AGREEMENT AND PLAN OF REORGANIZATION
By and Among
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.,
United Pacific Alliance
and
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc.
dated as of March 29, 2000
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of this 29th day of March 2000 by and among
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("Purchaser"),
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Inc., a Delaware corporation ("Company"), and United Pacific
Alliance, a Delaware corporation ("Parent").
BACKGROUND
Whereas Parent owns all of the issued and outstanding shares of capital
stock of Company; and
Whereas Parent desires to exchange all of the issued and outstanding
capital stock of Company to Purchaser and Purchaser desires to acquire such
capital stock from Parent in exchange for shares of Purchaser's common stock in
a tax free transaction and upon the terms and conditions hereinafter set forth.
Now, Therefore, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SHARE EXCHANGE
1.1 The Share Exchange. Subject to the terms and conditions of this
Agreement and on the basis of and in reliance upon the representations,
warranties, covenants and agreements set forth herein, on the Closing Date (as
hereinafter defined) Parent shall transfer to Purchaser one hundred percent
(100%) of the Company Stock (as defined in Section 1.3 hereof), all of which is
held by Parent, and Purchaser shall acquire (the "Stock Acquisition") from
Parent such Company Stock, in exchange for the Exchanged Stock (as defined in
Section 1.2 hereof). The Company, after the consummation of the Stock
Acquisition, is sometimes referred to as the "Surviving Corporation."
1.2 Exchanged Stock. For purposes of this Agreement, the "Exchanged Stock"
shall be 72,000 shares of common stock, par value $.001 of Purchaser (the
"Purchaser Common Stock").
1.3 Certain Information with Respect to Capital Stock of Company. As of the
date of this Agreement, the authorized capital stock of Company consists of the
number of shares of common stock of Company set forth in Schedule 1.3 (the
"Company Stock"), of which the number set forth in Schedule 1.3 are issued,
outstanding and owned beneficially and of record by Parent.
2. TAX FREE REORGANIZATION.
It is in the intent of the parties that the Stock Acquisition and other
transactions contemplated by this Agreement shall be a tax free reorganization
(of the type described in Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended (the "Code")) under Section 354 of the Code.
3. CLOSING
3.1 Location and Date. The Stock Acquisition and the other transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Purchaser, in Van Nuys, California on March 29, 2000, providing that all
conditions to Closing shall have been satisfied or waived, or at such other time
and date as Purchaser, Parent and Company may mutually agree, which date shall
be referred to as the "Closing Date."
3.2 Closing Deliveries.
(a)At the Closing Parent, as the holder of all outstanding certificates
representing shares of Company Stock, shall surrender such certificates to
Purchaser and Purchaser shall deliver to Parent the shares of Purchaser Common
Stock deliverable by Purchaser as set forth in Section 1.2 above.
(b)Parent shall deliver to Purchaser at Closing the certificates
representing the Company Stock, duly endorsed in blank by Parent, or accompanied
by blank irrevocable stock powers, and with all necessary transfer tax and other
revenue stamps, acquired at Parent's expense, affixed and canceled and shall
take such steps as shall be necessary to cause the Company to enter Purchaser or
its nominee(s) upon the books of the Company as the holder of the Company Stock
and to issue one or more share certificates to Purchaser or its nominee(s)
representing the Company Stock. Parent agrees promptly to cure any deficiencies
with respect to the endorsement of the certificates or other documents of
conveyance with respect to such Company Stock or with respect to the stock
powers accompanying any Company Stock.
(c) The parties hereto shall deliver such other documents as may be
required by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF PARENT, COMPANY AND THE COMMON STOCKHOLDER
To induce Purchaser to enter into this Agreement and consummate the
transactions contemplated hereby, each of Parent and Company, jointly and
severally, represents and warrants to Purchaser as follows (for purposes of this
Agreement, the phrases "knowledge of Company" or "Company's knowledge," or words
of similar import, mean the knowledge of the directors and officers of each of
Parent and Company and each of its Subsidiaries (as defined below), including
facts of which the directors and officers, in the reasonably prudent exercise of
their duties, should be aware):
2
4.1 Due Organization. Parent, the Company and each of Company's
subsidiaries (the "Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and is duly authorized, qualified and licensed under all
applicable laws, regulations, ordinances and orders of public authorities to
own, operate and lease its properties and to carry on its business in the places
and in the manner as now conducted except where the failure to be so authorized,
qualified or licensed would not have a material adverse effect on the business,
operations, properties, assets or condition, financial or otherwise, of Parent,
Company or any of its Subsidiaries ("Material Adverse Effect"). Schedule 4.1
hereto contains a list of all jurisdictions in which Parent, Company or any of
its Subsidiaries is authorized or qualified to do business. Parent, Company and
each Subsidiary is in good standing in each such jurisdiction. The Company has
made available to Purchaser true, complete and correct copies of the articles or
certificate of incorporation and bylaws of Parent, Company and each Subsidiary.
Such articles or certificate of incorporation and bylaws are collectively
referred to as the "Charter Documents." None of Parent, Company or any
Subsidiary is in violation of any Charter Documents. The minute books of Parent,
Company and each Subsidiary have been made available to Purchaser (and as of the
Closing, the minute books of Company and each Subsidiary) will have been
delivered, along with Company's and each Subsidiary's original stock ledger and
corporate seal, to Purchaser) and are correct and, except as set forth in
Schedule 4.1, complete in all material respects.
4.2 Authorization; Validity. Each of Parent and Company has all requisite
power and authority to enter into and perform its obligations pursuant to the
terms of this Agreement. Each of Parent and Company has the full legal right,
corporate power and authority to enter into this Agreement and the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the performance by Parent and Company of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors of each
Parent and Company, and this Agreement has been duly and validly authorized by
all necessary corporate action. This Agreement is a legal, valid and binding
obligation of Parent and Company, enforceable in accordance with its terms.
4.3 No Conflicts. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby, and the
fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of, any of the
Charter Documents;
(b) conflict with, or result in a default (or an event that would
constitute a default but for any requirement of notice or lapse of time or both)
under, any document, agreement or other instrument to which Parent, Company or
any Subsidiary is a party or by which Parent, Company or any Subsidiary is
bound, or result in the creation or imposition of any lien, charge or
encumbrance on any of Parent's, Company's or any Subsidiary's properties
pursuant to (i) any law or regulation to which Parent, Company or any Subsidiary
or any of their respective property is subject, or (ii) any judgment, order or
decree to which Parent, Company or any Subsidiary is bound or any of their
respective property is subject;
3
(c) result in termination or any impairment of any permit, license,
franchise, contractual right or other authorization of Parent, Company or any
Subsidiary; or
(d) violate any law, order, judgment, rule, regulation, decree or ordinance
to which Parent, Company or any Subsidiary is subject or by which Parent,
Company or any Subsidiary is bound including, without limitation, the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), together
with all rules and regulations promulgated thereunder.
4.4 Capital Stock of Parent and Company. The authorized capital stock of
Company consists of the number of shares of Company Sock set forth in Schedule
1.3, of which the number set forth in Schedule 1.3 are issued, outstanding and
owned beneficially and of record by Parent. Parent owns all of the outstanding
capital stock of Company and Company owns all of the outstanding capital stock
of each of its Subsidiaries, all of which are listed on Schedule 4.4, free and
clear of all Liens (defined below). All of the issued and outstanding shares of
the capital stock of Parent, Company and each Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable and are owned of
record and beneficially by the Stockholders, Parent or the Company, as
applicable, in the amounts set forth in Schedule 1.3 free and clear of all
Liens. All of the issued and outstanding shares of the capital stock of Parent,
Company and each Subsidiary were offered, issued, sold and delivered by Parent,
Company or such Subsidiary, as applicable, in compliance with all applicable
state and federal laws concerning the issuance of securities. Further, none of
such shares was issued in violation of any preemptive rights. There are no
voting agreements or voting trusts with respect to any of the outstanding shares
of the capital stock of Parent, Company or any Subsidiary. For purposes of this
Agreement, "Lien" means any mortgage, security interest, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
adverse claim, charge, preference, priority or other security agreement, option,
warrant, attachment, right of first refusal, preemptive, conversion, put, call
or other claim or right, restriction on transfer (other than restrictions
imposed by federal and state securities laws), or preferential arrangement of
any kind or nature whatsoever (including any restriction on the transfer of any
assets, any conditional sale or other title retention agreement, any financing
lease involving substantially the same economic effect as any of the foregoing
and the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
4.5 Transactions in Capital Stock. No option, warrant, call, subscription
right, conversion right or other contract or commitment of any kind exists of
any character, written or oral, which may obligate Parent, Company or any
Subsidiary to issue, sell or otherwise cause to become outstanding any shares of
capital stock. None of Parent, Company or any Subsidiary has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of their
respective equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof. As a result of the consummation of the
transactions contemplated by this Agreement, Purchaser will be the record and
beneficial owner of one hundred percent (100%) of the outstanding capital stock
of Company and rights to acquire capital stock of Company and Company will be
the record and beneficial owner of all of the outstanding capital stock of each
Subsidiary and rights to acquire capital stock of each Subsidiary.
4
4.6 Subsidiaries, Stock and Notes.
(a) Company has no subsidiaries.
(b) Company does not presently own, of record or beneficially, or control,
directly or indirectly, any capital stock, securities convertible into capital
stock or any other equity interest in any corporation, association or business
entity, nor is either Parent or Company, directly or indirectly, a participant
in any joint venture, partnership or other noncorporate entity.
(c) There are no promissory notes that have been issued to, or are held by,
Company or any Subsidiary.
4.7 Predecessor Status. There are no predecessor companies of Company or
any Subsidiary, and neither the Company or any Subsidiary has previously
acquired significant assets from any other entity. Neither Company nor any
Subsidiary has ever been a subsidiary or division of another corporation, nor
have they been a part of an acquisition that was later rescinded.
4.8 Absence of Claims. Neither Parent nor any Stockholder has any claims
against Company or any Subsidiary, and upon consummation of the Stock Purchase
and the distribution of the Purchase Price, neither Parent nor any Stockholder
will have any claims against Company or any Subsidiary except as expressly
provided in this Agreement.
4.9 Financial Statements. Company has delivered to Purchaser (a) true and
correct summaries accurately reflecting Company's financial condition at
December 31, 1998 (collectively, the "Year-end Financials") and (b) true and
correct summaries accurately reflecting Company's financial condition as of
February 29, 2000 (the "Balance Sheet Date") (the "Interim Financials," and
together with the Year-end Financials, the "Company Financial Statements"). The
Company Financial Statements present fairly the financial condition of Company
as of the dates indicated thereon and the results of its operations for the
periods indicated thereon.
4.10 Liabilities and Obligations.
(a) The Company is not liable for or subject to any liabilities except for:
(i) those liabilities reflected on the Interim Financial and not
previously paid or discharged;
(ii) those liabilities arising in the ordinary course of its business
consistent with past practice under any contract, commitment or
agreement specifically disclosed on any Schedule to this
Agreement or not required to be disclosed thereon because of the
term or amount involved or otherwise;
5
(iii)those liabilities incurred since the Balance Sheet Date in the
ordinary course of business consistent with past practice, which
liabilities are not, individually or in the aggregate, material.
(b) There are no liabilities which are not fixed or are contested.
(c) There are no current plans or projects involving the opening of new
operations, expansion of any existing operations or the acquisition of any real
property or existing business, to which management of Company or any Subsidiary
has made any material expenditure in the two-year period prior to the date of
this Agreement, which if pursued by Company would require additional material
expenditures of capital, other than in connection with the Site (as defined in
Section 4.16(g)).
(d) For purposes of this Section 4.10, the term "liabilities" shall include
without limitation any direct or indirect liability, indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, either accrued, absolute, contingent, mature, unmatured or
otherwise and whether known or unknown, fixed or unfixed, ▇▇▇▇▇▇ or inchoate,
liquidated or unliquidated, secured or unsecured. The Interim Financial
delivered to Purchaser contain a complete list of all indebtedness of Company
(on a consolidated basis) as of the Closing Date.
4.11 Accounts and Notes Receivable. The Company has delivered to Purchaser
a complete and accurate list, as of a date not more than two (2) business days
prior to the Closing Date, of the accounts and notes receivable of Company and
all Subsidiaries (including without limitation receivables from and advances to
employees, Parent, Parent's stockholders and affiliates), which includes an
aging of all accounts and notes receivable showing amounts due in 30-day aging
categories (collectively, the "Accounts Receivable"). All Accounts Receivable
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business. The Accounts Receivable
are current and collectible net of any respective reserves shown on the
Company's books and records (which reserves are adequate and calculated
consistent with past practice). Subject to such reserves, each of the Accounts
Receivable will be collected in full, without any set-off, within ninety (90)
days after the day on which it first became due and payable. There is no
contest, claim, or right of set-off, other than rebates and returns in the
ordinary course of business, under any contract with any obligor of an Account
Receivable relating to the amount or validity of such Account Receivable.
4.12 Books and Records. The Company has made and kept books and records and
accounts, which, in reasonable detail, accurately and fairly reflect the
activities of Company and its Subsidiaries. Neither Company nor any Subsidiary
has engaged in any transaction, maintained any bank account, or used any
corporate funds except for transactions, bank accounts, and funds which have
been and are reflected in the Company's normally maintained books and records
and which are in compliance with all applicable laws, including laws relating to
the receipt and deposit of funds in trust for third parties.
4.13 Permits. Company and each Subsidiary owns or holds all licenses,
franchises, permits and other governmental authorizations, including without
limitation permits, titles (including without limitation motor vehicle titles
6
and current registrations), licenses and franchises necessary for the continued
operation of their respective business as it is currently being conducted (the
"Permits"). The Permits are valid, and Company has not received any notice that
any governmental authority intends to modify, cancel, terminate or fail to renew
any Permit. No present or former officer, manager, member or employee of Company
or Parent or any affiliate thereof, or any other person, firm, corporation or
other entity, owns or has any proprietary, financial or other interest (direct
or indirect) in any Permits. Company and each Subsidiary has conducted and is
conducting its business in compliance with the requirements, standards, criteria
and conditions set forth in the Permits and other applicable orders, approvals,
variances, rules and regulations and is not in violation of any of the
foregoing. The transactions contemplated by this Agreement will not result in a
default under, or a breach or violation of, or adversely affect the rights and
benefits afforded to Company or any Subsidiary by, any Permit.
4.14 Real Property.
(a) For purposes of this Agreement, "Real Property" means all interests in
real property including, without limitation, fee estates, leaseholds and
subleaseholds, purchase options, easements, licenses, rights to access, and
rights of way, and all buildings and other improvements thereon, owned,
occupied, operated or used by Company or any Subsidiary, together with any
additions thereto or replacements thereof.
(b) Neither Company nor any Subsidiary leases any Real Property.
(c) Neither Company nor any Subsidiary holds any fee interest in any Real
Property.
(d) The Real Property and all present uses and operations of the Real
Property comply with all applicable statutes, rules, regulations, ordinances,
orders, writs, injunctions, judgments, decrees, awards or restrictions of any
government entity having jurisdiction over any portion of the Real Property
(including, without limitation, applicable statutes, rules, regulations, orders
and restrictions relating to zoning, land use, safety, health, employment and
employment practices and access by the handicapped) (collectively, "Laws"),
covenants, conditions, restrictions, easements, disposition agreements and
similar matters affecting the Real Property. Company and each Subsidiary has
obtained all approvals of governmental authorities (including certificates of
use and occupancy, licenses and permits) required in connection with the use,
occupation and operation of the Real Property.
(e) To Company's knowledge, there are no pending or threatened
condemnation, fire, health, safety, building, zoning or other land use
regulatory proceedings, lawsuits or administrative actions relating to any
portion of the Real Property or any other matters which do or may adversely
affect the current use, occupancy or value thereof, nor has Parent, Company or
any Subsidiary received notice of any pending or threatened special assessment
proceedings affecting any portion of the Real Property.
7
(f) No portion of the Real Property has suffered any damage by fire or
other casualty which has not heretofore been completely repaired and restored to
its original condition.
(g) There are no parties other than Company or a Subsidiary in possession
of any of the Real Property or any portion thereof, and there are no leases,
subleases, licenses, concessions or other agreements, written or oral, granting
to any party or parties the right of use or occupancy of any portion of the Real
Property or any portion thereof.
(h) There are no service contracts or other agreements relating to the use
or operation of the Real Property.
(i) All written leases, subleases, licenses, concession agreements or other
use or occupancy agreements pursuant to which Company or any Subsidiary leases
from any other party any real property, including all amendments, renewals,
extensions, modifications or supplements to any of the foregoing or
substitutions for any of the foregoing (collectively, the "Leases") are valid
and in full force and effect. Company has provided Purchaser with true and
complete copies of all of the Leases, all amendments, renewals, extensions,
modifications or supplements thereto, and all material correspondence related
thereto, including all correspondence pursuant to which any party to any of the
Leases declared a default thereunder or provided notice of the exercise of any
options granted to such party under such Lease. Neither Company nor any
Subsidiary has any oral leases. The Leases and Company's and the Subsidiaries'
interests thereunder are free of all Liens.
(j) None of the Leases requires the consent or approval of any party
thereto in connection with the consummation of the transactions contemplated
hereby.
4.15 Personal Property.
(a) Company has delivered to Purchaser a complete and accurate list of all
personal property included on the Interim Financials and all other personal
property owned or leased by Company or any Subsidiary with a current book value
in excess of $5,000 both (i) as of the Balance Sheet Date and (ii) acquired
since the Balance Sheet Date, including in each case true, complete and correct
copies of leases for material equipment and an indication as to which assets are
currently owned, or were formerly owned, by any stockholder of Parent or
business or personal affiliates of Parent or Company.
(b) Company and each Subsidiary currently owns or leases all personal
property necessary to conduct the business and operations of Company and such
Subsidiary as they are currently being conducted.
(c) All material machinery and equipment of Company are in good working
order and condition, ordinary wear and tear excepted. All leases relating to
such machinery and equipment are in full force and effect and constitute valid
and binding agreements of Company or any Subsidiary, and none of Parent, Company
or any Subsidiary is in breach of any of their terms. All fixed assets used by
the Company that are material to the operation of its business are either owned
by Company or a Subsidiary or leased.
8
4.16 Intellectual Property.
(a) Company or the respective Subsidiary is the true and lawful owner of,
or is licensed or otherwise possesses legally enforceable rights to use, the
registered and unregistered Marks listed on Schedule 4.16(a). Such schedule
lists (i) all of the Marks registered in the United States Patent and Trademark
Office ("PTO") or the equivalent thereof in any state of the United States or in
any foreign country, and (ii) all of the unregistered Marks, that Company and
the Subsidiaries now own or use in connection with their businesses. Except with
respect to those Marks shown as licensed on Schedule 4.16(a), Company owns all
of the registered and unregistered Marks that Company and the Subsidiaries use.
The Marks listed on Schedule 4.16(a) will not cease to be valid rights of
Company and the Subsidiaries by reason of the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby. For purposes of this Section 4.16, the term "▇▇▇▇" shall
mean all right, title and interest in and to any United States or foreign
trademarks, service marks and trade names now held by Company or any Subsidiary,
including any registration or application for registration of any trademarks and
services marks in the PTO or the equivalent thereof in any state of the United
States or in any foreign country, as well as any unregistered marks used by
Company or any Subsidiary, and any trade dress (including logos, designs,
company names, business names, fictitious names and other business identifiers)
used by Company or any Subsidiary in the United States or any foreign country.
(b) Company or the respective Subsidiary is the true and lawful owner of,
or is licensed or otherwise possesses legally enforceable rights to use, all
rights in the Patents and Copyrights used in their business. Such Patents and
Copyrights constitute all of the Patents and Copyrights that Company and the
Subsidiaries now own or are licensed to use. The Company or the respective
Subsidiary owns or is licensed to practice under all patents and copyright
registrations that Company or the respective Subsidiary now owns or uses in
connection with its businesses. For purposes of this Section 4.16, the term
"Patent" shall mean any United States or foreign patent to which Company or any
Subsidiary has title as of the date of this Agreement, as well as any
application for a United States or foreign patent made by Company or any
Subsidiary; the term "Copyright" shall mean any United States or foreign
copyright owned by Company or any Subsidiary as of the date of this Agreement,
including any registration of copyrights, in the United States Copyright Office
or the equivalent thereof in any foreign country, as well as any application for
a United States or foreign copyright registration made by Company or any
Subsidiary.
(c) Company or the respective Subsidiary is the true and lawful owner of,
or is licensed or otherwise possess legally enforceable rights to use, all
rights in the trade secrets, franchises, or similar rights (collectively, "Other
Rights"). Those Other Rights constitute all of the Other Rights that Company and
the Subsidiaries now own or are licensed to use. The Company and the
Subsidiaries, respectively, own or are licensed to practice under all trade
secrets, franchises or similar rights that they own, use or practice under.
(d) The Marks, Patents and Copyrights listed on Schedules 4.16(a),
4.16(b)(i) and 4.16(b)(ii), and the Other Rights are referred to collectively
herein as the "Intellectual Property." The Intellectual Property owned by
9
Company and its Subsidiaries is referred to herein collectively as the "Company
Intellectual Property." All other Intellectual Property is referred to herein
collectively as the "Third-Party Intellectual Property." Except as indicated on
Schedule 4.16(d), neither Company nor any Subsidiary has any obligation to
compensate any person for the use of any Intellectual Property nor has Company
or any Subsidiary granted to any person any license, option or other rights to
use in any manner any Intellectual Property, whether requiring the payment of
royalties or not.
(e) Neither Company nor any Subsidiary is, nor will any of them be as a
result of the execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any Third-Party Intellectual Property
license, sublicense or agreement described in Schedule 4.16(a), (b) or (c). No
claims with respect to Company Intellectual Property or Third-Party Intellectual
Property are currently pending or, to the knowledge of the Company, are
threatened by any person, nor, to Company's knowledge, do any grounds for any
claims exist: (i) to the effect that the manufacture, sale, licensing or use of
any product as now used, sold or licensed or proposed for use, sale or license
by Company or any Subsidiary infringe on any copyright, patent, trademark,
service ▇▇▇▇ or trade secret; (ii) against the use by Company or any Subsidiary
of any trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in Company's or any
Subsidiary's businesses as currently conducted by Company or any Subsidiary;
(iii) challenging the ownership, validity or effectiveness of any of Company
Intellectual Property or other trade secret material to Company or any
Subsidiary; or (iv) challenging Company's or any Subsidiary's license or legally
enforceable right to use of the Third-Party Intellectual Property. To Company's
knowledge, there is no unauthorized use, infringement or misappropriation of any
of Company Intellectual Property by any third party. Neither Company nor any of
Subsidiary (x) has been sued or charged in writing as a defendant in any claim,
suit, action or proceeding which involves a claim or infringement of trade
secrets, patents, trademarks, service marks, or copyrights and which has not
been finally terminated or been informed or notified by any third party that
Company or any Subsidiary may be engaged in such infringement or (y) has
knowledge of any infringement liability with respect to, or infringement by,
Company or any Subsidiary of any trade secret, patent, trademark, service ▇▇▇▇,
or copyright of another.
(f) All Intellectual Property in the form of computer software that is
utilized by Company and its Subsidiaries in the operation of their respective
businesses is capable of processing date data between and within the 20th and
21st centuries.
(g) Company currently owns all Intellectual Property and other assets
comprising the Internet site ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇ (the "Site"), including
all rights to the Site's domain name registrations with Network Solutions, Inc.
and any other registration entities and all associated Marks (the "Website
Assets"), and all Website Assets of the Internet sites contained within,
referenced or linked to the Site, including the following: ▇▇▇▇://▇▇▇▇▇▇.▇▇▇,
▇▇▇▇://▇▇▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇://▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇://▇▇▇▇▇▇▇▇▇▇.▇▇▇,
▇▇▇▇://▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇://▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇://▇▇▇▇▇.▇▇▇,
▇▇▇▇://▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇://▇▇▇▇▇.▇▇▇; ▇▇▇▇://▇▇▇▇▇▇▇▇▇.▇▇▇, and
▇▇▇▇://▇▇▇▇▇▇▇▇.▇▇▇, and all Internet sites contained within such sites and all
Internet sites referenced in or linked to such sites that are owned by Company.
10
The Site is fully functional and includes all features and functionality for
which it was designed. All functionality of the Site will be effectively
transferred to Purchaser pursuant to the transaction contemplated by this
Agreement. In addition to the Site, pursuant to the transactions contemplated
hereby, Purchaser will acquire all Intellectual Property.
4.17 Material Contracts and Commitments.
(a) Schedule 4.17 contains a complete and accurate list of all contracts,
commitments, leases, instruments, agreements, licenses or permits, written or
oral, to which Company or any Subsidiary is a party or by which they or their
properties are bound (including without limitation, joint venture or partnership
agreements, contracts with any labor organizations, employment agreements,
consulting agreements, loan agreements, indemnity or guaranty agreements, bonds,
mortgages, options to purchase land, liens, pledges or other security
agreements) (i) to which Company or any Subsidiary and any affiliate of Company
or any Subsidiary or any officer, director or stockholder of Company or any
Subsidiary are parties ("Related Party Agreements"); or (ii) that may give rise
to obligations or liabilities exceeding, during the current term thereof,
$20,000, or that may generate revenues or income exceeding, during the current
term thereof, $20,000 (collectively with the Related Party Agreements, the
"Material Contracts"). Company has delivered to Purchaser true, complete and
correct copies of the Material Contracts that are in writing. Company and each
Subsidiary has complied with all of their commitments and obligations and is not
in default under any of the Material Contracts, and no notice of default has
been received with respect to any thereof, and there are no Material Contracts
that were not negotiated at arm's length.
(b) Each Material Contract, except those terminated pursuant to Section
6.3(b), is valid and binding on Company and each Subsidiary and is in full force
and effect and is not subject to any default thereunder by any party obligated
to Company or any Subsidiary pursuant thereto. Company and each Subsidiary has
obtained all necessary consents, waivers and approvals of parties to any
Material Contracts that are required in connection with any of the transactions
contemplated hereby, or are required by any governmental agency or other third
party or are advisable in order that any such Material Contract remain in effect
without modification after the Stock Purchase and without giving rise to any
right to termination, cancellation or acceleration or loss of any right or
benefit.
(c) There are no loans or credit agreements either (i) between Company or
any Subsidiary and any person in which Parent or any of Parent's stockholders
owns a material interest, or (ii) guaranteed by Company or any Subsidiary for
the benefit of any person in which Parent or any of Parent's stockholders owns a
material interest.
(d) The pledge, hypothecation or mortgage of all or substantially all of
Company's or any Subsidiary's assets (including, without limitation, a pledge of
Company's or any Subsidiary's contract rights under any Material Contract) will
not (i) result in the breach or violation of, (ii) constitute a default under,
(iii) create a right of termination under, or (iv) result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
assets of Company or any Subsidiary (other than a Lien created pursuant to the
11
pledge, hypothecation or mortgage described at the start of this Section
4.17(d)) pursuant to any of the terms and provisions of, any Material Contract
to which Company or any Subsidiary is a party or by which the property of
Company or any Subsidiary is bound.
4.18 Government Contracts.
(a) Neither Company nor any Subsidiary is a party to any government
contracts.
(b) Neither Company nor any Subsidiary has been suspended or debarred from
bidding on contracts or subcontracts for any agency or instrumentality of the
United States Government or any state or local government, nor, to the knowledge
of Company, has any suspension or debarment action been threatened or commenced.
There is no valid basis for Company's or any Subsidiary's suspension or
debarment from bidding on contracts or subcontracts for any agency of the United
States Government or any state or local government.
(c) Neither Company nor any Subsidiary has been, nor is it now being,
audited, or investigated by any government agency, or the inspector general or
auditor general or similar functionary of any government agency or
instrumentality, nor, to the knowledge of Company, has such audit or
investigation been threatened.
(d) Neither Company nor any Subsidiary has any dispute pending before a
contracting office of, nor any current claim (other than the Accounts
Receivable) pending against, any agency or instrumentality of the United States
Government or any state or local government, relating to a contract.
(e) Neither Company nor any Subsidiary has, with respect to any government
contract, received a cure notice advising Company or any Subsidiary that it is
or was in default or would, if it failed to take remedial action, be in default
under such contract.
(f) Neither Company nor any Subsidiary has submitted any inaccurate,
untruthful, or misleading cost or pricing data, certification, bid, proposal,
report, claim, or any other information relating to a contract to any agency or
instrumentality of the United States Government or any state or local
government.
(g)No employee, agent, consultant, representative, or affiliate of Company
or any Subsidiary is in receipt or possession of any competitor or government
proprietary or procurement sensitive information related to Company's or any
Subsidiary's business under circumstances where there is reason to believe that
such receipt or possession is unlawful or unauthorized.
(h) Each of Company's and any Subsidiary's government contracts has been
issued, awarded or nominated to Company or such Subsidiary in Company's or such
Subsidiary's name.
4.19 Insurance. Company has delivered to Purchaser a complete and accurate
list of all insurance policies carried by Company and each Subsidiary and all
12
insurance loss runs or workmen's compensation claims received for the past two
policy years. The Company has made available to Purchaser true, complete and
correct copies of all current insurance policies, all of which are in full force
and effect. All premiums payable under all such policies have been paid and
Company and each Subsidiary is otherwise in full compliance with the terms of
such policies. Such policies of insurance are of the type and in amounts
customarily carried by persons conducting businesses similar to that of Company
and its Subsidiaries, as applicable. The insurance carried by Company with
respect to its properties, assets and business is, to the Company's knowledge,
with financially sound insurers. To the knowledge of Company and its
Subsidiaries, there have been no threatened terminations of, or material premium
increases with respect to, any of such policies.
4.20 Labor and Employment Matters. With respect to employees of and service
providers to Company and each Subsidiary:
(a) Company and each Subsidiary is and has been in compliance in all
material respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation any such laws respecting employment discrimination, workers'
compensation, family and medical leave, the Immigration Reform and Control Act,
and occupational safety and health requirements, and has not and is not engaged
in any unfair labor practice;
(b) there is not now, nor within the past three years has there been, any
unfair labor practice complaint against Company or such Subsidiary pending or,
to Company's knowledge, threatened, before the National Labor Relations Board or
any other comparable authority;
(c) there is not now, nor within the past three years has there been, any
labor strike, slowdown or stoppage actually pending or, to Company's knowledge,
threatened, against or directly affecting Company or such Subsidiary;
(d) to Company's knowledge, no labor representation organization effort
exists nor has there been any such activity within the past three years;
(e)no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending and, to Company's knowledge, no
claims therefor exist or have been threatened;
(f) the employees of Company and such Subsidiary are not and have never
been represented by any labor union, and no collective bargaining agreement is
binding and in force against Company or such Subsidiary or currently being
negotiated by Company or such Subsidiary; and
(g) all persons classified by Company and such Subsidiary as independent
contractors do satisfy and have satisfied the requirements of law to be so
classified, and the Company and such Subsidiary have fully and accurately
reported their compensation on IRS Forms 1099 when required to do so.
13
4.21 Employee Benefit Plans. Company has delivered to Purchaser a list of
all employee benefit plans, all employee welfare benefit plans, all employee
pension benefit plans, all multi-employer plans and all multi-employer welfare
arrangements (as defined in Sections 3(3), (1), (2), (37) and (40),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), copies of which have been made available to Purchaser, which are
currently maintained and/or sponsored by Company or any of its Subsidiaries, or
to which Company or any of its Subsidiaries currently contribute, or have an
obligation to contribute in the future (including, without limitation,
employment agreements and any other agreements containing "golden parachute"
provisions and deferred compensation agreements), together with copies of any
trusts related thereto and a classification of employees covered thereby
(collectively, the "Plans").
All Plans are in compliance in all material respects with all applicable
provisions of ERISA and the regulations issued thereunder, as well as with all
other applicable laws, and in all material respects have been administered,
operated and managed in accordance with the governing documents. All Plans that
are intended to qualify (the "Qualified Plans") under Section 401(a) of the
Code, have been determined by the Internal Revenue Service to be so qualified,
and copies of the current plan determination letters, most recent actuarial
valuation reports, if any, most recent Form 5500, or, as applicable, Form
5500-C/R filed with respect to each such Qualified Plan or employee welfare
benefit plan and most recent trustee or custodian report has been delivered by
Company to Purchaser. To the extent that any Qualified Plans have not been
amended to comply with applicable law, the remedial amendment period permitting
retroactive amendment of such Qualified Plans has not expired and will not
expire within 120 days after the Closing Date. All reports and other documents
required to be filed with any governmental agency or distributed to plan
participants or beneficiaries (including, but not limited to, annual reports,
summary annual reports, actuarial reports, PBGC-1 Forms, audits or tax returns)
have been timely filed or distributed. None of: (i) Parent; (ii) any Plan; (iii)
Company; or (iv) any Subsidiary have engaged in any transaction prohibited under
the provisions of Section 4975 of the Code or Section 406 of ERISA. No Plan has
incurred an accumulated funding deficiency, as defined in Section 412(a) of the
Code and Section 302(1) of ERISA; and neither Company nor any Subsidiary
currently has (nor at the Closing Date will have) any direct or indirect
liability whatsoever (including being subject to any statutory lien to secure
payment of any such liability), to the Pension Benefit Guaranty Corporation
("PBGC") with respect to any such Plan under Title IV of ERISA or to the
Internal Revenue Service for any excise tax or penalty; and none of Company, any
Subsidiary or any member of a "controlled group" (as defined in ERISA Section
4001(a)(14)) currently have (or at the Closing Date will have) any obligation
whatsoever to contribute to any "multi-employer pension plan" (as defined in
ERISA Section 4001(a)(14)), nor has any withdrawal liability whatsoever (whether
or not yet assessed) arising under or capable of assertion under Title IV of
ERISA (including, but not limited to, Sections 4201, 4202, 4203, 4204, or 4205
thereof) been incurred by any Plan. Further:
(a) there have been no terminations, partial terminations or discontinuance
of contributions to any Qualified Plan without notice to and approval by the
Internal Revenue Service;
14
(b) no Plan which is subject to the provisions of Title IV of ERISA has
been terminated;
(c) there have been no "reportable events" (as that phrase is defined in
Section 4043 of ERISA) with respect to any Plan which were not properly
reported;
(d) the valuation of assets of any Qualified Plan, as of the Closing Date,
shall exceed the actuarial present value of all accrued pension benefits under
any such Qualified Plan in accordance with the assumptions contained in the
Regulations of the PBGC governing the funding of terminated defined benefit
plans;
(e) with respect to Plans which qualify as "group health plans" under
Section 4980B of the Code and Section 607(1) of ERISA and related regulations
(relating to the benefit continuation rights imposed by "COBRA"), Company, each
Subsidiary and the Stockholders have complied (and on the Closing Date will have
complied), in all respects with all reporting, disclosure, notice, election and
other benefit continuation requirements imposed thereunder as and when
applicable to such plans, and neither Company nor any Subsidiary has (or will
incur) direct or indirect liability or is (or will be) subject to any loss,
assessment, excise tax penalty, loss of federal income tax deduction or other
sanction, arising on account of or in respect of any direct or indirect failure
by Parent, Company, any Subsidiary or the Stockholders, at any time prior to the
Closing Date, to comply with any such federal or state benefit continuation
requirement, which is capable of being assessed or asserted before or after the
Closing Date directly or indirectly against Parent, Company or any Subsidiary
with respect to such group health plans;
(f) neither Company nor any Subsidiary now is nor has it been within the
past five years a member of a "controlled group" as defined in ERISA Section
4001(a)(14);
(g) there is no pending litigation, arbitration, or disputed claim,
settlement or adjudication proceeding, and to Company's knowledge, there is no
threatened litigation, arbitration or disputed claim, settlement or adjudication
proceeding, or any governmental or other proceeding, or investigation with
respect to any Plan, or with respect to any fiduciary, administrator, or sponsor
thereof (in their capacities as such), or any party in interest thereof;
(h) the Company Financial Statements as of the Balance Sheet Date reflect
the approximate total pension, medical and other benefit expense for all Plans,
and no material funding changes or irregularities are reflected thereon which
would cause such Company Financial Statements to be not representative of most
prior periods; and
(i) neither Company nor any Subsidiary has incurred liability under Section
4062 of ERISA.
15
4.22 Conformity with Law; Litigation.
(a) Neither Company nor any Subsidiary is in violation of any law or
regulation or under any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction which would have a Material Adverse Effect. Company and each
Subsidiary has conducted and are conducting their business in substantial
compliance with the requirements, standards, criteria and conditions set forth
in applicable federal, state and local statutes, ordinances, permits, licenses,
orders, approvals, variances, rules and regulations and is not in violation of
any of the foregoing which might have a Material Adverse Effect.
(b) No officer, director or stockholder of Company or Parent has, at any
time: (i) committed any criminal act (except for minor traffic violations); (ii)
engaged in acts of fraud, gross negligence or moral turpitude; (iii) filed for
personal bankruptcy; or (iv) been an officer, director, manager, trustee or
controlling shareholder of a company that filed for bankruptcy or Chapter 11
protection while he held such position or within two years thereafter.
(c) There are no claims, actions, suits or proceedings, pending or, to the
knowledge of Company, threatened against or affecting Company or any Subsidiary
at law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over it and no notice of any claim, action, suit or
proceeding, whether pending or threatened, has been received. There are no
judgments, orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency or by arbitration) against Company
or any Subsidiary or against any of their respective properties or business.
4.23 Restrictive Covenants. Neither Company nor any Subsidiary is a party
to or bound or affected by any commitment, agreement or document containing any
covenant limiting the freedom of Company or a Subsidiary to compete in any line
of business, transfer or move any of its assets or operations or which does or
would reasonably expected to materially or adversely affect the business
practices, operations or conditions of Company, any Subsidiary or the Surviving
Company.
4.24 Taxes.
(a)
(i) Company and each Subsidiary timely filed all Tax Returns due
on or before the Closing Date and all such Tax Returns are true,
correct and complete in all respects.
(ii) Company and each Subsidiary has paid in full on a timely
basis all Taxes owed by it, whether or not shown on any Tax Return.
(iii) The amount of Company's and all Subsidiaries' liability for
unpaid Taxes as of the Balance Sheet Date did not exceed the amount of
the current liability accruals for Taxes (excluding reserves for
16
deferred Taxes) shown on the Interim Balance Sheet, and the amount of
Company's and all Subsidiaries' liability for unpaid Taxes for all
periods or portions thereof ending on or before the Closing Date will
not exceed the amount of the current liability accruals for Taxes
(excluding reserves for Deferred Taxes) as such accruals are reflected
on the books and records of Company on the Closing Date.
(iv) There are no ongoing examinations or claims against Company
or any Subsidiary for Taxes, and no notice of any audit, examination
or claim for Taxes, whether pending or threatened, has been received.
(v) Company has had a taxable year ended on December 31, in each
year since its formation.
(vi) Company and each Subsidiary currently utilizes the accrual
method of accounting for income Tax purposes and such method of
accounting has not changed in the past 10 years. Neither Company nor
any Subsidiary has agreed to, and neither is or will be required to,
make any adjustments under Code Section 481(a) as a result of a change
in accounting methods.
(vii) Company and each Subsidiary has withheld and paid over to
the proper governmental authorities all Taxes required to have been
withheld and paid over, and complied with all information reporting
and backup withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts paid to any
employee, independent contractor, creditor or third party.
(viii) Copies of (A) any Tax examinations, (B) extensions of
statutory limitations for the collection or assessment of Taxes and
(C) the Tax Returns of Company and each Subsidiary for the last five
fiscal years have been made available to Purchaser.
(ix) There are (and as of immediately following the Closing there
will be) no Liens on the assets of Company or any Subsidiary relating
to or attributable to Taxes.
(x) To Company's knowledge, there is no basis for the assertion
of any claim relating to or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of Company or any
Subsidiary or otherwise have a Material Adverse Effect.
(xi) There are no contracts, agreements, plans or arrangements,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of Company or any Subsidiary
that, individually or collectively, could give rise to any payment (or
portion thereof) that would not be deductible pursuant to Sections
280G, 404 or 162 of the Code.
17
(xii) Neither Company nor any Subsidiary is or has been at any
time, a party to a tax sharing, tax indemnity or tax allocation
agreement, and neither Company nor any Subsidiary has assumed the tax
liability of any other person under contract.
(xiii) Company's and its Subsidiaries' tax basis in their assets
for purposes of determining future amortization, depreciation and
other federal income tax deductions is accurately reflected on
Company's tax books and records.
(b) For purposes of this Agreement:
(i) the term "Tax" shall include any tax or similar governmental
charge, impost or levy (including without limitation income taxes,
franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross
receipt taxes, value added taxes, employment taxes, excise taxes, ad
valorem taxes, property taxes, withholding taxes, payroll taxes,
minimum taxes or windfall profit taxes) together with any related
penalties, fines, additions to tax or interest imposed by the United
States or any state, county, local or foreign government or
subdivision or agency thereof; and
(ii) the term "Tax Return" shall mean any return (including any
information return), report, statement, schedule, notice, form,
estimate or declaration of estimated tax relating to or required to be
filed with any governmental authority in connection with the
determination, assessment, collection or payment of any tax.
4.25 Absence of Changes. Since the Balance Sheet Date, Company and each
Subsidiary has conducted its business in the ordinary course and there has not
been:
(a) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or business of Company or any
Subsidiary;
(b) any damage, destruction or loss (whether or not covered by insurance)
adversely affecting the properties or business of Company or any Subsidiary;
(c) any change in the authorized capital of Company or any Subsidiary or in
its outstanding securities or any change in its ownership interests or any grant
of any options, warrants, calls, conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in respect
of the capital stock, or any direct or indirect redemption, purchase or other
acquisition of any of the capital stock of Company or any Subsidiary (except for
dividends or distributions to Company by a Subsidiary);
(e) any increase in the compensation, bonus, sales commissions or fee
arrangements payable or to become payable by Company or any Subsidiary to any of
its officers, directors, stockholders, employees, consultants or agents, except
for ordinary and customary bonuses and salary increases for employees in
accordance with past practice;
(f) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character, which has had a Material Adverse
Effect;
18
(g) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of Company or any Subsidiary to any person,
including without limitation the Stockholders and their affiliates;
(h) any cancellation, or agreement to cancel, any indebtedness or other
obligation owing to Company or any Subsidiary, including without limitation any
indebtedness or obligation of the Stockholders and their affiliates, provided
that Company or any Subsidiary may negotiate and adjust bills in the course of
good faith disputes with customers in a manner consistent with past practice;
(i) any plan, agreement or arrangement granting any preferential rights to
purchase or acquire any interest in any of the assets, property or rights of
Company or any Subsidiary or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or agreement, plan or arrangement to
purchase or acquire, any property, rights or assets outside of the ordinary
course of business of Company or any Subsidiary;
(k) any waiver of any material rights or claims of Company or any
Subsidiary;
(l) any breach, amendment or termination of any material contract,
agreement, license, permit or other right to which Company or any Subsidiary is
a party;
(m) any transaction by Company or any Subsidiary outside the ordinary
course of business;
(n) any capital commitment by Company or any Subsidiary, either
individually or in the aggregate, exceeding $25,000;
(o) any change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by Company or any Subsidiary or
the revaluation by Company or any Subsidiary of any of its assets;
(p) any creation or assumption by Company of any mortgage, pledge, security
interest or lien or other encumbrance on any asset (other than liens arising
under existing lease financing arrangements which are not material and liens for
Taxes not yet due and payable);
(q) any entry into, amendment of, relinquishment, termination or
non-renewal by Company or any Subsidiary of any contract, lease transaction,
commitment or other right or obligation requiring aggregate payments by Company
and its Subsidiaries in excess of $25,000;
19
(r) any loan by Company or any Subsidiary to any person or entity,
incurring by Company, of any indebtedness, guaranteeing by Company or any
Subsidiary of any indebtedness, issuance or sale of any debt securities of
Company or any Subsidiary or guaranteeing of any debt securities of others;
(s) the commencement or notice or, to the knowledge of Company or any
Subsidiary, threat of commencement, of any lawsuit or proceeding against, or
investigation of, Company or any Subsidiary or any of their respective affairs;
or
(t) any negotiation or agreement by Company or any Subsidiary or any
officer or employee thereof to do any of the things described in the preceding
clauses (a) through (s) (other than negotiations with Purchaser and its
representatives regarding the transactions contemplated by this Agreement).
4.26 Deposit Accounts; Powers of Attorney. Schedule 4.26 sets forth a
complete and accurate list as of the date of this Agreement, of:
(a) the name of each financial institution in which Company or any
Subsidiary has any account or safe deposit box;
(b) the names in which the accounts or boxes are held;
(c) the type of account;
(d) the name of each person authorized to draw thereon or have access
thereto; and
(e) the name of each person, corporation, firm or other entity holding a
general or special power of attorney from Company or any Subsidiary and a
description of the terms of such power.
4.27 Environmental Matters.
(a) Hazardous Material. To the knowledge of Company, no underground storage
tanks and no amount of any substance that has been designated by any
Governmental Entity or by applicable federal, state, local or other applicable
law to be radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
properly and safely maintained (a "Hazardous Material"), are present in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that Company or any Subsidiary has at any time owned,
operated, occupied or leased. To the knowledge of Company, there are no
identifies all known underground and aboveground storage tanks, and the
20
capacity, age, and contents of such tanks, located on Real Property owned or
leased by Company or any Subsidiary.
(b) Hazardous Materials Activities. To the knowledge of the Company,
neither the Company nor any Subsidiary has transported, stored, used,
manufactured, disposed of or released, or exposed their employees or others to,
Hazardous Materials in violation of any law in effect on or before the Closing
Date, nor has Company nor any Subsidiary disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (collectively, "Company
Hazardous Materials Activities") in violation of any rule, regulation, treaty or
statute promulgated by any Governmental Entity in effect prior to or as of the
date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
(c) Permits. The Company and each Subsidiary currently holds all
environmental approvals, permits, licenses, clearances and consents (the
"Environmental Permits") necessary for the conduct of Company Hazardous Material
Activities and other business of Company and its Subsidiaries as such activities
and business are currently being conducted. All Environmental Permits are in
full force and effect. Company and each Subsidiary (A) is in compliance in all
material respects with all terms and conditions of the Environmental Permits and
(B) is in compliance in all material respects with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the laws of all Governmental Entities
relating to pollution or protection of the environment or contained in any
regulation, code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder. To Company's knowledge, there are
no circumstances that may prevent or interfere with such compliance in the
future.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
knowledge of Company, threatened concerning any Environmental Permit, Hazardous
Material or any Company Hazardous Materials Activity. There are no past or
present actions, activities, circumstances, conditions, events, or incidents
that could involve Company or any Subsidiary (or any person or entity whose
liability Company or any Subsidiary has retained or assumed, either by contract
or operation of law) in any environmental litigation, or impose upon Company or
any Subsidiary (or any person or entity whose liability Company or any
Subsidiary has retained or assumed, either by contract or operation of law) any
environmental liability including, without limitation, common law tort
liability.
4.28 Relations with Governments. Neither Company nor any Subsidiary has
made, offered or agreed to offer anything of value to any governmental official,
political party or candidate for government office, nor has it otherwise taken
any action that would cause Company to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any law of similar effect.
4.29 Disclosure. The Company has delivered to Purchaser true and complete
copies of each agreement, contract, commitment or other document (or summaries
thereof) that is referred to in the Schedules or that has been requested in
writing by Purchaser. Without limiting any exclusion, exception or other
21
limitation contained in any of the representations and warranties made herein,
this Agreement, the Schedules hereto and all other documents and information
furnished to Purchaser and its representatives pursuant hereto do not and will
not include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading. If Parent or
Company becomes aware of any fact or circumstance which would change a
representation or warranty of Parent or Company in this Agreement or any
representation made on behalf of Parent or Company, Parent or Company shall
immediately give notice of such fact or circumstance to Purchaser. However, such
notification shall not relieve Parent or Company of their respective obligations
under this Agreement, and at the sole option of Purchaser, the truth and
accuracy of any and all warranties and representations of Parent and Company, at
the date of this Agreement and as of the Closing Date, shall be a precondition
to the consummation of this Agreement.
4.30 Affiliates. Parent is the only person who is, in the reasonable
judgment of Company, an affiliate of Company within the meaning of Rule 405
promulgated under the Securities Act of 1933, as amended (the "1933 Act") or
Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended
(each such person an "Affiliate").
4.31 Location of Chief Executive Offices. Schedule 4.31 sets forth the
location of Company's and each Subsidiary's chief executive offices.
4.32 Location of Equipment and Inventory. All Inventory and Equipment held
on the date hereof by Company and each Subsidiary are located at one of the
locations shown on Schedule 4.32. For purposes of this Agreement, (a) the term
"Inventory" shall mean any "inventory" as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of California (the
"Cal. U.C.C.") owned by Company or any Subsidiary as of the date hereof, and, in
any event, shall include, but shall not be limited to, all merchandise,
inventory and goods, and all additions, substitutions and replacements thereof,
wherever located, together with all goods, supplies, incidentals, packaging
materials, labels, materials and any other items used or usable in
manufacturing, processing, packaging or shipping same; in all stages of
production, and all proceeds therefrom; and (b) the term "Equipment" shall mean
any "equipment," as such term is defined in the Cal.U.C.C. in effect on the date
hereof, owned by Company or any Subsidiary, and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures and
vehicles owned by Company or any Subsidiary, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.
4.33 Accredited Investor. Parent is an "accredited investor" as that term
is defined in Rule 501(a) promulgated under the 1933 Act; is acquiring the
Purchaser Common Stock for investment purposes only, for the account of Parent
and not with the view to any resale or distribution thereof; is not
participating, directly or indirectly, in an underwriting of such Purchaser
Common Stock; and will not take, or cause to be taken, any action that would
cause itself or its stockholders to be deemed an "underwriter," as defined in
Section 2(a)(11) of the 1933 Act, of such Purchaser Common Stock.
22
5. REPRESENTATIONS OF PURCHASER
To induce Parent and Company to enter into this Agreement and consummate
the transactions contemplated hereby, Purchaser represents and warrants to
Parent and Company as follows:
5.1 Due Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly authorized, qualified and licensed under all applicable laws, regulations,
ordinances and orders of public authorities to own, operate and lease its
properties and to carry on its business in the places and in the manner as now
conducted, except where the failure to be so authorized, qualified or licensed
would not have a material adverse effect on Purchaser. Copies of the articles or
certificate of incorporation and the bylaws, each as amended, of Purchaser
(collectively, the "Purchaser Charter Documents") have been made available to
Company. Purchaser is not in violation of any Purchaser Charter Document.
5.2 Purchaser Common Stock. The shares of Purchaser Common Stock to be
delivered to Parent at the Closing Date, when delivered in accordance with the
terms of this Agreement, will be valid and legally issued shares of Purchaser's
capital stock, fully paid and nonassessable.
5.3 Authorization; Validity of Obligations. The representatives of
Purchaser executing this Agreement have all requisite corporate power and
authority to enter into and bind Purchaser to the terms of this Agreement.
Purchaser has the full legal right, power and corporate authority to enter into
this Agreement and the transactions contemplated hereby. The execution and
delivery of this Agreement by Purchaser and the performance by Purchaser of the
transactions contemplated herein have been duly and validly authorized by the
Board of Directors of Purchaser, and this Agreement has been duly and validly
authorized by all necessary corporate action. This Agreement is a legal, valid
and binding obligation of Purchaser enforceable in accordance with its terms.
5.4 No Conflicts. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of the Purchaser
Charter Documents;
(b) subject, until the time of Closing, to compliance with any agreements
between Purchaser and its lenders, conflict with, or result in a default (or
would constitute a default but for a requirement of notice or lapse of time or
both) under any document, agreement or other instrument to which Purchaser is a
party or by which Purchaser is bound, or result in the creation or imposition of
any lien, charge or encumbrance on any of Purchaser's properties pursuant to (i)
any law or regulation to which Purchaser or any of its property is subject, or
(ii) any judgment, order or decree to which Purchaser is bound or any of its
property is subject;
23
(c) result in termination or any impairment of any material permit,
license, franchise, contractual right or other authorization of Purchaser; or
(d) violate any law, order, judgment, rule, regulation, decree or ordinance
to which Purchaser is subject, or by which Purchaser is bound, (including,
without limitation, the HSR Act, together with all rules and regulations
promulgated thereunder).
6. COVENANTS
6.1 Tax Matters.
(a) The following provisions shall govern the allocation of responsibility
as between Parent and the Surviving Corporation for certain tax matters
following the Closing Date:
(i) Parent shall prepare or cause to be prepared and file or
cause to be filed, within the time and in the manner provided by law,
all Tax Returns of Company (which for purposes of this Section 6.1
shall include all Subsidiaries) for all periods ending on or before
the Closing Date that are due after the Closing Date. Parent shall pay
to the Surviving Corporation on or before the due date of such Tax
Returns the amount of all Taxes shown as due on such Tax Returns to
the extent that such Taxes are not reflected in the current liability
accruals for Taxes (excluding reserves for deferred Taxes) shown on
Company's books and records as of the Closing Date. Such Returns shall
be prepared and filed in accordance with applicable law and in a
manner consistent with past practices and shall be subject to the
reasonable review and approval by Purchaser. To the extent reasonably
requested by Parent or required by law, Purchaser and the Surviving
Corporation shall participate in the filing of any Tax Returns filed
pursuant to this paragraph.
(ii) The Surviving Corporation shall prepare or cause to be
prepared and file or cause to be filed any Tax Returns for Tax periods
which begin before the Closing Date and end after the Closing Date.
Parent shall pay to the Surviving Corporation within fifteen (15) days
after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion
of such taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the current liability accruals for Taxes
(excluding reserves for deferred Taxes) shown on Company's books and
records as of the Closing Date. For purposes of this Section 6.1, in
the case of any Taxes that are imposed on a periodic basis and are
payable for a taxable period that includes (but does not end on) the
Closing Date, the portion of such Tax which relates to the portion of
such taxable period ending on the Closing Date shall (x) in the case
of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction the numerator of which is the
number of days in the taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire taxable
period, and (y) in the case of any Tax based upon or related to income
or receipts be deemed equal to the amount which would be payable if
the relevant taxable period ended on the Closing Date. Any credits
relating to a taxable period that begins before and ends after the
24
Closing Date shall be taken into account as though the relevant
taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner
consistent with prior practice of the Surviving Corporation.
(iii) Purchaser and the Surviving Corporation on one part and
Parent on the another part shall (A) cooperate fully, as reasonably
requested, in connection with the preparation and filing of Tax
Returns pursuant to this Section 6.1 and any audit, litigation or
other proceeding with respect to Taxes; (B) make available to the
other, as reasonably requested, all information, records or documents
with respect to Tax matters pertinent to Company for all periods
ending prior to or including the Closing Date; and (C) preserve
information, records or documents relating to tax matters pertinent to
Company that is in their possession or under their control until the
expiration of any applicable statute of limitations or extensions
thereof.
(iv) Parent shall timely pay all transfer, documentary, sales,
use, stamp, registration and other Taxes and fees arising from or
relating to the transactions contemplated by this Agreement, and
Parent shall, at its own expense, file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration, and other Taxes and fees. If required
by applicable law, Purchaser and the Surviving Corporation will join
in the execution of any such Tax Returns and other documentation.
6.2 Accounts Receivable. Purchaser and the Surviving Corporation will use
their reasonable best efforts to collect the Accounts Receivable. Any amounts
received by the Surviving Corporation for a particular Account Receivable (i)
that was not originally collected within ninety (90) days after the day on which
it became due and payable and (ii) for which Purchaser or the Surviving
Corporation has not received indemnification pursuant to Article 9, shall be
applied against amounts due on that particular Account Receivable and such
amount shall be subtracted from the aggregate amount of Damages on the date of
collection of such Account Receivable. Any amounts received by the Surviving
Corporation for a particular Account Receivable (i) that was not originally
collected within ninety (90) days after the day on which it became due and
payable and (ii) for which Purchaser or the Surviving Corporation has received
indemnification pursuant to Article 9, shall be remitted to Parent within
fifteen (15) days of receipt by the Surviving Corporation.
6.3 Related Party Agreements. Company and/or Parent, as the case may be,
shall terminate any Related Party Agreements that Purchaser requests Company or
Parent to terminate in writing.
25
6.4 Cooperation; Delayed Deliveries.
(a) The Company, Parent, and Purchaser shall each deliver or cause to be
delivered to the other on the Closing Date, and at such other times and places
as shall be reasonably agreed to, such instruments as the other may reasonably
request for the purpose of carrying out this Agreement. In connection therewith,
if required, the president or chief financial officer of Company shall execute
any documentation reasonably required by Purchaser's Accountants (in connection
with the Purchaser's Accountants' future audits of Company).
(b) Parent and Company shall cooperate and use their reasonable efforts to
have the present officers, directors and employees of Company and its
Subsidiaries cooperate with Purchaser on and after the Closing Date in
furnishing information, evidence, testimony and other assistance in connection
with any filing obligations, actions, proceedings, arrangements or disputes of
any nature with respect to matters pertaining to all periods prior to the
Closing Date.
(c) Each party hereto shall cooperate in obtaining all consents and
approvals required under this Agreement to effect the transactions contemplated
hereby.
(d) The Company, Parent, and Purchaser shall file all notices and other
information and documents required under the HSR Act as promptly as practicable
after the date hereof.
6.5 Conduct of Business Pending Closing. Between the date hereof and the
Closing Date, Company (which includes each Subsidiary for purposes of this
Section 6.5) will (except as requested or agreed by Purchaser):
(a) carry on its business in substantially the same manner as it has
heretofore and not introduce any material new method of management, operation or
accounting;
(b) maintain its properties and facilities, including those held under
leases, in as good working order and condition as at present, ordinary wear and
tear excepted;
(c) perform all of its obligations under agreements relating to or
affecting its respective assets, properties or rights;
(d) keep in full force and effect present insurance policies or other
comparable insurance coverage;
(e) use all commercially reasonable efforts to maintain and preserve its
business organization intact, retain its present officers and key employees and
maintain its relationships with suppliers, vendors, customers, creditors and
others having business relations with it;
26
(f) maintain compliance with all permits, laws, rules and regulations,
consent orders, and all other orders of applicable courts, regulatory agencies
and similar governmental authorities;
(g) maintain present debt and lease instruments and not enter into new or
amended debt or lease instruments; and
(h) maintain present salaries and commission levels for all officers,
directors, employees, agents, representatives and independent contractors,
except for ordinary and customary bonuses and salary increases for employees
(other than employees who are also stockholders of Parent in accordance with
past practice.
6.6 Access to Information. Between the date of this Agreement and the
Closing Date, Parent and Company will afford to the officers and authorized
representatives of Purchaser access to (i) all of the sites, properties, books
and records of Company and each Subsidiary and (ii) such additional financial
and operating data and other information as to the business and properties of
Company and each Subsidiary as Purchaser may from time to time reasonably
request, including without limitation, access upon reasonable request to
Company's and each Subsidiary's employees, customers, vendors, suppliers and
creditors for due diligence inquiry. No information or knowledge obtained in any
investigation pursuant to this Section 6.6 shall affect or be deemed to modify
any representation or warranty contained in this Agreement or the conditions to
the obligations of the parties to consummate the Stock Purchase.
6.7 Prohibited Activities. Between the date hereof and the Closing Date,
neither Company nor any Subsidiary will, without the prior written consent of
Purchaser:
(a) make any change in their articles or certificate of incorporation or
bylaws, or authorize or propose the same;
(b) issue, deliver or sell, authorize or propose the issuance, delivery or
sale of any securities, options, warrants, calls, conversion rights or
commitments relating to their securities of any kind, or authorize or propose
any change in its equity capitalization, or issue or authorize the issuance of
any debt securities;
(c) declare or pay any dividend, or make any distribution (whether in cash,
stock or property) in respect of its stock whether now or hereafter outstanding,
or split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or purchase, redeem or otherwise
acquire or retire for value any shares of its stock;
(d) enter into any contract or commitment or incur or agree to incur any
liability or make any capital expenditures, or guarantee any indebtedness,
except in the ordinary course of business and consistent with past practice, in
an amount in excess of $25,000, including contracts to provide services to
customers;
27
(e) increase the compensation payable or to become payable to any officer,
director, stockholder of Parent or Company, employee, agent, representative or
independent contractor; make any bonus or management fee payment to any such
person; make any loans or advances; adopt or amend any Company Plan or Company
Benefit Arrangement; or grant any severance or termination pay;
(f) create or assume any mortgage, pledge or other lien or encumbrance upon
any assets or properties whether now owned or hereafter acquired;
(g) sell, assign, lease, pledge or otherwise transfer or dispose of any
property or equipment except in the ordinary course of business consistent with
past practice;
(h) acquire or negotiate for the acquisition of (by stock purchase,
consolidation, purchase of a substantial portion of assets or otherwise) any
business or the start-up of any new business, or otherwise acquire or agree to
acquire any assets that are material, individually or in the aggregate, to
Company;
(i) merge or consolidate or agree to merge or consolidate with or into any
other corporation;
(j) waive any material rights or claims of Company or any Subsidiary,
provided that the Company may negotiate and adjust bills in the course of good
faith disputes with customers in a manner consistent with past practice;
(k) commit a breach of or amend or terminate any material agreement,
permit, license or other right;
(l) enter into any other transaction (i) that is not negotiated at arm's
length with a third party not affiliated with Company or any Subsidiary or any
officer, director or stockholder of Company or any Subsidiary or (ii) outside
the ordinary course of business consistent with past practice or (iii)
prohibited hereunder;
(m) commence a lawsuit other than for routine collection of bills;
(n) revalue any of its assets, including without limitation, writing down
the value of inventory or writing off notes or accounts receivable other than in
the ordinary course of business consistent with past practice;
(o) make any tax election other than in the ordinary course of business and
consistent with past practice, change any tax election, adopt any tax accounting
method other than in the ordinary course of business and consistent with past
practice, change any tax accounting method, file any Tax Return (other than any
estimated tax returns, payroll tax returns, withholding tax returns or sales tax
returns) or any amendment to a Tax Return, enter into any closing agreement,
settle any tax claim or assessment, or consent to any tax claim or assessment,
without the prior written consent of Purchaser; or
28
(p) take, or agree (in writing or otherwise) to take, any of the actions
described in Sections 6.7(a) through (o) above, or any action which would make
any of the representations and warranties of Parent and Company contained in
this Agreement untrue or result in any of the conditions set forth in Articles 7
and 8 not being satisfied.
6.8 Sales of Purchaser Common Stock.
(a)Parent acknowledges and agrees that Purchaser will not provide Parent
with a prospectus for Parent's use in selling the shares of Purchaser Common
Stock to be received by Parent in the Stock Purchase, and agrees to sell such
shares only in accordance with the requirements, if any, of Rule 144 or Rule
145(d) promulgated under the 1933 Act, as applicable. Purchaser acknowledges
that the provisions of this Section 6.8(a) will be satisfied as to any sale by
Parent of the Purchaser Common Stock Parent may acquire pursuant to the Stock
Purchase pursuant to Rule 144 or Rule 145(d) under the Securities Act, by a
broker's letter and a letter from Parent with respect to that sale stating that
the applicable requirements of Rule 144(c), (d), (e), (f) and (h) or Rule
145(d)(1) have been met or are inapplicable by virtue of Rule 144(k), Rule
145(d)(2) or Rule 145(d)(3), provided, however, that Purchaser has no reasonable
basis to believe that such sales were not made in compliance with such
provisions of Rule 144 or Rule 145(d) and subject to any changes in Rule 144 or
Rule 145 after the date of this Agreement.
(b)The certificate or certificates evidencing the shares of Purchaser
Common Stock to be delivered to Parent in the Stock Purchase will bear
restrictive legends substantially in the following forms: THE SHARES REPRESENTED
BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES. THESE SHARES MAY ONLY BE
TRANSFERRED PURSUANT TO A REGISTRATION STATEMENT COVERING THE TRANSFER OF SUCH
SHARES OR A VALID EXEMPTION FROM REGISTRATION."
6.9 Access to Information in Log Files. From and after the Closing, Company
will make available to Parent information contained in the log files relating to
the Site. Parent agrees to retain such Information in confidence to only use
such Information for Parent's internal business proposes.
6.10 Royalty for Site Foreign Language Capability. The Parent shall have
the right to create a site exactly the same as the Site except that it must be
in a language other than English (the "Foreign Site"). The Parent has the
exclusive right to sell advertising or create other forms of income from the
Foreign Site. Parent shall pay to Company a royalty equal to 10% of the net
income derived from sales effected through the Foreign Site. Such royalty shall
be payable on account of such sales effected during such time that Purchaser or
Company owns the Foreign Site. The Company shall have a right of first refusal
to purchase the Foreign Site.
29
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser to effect the Stock Purchase is subject to the
satisfaction or waiver, before the date for such loan and on or before the
Closing Date, as applicable, to the following conditions and deliveries:
7.1 Representations and Warranties; Performance of Obligations. All of the
representations and warranties of Parent and Company contained in this Agreement
shall be true, correct and complete on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date; all of the terms, covenants, agreements and conditions of this
Agreement to be complied with, performed or satisfied by Parent and Company on
or before the Closing Date shall have been duly complied with, performed or
satisfied; and a certificate to the foregoing effect dated the Closing Date and
signed on behalf of Parent and Company shall have been delivered to Purchaser.
7.2 No Litigation. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or provision challenging Purchaser's acquisition
of the Company Stock, or limiting or restricting Purchaser's conduct or
operation of the business of Company (or its own businesses) following the Stock
Purchase shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending.
There shall be no action, suit, claim or proceeding of any nature pending or
threatened against Purchaser or Company or any Subsidiary, their respective
properties or any of their officers or directors, that could materially and
adversely affect the business, assets, liabilities, financial condition, results
of operations or prospects of Company or any Subsidiary.
7.3 No Material Adverse Change. Except as otherwise disclosed in this
Agreement or the Schedules hereto, there shall have been no material adverse
changes in the business, operations, affairs, prospects, properties, assets,
existing and potential liabilities, obligations, profits or condition (financial
or otherwise) of Company, taken as a whole, since the Balance Sheet Date; and
Purchaser shall have received a certificate signed by Parent dated the Closing
Date to such effect.
7.4 Consents and Approvals. All necessary consents of, and filings with,
any governmental authority or agency or third party, relating to the
consummation by Parent and Company of the transactions contemplated hereby,
shall have been obtained and made.
7.5 Opinion of Counsel. Purchaser shall have received an opinion of legal
counsel to Parent and Company dated the Closing Date in form and substance
reasonably satisfactory to Purchaser and its counsel.
7.6 Charter Documents. Purchaser shall have received (a) a copy of the
articles or certificate of incorporation of Company and each Subsidiary
certified by an appropriate authority in their respective state of incorporation
and (b) a copy of the bylaws of Company and each Subsidiary certified by the
30
Secretary of Company and each Subsidiary, and such documents shall be in form
and substance reasonably acceptable to Purchaser.
7.7 Quarterly Financial Statements. Purchaser shall have received from
Company completed quarterly financial statements through September 30, 1999 in a
form reasonably satisfactory to Purchaser.
7.8 Due Diligence Review; Schedules. Parent, Company and the Common
Stockholder shall have made such deliveries as are called for by this Agreement.
Purchaser shall be fully satisfied in its sole discretion with the results of
its review of all of the Schedules, whether delivered before or after the
execution hereof, and such deliveries, and its review of, and other due
diligence investigations with respect to, the business, operations, affairs,
prospects, properties, assets, existing and potential liabilities, obligations,
profits and condition (financial or otherwise) of the Company and the
Subsidiaries. If Purchaser shall not be fully satisfied with the foregoing,
Purchaser shall be entitled to terminate this Agreement.
7.9 Stockholders' Release. Parent and the stockholders of Parent shall each
have delivered to Purchaser an instrument dated the Closing Date releasing
Company from any and all claims of such Parent and such stockholders against
Company.
7.10 No Laws. No laws, rules, regulations, orders or any other requirements
of any Governmental Authority shall have been enacted, introduced or announced
which may materially and adversely affect Company or any Subsidiary or the
business carried on by any of them.
7.11 HSR Act. Any waiting period applicable to the consummation of the
Stock Purchase under the HSR Act shall have expired or been terminated, and no
action by the Department of Justice or Federal Trade Commission challenging or
seeking to enjoin the consummation of the transactions contemplated hereby shall
be pending.
7.12 Related Party Agreements. Except as provided in Section 6.3(a),
Company shall have delivered to Purchaser evidence of repayment of all amounts
due from, or due to, Parent or any stockholder of Parent and all entities in
which Parent or any stockholder of Parent has an interest. Such amounts shall
include all accounts receivable.
7.13 Termination of Employment Agreements. The Company shall have
terminated without liability, expense or obligation to Company or any Subsidiary
(and no payments shall be required to be made by the Surviving Corporation or
any Subsidiary from and after the Closing Date in respect of) any employment
agreements the terms of which are not specifically provided for in this
Agreement, and neither Company nor any subsidiary shall be liable for any
payment in respect of any agreement as a result of a change in control of
Company (whether or not in conjunction with any other event or events).
7.14 Site. The Site shall be in a condition and be fully functional in a
manner satisfactory to Purchaser in its sole discretion.
31
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND COMPANY
The obligation of Parent and Company to effect the Stock Purchase are
subject to the satisfaction or waiver, at or before the Closing Date, of the
following conditions and deliveries:
8.1 Representations and Warranties; Performance of Obligations. All of the
representations and warranties of Purchaser contained in this Agreement shall be
true, correct and complete on and as of the Closing Date with the same effect as
though such representations and warranties had been made as of such date; all of
the terms, covenants, agreements and conditions of this Agreement to be complied
with, performed or satisfied by Purchaser on or before the Closing Date shall
have been duly complied with, performed or satisfied; and a certificate to the
foregoing effects dated the Closing Date and signed by the President or any Vice
President of Purchaser shall have been delivered to Parent.
8.2 No Litigation. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or provision challenging Purchaser's proposed
acquisition of the Company Stock, or limiting or restricting Purchaser's conduct
or operation of the business of the Company or the Subsidiaries (or its own
businesses) following the Stock Purchase shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending. There shall be no action, suit, claim or proceeding of
any nature pending or threatened, against Purchaser or Parent, Company, any
Subsidiary, their respective properties or any of their officers or directors,
that could materially and adversely affect the business, assets, liabilities,
financial condition, results of operations or prospects of the Purchaser and its
subsidiaries taken as a whole.
8.3 Consents and Approvals. All necessary consents of, and filings with,
any governmental authority or agency or third party relating to the consummation
by Purchaser of the transactions contemplated herein, shall have been obtained
and made. Any waiting period applicable to the consummation of the Stock
Purchase under the HSR Act shall have expired or been terminated, and no action
by the Department of Justice or Federal Trade Commission challenging or seeking
to enjoin the consummation of the transactions contemplated hereby shall be
pending.
9. INDEMNIFICATION
9.1 General Indemnification by Parent. Parent covenants and agrees to
indemnify, defend, protect and hold harmless Purchaser and the Surviving
Corporation and their respective officers, directors, employees, stockholders,
assigns, successors and affiliates (individually, an "Indemnified Party" and
collectively, "Indemnified Parties') from, against and in respect of:
(a) all liabilities, losses, claims, damages, punitive damages, causes of
action, lawsuits, administrative proceedings (including informal proceedings),
investigations, audits, demands, assessments, adjustments, judgments, settlement
32
payments, deficiencies, penalties, fines, interest (including interest from the
date of such damages) and costs and expenses (including without limitation
reasonable attorneys' fees and disbursements of every kind, nature and
description) (collectively, "Damages") suffered, sustained, incurred or paid by
the Indemnified Parties in connection with, resulting from or arising out of,
directly or indirectly:
(i) any breach of any representation or warranty of Parent or Company
set forth in this Agreement or any Schedule or certificate, delivered by or
on behalf of Parent or Company in connection herewith; or
(ii) any nonfulfillment of any covenant or agreement by Parent or,
prior to the Closing Date, Company, under this Agreement; or
(iii) the business, operations or assets of Company and its
Subsidiaries prior to the Closing Date or the actions or omissions of
Company's or any Subsidiary's directors, officers, shareholders, employees
or agents prior to the Closing Date, other than Damages arising from
matters expressly disclosed in the Company Financial Statements, this
Agreement or the Schedules to this Agreement.
(b) any and all Damages incident to any of the foregoing or to the
enforcement of this Section 9.1.
9.2 Limitation and Expiration. Notwithstanding the above:
(a) there shall be no liability for indemnification under Section 9.1
unless, and solely to the extent that, the aggregate amount of Damages exceeds
$25,000 (the "Indemnification Threshold"); provided, however, that the
Indemnification Threshold shall not apply to (i) Damages arising out of any
breaches of the covenants of Parent set forth in this Agreement or
representations and warranties made in Sections 4.4 (capital stock of Company),
4.5 (transactions in capital stock), 4.9 (Company financial conditions), 4.17
(material contracts and commitments), 4.22 (conformity with law; litigation),
4.24 (taxes) and 4.27 (environmental matters); or (ii) Damages described in
Section 9.1(a)(iv) or (v).
(b) the aggregate amount of Parent's liability under this Article 9 shall
not exceed the Purchase Price; provided, however, that Parent's liability for
Damages arising out of any breaches of the representations made in Sections 4.24
(taxes) or 4.27 (environmental matters) or Damages described in Sections
9.1(a)(ii) and 9.1(a)(iv) shall not be subject to such limitation;
(c) the indemnification obligations under this Article 9, or under any
certificate or writing furnished in connection herewith, shall terminate at the
date that is the later of clause (i) or (ii) of this Section 9.2(c):
33
(i) (1) except as to representations, warranties, and covenants
specified in clause (i)(2) of this Section 9.2(c), the first anniversary of
the Closing Date, or
(2) with respect to representations and warranties contained in
Sections 4.21 (employee benefit plans), 4.24 (taxes), 4.27 (environmental
matters), and the indemnification set forth in Section 9.1(a)(ii), (iii),
(iv), (v) on (A) the date that is six (6) months after the expiration of
the longest applicable federal or state statute of limitation (including
extensions thereof), or (B) if there is no applicable statute of
limitation, (x) ten (10) years after the Closing Date if the Claim (as
defined below) is related to the cost of investigating, containing,
removing, or remediating a release of Hazardous Material into the
environment, or (y) five (5) years after the Closing Date for any other
Claim covered by clause (i)(2)(B) of this Section 9.2(c); or
(ii) the final resolution of claims or demands pending as of the
relevant dates described in clause (i) of this Section 9.2(c) (such claims
referred to as "Pending Claims").
9.3 Indemnification Procedures. All claims or demands for indemnification
under this Article 9 ("Claims") shall be asserted and resolved as follows:
(a) In the event that any Indemnified Party has a Claim against any party
obligated to provide indemnification pursuant to Section 9.1 hereof (the
"Indemnifying Party") which does not involve a Claim being asserted against or
sought to be collected by a third party, the Indemnified Party shall with
reasonable promptness notify the Indemnifying Party of such Claim, specifying
the nature of such Claim and the amount or the estimated amount thereof to the
extent then feasible (the "Claim Notice"). If Indemnifying Party does not notify
the Indemnified Party within thirty days after the date of delivery of the Claim
Notice that the Indemnifying Party disputes such Claim, with a detailed
statement of the basis of such position, the amount of such Claim shall be
conclusively deemed a liability of the Indemnifying Party hereunder. In case an
objection is made in writing in accordance with this Section 9.3(a), the
Indemnified Party shall respond in a written statement to the objection within
thirty days and, for sixty days thereafter, attempt in good faith to agree upon
the rights of the respective parties with respect to each of such Claims (and,
if the parties should so agree, a memorandum setting forth such agreement shall
be prepared and signed by both parties).
(b)
(i) In the event that any Claim for which the Indemnifying Party would
be liable to an Indemnified Party hereunder is asserted against an
Indemnified Party by a third party (a "Third-Party Claim"), the Indemnified
Party shall deliver a Claim Notice to Indemnifying Party. The Indemnifying
Party shall have thirty days from the date of delivery of the Claim Notice
to notify the Indemnified Party (A) whether the Indemnifying Party disputes
liability to the Indemnified Party hereunder with respect to the
Third-Party Claim, and, if so, the basis for such a dispute, and (B) if
such party does not dispute liability, whether or not the Indemnifying
Party desires, at the sole cost and expense of the Indemnifying Party, to
defend against the Third-Party Claim, provided that the Indemnified Party
is hereby authorized (but not obligated) to file any motion, answer or
other pleading and to take any other action which the Indemnified Party
shall deem necessary or appropriate to protect the Indemnified Party's
interests.
(ii) In the event that the Indemnifying Party timely notifies the
Indemnified Party that the Indemnifying Party does not dispute the
Indemnifying Party's obligation to indemnify with respect to the
Third-Party Claim, the Indemnifying Party shall defend the Indemnified
Party against such Third-Party Claim by appropriate proceedings, provided
that, unless the Indemnified Party otherwise agrees in writing, the
Indemnifying Party may not settle any Third-Party Claim (in whole or in
part) if such settlement does not include a complete and unconditional
release of the Indemnified Party. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement the
Indemnified Party may do so at its sole cost and expense. If the
Indemnifying Party elects not to defend the Indemnified Party against a
Third-Party Claim, whether by failure of such party to give the Indemnified
Party timely notice as provided herein or otherwise, then the Indemnified
Party, without waiving any rights against such party, may settle or defend
against such Third-Party Claim in the Indemnified Party's sole discretion
and the Indemnified Party shall be entitled to recover from the
Indemnifying Party the amount of any settlement or judgment and, on an
ongoing basis, all indemnifiable costs and expenses of the Indemnified
Party with respect thereto, including interest from the date such costs and
expenses were incurred.
(iii) If at any time, in the reasonable opinion of the Indemnified
Party, notice of which shall be given in writing to the Indemnifying Party,
any Third-Party Claim seeks material prospective relief which could have an
adverse effect on any Indemnified Party or the Surviving Corporation or any
subsidiary, the Indemnified Party shall have the right to control or assume
(as the case may be) the defense of any such Third-Party Claim and the
amount of any judgment or settlement and the reasonable costs and expenses
of defense shall be included as part of the indemnification obligations of
the Indemnifying Party hereunder. If the Indemnified Party elects to
exercise such right, the Indemnifying Party shall have the right to
participate in, but not control, the defense of such Third-Party Claim at
the sole cost and expense of the Indemnifying Party.
34
(c) Nothing herein shall be deemed to prevent the Indemnified Party from
making a Claim, and an Indemnified Party may make a Claim hereunder, for
potential or contingent Damages provided the Claim Notice sets forth the
specific basis for any such potential or contingent claim or demand to the
extent then feasible and the Indemnified Party has reasonable grounds to believe
that such Claim may be made.
(d) Subject to the provisions of Section 9.2, the Indemnified Party's
failure to give reasonably prompt notice as required by this Section 9.3 of any
actual, threatened or possible claim or demand which may give rise to a right of
indemnification hereunder shall not relieve the Indemnifying Party of any
liability which the Indemnifying Party may have to the Indemnified Party unless
the failure to give such notice materially and adversely prejudiced the
Indemnifying Party.
(e) The parties will make appropriate adjustments for any Tax benefits, Tax
detriments or insurance proceeds in determining the amount of any
indemnification obligation under this Article 9, provided that no Indemnified
Party shall be obligated to continue pursuing any payment pursuant to the terms
of any insurance policy.
9.4 Survival of Representations Warranties and Covenants. All
representations, warranties and covenants made by Parent, Company and Purchaser
in or pursuant to this Agreement or in any document delivered pursuant hereto
shall be deemed to have been made on the date of this Agreement (except as
otherwise provided herein) and, if a Closing occurs, as of the Closing Date. The
representations of Parent and Company will survive the Closing and will remain
in effect until, and will expire upon, the termination of the indemnification
obligations as provided in Section 9.2. The representations of Purchaser will
survive the Closing and will remain in effect until, and will expire upon the
first anniversary of the Closing Date.
9.5 Remedies Cumulative. The remedies set forth in this Article 9 are
cumulative and shall not be construed to restrict or otherwise affect any other
remedies that may be available to the Indemnified Parties under any other
agreement or pursuant to statutory or common law.
9.6 Right to Set Off. Purchaser shall have the right, but not the
obligation, to set off or recoup, in whole or in part, any sums or property held
or owed by Purchaser or the Surviving Corporation to Parent amounts finally
determined under Section 9.3 to be owed to Purchaser by Parent under Section 9.1
hereof. Parent shall have no right of contribution or subrogation against
Company or the Surviving Corporation for any claim made hereunder by Purchaser
or any other Indemnified Party from and after the Closing.
10. NONCOMPETITION
10.1 Prohibited Activities. Parent agrees that for a period of two years
following the Closing, neither it nor any of its affiliates, including its
stockholders immediately prior to the Closing, shall:
35
(a) engage, as an officer, director, shareholder, owner, partner, joint
venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, in any business
selling any products or services in direct competition with the Surviving
Corporation or Purchaser, including without limitation online information
dissemination, advertising or marketing or web page design or development
related services within the United States of America, Canada or any other
country in which Purchaser, Company or their respective affiliates currently
conduct business (the "Territory");
(b) call upon any person who is, at that time, within the Territory, an
employee of Purchaser or any subsidiary of Purchaser in a managerial capacity
for the purpose or with the intent of enticing such employee away from or out of
the employ of Purchaser or such subsidiary;
(c) call upon any person or entity which is, at that time, or which has
been, within one year prior to that time, a customer of Purchaser or Company or
any subsidiaries of Purchaser or Company within the Territory for the purpose of
soliciting or selling online information dissemination, advertising or marketing
or web page design or development related services within the Territory;
(d) call upon any prospective acquisition candidate, on their own behalf or
on behalf of any competitor, which candidate was either called upon by any of
them or for which any of them made an acquisition analysis for themselves or
Purchaser or any subsidiaries of Purchaser, including Company; or
(e) disclose customers, whether in existence or proposed, of Company to any
person, firm, partnership, corporation or business for any reason or purpose
whatsoever.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Parent or any such affiliate from (i) acquiring as an investment not
more than one percent of the capital stock of a competing business, whose stock
is traded on a national securities exchange or in the over-the-counter market or
(ii) engaging in any activity to which Purchaser shall have provided its prior
written consent.
10.2 Damages. Because of the difficulty of measuring economic losses to
Purchaser and the Surviving Corporation as a result of the breach of the
foregoing covenant, and because of the immediate and irreparable damage that
would be caused to Purchaser and the Surviving Corporation for which they would
have no other adequate remedy, Parent agrees that, in the event of a breach by
it or its affiliates of the foregoing covenant, the covenant may be enforced by
Purchaser or the Surviving Corporation by, without limitation, injunctions and
restraining orders.
10.3 Reasonable Restraint. It is agreed by the parties that the foregoing
covenants in this Article 10 impose a reasonable restraint on Parent and its
affiliates in light of the activities and business of Purchaser on the date of
the execution of this Agreement and the current and future plans of Purchaser
and the Surviving Corporation (as successors to the businesses of Company).
36
10.4 Severability; Reformation. The covenants in this Article 10 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
10.5 Independent Covenants. All of the covenants in this Article 10 shall
be construed as an agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of Parent against
Company, the Surviving Corporation or Purchaser, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement of
such covenants. It is specifically agreed that the period of three years stated
above, shall be computed by excluding from such computation any time during
which Parent or any of its affiliates is in violation of any provision of this
Article 10 and any time during which there is pending in any court of competent
jurisdiction any action (including any appeal from any judgment) brought by any
person, whether or not a party to this Agreement, in which action Purchaser or
the Surviving Corporation seeks to enforce the agreements and covenants of
Parent or in which any person contests the validity of such agreements and
covenants or their enforceability or seeks to avoid their performance or
enforcement; provided, however, that if Parent or any of its affiliates is found
not to be in violation of the agreements or covenants in any such activity the
period during which the action was pending shall not be excluded from such
computation.
10.6 Materiality. Company and Parent hereby agree that the covenants set
forth in this Article 10 are a material and substantial part of the transactions
contemplated by this Agreement, supported by adequate consideration.
11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
11.1 Parent. Parent recognizes and acknowledges that it has in the past,
currently have, and in the future may possibly have, access to certain
confidential information of Company, such as lists of customers, operational
policies, and pricing and cost policies that are valuable, special and unique
assets of Company and Company's business. Parent agrees that it will not
disclose any confidential information to any person, firm, corporation,
association or other entity for any purpose or reason whatsoever, except to
authorized representatives of Purchaser, unless Parent can show that such
information has become known to the public generally through no fault Parent. In
the event of a breach or threatened breach by Parent of the provisions of this
Article 11, Purchaser and the Surviving Corporation shall be entitled to an
injunction restraining Parent from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
Purchaser and the Surviving Corporation from pursuing any other available remedy
for such breach or threatened breach, including the recovery of damages.
11.2 Purchaser. Purchaser recognizes and acknowledges that it has in the
past, currently has, and prior to the Closing Date will have, access to certain
confidential information of Company, such as lists of customers, operational
37
policies, pricing and cost policies that are valuable, special and unique assets
of Company and Company's business. Purchaser agrees that it will not disclose
any confidential information to any person, firm, corporation, association, or
other entity for any purpose or reason whatsoever, prior to the Closing Date
without prior written consent of Parent. In the event of a breach or threatened
breach by Purchaser of the provisions of this Article 11, Parent shall be
entitled to an injunction restraining Purchaser from disclosing, in whole or in
part, such confidential information. Nothing contained herein shall be construed
as prohibiting Parent from pursuing any other available remedy for such breach
or threatened breach, including the recovery of damages.
11.3 Damages. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants, and because of the immediate
and irreparable damage that would be caused for which they would have no other
adequate remedy, Purchaser, the Surviving Corporation and Parent agrees that, in
the event of a breach by any of them of the foregoing covenant, the covenant may
be enforced against them by injunctions and restraining orders.
12. GENERAL
12.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date solely:
(a) by mutual consent of the boards of directors of Purchaser and Company;
or
(b) by Parent and Company as a group, on one part, or by Purchaser, on
another part, if the Closing shall not have occurred on or before March 31,
2000, provided that the right to terminate this Agreement under this Section
12.1(b) shall not be available to either party (with Parent and Company deemed
to be a single party for this purpose) whose material misrepresentation, breach
of warranty or failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing to occur on or before
such date; or
(c) by Parent and Company as a group, on one part, or by Purchaser, on
another part, if there is or has been a material breach, failure to fulfill or
default on the part of the other party (with Parent and Company deemed to be a
single party for this purpose) of any of the representations and warranties
contained herein or in the due and timely performance and satisfaction of any of
the covenants, agreements or conditions contained herein, and the curing of such
default shall not have been made or shall not reasonably be expected to occur
before the Closing Date; or
(d) by Parent and Company as a group, on one part, or by Purchaser, on
another part, if there shall be a final nonappealable order of a federal or
state court in effect preventing consummation of the Stock Purchase; or there
shall be any action taken, or any statute, rule regulation or order enacted,
promulgated or issued or deemed applicable to the Stock Purchase by any
governmental entity which would make the consummation of the Stock Purchase
illegal.
38
12.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 12.1, this Agreement shall forthwith become
ineffective, and there shall be no liability or obligation on the part of any
party hereto or its officers, directors or shareholders. Notwithstanding the
foregoing sentence, (i) the provisions of this Article 12 shall remain in full
force and effect and survive any termination of this Agreement; (ii) each party
shall remain liable for any breach of this Agreement prior to its termination;
and (iii) in the event of termination of this Agreement pursuant to Section
12.1(c) above, then notwithstanding the provisions of Section 12.7 below, the
breaching party (with Parent and Company deemed to be a single party for
purposes of this Article 12), shall be liable to the other party to the extent
of the expenses incurred by such other party in connection with this Agreement
and the transactions contemplated hereby, as well as any damages in accordance
with applicable law.
12.3 Successors and Assigns. Except as provided in this Section 12.3, this
Agreement and the rights of the parties hereunder may not be assigned (except by
operation of law) and shall be binding upon and shall inure to the benefit of
the parties hereto, the successors of Purchaser and Parent. Purchaser may assign
this Agreement to any affiliate or associate (as such terms are defined in Rule
405 under the ▇▇▇▇ ▇▇▇) of Purchaser or any entity newly formed by Purchaser or
such affiliate or associate for the purpose of consummating the transactions
contemplated by this Agreement.
12.4 Entire Agreement; Amendment; Waiver. This Agreement sets forth the
entire understanding of the parties hereto with respect to the transactions
contemplated hereby. Each of the Schedules to this Agreement is incorporated
herein by this reference and expressly made a part hereof. Any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement. This
Agreement shall not be amended or modified except by a written instrument duly
executed by each of the parties hereto, or in accordance with Section 12.4. Any
extension or waiver by any party of any provision hereto shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
12.5 Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, including by
electronic facsimile, each of which when executed and delivered shall be deemed
to be an original, and all of which counterparts taken together shall constitute
but one and the same instrument.
12.6 Brokers and Agents. Each of Purchaser, on one part, and Parent and
Company (as a group), on another part, represents and warrants to the other that
it has not employed any broker or agent in connection with the transactions
contemplated by this Agreement and agrees to indemnify the other against all
losses, damages or expenses relating to or arising out of claims for fees or
commission of any broker or agent employed or alleged to have been employed by
such party.
12.7 Expenses. Purchaser has and will pay the fees, expenses and
disbursements of Purchaser and its agents, representatives, accountants and
39
counsel incurred in connection with the subject matter of this Agreement. Parent
(and not Company) have and will pay the fees, expenses and disbursements of
Parent, Company and their agents, representatives, financial advisers,
accountants and counsel incurred in connection with the subject matter of this
Agreement.
12.8 Specific Performance; Remedies. Each party hereto acknowledges that
the other parties will be irreparably harmed and that there will be no adequate
remedy at law for any violation by any of them of any of the covenants or
agreements contained in this Agreement, including without limitation, the
noncompetition provisions set forth in Article 10 and the confidentiality
obligations set forth in Article 11. It is accordingly agreed that, in addition
to any other remedies which may be available upon the breach of any such
covenants or agreements, each party hereto shall have the right to obtain
injunctive relief to restrain a breach or threatened breach of, or otherwise to
obtain specific performance of, the other parties, covenants and agreements
contained in this Agreement.
12.9 Notices. Any notice, request, claim, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given if delivered personally or sent by telefax
(with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
If to Purchaser or the Surviving Corporation, to:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Ramy El-Batrawi
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a required copy to:
Nida & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Company (prior to the Closing) to:
c/o United Pacific Alliance
_______________________
_______________________
Attn: __________________
Facsimile: _______________
40
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
12.10 Governing Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of California,
without giving effect to any of the conflicts of laws provisions thereof that
would require the application of the substantive laws of any other jurisdiction.
12.11 Severability. If any provision of this Agreement or the application
thereof to any person or circumstances is held invalid or unenforceable in any
jurisdiction, the remainder hereof, and the application of such provision to
such person or circumstances in any other jurisdiction, shall not be affected
thereby, and to this end the provisions of this Agreement shall be severable.
The preceding sentence is in addition to and not in place of the severability
provisions in Section 10.4.
12.12 Absence of Third-Party Beneficiary Rights. No provision of this
Agreement is intended, nor will any provision be interpreted, to provide or to
create any third-party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, shareholder, employee or partner of any party
hereto or any other person or entity.
12.13 Further Representations. Each party to this Agreement acknowledges
and represents that it has been represented by its own legal counsel in
connection with the transactions contemplated by this Agreement, with the
opportunity to seek advice as to its legal rights from such counsel. Each party
further represents that it is being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences.
12.14 Accounting Terms. Except as otherwise expressly provided herein or in
the Schedules, all accounting terms used in this Agreement shall be interpreted,
and all financial statements, Schedules, certificates and reports as to
financial matters required to be delivered hereunder shall be prepared, in
accordance with GAAP consistently applied.
[Signature Pages Follow]
41
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:______________________________
Name: _____________________
UNITED PACIFIC ALLIANCE
By:______________________________
Name: _____________________
▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:______________________________
Name: _____________________
