of
current market prices for the products or services to be provided thereunder.
2.24 PERMITS. SECTION 2.24 of the Disclosure Schedule sets forth a list
of all permits, licenses, registrations, certificates, orders or approvals from
any Governmental Entity (including those issued or required under Environmental
Laws and those relating to the occupancy or use of owned or leased real
property) ("Permits") issued to or held by NRI. Such listed Permits are the only
Permits that are required for NRI to conduct its business as presently conducted
or as proposed to be conducted, except for those the absence of which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a NRI MAE. Each such Permit is in full force and effect and, to
the Knowledge of NRI, no suspension or cancellation of such Permit is threatened
and there is no basis for believing that such Permit will not be renewable upon
expiration.
2.25 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. No Affiliate of
NRI (a) owns any property or right, tangible or intangible, that is used in the
business of NRI, (b) has any claim or cause of action against NRI, or (c) owes
any money to, or is owed any money by, NRI. SECTION 2.25 of the Disclosure
Schedule describes any transactions or relationships between NRI and any
Affiliate thereof that have occurred or existed since NRI's inception.
20
2.26 BROKERS' FEES. NRI has not retained any broker in connection with
the transactions contemplated hereunder. PurchasePro has, and will have, no
obligation to pay any broker's, finder's investment banker's, financial
advisor's or similar fee in connection with this Agreement or the transactions
contemplated hereby by reason of any action taken by or on behalf of NRI.
2.27 BOOKS AND RECORDS. The minute book and other similar records of
NRI contain complete and accurate records of all actions taken at any meetings
of NRI's shareholders, Board of Directors or any committee thereof and of all
written consents executed in lieu of the holding of any such meeting.
2.28 DISCLOSURE. No representation or warranty by NRI contained in this
Agreement, and no statement contained in the Disclosure Schedule or any other
document, certificate or other instrument delivered or to be delivered by or on
behalf of NRI pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made, in
order to make the statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASEPRO AND THE MERGER SUBSIDIARY
Each of PurchasePro and the Merger Subsidiary represents and warrants
to NRI as of the date hereof and as of the Closing Date, as follows:
3.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. PurchasePro is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and the Merger Subsidiary is a corporation incorporated
under the Florida Business Corporation Act and its status is active. PurchasePro
is duly qualified to conduct business and is in corporate and tax good standing
under the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified or in good standing would not have an PurchasePro
MAE (as defined below). PurchasePro has all requisite corporate power and
authority to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. PurchasePro has furnished or made available
to NRI complete and accurate copies of its Articles of Incorporation and Bylaws.
For purposes of this Agreement, "PurchasePro MAE" means a material adverse
effect on the assets, business, condition (financial or otherwise), results of
operations or future prospects of PurchasePro and its subsidiaries, taken as a
whole, but shall not include any of the foregoing related to (i) the economy or
financial markets in general, (ii) the industries in general in which
PurchasePro operates and not specifically related to (or having the effect of
specifically relating to or having a materially disproportionate effect
(relative to most other industry participants) on) PurchasePro, or (iii) any
change in the market price or trading volume of PurchasePro.
3.2 CAPITALIZATION. The authorized capital stock of PurchasePro
includes 150,000,000 shares of PurchasePro Common Stock, of which 67,495,450
shares were issued and outstanding as of March 1, 2001. All of the issued and
outstanding shares of PurchasePro
21
Common Stock are duly authorized, validly issued, fully paid, nonassessable
and free of all preemptive rights.
3.3 VALIDITY OF SHARES. The shares of PurchasePro Common Stock to be
issued pursuant to the Merger will, when issued: (a) be duly authorized, validly
issued, fully paid and nonassessable and free of liens and encumbrances created
by PurchasePro, and (b) be subject to applicable securities law restrictions on
transfer, including those imposed by Regulation D or Section 4(2) of the 1933
Act and Rule 144 promulgated under the 1933 Act, under applicable "blue sky"
state securities laws.
3.4 AUTHORIZATION OF TRANSACTION. Each of PurchasePro and the Merger
Subsidiary has all requisite corporate power and authority to execute and
deliver this Agreement and the agreements contemplated hereby and to perform its
respective obligations hereunder and thereunder. The execution and delivery by
PurchasePro and the Merger Subsidiary of this Agreement and the agreements
contemplated hereby and the consummation by PurchasePro and the Merger
Subsidiary of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of
PurchasePro and the Merger Subsidiary, respectively. This Agreement has been
duly and validly executed and delivered by PurchasePro and the Merger Subsidiary
and constitutes a valid and binding obligation of PurchasePro and the Merger
Subsidiary, enforceable against them in accordance with its terms.
3.5 NONCONTRAVENTION. Subject to (i) compliance with the applicable
requirements of the Securities Act and any applicable state securities laws and
the Exchange Act and (ii) the filing of the Articles of Merger as required by
the FBCA, neither the execution and delivery by PurchasePro or the Merger
Subsidiary of this Agreement or (in the case of PurchasePro) the Escrow
Agreement, nor the consummation by PurchasePro or the Merger Subsidiary of the
transactions contemplated hereby or thereby, will (a) conflict with or violate
any provision of the charter or Bylaws of PurchasePro or the Merger Subsidiary,
(b) require on the part of PurchasePro or the Merger Subsidiary any filing with,
or permit, authorization, consent or approval of, any Governmental Entity (c)
conflict with, result in breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party any right to terminate, modify or cancel,
or require any notice, consent or waiver under, any contract or instrument to
which PurchasePro or the Merger Subsidiary is a party or by which either is
bound or to which any of their assets are subject, except for (i) any conflict,
breach, default, acceleration, termination, modification or cancellation that
would not adversely affect the consummation of the transactions contemplated
hereby or (ii) any notice, consent or waiver the absence of which would not
adversely affect the consummation of the transactions contemplated hereby, or
(d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to PurchasePro or the Merger Subsidiary or any of their properties or
assets.
3.6 REPORTS AND FINANCIAL STATEMENTS. PurchasePro has previously
furnished or made available to NRI complete and accurate copies, as amended or
supplemented, of its (a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, as filed with the Securities and Exchange Commission (the
"SEC"), and (b) all other reports filed by PurchasePro under Section 13 or
subsections (a) or (c) of Section 14 of the Exchange Act with the SEC since
January 1, 2000 (such reports are collectively referred to herein as the
"PurchasePro Reports").
22
The PurchasePro Reports constitute all of the documents required to be filed
by PurchasePro under Section 13 or subsections (a) or (c) of Section 14 of
the Exchange Act with the SEC from July 1, 1999 through the date of this
Agreement. The PurchasePro Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder
when filed. As of their respective dates, the PurchasePro Reports did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited financial statements and unaudited interim financial
statements of PurchasePro included in the PurchasePro Reports (i) complied as
to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto when
filed, (ii) were prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby (except as may be indicated
therein or in the notes thereto, and in the case of quarterly financial
statements, as permitted by Form 10-Q under the Exchange Act), (iii) fairly
present the consolidated financial condition, results of operations and cash
flows of PurchasePro as of the respective dates thereof and for the periods
referred to therein, and (iv) are consistent with the books and records of
PurchasePro.
3.7 LITIGATION. Except as disclosed in the PurchasePro Reports, as of
the date of this Agreement, there is no Legal Proceeding that is pending or, to
PurchasePro's knowledge, threatened against PurchasePro or any subsidiary of
PurchasePro that, if determined adversely to PurchasePro or such subsidiary,
could have, individually or in the aggregate, an PurchasePro MAE or that in any
manner challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated by this Agreement.
3.8 INTERIM OPERATIONS OF THE MERGER SUBSIDIARY. The Merger Subsidiary
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement and has engaged in no business activities other than as
contemplated by this Agreement.
3.9 BROKERS' FEES. PurchasePro has not retained any broker in
connection with the transactions contemplated hereunder. NRI has, and will have,
no obligation to pay any broker's, finder's investment banker's, financial
advisor's or similar fee in connection with this Agreement or the transactions
contemplated hereby by reason of any action taken by or on behalf of
PurchasePro.
3.10 DISCLOSURE. No representation or warranty by PurchasePro contained
in this Agreement, and no statement contained in the any document, certificate
or other instrument delivered or to be delivered by or on behalf of PurchasePro
pursuant to this Agreement, contains or will contain any untrue statement of a
material fact or omit or will omit to state any material fact necessary, in
light of the circumstances under which it was or will be made, in order to make
the statements herein or therein not misleading.
ARTICLE IV.
COVENANTS
4.1 CLOSING EFFORTS. Each of the Parties shall use its best efforts to
take all actions and to do all things necessary, proper or advisable to
consummate the transactions contemplated
23
by this Agreement, including using its best efforts to ensure that (a) its
representations and warranties remain true and correct in all material
respects through the Closing Date and (b) the conditions to the obligations
of the other Parties to consummate the Merger are satisfied.
4.2 GOVERNMENTAL AND THIRD-PARTY NOTICES AND CONSENTS.
(a) Each Party shall use its best efforts to obtain, at its
expense, all waivers, permits, consents, approvals or other authorizations from
Governmental Entities, and to effect all registrations, filings and notices with
or to Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement.
(b) NRI shall use its best efforts to obtain, at its expense,
all such waivers, consents or approvals from third parties set forth in SECTION
2.4 of the Disclosure Schedule.
(c) PurchasePro and NRI shall cooperate with each other in
determining whether filings are required to be made or consents required to be
obtained in any jurisdiction in connection with the consummation of the
transactions contemplated by this Agreement and in making or causing to be made
any such filings promptly and in seeking to obtain timely any such consents.
(d) PurchasePro agrees that it will execute an agreement
wherein it agrees to be bound by the Standard Sales Agreement between NRI and
Dofasco Inc. dated December 18, 2000 (the "Dofasco Agreement") and fully perform
NRI's obligations thereunder; PROVIDED that Dofasco Inc. agrees to revisions to
the Dofasco Agreement pursuant to terms satisfactory to PurchasePro.
4.3 OPERATION OF BUSINESS. Except as otherwise expressly contemplated
by this Agreement, during the period from the date of this Agreement to the
Effective Time, NRI shall conduct its operations in the Ordinary Course of
Business and in compliance with all applicable laws and regulations and, to the
extent consistent therewith, use its best efforts to preserve intact its current
business organization, keep its physical assets in good working condition, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall not be impaired in
any material respect. Without limiting the generality of the foregoing, prior to
the Effective Time, NRI shall not without the written consent of PurchasePro or
as otherwise specifically set forth in this Agreement:
(a) issue or sell, or redeem or repurchase, any stock or other
securities of NRI or any rights, warrants or options to acquire any such stock
or other securities (except pursuant to the exercise or termination of the
Derivative Securities);
(b) split, combine or reclassify any shares of its capital
stock or declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its capital
stock;
24
(c) create, incur or assume any indebtedness (including
obligations in respect of capital leases); assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity; or make any loans,
advances or capital contributions to, or investments in, any other person or
entity;
(d) enter into, adopt or amend any Employee Benefit Plan or
any employment or severance agreement or arrangement of the type described in
SECTION 2.21(k) or increase in any manner the compensation or fringe benefits
of, or materially modify the employment terms of, its directors, officers or
employees, generally or individually, or pay any bonus or other benefit to its
directors, officers or employees;
(e) acquire, sell, lease, license or dispose of any assets or
property other than purchases and sales of assets in the Ordinary Course of
Business;
(f) mortgage or pledge any of its property or assets or
subject any such property or assets to any Security Interest;
(g) discharge or satisfy any Security Interest or pay any
obligation or liability other than in the Ordinary Course of Business;
(h) amend its charter, Bylaws or other organizational
documents, except for the amendment of its Articles of Incorporation to remove
Article 8 of such articles;
(i) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a generally
applicable change in GAAP;
(j) enter into, amend, terminate, take or omit to take any
action that would constitute a violation of or default under, or waive any
rights under, any material contract or agreement;
(k) make or commit to make any capital expenditure in excess
of Twenty Thousand Dollars ($20,000) per item or Forty Thousand ($40,000) in the
aggregate;
(l) institute or settle any Legal Proceeding;
(m) take any action or fail to take any action permitted by
this Agreement with the knowledge that such action or failure to take action
would result in (i) any of the representations and warranties of NRI set forth
in this Agreement becoming untrue or (ii) any of the conditions to the Merger
set forth in ARTICLE V not being satisfied; or
(n) agree in writing or otherwise to take any of the foregoing
actions.
4.4 ACCESS TO INFORMATION. NRI shall permit representatives of
PurchasePro to have full access (at all reasonable times, and in a manner so as
not to interfere with the normal business operations of NRI) to personnel,
premises properties, financial and accounting records, contracts, other records
and documents, and personnel, of or pertaining to NRI, in order to permit
PurchasePro to conduct its due diligence investigation with respect to the
period from the date hereof until the Effective Time. The confidentiality
provisions of the letter agreement dated
25
January 31, 2001 entered into by PurchasePro and NRI (the "Confidentiality
Agreement") shall continue in full force and effect.
4.5 NOTICE OF BREACHES. From the date of this Agreement until the
Effective Time, NRI shall promptly deliver to PurchasePro supplemental
information concerning events or circumstances occurring subsequent to the date
hereof that would render any representation, warranty or statement in this
Agreement or the Disclosure Schedule inaccurate or incomplete in any material
respect at any time after the date of this Agreement until the Closing Date or
that would cause any condition precedent to NRI's obligations hereunder not to
be satisfied in a timely manner. No such supplemental information shall be
deemed to cure any misrepresentation or breach of warranty or constitute an
amendment of any representation, warranty or statement in this Agreement or the
Disclosure Schedule.
4.6 EXCLUSIVITY.
(a) Except with respect to this Agreement and the transactions
contemplated hereby, NRI shall not, and NRI shall require each of its officers,
directors, employees, representatives and agents not to, directly or indirectly,
(i) initiate, solicit, encourage or otherwise facilitate any inquiry, proposal,
offer or discussion with any party (other than PurchasePro) concerning any
merger, reorganization, consolidation, recapitalization, business combination,
liquidation, dissolution, share exchange, sale of stock, sale of material assets
or similar business transaction involving NRI, (ii) furnish any non-public
information concerning the business, properties or assets of NRI to any party
(other than PurchasePro) or (iii) engage in discussions or negotiations with any
party (other than PurchasePro) concerning any such transaction.
(b) NRI shall immediately notify any party with which
discussions or negotiations of the nature described in paragraph (a) above were
pending that NRI is terminating such discussions or negotiations. If NRI
receives any inquiry, proposal or offer of the nature described in paragraph (a)
above, NRI shall, within one (1) business day after such receipt, notify
PurchasePro of such inquiry, proposal or offer, including the identity of the
other party and the terms of such inquiry, proposal or offer.
4.7 TERMINATION OF DERIVATIVE SECURITIES AND VESTING OF NRI COMMON
STOCK. Prior to the Closing, (a) NRI shall have either terminated the Derivative
Securities under the terms thereof or converted the Derivative Securities into
NRI Common Stock, as the case may be, under the terms thereof, and all payment
obligations arising for any such termination shall be satisfied out of the Cash
Consideration or Merger Shares, and (b) all of the NRI Common Stock subject to
vesting shall have fully vested or such vesting rights shall have been
terminated prior to the Closing pursuant to the terms of the agreements
providing for such vesting.
4.8 APPROVAL OF NRI COMMON SHAREHOLDERS. NRI shall take the actions
necessary to conduct a meeting of the NRI Common Shareholders to consider and
vote on the Merger, subject to compliance by PurchasePro's obligations
hereunder, at the earliest practicable date after the Agreement Date (consistent
with the requirements of Section 4(2) and/or Regulation D under the 0000 Xxx)
and in connection therewith NRI's Board of Directors shall recommend to the NRI
Common Shareholders that they approve the Merger, this Agreement and the
26
transactions contemplated thereby. The vote of the NRI Common Shareholders shall
be called, held and conducted, and any proxies or written consents shall be
solicited, in compliance with NRI's Articles of Incorporation and Bylaws, both
as amended, and in compliance with applicable law.
4.9 APPROVAL BY PRINCIPAL SHAREHOLDER. The Principal Shareholder shall
vote all of his shares of NRI Common Stock to approve this Agreement and the
Merger and against any other alternative proposal and shall timely grant
PurchasePro an irrevocable proxy to so vote his shares of NRI Common Stock.
4.10 CASH AS OF THE CLOSING DATE. NRI shall have at least $300,000 in
cash as of the Closing Date.
4.11 NRI EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS. NRI shall terminate
any Employee Benefit Plans that are governed by Section 401(K) of the Code
immediately prior to the Effective Time upon the request of PurchasePro. In the
event that the distribution or rollover of assets from the trust of a Code
Section 401(K) plan that is terminated will trigger liquidation, surrender or
other fees that will be imposed on the terminated plan or any participant or
beneficiary of such terminated plan, NRI shall take such actions as are
necessary to reasonably estimate the amount of such fees and provide such
reasonable estimate in writing to PurchasePro prior to the Effective Time. Any
Employee Benefit Plan that is governed by Section 401(K) of the Code and relies
on a standardized prototype document shall be amended prior to the Effective
Time so as not to require all corporations that are members of the same
controlled group of corporations as the employer sponsoring such plan to
participate in such plan. NRI shall file any delinquent Form 5500s through the
Department of Labor Delinquent Filer Voluntary Compliance Program prior to the
Effective Time.
4.12 TAX-FREE REORGANIZATION.
(a) Subject to the express terms of this Agreement, the
Parties will not knowingly undertake any voluntary action that would cause the
Merger to fail to qualify as a "reorganization" within the meaning of Section
368(a) of the Code; PROVIDED, HOWEVER, that no breach of this covenant shall
occur as a result of the Parties consummating the Merger in accordance with the
terms of this Agreement.
(b) Each of the Parties agree that they will prepare all Tax
Returns in a manner that is consistent with the treatment of the Merger as a
tax-free reorganization under Section 368(a) of the Code.
4.13 CUSTOMER TRANSITION. NRI and the Principal Shareholder shall use
its best efforts to take all actions and to do all things necessary, proper or
advisable to assist the Surviving Corporation or PurchasePro in working with and
maintaining NRI's existing customers in connection with the transactions
contemplated by this Agreement.
4.14 NRI CONTRACT TERMINATIONS. NRI and the Principal Shareholder shall
use its best efforts to take all actions and to do all things necessary, proper
or advisable to assist the Surviving Corporation or PurchasePro in negotiating
terminations of the RP Lease, the Adelphia
27
Alarm System and Monitoring Agreement dated December 23, 1999 and the
Ciberlynx, Inc. Internet Services and Equipment Contract Term Commitment
dated 27, 1999.
ARTICLE V.
CONDITIONS TO CONSUMMATION OF MERGER
5.1 CONDITIONS TO OBLIGATIONS OF PURCHASEPRO AND THE MERGER SUBSIDIARY.
The obligation of each of PurchasePro and the Merger Subsidiary to consummate
the Merger is subject to the satisfaction (or waiver by PurchasePro) of the
following conditions:
(a) NRI shall have obtained (and shall have provided copies
thereof to PurchasePro) all of the waivers, permits, consents, approvals or
other authorizations, and effected all of the registrations, filings and
notices, referred to in SECTION 4.2 that are required on the part of NRI.
(b) All representations and warranties of NRI set forth in
this Agreement shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Effective Time as though made as
of the Effective Time, except to the extent such representations and warranties
are specifically made as of a particular date or as of the date of this
Agreement (in which case such representations and warranties shall be true and
correct as of such date).
(c) NRI shall have performed or complied with in all respects,
its agreements and covenants required to be performed or complied with under
this Agreement as of or prior to the Effective Time.
(d) No Legal Proceeding shall be pending or threatened wherein
an unfavorable judgment, order, decree, stipulation or injunction would (i)
prevent consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation or (iii) have a NRI MAE, and no such judgment,
order, decree, stipulation or injunction shall be in effect.
(e) NRI shall have terminated or converted all Derivative
Securities into NRI Common Stock.
(f) The holders of at least ninety five percent (95%) of the
outstanding shares of NRI Common Stock shall have entered into the Registration
Rights Agreement (either individually or by proxy) in the form attached hereto
as EXHIBIT D (the "Registration Rights Agreement").
(g) NRI shall have delivered to PurchasePro and the Merger
Subsidiary a certificate (the "NRI Certificate") in the form of EXHIBIT E
attached hereto to the effect that each of the conditions specified in clauses
(a) through (d) (insofar as clause (d) relates to Legal Proceedings involving
NRI) of this SECTION 5.1 is satisfied in all respects.
(h) Each of the NRI Common Shareholders not exercising his/her
dissenter's rights under the FBCA shall have executed and delivered to
PurchasePro an Investment Representation Letter.
28
(i) PurchasePro shall have received from Broad and Xxxxxx,
counsel to NRI, an opinion in the form attached hereto as EXHIBIT F, addressed
to PurchasePro and dated as of the Closing Date.
(j) PurchasePro shall have received a certificate of NRI's
secretary in the form of EXHIBIT G attached hereto, certifying as of the Closing
Date (i) a true and complete copy of the Articles of Incorporation and Bylaws of
NRI certified as of a recent date by the Secretary of State of Florida, (ii) a
certificate of each appropriate Secretary of State certifying the good standing
of NRI in its state of incorporation and all states in which it qualified to do
business, (iii) a true and complete copy of the resolutions of the board of
directors of NRI and the resolutions of the NRI Common Shareholders, each
authorizing the execution, delivery and performance of this Agreement by NRI and
(iv) incumbency matters.
(k) The Principal Shareholder shall have entered into an
Employment Agreement with PurchasePro in the form attached hereto as EXHIBIT H.
(l) Each shareholder of NRI that has executed the Registration
Rights Agreement, and Messrs. Xxx, Sure, Shaik, Chittathoor and Mr. and Xxx.
Xxxxx (to the extent Messrs. Xxx, Sure, Shaik, Chittathoor or Mr. and Xxx. Xxxxx
have not executed the Registration Rights Agreement) shall have executed and
delivered to PurchasePro a Shareholder Waiver Agreement in the form attached
hereto as EXHIBIT I.
(m) PurchasePro shall have received the Escrow Agreement
executed by the Escrow Agent and the Shareholder Representative.
(n) This Agreement, the Merger and all the other documents to
be delivered hereunder will have been duly and validly approved and adopted, as
required by applicable law, by (i) NRI's Board of Directors, and (ii) the valid
and affirmative vote of ninety five percent (95%) of the outstanding shares of
NRI's capital stock entitled to vote thereon.
(o) All officers, employees and consultants of NRI shall have
executed proprietary information and inventions agreements in the form attached
hereto as EXHIBIT J.
(p) Each of The Timken Company, Dofasco Inc. and Xxxxx Corning
shall have agreed to continue working with the Surviving Corporation or
PurchasePro under its existing terms with NRI or terms satisfactory to
PurchasePro.
(q) Xxxxxxxx Xxxxxx shall have paid to NRI the $37,125 that he
owes NRI in connection with his purchase of NRI Common Stock.
5.2 CONDITIONS TO OBLIGATIONS OF NRI. The obligation of NRI to
consummate the Merger is subject to the satisfaction of the following additional
conditions:
(a) PurchasePro shall have effected all of the registrations,
filings and notices referred to in SECTION 4.2 that are required on the part of
PurchasePro, except for any which if not obtained or effected would not have an
PurchasePro MAE or a material adverse effect on the ability of the Parties to
consummate the transactions contemplated by this Agreement;
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(b) All representations and warranties of PurchasePro and
the Merger Subsidiary set forth in this Agreement shall be true and correct
in all material respects, in each case as of the date of this Agreement and
as of the Effective Time as though made as of the Effective Time, except to
the extent such representations and warranties are specifically made as of a
particular date or as of the date of this Agreement (in which case such
representations and warranties shall be true and correct as of such date);
(c) each of PurchasePro and the Merger Subsidiary shall have
performed or complied with in all respects its agreements and covenants required
to be performed or complied with under this Agreement as of or prior to the
Effective Time;
(d) no Legal Proceeding shall be pending or threatened wherein
an unfavorable judgment, order, decree, stipulation or injunction would (i)
prevent consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation or (iii) have an PurchasePro MAE, and no such
judgment, order, decree, stipulation or injunction shall be in effect;
(e) PurchasePro shall have delivered to NRI a certificate (the
"PurchasePro Certificate") in the form attached hereto as EXHIBIT K to the
effect that each of the conditions specified in clauses (a) through (d) (insofar
as clause (d) relates to Legal Proceedings involving PurchasePro or the Merger
Subsidiary) of this SECTION 5.2 is satisfied in all respects;
(f) NRI shall have received a certificate of PurchasePro's
Secretary in the form of EXHIBIT L attached hereto, certifying as of the Closing
Date (i) a true and complete copy of the Certificate of Incorporation and Bylaws
of PurchasePro certified as of a recent date by the Secretary of State of Nevada
(ii) a certificate of Secretary of State of Nevada certifying the good standing
of PurchasePro in its state of incorporation, (iii) a true and complete copy of
the resolutions of the board of directors of PurchasePro, authorizing the
execution, delivery and performance of this Agreement by PurchasePro and (iv)
incumbency matters.
(g) NRI shall have received from Xxxxxxx, Xxxxxxx & Xxxxxxxx
LLP, counsel to PurchasePro, an opinion in the form attached hereto as EXHIBIT
M, addressed to NRI and the Principal Shareholder and dated as of the Closing
Date.
(h) PurchasePro shall have executed and delivered to the
Shareholder Representative the Registration Rights Agreement and the Escrow
Agreement.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY THE PRINCIPAL SHAREHOLDER. The Principal
Shareholder shall indemnify PurchasePro, the Surviving Corporation and their
respective officers, directors, Affiliates, employees, agents, successors and
assigns (collectively the "PurchasePro Group") in respect of, and hold it
harmless against, any and all debts, obligations and other liabilities (whether
absolute, accrued, contingent, fixed or otherwise, or whether known or unknown,
or due or to become due or otherwise), monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses and expenses (including amounts paid
in settlement, interest,
30
court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation) ("Damages") incurred or suffered by any member of the PurchasePro
Group thereof resulting from, relating to or constituting:
(a) breach of any covenant, representation, warranty or
agreement made by NRI in or pursuant to this Agreement, or in other documents
delivered in connection with the transactions contemplated in this Agreement;
(b) any failure of any NRI Common Shareholder to have good,
valid and marketable title to the issued and outstanding NRI Common Stock issued
in the name of such NRI Common Shareholder, free and clear of all Security
Interests and any other encumbrances;
(c) any claim by a shareholder or former shareholder of NRI,
or any other person or entity, seeking to assert, or based upon: (i) ownership
or rights to ownership of any shares of stock of NRI; (ii) any rights of a
shareholder (other than the right to receive the Merger Shares pursuant to this
Agreement), including any option, preemptive rights or rights to notice or to
vote; (iii) any rights under the Articles of Incorporation or Bylaws of NRI; or
(iv) any claim that, his, her or its shares were wrongfully repurchased by NRI;
or
(d) any Legal Proceedings listed in the Disclosure Schedule.
6.2 INDEMNIFICATION BY PURCHASEPRO. PurchasePro shall indemnify the NRI
Common Shareholders in respect of, and hold them harmless against, any and all
Damages incurred or suffered by the NRI Common Shareholders resulting from,
relating to or constituting any breach of any covenant, representation, warranty
or agreement made by PurchasePro or the Merger Subsidiary in or pursuant to this
Agreement or in other documents delivered in connection with the transactions
contemplated in this Agreement.
6.3 INDEMNIFICATION CLAIMS.
(a) THIRD PARTY SUIT OR PROCEEDING. A party entitled, or
seeking to assert rights, to indemnification under this ARTICLE VI (an
"Indemnified Party") shall give written notification to the party from whom
indemnification is sought (an "Indemnifying Party") of the commencement of any
suit or proceeding relating to a third party claim for which indemnification
pursuant to this ARTICLE VI may be sought. Such notification shall be given
within twenty (20) business days after receipt by the Indemnified Party of
notice of such suit or proceeding, and shall describe in reasonable detail (to
the extent known by the Indemnified Party) the facts constituting the basis for
such suit or proceeding and the amount of the claimed damages; PROVIDED,
HOWEVER, that no delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party of any liability or
obligation hereunder except to the extent of any damage or liability caused by
or arising out of such failure. Within twenty (20) calendar days after delivery
of such notification, the Indemnifying Party may, upon written notice thereof to
the Indemnified Party, assume control of the defense of such suit or proceeding
with counsel reasonably satisfactory to the Indemnified Party; PROVIDED that (i)
the Indemnifying Party may only assume control of such defense if (A) it
acknowledges in writing to the Indemnified Party that any damages, fines, costs
or other liabilities that may be assessed against the Indemnified Party in
connection with such suit or proceeding constitute Damages for
31
which the Indemnified Party shall be indemnified pursuant to this ARTICLE VI
and (B) the AD DAMNUM is less than or equal to the amount of Damages for
which the Indemnifying Party is liable under this ARTICLE VI and (ii) the
Indemnifying Party may not assume control of the defense of a suit or
proceeding involving criminal liability or in which equitable relief is
sought against the Indemnified Party. If the Indemnifying Party does not so
assume control of such defense, the Indemnified Party shall control such
defense. The party not controlling such defense (the "Non-controlling Party")
may participate therein at its own expense; PROVIDED that if the Indemnifying
Party assumes control of such defense and the Indemnified Party reasonably
concludes that the Indemnifying Party and the Indemnified Party have
conflicting interests or different defenses available with respect to such
suit or proceeding, the reasonable fees and expenses of counsel to the
Indemnified Party shall be considered "Damages" for purposes of this
Agreement. The party controlling such defense (the "Controlling Party") shall
keep the Non-controlling Party advised of the status of such suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the Non-controlling Party with respect thereto. The
Non-controlling Party shall furnish the Controlling Party with such
information as it may have with respect to such suit or proceeding (including
copies of any summons, complaint or other pleading that may have been served
on such party and any written claim, demand, invoice, billing or other
document evidencing or asserting the same) and shall otherwise cooperate with
and assist the Controlling Party in the defense of such suit or proceeding.
The Indemnifying Party shall not agree to any settlement of, or the entry of
any judgment arising from, any such suit or proceeding without the prior
written consent of the Indemnified Party, that shall not be unreasonably
withheld or delayed. The Indemnified Party shall not agree to any settlement
of, or the entry of any judgment arising from, any such suit or proceeding
without the prior written consent of the Indemnifying Party, which shall not
be unreasonably withheld or delayed.
(b) INDEMNIFICATION CLAIM PROCEDURE. Except as provided in
SECTION 6.3(a) above, in order to seek indemnification under this ARTICLE VI, an
Indemnified Party shall give written notification (a "Claim Notice") to the
Indemnifying Party pursuant to the procedure set forth in Section 4(c) of the
Escrow Agreement. In the event the Escrow Agreement has terminated and the
Indemnifying Party disputes the claim by the Indemnified Party, the Indemnifying
Party shall deliver to the Indemnified Party a written response (the "Response")
in which the Indemnifying Party shall: (i) agree that the Indemnified Party is
entitled to receive part, but not all, of the Damages in dispute (the "Claimed
Amount"), in which case the Response shall be accompanied by a payment by the
Indemnifying Party to the Indemnified Party of the Damages not in dispute (the
"Agreed Amount"), by check or by wire transfer or (ii) dispute that the
Indemnified Party is entitled to receive any of the Claimed Amount. If the
Indemnifying Party in the Response disputes its liability for all or part of the
Claimed Amount, the Indemnifying Party and the Indemnified Party shall follow
the procedures set forth in this SECTION 6.3(b) for the resolution of such
dispute (a "Dispute").
During the sixty (60)-day period following the delivery of a Response
that reflects a Dispute, the Indemnifying Party and the Indemnified Party shall
use good faith efforts to resolve the Dispute. If the Dispute is not resolved
within such sixty (60)-day period, the Indemnifying Party and the Indemnified
Party shall discuss in good faith the submission of the Dispute to a mutually
acceptable alternative dispute resolution procedure (which may be non-binding or
binding upon the parties, as they agree in advance) (the "ADR Procedure"). In
the event the
32
Indemnifying Party and the Indemnified Party agree upon an ADR Procedure,
such parties shall, in consultation with the chosen dispute resolution
service (the "ADR Service"), promptly agree upon a format and timetable for
the ADR Procedure, agree upon the rules applicable to the ADR Procedure, and
promptly undertake the ADR Procedure. The provisions of this SECTION 6.3(b)
shall not obligate the Indemnifying Party and the Indemnified Party to pursue
an ADR Procedure or prevent either such party from pursuing the Dispute in a
court of competent jurisdiction; PROVIDED that, if the Indemnifying Party and
the Indemnified Party agree to pursue an ADR Procedure, neither the
Indemnifying Party nor the Indemnified Party may commence litigation or seek
other remedies with respect to the Dispute prior to the completion of such
ADR Procedure. Any ADR Procedure undertaken by the Indemnifying Party and the
Indemnified Party shall be considered a compromise negotiation for purposes
of federal and state rules of evidence, and all statements, offers, opinions
and disclosures (whether written or oral) made in the course of the ADR
Procedure by or on behalf of the Indemnifying Party, the Indemnified Party or
the ADR Service shall be treated as confidential and, where appropriate, as
privileged work product. Such statements, offers, opinions and disclosures
shall not be discoverable or admissible for any purposes in any litigation or
other proceeding relating to the Dispute (provided that this sentence shall
not be construed to exclude from discovery or admission any matter that is
otherwise discoverable or admissible). The fees and expenses of any ADR
Service used by the Indemnifying Party and the Indemnified Party shall be
shared equally by the Indemnifying Party and the Indemnified Party.
Notwithstanding the other provisions of this SECTION 6.3, if a third
party asserts (other than by means of a lawsuit) that an Indemnified Party is
liable to such third party for a monetary or other obligation that may
constitute or result in Damages for which such Indemnified Party may be entitled
to indemnification pursuant to this ARTICLE VI, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Party, (ii)
such Indemnified Party may subsequently make a claim for indemnification in
accordance with the provisions of this ARTICLE VI, and (iii) such Indemnified
Party shall be reimbursed, in accordance with the provisions of this ARTICLE VI,
for any such Damages for which it is entitled to indemnification pursuant to
this ARTICLE VI (subject to the right of the Indemnifying Party to dispute the
Indemnified Party's entitlement to indemnification, or the amount for which it
is entitled to indemnification, under the terms of this ARTICLE VI).
For purposes of this SECTION 6.3 and the last two sentences of SECTION
6.4, if the NRI Common Shareholders comprise the Indemnifying Party, any
references to the Indemnifying Party (except provisions relating to an
obligation to make or a right to receive any payments provided for in SECTION
6.3 or 6.4) shall be deemed to refer to the Shareholder Representative. The
Shareholder Representative shall have full power and authority on behalf of each
NRI Common Shareholder to take any and all actions on behalf of, execute any and
all instruments on behalf of, and execute or waive any and all rights of, the
NRI Common Shareholders under this ARTICLE VI. The Shareholder Representative
shall have no liability to any NRI Common Shareholder for any action taken or
omitted on behalf of the NRI Common Shareholders pursuant to this ARTICLE VI.
(c) TAX INDEMNITY. Notwithstanding anything in this Agreement
to the contrary, in the event any member of the PurchasePro Group incurs Damages
arising resulting
33
from a breach of the representations or warranties set forth in SECTION 2.9
herein, including without limitation the Disclosure Schedule referred to
therein and relating to such Section ("Tax Losses"), PurchasePro shall have
the right, for the period covered by SECTION 2.9 hereof, to control any audit
or determination by any taxing authority, initiate any claim for refund or
amended return, contest, defend against, resolve, and settle any assessment,
notice of deficiency or other adjustment or proposed adjustment of Taxes or
otherwise resolve any issue pertaining to any Tax Losses; PROVIDED, HOWEVER,
that PurchasePro will not settle any such claim that would result in an
indemnity obligation on the Principal Shareholder without the Principal
Shareholder's prior written consent, which consent shall not be unreasonably
withheld. The Principal Shareholder shall have the right to receive in a
timely manner copies of all non-privileged correspondence, records and
relevant documentation and to be timely informed of and to attend all
meetings with third parties relating to any claimed Tax Losses.
6.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement, shall (a) survive the Closing and any
investigation at any time made by or on behalf of an Indemnified Party and (b)
shall remain in full force and effect for a period of twenty four (24) months
after the Effective Date; PROVIDED, HOWEVER, that the representations and
warranties in SECTIONS 2.1-2.3 shall survive indefinitely and the
representations and warranties in SECTION 2.9 shall survive for the applicable
statute of limitation plus one year. If an Indemnified Party delivers to an
Indemnifying Party, before expiration of a representation or warranty, either a
Claim Notice based upon a breach of such representation or warranty, or a notice
that, as a result a legal proceeding instituted by or written claim made by a
third party, the Indemnified Party reasonably expects to incur Damages as a
result of a breach of such representation or warranty (an "Expected Claim
Notice"), then such representation or warranty shall survive until, but only for
purposes of, the resolution of the matter covered by such notice. If the legal
proceeding or written claim with respect to which an Expected Claim Notice has
been given is definitively withdrawn or resolved in favor of the Indemnified
Party, the Indemnified Party shall promptly so notify the Indemnifying Party;
and if the Indemnified Party has delivered a copy of the Expected Claim Notice
to the Escrow Agent and Escrow Cash or Escrow Shares have been retained in
escrow after the Termination Date (as defined in the Escrow Agreement) with
respect to such Expected Claim Notice, the Indemnifying Party and the
Indemnified Party shall promptly deliver to the Escrow Agent a written notice
executed by both parties instructing the Escrow Agent to distribute such
retained Escrow Cash or Escrow Shares to the NRI Common Shareholders in
accordance with the terms of the Escrow Agreement.
6.5 LIMITATIONS.
(a) ESCROW ACCOUNT. In the event that any member of the
PurchasePro Group is entitled to indemnification under this ARTICLE VI,
PurchasePro's first recourse for indemnification shall be the Escrow Fund. After
the Escrow Fund is exhausted or the Escrow Agreement is terminated, PurchasePro
shall be entitled to seek indemnification under this ARTICLE VI directly from
the Principal Shareholder.
(b) THRESHOLD AMOUNT. The Principal Shareholder shall have no
liability to any member of the PurchasePro Group, and PurchasePro shall have no
liability to the NRI Common Shareholders, for amounts payable pursuant to their
respective indemnification obligations in this ARTICLE VI until the total of all
such Damages incurred by the Indemnified
34
Party exceed Fifty Thousand Dollars ($50,000) in the aggregate (the
"Threshold Amount"), and then indemnification by the Indemnifying Party shall
apply to all such Damages exceeding the Threshold Amount.
(c) CAP AMOUNT. The Principal Shareholder shall have no
liability to any member of the PurchasePro Group, and PurchasePro shall have no
liability to the NRI Common Shareholders, pursuant to their respective
indemnification obligations in this ARTICLE VI to the extent that the total of
all Damages (subject to the threshold requirements set forth in SECTION 6.5(b)
above) paid by such indemnifying party pursuant to such indemnification
obligations exceeds Fifteen Million Dollars ($15,000,000) in the aggregate.
(d) FRAUD EXCEPTION. The limitation on the Principal
Shareholder's and PurchasePro's indemnification obligation in this ARTICLE VI
shall not apply to any fraud by NRI or the Principal Shareholder, or by
PurchasePro, as the case may be, or to Damages resulting from (i) disputes as to
the title of NRI Common Stock or (ii) Legal Proceedings listed in the Disclosure
Schedule.
ARTICLE VII
TERMINATION
7.1 TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
prior to the Effective Time as provided below (the "Termination Date"):
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) PurchasePro may terminate this Agreement by giving written
notice to NRI in the event NRI is in breach of any representation, warranty or
covenant contained in this Agreement, and such breach, individually or in
combination with any other such breach, would cause any of the conditions set
forth in SECTION 5.1 not to be satisfied and which breach is not cured within
ten (10) business days of receipt of notice thereof;
(c) NRI may terminate this Agreement by giving written notice
to PurchasePro in the event PurchasePro or the Merger Subsidiary is in breach of
any representation, warranty or covenant contained in this Agreement, and such
breach, individually or in combination with any other such breach, would cause
the conditions set forth in SECTION 5.2 not to be satisfied and which breach is
not cured within ten (10) business days of receipt of notice thereof;
(d) PurchasePro may terminate this Agreement by giving written
notice to NRI if the Closing shall not have occurred within forty five (45) days
of the date hereof by reason of the failure of any condition precedent under
SECTION 5.1 (unless the failure results primarily from a breach by PurchasePro
or the Merger Subsidiary of any representation, warranty or covenant contained
in this Agreement); or
(e) NRI may terminate this Agreement by giving written notice
to PurchasePro and the Merger Subsidiary if the Closing shall not have occurred
within forty five (45) days of the date hereof by reason of the failure of any
condition precedent under SECTION 5.2
35
(unless the failure results primarily from a breach by NRI of any
representation, warranty or covenant contained in this Agreement).
7.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to SECTION 7.1, all obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (except for any
liability of any Party for breaches of this Agreement, PROVIDED that the
provisions of the Confidentiality Agreement shall survive the termination of
this Agreement).
ARTICLE VIII
DEFINITIONS
8.1 DEFINITIONS. For purposes of this Agreement, each of the following
defined terms is defined in the Section of this Agreement indicated below.
DEFINED TERM SECTION
------------ -------
ADR Procedure 6.3(b)
ADR Service 6.3(b)
Affiliate 2.13(a)(vii)
Agreed Amount 6.3(b)
Agreement Introduction
Articles of Merger 1.2
CERCLA 2.21
Cash Consideration 1.5(a)
Certificates 1.5(f)
Claim Notice 6.3(b)
Claimed Amount 6.3(b)
Closing 1.13(a)
Closing Date 1.13(a)
Closing Share Price 1.5(a)
Code Recitals
Confidentiality Agreement 4.4
Controlling Party 6.3(a)
Damages 6.1
Dofasco Agreement 4.2(d)
Derivative Securities 1.5(c)
Disclosure Schedule Article II
Dispute 6.3(b)
Dissenting Shares 1.8(a)
ERISA 2.20(a)(ii)
ERISA Affiliate 2.20(a)(iii)
Effective Time 1.2
Employee Benefit Plan 2.20(a)(i)
Environmental Law 2.21(a)
Escrow Agreement 1.9
Escrow Cash 1.9
Escrow Fund 1.9
Escrow Shares 1.9
Exchange Act 2.13(a)(vii)
Exchange Agent 1.6(a)
Exchange Ratio 1.5(a)
Expected Claim Notice 6.4
36
DEFINED TERM SECTION
------------ -------
FBCA Recitals
Financial Statements 2.6
GAAP 2.6
Governmental Entity 2.4(b)
Indemnified Party 6.3(a)
Indemnifying Party 6.3(a)
Intellectual Property 2.12(a)
Investment Representation Letter 1.12
Leased Property 2.11
Legal Proceeding 2.17
Knowledge of NRI 2.2
Merger Recitals
Merger Shares 1.5(e)
Merger Subsidiary Introduction
NRI Introduction
NRI Certificate 5.1(g)
NRI Common Stock 1.5(a)
NRI Common Shareholders 2.2
NRI Intellectual Property 2.12(a)
NRI MAE 2.1
NRI Software 2.12(e)
Non-controlling Party 6.3(a)
Ordinary Course of Business 2.4
Outstanding NRI Common Stock 1.5(a)
Parties Introduction
Permits 2.24
Principal Shareholder Introduction
PurchasePro Introduction
PurchasePro Certificate 5.2(e)
PurchasePro Common Stock 1.5(a)
PurchasePro MAE 3.1
PurchasePro Reports 3.6
RP Lease 2.11
Record Date 2.3(c)
Registration Rights Agreement 5.1(f)
Representative Agreement 1.11
Response 6.3(b)
SEC 3.6
Securities Act 1.12
Security Interest 2.4(e)
Shareholder Representative 1.11
Surviving Corporation 1.1
Tax Losses 6.3(c)
Tax Returns 2.9(a)(ii)
Taxes 2.9(a)(i)
Termination Date 7.1
Threshold Amount 6.5(b)
37
ARTICLE IX
MISCELLANEOUS
9.1 PUBLIC ANNOUNCEMENTS. Upon execution of this Agreement, PurchasePro
and NRI will issue a press release approved by both parties announcing the
Merger. Thereafter, PurchasePro may issue such press releases, and make such
other disclosures regarding the Merger, as it determines are required under
applicable securities laws or regulatory rules. Prior to the publication of such
press release (unless this Agreement has been terminated), neither party will
make any public announcement relating to this Agreement or the transactions
contemplated hereby (unless PurchasePro determines that it is required under
applicable securities laws or regulatory rules to issue a press release) and NRI
will use its best efforts to prevent any trading in PurchasePro Common Stock by
its officers, directors, employees, shareholders and agents.
9.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns; PROVIDED, HOWEVER, that the provisions
concerning indemnification are intended for the benefit of the individuals
specified therein and their successors and assigns.
9.3 ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, with respect to the subject matter hereof.
9.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties.
9.5 COUNTERPARTS AND FACSIMILE SIGNATURE. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. This
Agreement may be executed by facsimile signature.
9.6 HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
38
9.7 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly delivered four
business days after it is sent by registered or certified mail, return
receipt requested, postage prepaid, or one business day after it is sent for
next business day delivery via a reputable nationwide overnight courier
service, in each case to the intended recipient as set forth below:
TO PURCHASEPRO AND/OR THE MERGER XxxxxxxxXxx.xxx, Inc.
SUBSIDIARY: 0000 Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxxx
WITH A COPY TO: Xxxxxxx, Phleger & Xxxxxxxx LLP
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx, Esq.
Xxxxx Xxxxxxxxx, Esq.
To the Principal Shareholder or the NRI Xxx X. Xxxxxx
Common Shareholders 0000 XX Xxxxxxxxx Xxxx., Xxx. 000
c/o Shareholder Representative: Xxxx Xxxxx, XX 00000
Fax: (000) 000-0000
WITH A COPY TO: Broad and Xxxxxx
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, P.A.
Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, facsimile, ordinary mail or electronic mail), but no such
notice, request, demand, claim or other communication shall be deemed to have
been duly given unless and until it actually is received by the party for whom
it is intended. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set forth.
9.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Nevada without giving effect
to any choice or conflict of law provision or rule that would cause the
application of laws of any jurisdictions other than those of the State of
Nevada; PROVIDED that the Articles of Merger shall be governed by and
interpreted and enforced in accordance with the FBCA.
39
9.9 AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver of any right or
remedy hereunder shall be valid unless the same shall be in writing and signed
by the Party giving such waiver. No waiver by any Party with respect to any
default, misrepresentation or breach of warranty or covenant hereunder shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
9.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a 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.
9.11 SUBMISSION TO JURISDICTION. Each of the Parties (a) submits to the
jurisdiction of any state or federal court sitting in Nevada in any action or
proceeding arising out of or relating to this Agreement, (b) agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such court, and (c) agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required
of any other Party with respect thereto. Any Party may make service on another
Party by sending or delivering a copy of the process to the Party to be served
at the address and in the manner provided for the giving of notices in SECTION
9.7. Nothing in this SECTION 9.11, however, shall affect the right of any Party
to serve legal process in any other manner permitted by law.
9.12 STANDSTILL. NRI (or any of its officers, directors, employees,
affiliates or agents) will not, directly or indirectly, effect the purchase or
sale of any security of PurchasePro until the later of (i) the date on which
this Agreement is terminated and (ii) the Merger is consummated.
9.13 CONSTRUCTION.
(a) The language used in this Agreement shall be deemed to be
the language chosen by the Parties to express their mutual intent, and no rule
of strict construction shall be applied against any Party.
(b) Any reference to any federal, state, local or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
40
9.14 FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.
9.15 CONFIDENTIALITY. PurchasePro and NRI recognize that they have
received confidential information concerning the others during the course of the
Merger negotiations and preparations. Accordingly, each of the parties hereto
(a) represents that it has not permitted the unauthorized disclosure of any
confidential information concerning the other parties hereto that was disclosed
during the course of such negotiations and preparations and was clearly
designated in writing as confidential at the time of disclosure and (b) agrees
to not make use of or permit to be used any such confidential information other
than for the purpose of effectuating the Merger and related transactions. The
obligations of PurchasePro under this SECTION 9.15 will terminate upon the
Effective Time. Otherwise, the obligations under this SECTION 9.15 will not
apply to information that (i) is or becomes part of the public domain, (ii) is
disclosed by the disclosing party to third parties without restrictions on
disclosure, (iii) is received by the receiving party from a third party without
breach of a nondisclosure obligation to the other party, or (iv) is required to
be disclosed by subpoena or by law. If this Agreement is terminated, all copies
of documents containing confidential information shall be returned by the
receiving party to the disclosing party.
9.16 EXPENSE. Except as otherwise provided in this Agreement, NRI, for
itself, and on behalf of the NRI Common Shareholders, and PurchasePro shall pay
their own expenses and costs incidental to the preparation of this Agreement and
to the consummation of the transactions contemplated hereby.
[Remainder of This Page Intentionally Left Blank]
41
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
March 5, 2001.
XXXXXXXXXXX.XXX, INC.
By: /s/ Xxxxx X. XxXxxx
-------------------------------------
Name: Xxxxx X. XxXxxx
-------------------------------------
Title: President and Chief Operating Officer
-------------------------------------
NRI MERGER CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
-------------------------------------
Title: President
-------------------------------------
NET RESEARCH, INC. (D/B/A BAYBUILDER)
By: /s/ Xxx X. Xxxxxx
-------------------------------------
Name: Xxx X. Xxxxxx
Title: President
PRINCIPAL SHAREHOLDER
/s/ Xxx X. Xxxxxx
---------------------------------------------
Xxx X. Xxxxxx
[Signature Page to Agreement and Plan of Reorganization]
DISCLOSURE SCHEDULE
[See Attached]
EXHIBIT A
ESCROW AGREEMENT
[See Attached]
EXHIBIT B
SHAREHOLDER REPRESENTATIVE AGREEMENT
[See Attached]
EXHIBIT C
INVESTMENT REPRESENTATION LETTER
[See Attached]
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
[See Attached]
EXHIBIT E
NRI CERTIFICATE
[See Attached]
EXHIBIT F
OPINION OF COUNSEL TO NRI
[See Attached]
EXHIBIT G
NRI SECRETARY CERTIFICATE
[See Attached]
EXHIBIT H
EMPLOYMENT AGREEMENT
[See Attached]
EXHIBIT I
SHAREHOLDER WAIVER AGREEMENT
[See Attached]
EXHIBIT J
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
[See Attached]
EXHIBIT K
PURCHASEPRO CERTIFICATE
[See Attached]
EXHIBIT L
PURCHASEPRO SECRETARY CERTIFICATE
[See Attached]
EXHIBIT M
OPINION OF COUNSEL TO PURCHASEPRO
[See Attached]
