EXHIBIT 2.1
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
dated as of
May 15, 2000
among
UNITED SHIPPING & TECHNOLOGY, INC.,
TH ▇▇▇.▇▇▇▇▇▇ INTERNET PARTNERS, L.P.
and
TH ▇▇▇.▇▇▇▇▇▇ INTERNET PARALLEL PARTNERS, L.P.
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS.............................................1
SECTION 1.01 DEFINITIONS.............................................1
ARTICLE 2 PURCHASE AND SALE OF SECURITIES.........................4
SECTION 2.01 COMMITMENT TO PURCHASE..................................4
SECTION 2.02 THE CLOSING.............................................4
SECTION 2.03 THE CLOSING.............................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLER............5
SECTION 3.01 ORGANIZATION, CORPORATE POWER AND LICENSES..............5
SECTION 3.02 CAPITAL STOCK AND RELATED MATTERS.......................5
SECTION 3.03 SUBSIDIARIES; INVESTMENTS...............................6
SECTION 3.04 AUTHORIZATION; NO BREACH................................7
SECTION 3.05 SECURITIES LAW COMPLIANCE...............................7
SECTION 3.06 COMMISSION DOCUMENTS....................................7
SECTION 3.07 FINANCIAL STATEMENTS....................................8
SECTION 3.08 ABSENCE OF UNDISCLOSED LIABILITIES......................8
SECTION 3.09 NO MATERIAL ADVERSE CHANGE..............................8
SECTION 3.10 ABSENCE OF CERTAIN DEVELOPMENTS.........................8
SECTION 3.11 ASSETS..................................................9
SECTION 3.12 REAL PROPERTY..........................................10
SECTION 3.13 TAX MATTERS............................................11
SECTION 3.14 CONTRACTS AND COMMITMENTS..............................12
SECTION 3.15 INTELLECTUAL PROPERTY RIGHTS...........................14
SECTION 3.16 LITIGATION, ETC........................................15
SECTION 3.17 BROKERAGE..............................................15
SECTION 3.18 GOVERNMENTAL CONSENT, ETC..............................15
SECTION 3.19 INSURANCE..............................................16
SECTION 3.20 EMPLOYEES..............................................16
SECTION 3.21 ERISA..................................................16
SECTION 3.22 COMPLIANCE WITH LAWS...................................18
SECTION 3.23 ENVIRONMENTAL AND SAFETY MATTERS.......................18
SECTION 3.24 AFFILIATED TRANSACTIONS................................20
SECTION 3.25 DISCLOSURE.............................................20
SECTION 3.26 CUSTOMERS AND SUPPLIERS................................20
SECTION 3.27 REPORTS WITH THE SECURITIES AND EXCHANGE COMMISSION....21
SECTION 3.28 REGULATORY MATTERS.....................................21
SECTION 3.29 VOTE REQUIRED..........................................21
SECTION 3.30 KNOWLEDGE..............................................22
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.......22
ARTICLE 5 COVENANTS OF THE SELLER................................23
SECTION 5.01 ACCESS TO INFORMATION..................................23
SECTION 5.02 CERTIFICATE OF DESIGNATIONS............................23
SECTION 5.03 RESTRICTIONS PENDING THE CLOSING.......................23
SECTION 5.04 RESERVATION OF SHARES..................................24
SECTION 5.05 TAX CONSISTENCY........................................24
SECTION 5.06 USE OF PROCEEDS........................................23
SECTION 5.07 SHAREHOLDER APPROVAL...................................
ARTICLE 6 COVENANTS OF THE PURCHASERS............................25
SECTION 6.01 CONFIDENTIALITY........................................25
ARTICLE 7 COVENANTS OF THE SELLER AND THE PURCHASERS.............25
SECTION 7.01 REQUIRED REGULATORY APPROVALS; REASONABLE BEST
EFFORTS; FURTHER ASSURANCES..........................25
SECTION 7.02 CERTAIN FILINGS........................................26
SECTION 7.03 PUBLIC ANNOUNCEMENTS...................................26
ARTICLE 8 CONDITIONS PRECEDENT TO CLOSING........................27
SECTION 8.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS.................27
SECTION 8.02 CONDITIONS TO EACH PURCHASER'S OBLIGATIONS.............27
SECTION 8.03 CONDITIONS TO ISSUER'S OBLIGATIONS.....................28
ARTICLE 9 MISCELLANEOUS..........................................28
SECTION 9.01 NOTICES................................................28
SECTION 9.02 NO WAIVERS; AMENDMENTS.................................29
SECTION 9.03 SURVIVAL...............................................29
SECTION 9.04 INDEMNIFICATION........................................29
SECTION 9.05 PROCEDURES.............................................30
SECTION 9.06 ACCOUNTS RECEIVABLE AND GOODWILL INDEMNIFICATION.......30
SECTION 9.07 TERMINATION............................................30
SECTION 9.08 EXPENSES; DOCUMENTARY TAXES............................31
SECTION 9.09 SUCCESSORS AND ASSIGNS.................................32
SECTION 9.10 GOVERNING LAW..........................................32
SECTION 9.11 JURISDICTION...........................................32
SECTION 9.12 COUNTERPARTS...........................................32
SECTION 9.13 ENTIRE AGREEMENT.......................................32
SECTION 9.14 REMEDIES...............................................33
SECTION 9.15 SEVERABILITY...........................................33
SECTION 9.16 DESCRIPTIVE HEADINGS; INTERPRETATION...................33
SECTION 9.17 NO STRICT CONSTRUCTION.................................33
EXHIBITS, ANNEX AND SCHEDULES
Exhibit A - Certificate of Designation
Exhibit B - Form of Additional Warrant
Exhibit C - Form of Common Warrant
Exhibit D - Form of Preferred Warrant
Exhibit E - Form of Registration Rights Agreement
Annex I - Share and Warrant Purchase Table
Schedule 3.02(a) - Capitalization (a)
Schedule 3.02(b) - Capitalization (b)
Schedule 3.03 - Subsidiaries
Schedule 3.08 - Liabilities
Schedule 3.10 - Developments
Schedule 3.11 - Assets
Schedule 3.12(a) - Real Property(a)
Schedule 3.12(b) - Real Property(b)
Schedule 3.13 - Taxes
Schedule 3.14 - Contracts
Schedule 3.15 - Intellectual Property
Schedule 3.16 - Litigation
Schedule 3.17 - Brokerage
Schedule 3.19 - Self Insurance
Schedule 3.21 - Employee Benefit Plans
Schedule 3.23 - Environmental and Safety Matters
Schedule 3.24 - Affiliated Transactions
Schedule 3.26 - Customers and Suppliers
Schedule 5.06(a) - Use of Proceeds
SECURITIES PURCHASE AGREEMENT
AGREEMENT dated as of May 15, 2000 among United Shipping &
Technology, Inc., a Utah corporation (the "Issuer"), TH ▇▇▇.▇▇▇▇▇▇ Internet
Partners, L.P., a Delaware limited partnership ("TH ▇▇▇"), and TH
▇▇▇.▇▇▇▇▇▇ Internet Parallel Partners, L.P., a Delaware limited Partnership
("TH ▇▇▇ Parallel") (together, the "Purchasers" and each a "Purchaser").
WHEREAS, the Issuer desires to sell the Securities (as defined
below) to the Purchasers, and the Purchasers desire to purchase the
Securities from the Issuer, upon the terms and subject to the conditions
hereinafter set forth;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. The following terms, as used herein, have
the following meanings:
"Additional Warrants" means the stock purchase warrants to
purchase Series B Shares in the form attached as Exhibit B hereto.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
Person, where "control" means the possession, directly or indirectly, of
the power to direct the management and policies of a Person whether through
ownership of voting securities, contract or otherwise; provided that none
of the Purchasers shall be considered an Affiliate of the Issuer or any of
its Subsidiaries.
"Agreement" means this Agreement, as it may be amended from time
to time.
"Applicable Law" means any applicable constitution, treaty,
statute, rule, regulation, ordinance, order, directive, code,
interpretation, judgment, decree, injunction, writ, determination, award,
permit, license, authorization, directive, requirement, ruling or decision
of, agreement with, or by any Governmental Authority.
"Certificate of Designation" means the Certificate of Designation
for the Series B Shares, in the form attached as Exhibit A hereto with such
changes and modifications as may be agreed to by the Issuer and the
Purchasers.
"Benefit Plan" has the meaning set forth in Section 3.21.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized by law
to close.
"Closing" shall have the meaning set forth in Section 2.02.
"Closing Date" shall have the meaning set forth in Section 2.02.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the U.S. Securities and Exchange Commission or
any governmental body or agency succeeding to the functions thereof.
"Common Stock" means the common stock, par value $.004 per share,
of the Issuer.
"Common Warrants" means the stock purchase warrants to purchase
shares of the Company's Common Stock in the form attached as Exhibit C
hereto.
"Common Stock Equivalents" has the meaning set forth in Section
3.02.
"Credit Agreement" means the credit agreement between UST Delivery
Systems, Inc., a Subsidiary of the Issuer, and General Electric Capital
Corporation, dated September 24, 1999, and all documents executed in
connection therewith.
"ERISA" has the meaning set forth in Section 3.21.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any governmental body, agency or
official of any country or political subdivision of any country, including,
but not limited to, federal, state, county and local governments,
administrative agencies and courts.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Indebtedness" means at a particular time, without duplication,
(i) any indebtedness for borrowed money or issued in substitution for or
exchange of indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) any
indebtedness for the deferred purchase price of property or services with
respect to which a Person is liable, contingently or otherwise, as obligor
or otherwise (other than trade payables and other current liabilities
incurred in the ordinary course of business which are not more than six
months past due or being contested in good faith), (iv) any commitment by
which a Person assures a creditor against loss (including, without
limitation, contingent reimbursement obligations with respect to letters of
credit), (v) any indebtedness guaranteed in any manner by a Person
(including, without limitation, guarantees in the form of an agreement to
repurchase or reimburse), (vi) any obligations under capitalized leases
with respect to which a Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or with respect to which obligations a
Person assures a creditor against loss, (vii) any indebtedness secured by a
Lien on a Person's assets and (viii) any unsatisfied obligation for
"withdrawal liability" to a "multiemployer plan" as such terms are defined
under ERISA.
"Intellectual Property Rights" means all (i) patents, patent
applications and patent disclosures, (ii) trademarks, service marks, trade
dress, trade names, logos, corporate names, websites and internet domain
names and registrations and applications for registration thereof together
with all of the goodwill associated therewith, (iii) copyrights and
copyrightable works and registrations and applications for registration
thereof, (iv) mask works and registrations and applications for
registration thereof, (v) computer software, data, data bases and
documentation thereof, (vi) trade secrets and other confidential
information (including, without limitation, ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced
to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, financial and marketing plans
and customer and supplier lists and information), (vii) other intellectual
property rights and (viii) copies and tangible embodiments thereof (in
whatever form or medium).
"Investment" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes,
obligations, instruments, stock, securities or ownership interest
(including partnership interests, limited liability company interests and
joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"Issuable Securities" has the meaning set forth in Section 3.05.
"Issuer SEC Reports" has the meaning given to it in Section 3.25.
"Latest Balance Sheet" means the audited balance sheet of the
Issuer for the most recent fiscal year ended June 30, 1999.
"Leased Property" has the meaning set forth in Section 3.12.
"Licenses" means all licenses, permits, construction permits,
certificates of public convenience and necessity and other authorizations
issued by any federal, state, county or local Governmental Authorities to
the Issuer and its Subsidiaries and used or necessary in connection with
the operation and conduct of their business, and including any applications
for any such licenses, permits, construction permits and other
authorizations applied for by the Issuer and its Subsidiaries that are
currently pending.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For the purposes of this Agreement, a Person shall be deemed to
own subject to Lien any asset that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Material Adverse Effect" means any change or effect (or
aggregation of changes and effects) that is or could reasonably be expected
to be materially adverse to the business, assets, condition (financial or
otherwise) or results of operations of the Issuer and its Subsidiaries,
taken as a whole.
"Owned Property" has the meaning set forth in Section 3.12.
"Person" means an individual or a corporation, partnership,
limited liability company, association, a joint stock company, trust, a
joint venture, an unincorporated organization, or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Preferred Warrants" means the stock purchase warrants to purchase
Series B Shares in the form attached as Exhibit D hereto.
"Real Property" has the meaning set forth in Section 3.12.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement to be dated as of the Closing Date by and among the Issuer and
the Purchasers, substantially in the form attached hereto as Exhibit E.
"SEC Documents" means all reports, schedules, registration
statements and other documents (including all Exhibits and Schedules
thereto) filed by the Issuer with the Commission.
"Securities" means the Series B Shares and the Warrants.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
"Series B Shares" means the shares of Series B Convertible
Preferred Stock, par value $.004 per share, of the Issuer.
"Subsidiary" means, with respect to any Person any other Person of
which a majority of the capital stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person.
"Transaction Agreements" means this Agreement, the Registration
Rights Agreement, the Voting Agreement, and the Certificate of Designation.
"Warrants" means the Additional Warrants, the Common Warrants and
the Preferred Warrants.
ARTICLE 2
PURCHASE AND SALE OF SECURITIES
SECTION 2.1 Commitment to Purchase. Upon the basis of the
representations and warranties herein contained of each Purchaser, but
subject to the terms and conditions hereinafter stated, the Issuer agrees
to sell to each Purchaser, and each Purchaser, upon the basis of the
representations and warranties herein contained of the Issuer, but subject
to the terms and conditions hereinafter stated, agrees to purchase from the
Issuer at the Closing, the Series B Shares and the Warrants each in the
amount and for the aggregate purchase price set forth opposite the name of
such Purchaser on Annex I hereto. The purchase price per Series B Share
shall be $9.00. The Series B Shares shall have the rights, terms and
privileges set forth in the Certificate of Designation, a copy of which is
attached hereto as Exhibit A.
SECTION 2.2 Issue of Warrants. In addition to issuing the Series B
Shares, at the closing the Issuer shall, subject to the terms and
conditions of the Warrants, issue the Warrants.
SECTION 2.3 The Closing.
(a) The closing (the "Closing") of the purchase and sale of
the Securities hereunder shall take place at the offices of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square,
New York, New York, and shall occur three (3) days following
fulfillment of each of the conditions set forth in Article
8, or at such other time and place as the Issuer and the
Purchasers shall agree in their sole discretion. The date
and time of Closing are referred to herein as the "Closing
Date."
(b) At the Closing, each Purchaser shall deliver to the
Issuer, by wire transfer to an account designated by the
Issuer not later than three Business Days prior to the
Closing Date, an amount, in immediately available funds,
equal to the aggregate purchase price of the Securities
being purchased by such Purchaser.
(c) At the Closing, the Issuer shall deliver to each
Purchaser, against payment of the purchase price by such
Purchaser to the Issuer, (i) certificates evidencing the
Series B Shares being purchased by such Purchaser in
definitive form and registered in such names as such
Purchaser shall request not later than two Business Days
prior to the Closing Date and (ii) the Warrants to be issued
to such Purchasers.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer represents and warrants to each Purchaser that:
SECTION 3.1 Organization, Corporate Power and Licenses. The Issuer
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Utah and is qualified to do business in
every jurisdiction in which its ownership of property or conduct of
business requires it to qualify, except where the failure to be so
qualified would not have a Material Adverse Effect. The Issuer possesses
all requisite corporate power and authority and all material Licenses
necessary to own and operate its properties, to carry on its businesses as
now conducted and presently proposed to be conducted and to carry out the
transactions contemplated by this Agreement. The copies of the Issuer's and
each Subsidiary's charter documents and bylaws which have been furnished to
the Purchasers' counsel reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete.
SECTION 3.2 Capital Stock and Related Matters.
(a) As of the Closing and immediately thereafter, the
authorized capital stock of the Issuer shall consist of (a)
25,000,000 shares of preferred stock, of which (i) 4,500,000
shares have been designated as Series A Cumulative
Convertible Preferred Stock (none of which shall be issued
and outstanding as of the Closing) and (ii) 10,000,000
shares shall be designated as Series B Convertible Preferred
Stock (2,806,796 of which shall be issued and outstanding as
of the Closing and the remainder of which shall be reserved
for issuance upon exercising the Additional Warrants and the
Preferred Warrants) and (b) 75,000,000 shares of Common
Stock, of which (i) 16,298,760 shares shall be issued and
outstanding as of the Closing, (ii) 10,000,000 shares shall
be reserved for issuance upon conversion of the Series B
Shares, (iii) 5,515,835 shares shall be reserved for
issuance upon exercise of stock options, warrants (including
the Common Warrants but excluding the securities described
in clause (iv) below) and convertible securities and (iv)
certain of the remaining shares are reserved for issuance
upon the exercise the warrants issued to Bayview Capital
Partners L.P., the Convertible Subordinated Promissory Note
issued to CEX Holdings, Inc, and the 9% Convertible
Subordinated Promissory Note issued to J. Iver & Company. As
of the Closing, neither the Issuer nor any Subsidiary shall
have outstanding any stock or securities convertible or
exchangeable for any shares of its capital stock or
containing any profit participation features, nor shall it
have outstanding any rights or options to subscribe for or
to purchase its capital stock or any stock or securities
convertible into or exchangeable for its capital stock or
any stock appreciation rights or phantom stock plans
("Common Stock Equivalents"), except for the Series B Shares
and the Warrants and except as set forth on the attached
Capitalization Schedule (a). Capitalization Schedule (a)
accurately sets forth the following information with respect
to all outstanding Common Stock Equivalents: the holder, the
number of shares covered, the exercise price and the
expiration date. As of the Closing, neither the Issuer nor
any Subsidiary shall be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock or any warrants,
options or other rights to acquire its capital stock, except
as set forth on the Capitalization Schedule (a) and except
pursuant to the Certificate of Designation. As of the
Closing, all of the outstanding shares of the Issuer's
capital stock shall be validly issued, fully paid and
nonassessable.
(b) Except as set forth on Capitalization Schedule (b)
hereto, there are no statutory or contractual stockholders'
preemptive rights or rights of first refusal with respect to
the issuance of the Securities hereunder or the issuance of
the Common Stock upon conversion of the Securities. Except
as set forth on Capitalization Schedule (b) hereto, the
Issuer has not violated any applicable federal or state
securities laws in connection with the offer, sale or
issuance of any of its capital stock. There are no
agreements between the Issuer and any of the Issuer's
stockholders with respect to the voting or transfer of the
Issuer's capital stock.
SECTION 3.3 Subsidiaries; Investments. The attached Subsidiary
Schedule correctly sets forth the name of each Subsidiary of the Issuer,
the jurisdiction of its incorporation and the Persons owning the
outstanding capital stock of such Subsidiary. Each Subsidiary is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, possesses all requisite corporate or
other power and authority necessary to own its properties and to carry on
its businesses as now being conducted and as presently proposed to be
conducted and is qualified to do business in every jurisdiction in which
its ownership of property or the conduct of business requires it to
qualify, except where the failure to be so qualified would not have a
Material Adverse Effect. Except as set forth on the Subsidiary Schedule,
all of the outstanding shares of capital stock or other equity interests of
each Subsidiary are validly issued, fully paid and nonassessable or not
subject to a capital call or capital contribution requirement, as
applicable, and all such shares are owned by the Issuer or another
Subsidiary free and clear of any Lien and not subject to any option or
right to purchase any such shares. Except as set forth on the Subsidiary
Schedule, neither the Issuer nor any Subsidiary owns or holds the right to
acquire any shares of stock or any other security or interest in any other
Person.
SECTION 3.4 Authorization; No Breach. The execution, delivery and
performance of the Transaction Agreements and all other agreements
contemplated hereby or thereby to which the Issuer or any of its
Subsidiaries is a party, the filing of the Certificate of Designation have
been duly and validly authorized by the Issuer. The Transaction Agreements
and all other agreements contemplated hereby to which the Issuer or any of
its Subsidiaries is a party each constitutes a valid and binding obligation
of the Issuer or such Subsidiary, as applicable, enforceable in accordance
with its terms. The issuance of the Common Stock upon conversion of the
Series B Shares and the issuance of Common Stock and Series B Shares upon
exercise of the Warrants will not require any further corporate action
(except for action related to any anti-dilution adjustments) on the part of
the Issuer except as required pursuant to Section 5.07 and, except as set
forth in Capitalization Schedule (b), will not be subject to any preemptive
right, right of first refusal or other similar right. The execution and
delivery by the Issuer of this Agreement and all other agreements
contemplated hereby to which the Issuer is a party, the offering, sale and
issuance of the Securities hereunder, the issuance of Common Stock upon
conversion of the Series B Shares, the exercise of the Warrants, the filing
of the Certificate of Designation, and the fulfillment of and compliance
with the respective terms hereof and thereof by the Issuer, do not and
shall not (i) conflict with or result in a breach of the terms, conditions
or provisions of, (ii) constitute a default under, (iii) result in the
creation of any Lien upon the Issuer's or any Subsidiary's capital stock or
assets pursuant to, (iv) give any third party the right to modify,
terminate or accelerate any obligation under, (v) result in a violation of,
or (vi) require any authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, the articles of
incorporation or bylaws of the Issuer or any Subsidiary, or any law,
statute, rule or regulation, order, judgment or decree to which the Issuer
or any Subsidiary is subject, or any material agreement or instrument to
which the Issuer or any Subsidiary is subject, except for such matters that
would not have a Material Adverse Effect.
SECTION 3.5 Securities Law Compliance. Assuming the
representations and warranties of the Purchasers set forth in Article 4
hereof are true and correct in all material respects, the offer and sale of
the Series B Shares and the shares of Common Stock issuable upon conversion
of the Series B Shares and the exercise of the Warrants (collectively, the
"Issuable Securities") pursuant to this Agreement will be exempt from the
registration requirements of the Securities Act. Neither the Issuer nor any
Person acting on its behalf has, in connection with the offering of the
Issuable Securities, engaged in (i) any form of general solicitation or
general advertising (as those terms are used within the meaning of Rule
502(c) under the Securities Act), (ii) any action involving a public
offering within the meaning of Section 4(2) of the Securities Act, or (iii)
any action that would require the registration under the Securities Act of
the offering and sale of the Issuable Securities pursuant to this
Agreement. The Company has not made and will not prior to the Closing make,
directly or indirectly, any offer or sale of the Issuable Securities or of
securities of the same or similar class as the Issuable Securities if, as a
result, the offer and sale contemplated hereby could fail to be entitled to
exemption from the registration requirements of the Securities Act. As used
herein, the terms "offer" and "sale" have the meanings specified in Section
2(3) of the Securities Act.
SECTION 3.6 Commission Documents. Upon request, the Issuer will
make available to the Purchasers true and complete copies of all SEC
Documents filed with the Commission prior to the date hereof and will
furnish the Purchasers a true and correct copy of each amendment thereto
and any SEC Documents filed by the Issuer with the Commission on or before
the Closing Date. As of their respective filing dates, the SEC Documents
complied (or will comply) in all material respects with the requirements of
the Securities Act, Exchange Act and the rules and regulations of the
Commission thereunder applicable to such SEC Documents, and as of their
respective dates none of the SEC Documents contained (or will contain) any
untrue statement of a material fact or omitted (or will omit) to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 3.7 Financial Statements. Each of the financial statements
(including, in each case, any notes and schedules thereto) contained in the
Issuer SEC Reports complied as to form in all material respects with the
applicable accounting requirements and rules and regulations of the
Commission and was prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto), and each fairly presented the consolidated financial position,
results of operations and cash flows of the Issuer and its consolidated
subsidiaries as at the respective dates thereof and for the respective
periods indicated therein in accordance with GAAP (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments and the
absence of footnotes none of which would, individually or in the aggregate,
reflect or be reasonably expected to reflect a Material Adverse Effect).
SECTION 3.8 Absence of Undisclosed Liabilities. Except as set
forth on the attached Liabilities Schedule or as disclosed in the Issuer
SEC Reports, the Issuer and its Subsidiaries do not have any material
obligation or liability of a nature required to be reflected on a balance
sheet prepared in accordance with GAAP arising out of transactions entered
into at or prior to the Closing, or any action or inaction at or prior to
the Closing, or any state of facts existing or any occurrence at or prior
to the Closing other than: (i) liabilities set forth on the Latest Balance
Sheet (including any liabilities expressly disclosed in any notes thereto),
(ii) liabilities and obligations which have arisen after the date of the
Latest Balance Sheet in the ordinary course of business (none of which is a
liability resulting from breach of contract, breach of warranty, tort,
infringement, claim or lawsuit) and (iii) other liabilities and obligations
expressly disclosed in the other Schedules to this Agreement.
SECTION 3.9 No Material Adverse Change. Since March 30, 2000,
except as disclosed in the Issuer SEC Reports, there has been no change in
the financial condition, operating results, assets, operations, employee
relations or customer or supplier relations of the Issuer and its
Subsidiaries taken as a whole that could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.10 Absence of Certain Developments. Except as expressly
contemplated by the Transaction Agreements or as set forth on the attached
Developments Schedule, and except as disclosed in the Issuer SEC Reports
filed prior to the date of this Agreement, since the date of the Latest
Balance Sheet, neither the Issuer nor any Subsidiary has:
(i) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities
convertible, exchangeable or exercisable into any capital
stock or other equity securities;
(ii) borrowed any amount in excess of $250,000 or incurred
or become subject to any material liabilities, except
current liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the
ordinary course of business;
(iii) discharged or satisfied any material Lien or paid any
material obligation or liability, other than current
liabilities paid in the ordinary course of business;
(iv) declared or made any payment or distribution of cash or
other property to its stockholders with respect to its
capital stock or other equity securities or purchased or
redeemed any shares of its capital stock or other equity
securities (including, without limitation, any warrants,
options or other rights to acquire its capital stock or
other equity securities;
(v) mortgaged or pledged any of its properties or assets or
subjected them to any material Lien, except Liens for
current property taxes not yet due and payable;
(vi) sold, assigned or transferred any of its tangible
assets in excess of $50,000 individually or $250,000 in the
aggregate or any interest in any Subsidiary, except in the
ordinary course of business, or canceled any material debts
or claims;
(vii) sold, assigned, transferred or abandoned any material
patents or patent applications, trademarks, service marks,
trade names, corporate names, copyrights or copyright
registrations, trade secrets or other Intellectual Property
Rights, or disclosed any material proprietary confidential
information to any Person;
(viii) suffered any material extraordinary losses or waived
any rights of material value, whether or not in the ordinary
course of business or consistent with past practice;
(ix) made any Investment in or taken steps to incorporate
any Subsidiary; or
(x) entered into any other material transaction, other than
in the ordinary course of business.
SECTION 3.11 Assets. Except as disclosed in the Issuer SEC Reports
filed prior to the date of this Agreement or as set forth on the attached
Assets Schedule, the Issuer and each Subsidiary have good and marketable
title to, a valid leasehold interest in, or has the right or use, the
material assets (other than Real Property, which is addressed in Section
3.10) used by them, or shown on the Latest Balance Sheet or acquired
thereafter, free and clear of all Liens, except for (i) assets disposed of
in the ordinary course of business since the date of the Latest Balance
Sheet, (ii) Liens disclosed on the Latest Balance Sheet, (iii) Liens for
Taxes not yet due and payable, and (iv) covenants, conditions and
restrictions of record and minor title defects none of which individually
or collectively could reasonably be expected to interfere with Issuer's
business as presently conducted or planned to be conducted ("Permitted
Liens"). The Issuer and each Subsidiary owns, or has a valid leasehold
interest in, or has the right to use, all material tangible assets
necessary for the conduct of their respective businesses as presently
conducted and as presently proposed to be conducted.
SECTION 3.12 Real Property.
(a) The attached Real Property Schedule (a) sets forth the
address and description of each parcel of real property
owned by the Issuer or any of its Subsidiaries (the "Owned
Property"). The Issuer or its applicable Subsidiary has good
and marketable fee simple title in and to each parcel of the
Owned Property with a fair market value in excess of
$250,000, subject to no liens, encroachments, encumbrances,
claims, leases, rights of possession or other defects in
title (collectively, "Encumbrance" ), except (i) as
disclosed on the Latest Balance Sheet, (ii) Liens for Taxes
not yet due and payable or as disclosed in the Issuer SEC
Reports, (iii) covenants, conditions and restrictions of
record and minor title defects none of which individually or
collectively could reasonably be expected to interfere with
Issuer's business as presently conducted or as planned to be
conducted and (iv) for Permitted Liens or as described on
Real Property Schedule (a).
(b) The attached Real Property Schedule (b) sets forth a
list of all leases, subleases and other occupancy agreements
providing for annual payments in excess of $50,000,
including all amendments, extensions and other modifications
thereto (the "Leases") for real property (the "Leased
Property"; and collectively with the Owned Property, the
"Real Property") to which the Issuer or any of its
Subsidiaries is a party. To the best of their respective
knowledge, the Issuer or its applicable Subsidiary has a
good and valid leasehold interest in and to all of the
Leased Property, subject to no Encumbrances except for
Permitted Liens or as described on such Schedule. Each Lease
is in full force and effect and is enforceable in accordance
with its terms in all material respects. To the knowledge of
the Issuer, there exists no default or condition which with
the giving of notice, the passage of time or both could
become a default under any Lease. Except as described on the
Real Property Schedule (b), no consent, waiver, approval or
authorization is required from the landlord under any Lease
as a result of the execution of this Agreement or the
consummation of the transactions contemplated hereby.
(c) The Real Property constitutes all of the real property
owned, leased, occupied or otherwise utilized in connection
with the business of the Issuer and its Subsidiaries which
is material to the conduct of the business of the Issuer and
its Subsidiaries. To the knowledge of the Issuer, other than
the Issuer, its Subsidiaries and the landlords under the
Leases, there are no parties in possession or parties having
any current or future right to occupy any of the Real
Property which are material to the conduct of the business
of the Issuer and its Subsidiaries. The Real Property and
all plants, buildings and improvements located thereon
conform in all material respects to all applicable building,
zoning and other laws, ordinances, rules and regulations.
All permits, licenses and other approvals necessary to the
current occupancy and use of the Real Property which are
material to the conduct of the business of the Issuer and
its Subsidiaries have been obtained, are in full force and
effect and have not been violated in any material respect.
To the knowledge of the Issuer or any of its Subsidiaries,
there exists no violation of any covenant, condition,
restriction, easement, agreement or order affecting any
portion of the Real Property which is material to the
conduct of the business of the Issuer and its Subsidiaries.
There is no pending or, to the knowledge of the Issuer, any
threatened condemnation proceeding affecting any portion of
the Real Property which is material to the conduct of the
business of the Issuer and its Subsidiaries. There are no
outstanding options, rights of first offer or rights of
first refusal to purchase the Owned Property or any portion
thereof or interest therein.
SECTION 3.13 Tax Matters.
(a) Except as set forth on the attached Taxes Schedule: the
Issuer, each Subsidiary and each Affiliated Group have filed
all Tax Returns which they are required to have filed under
Applicable Law, except where the failure to do so would not
have a Material Adverse Effect; all such Tax Returns are
complete and correct in all material respects and have been
prepared in compliance with Applicable Law; the Issuer, each
Subsidiary and each Affiliated Group in all material
respects have paid all Taxes due and owing by them (whether
or not such Taxes are required to be shown on a Tax Return)
in all material respects and have withheld and paid over to
the appropriate taxing authority all Taxes which they are
required to withhold from amounts paid or owing to any
employee, stockholder, creditor or other third party;
neither the Issuer, any Subsidiary nor any Affiliated Group
have outstanding any waiver of any statute of limitations
with respect to any material Taxes or agreement to extend
the time with respect to any material Tax assessment or
deficiency; to the extent required by GAAP, the accrual for
Taxes on the Latest Balance Sheet would be adequate to pay
all Tax liabilities of the Issuer and its Subsidiaries if
their current tax year were treated as ending on the date of
the Latest Balance Sheet (excluding any amount recorded
which is attributable solely to timing differences between
book and Tax income); since the date of the Latest Balance
Sheet, neither the Issuer nor any of its Subsidiaries have
incurred any material liability for Taxes other than in the
ordinary course of business; the federal income Tax Returns
of the Issuer and its Subsidiaries have been audited and
closed for all tax years through 1998; to the knowledge of
the Issuer or its Subsidiaries, no foreign, federal, state
or local tax audits or administrative or judicial
proceedings are pending or being conducted with respect to
the Issuer, any Subsidiary or any Affiliated Group; except
with respect to such audits or proceedings, to the knowledge
of the Issuer or its Subsidiaries, no information related to
Tax matters has been requested by any foreign, federal,
state or local taxing authority and no written notice
indicating an intent to open an audit or other review has
been received by the Issuer from any foreign, federal, state
or local taxing authority; and there are no material
unresolved questions or claims raised by any such taxing
authority concerning the Issuer's, any Subsidiary's or any
Affiliated Group Tax liability.
(b) Except as set forth on the Taxes Schedule, neither the
Issuer nor any of its Subsidiaries has made an election
under ss.341(f) of the Internal Revenue Code of 1986, as
amended. Neither the Issuer nor any Subsidiary is liable for
the Taxes of another Person that is not a Subsidiary in a
material amount under (a) Treas. Reg. ss. 1.1502-6 (or
comparable provisions of state, local or foreign law), (b)
as a transferee or successor, (c) by contract or indemnity
or (d) otherwise by operation of Applicable Law. Neither the
Issuer nor any Subsidiary is a party to any tax sharing
agreement except as a member of an Affiliated Group. Neither
the Issuer nor any Subsidiary has made any payments, is
obligated to make payments or is a party to an agreement
that could obligate it to make any payments that would not
be deductible under IRC ss.280G.
(c) "Tax" or "Taxes" means federal, state, county, local,
foreign or other income, gross receipts, ad valorem,
franchise, profits, sales or use, transfer, registration,
excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or
other withholding, employment, social security, severance,
stamp, occupation, alternative or add-on minimum, estimated
and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and
interest attributable thereto) whether disputed or not. "Tax
Return" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto
and including any amendment thereof. "Affiliated Group"
means any affiliated group as defined in IRC ss.1504 that
has filed a consolidated return for federal income tax
purposes (or any similar group under state, local or foreign
law) for a period and that includes any of the Issuer or any
of its Subsidiaries as a member.
SECTION 3.14 Contracts and Commitments.
(a) Except as expressly contemplated by this Agreement or as
disclosed in the Issuer SEC Reports filed prior to the date
of this Agreement or on the attached Contracts Schedule or
the attached Employee Benefits Schedule or the attached Real
Property Schedule, neither the Issuer nor any Subsidiary is
a party to or bound by any written or oral:
(i) pension, profit sharing, stock option, employee
stock purchase or other plan or arrangement providing
for deferred or other compensation to employees or any
other employee benefit plan or arrangement, or any
collective bargaining agreement or any other contract
with any labor union, or severance agreements, programs,
policies or arrangements;
(ii) contract for the employment of any officer,
individual employee or other Person on a full-time,
part-time, consulting or other basis providing annual
compensation in excess of $100,000 or contract relating
to loans to officers, directors or Affiliates;
(iii) contract under which the Issuer or Subsidiary has
advanced or loaned any other Person amounts in the
aggregate exceeding $250,000;
(iv) agreement or indenture relating to borrowed money
or other Indebtedness or the mortgaging, pledging or
otherwise placing a Lien on any material asset or
material group of assets of the Issuer and/or its
Subsidiaries;
(v) guarantee of any obligation in excess of $100,000
(other than by the Issuer of a wholly-owned Subsidiary's
debts or a guarantee by a Subsidiary of the Issuer's
debts or of another wholly-owned Subsidiary's debts)
other than in connection with the Credit Agreement;
(vi) lease or agreement under which the Issuer or any
Subsidiary is lessee of or holds or operates any
personal property owned by any other party, except for
any lease of personal property under which the aggregate
annual rental payments do not exceed $50,000;
(vii) lease or agreement under which the Issuer or any
Subsidiary is lessor of or permits any third party to
hold or operate any property, real or personal, owned or
controlled by the Issuer or any Subsidiary,
respectively;
(viii) contract or group of related contracts with the
same party or group of affiliated parties the
performance of which involves consideration in excess of
$250,000;
(ix) assignment, license, indemnification or agreement
with respect to any material intangible property
(including, without limitation, any Intellectual
Property Rights);
(x) express warranty agreement with respect to its
services rendered or its products sold or leased;
(xi) agreement under which it has granted any Person any
registration rights (including, without limitation,
demand and piggyback registration rights);
(xii) sales, distribution or franchise agreement the
performance of which involves consideration in excess of
$250,000;
(xiii) agreement, the performance of which involves
consideration in excess of $250,000, with a term of more
than six months which is not terminable by the Issuer or
any Subsidiary upon less than 30 days notice without
penalty;
(xiv) contract or agreement prohibiting it from freely
engaging in any business or competing anywhere in the
world;
(xv) any joint venture agreement or other agreement
pursuant to which the Issuer or any Subsidiary has made,
or any agreement governing the Issuer's or any
Subsidiary's investment in any other person; or
(xvi) any other agreement which is material to its
operations and business prospects or involves a
consideration in excess of $250,000 annually.
(b) All of the contracts, agreements and instruments set
forth or required to be set forth on the Contracts Schedule
are valid, binding and enforceable in accordance with their
respective terms. Except as set forth on the Contracts
Schedule, the Litigation Schedule, the Liabilities Schedule
or the Real Property Schedule, the Issuer and each
Subsidiary has performed all material obligations required
to be performed by it under the contracts, agreements and
instruments listed on the Contracts Schedule or required to
be set forth and are not in default under or in breach of
nor in receipt of any claim of default or breach under any
material contract, agreement or instrument to which the
Issuer or any Subsidiary is subject and no event has
occurred which with the passage of time or the giving of
notice or both would result in a default, breach or event of
noncompliance by the Issuer or any Subsidiary under any
material contract, agreement or instrument to which the
Issuer or any Subsidiary is subject; the Issuer has no
present intention of not fully performing all such
obligations; the Issuer has no knowledge of any breach or
anticipated breach by the other parties to any material
contract, agreement, instrument or commitment to which it is
a party; and neither the Issuer nor any Subsidiary is a
party to any contract or commitment or group of contracts or
commitments the performance of which could have a Material
Adverse Effect.
(c) Upon request, the Issuer will make available to the
Purchasers a true and correct copy of each of the written
instruments, plans, contracts and agreements and an accurate
description of each of the oral arrangements, contracts and
agreements which are listed on, referred to or required to
be listed on or referred to on the Contracts Schedule or the
Employee Benefits Schedule, together with all amendments,
waivers or other changes thereto.
SECTION 3.15 Intellectual Property Rights.
(a) The attached Intellectual Property Schedule contains a
complete and accurate list of all (a) patented or registered
Intellectual Property Rights owned or used by the Issuer or
any Subsidiary and material to the business of the Issuer
and its Subsidiaries, (b) pending patent applications and
applications for registration of other Intellectual Property
Rights filed by the Issuer or any Subsidiary material to the
business of the Issuer and its Subsidiaries, (c) material
unregistered trade names and corporate names owned or used
by the Issuer or any Subsidiary and (d) material
unregistered trademarks, service marks, copyrights, mask
works and computer software (other than commercially
available computer software) owned or used by the Issuer or
any Subsidiary and material to the business of the Issuer
and its Subsidiaries. The Intellectual Property Schedule
also contains a complete and accurate list of all material
licenses and other material rights granted by the Issuer or
any Subsidiary to any third party with respect to any
Intellectual Property Rights and all material licenses and
other material rights granted by any third party to the
Issuer or any Subsidiary with respect to any Intellectual
Property Rights, in each case identifying the subject
Intellectual Property Rights. The Issuer or one of its
Subsidiaries is the beneficial and record owner of all
right, title and interest to, or has the right to use
pursuant to a valid and enforceable license, all
Intellectual Property Rights necessary for the operation of
the businesses of the Issuer and its Subsidiaries as
presently conducted and as presently proposed to be
conducted, free and clear of all Liens, except where the
failure to have such right would not have a Material Adverse
Effect. The loss or expiration of any Intellectual Property
Right or related group of Intellectual Property Rights owned
or used by the Issuer or any Subsidiary would not reasonably
be expected to have a Material Adverse Effect and no such
loss or expiration is, to the best of the Issuer's
knowledge, threatened, pending or reasonably foreseeable.
The Issuer and its Subsidiaries have taken all necessary
actions to maintain and protect the Intellectual Property
Rights which they own, except where the failure to have
taken such actions would not have a Material Adverse Effect.
To the best of the Issuer's knowledge, the owners of any
Intellectual Property Rights licensed to the Issuer or any
Subsidiary have taken all necessary actions to maintain and
protect the Intellectual Property Rights which are subject
to such licenses.
(b) Except as set forth on the Intellectual Property
Schedule or the Litigation Schedule, (i) to the best of the
Issuer's knowledge, there have been no claims made against
the Issuer or any Subsidiary within the past five (5) years
asserting the invalidity, misuse or unenforceability of any
of the Issuer's or its subsidiaries' Intellectual Property
Rights or alleging infringement, misappropriation or other
conflict of any third Person's Intellectual Property Rights
by the Issuer or any of its Subsidiaries (including, without
limitation, any demand or request that the Issuer or any
Subsidiary license any rights from a third party), and, to
the best of the Issuer's knowledge, there are no grounds for
the same, (ii) neither the Issuer nor any Subsidiary has
received any notices of, and is not aware of any facts which
indicate a likelihood of, any infringement or
misappropriation by any third party with respect to the
Issuer's or its Subsidiaries' Intellectual Property Rights
(including, without limitation, any demand or request that
the Issuer or any Subsidiary license any rights from a third
party) and (iii) to the best of the Issuer's knowledge, the
conduct of the Issuer's and each Subsidiary's business has
not infringed, misappropriated or conflicted with and does
not infringe, misappropriate or conflict with any
Intellectual Property Rights of other Persons, nor would any
future conduct as presently contemplated infringe,
misappropriate or conflict with any Intellectual Property
Rights of other Persons. All Intellectual Property Rights
owned or used by the Issuer or any Subsidiary immediately
prior to Closing will be owned or available for use by the
Issuer or any such Subsidiary on identical terms and
conditions immediately subsequent to Closing.
SECTION 3.16 Litigation, etc. Except as disclosed in the Issuer
SEC Reports filed prior to the date of this Agreement or on the attached
Litigation Schedule, there are no actions, suits, proceedings, orders,
investigations or claims pending or, to the best of the Issuer's knowledge,
threatened against or, to the Issuer's knowledge, affecting the Issuer or
any Subsidiary that individually or in the aggregate have a Material
Adverse Effect (or to the best of the Issuer's knowledge, pending or
threatened against or affecting any of the officers, directors or employees
of the Issuer and its Subsidiaries with respect to their respective
businesses or proposed business activities), or pending or threatened by
the Issuer or any Subsidiary against any third party, at law or in equity,
or before or by any governmental department, commission, board, bureau,
agency or instrumentality (including, without limitation, any actions,
suit, proceedings or investigations with respect to the transactions
contemplated by this Agreement); nor has there been any such actions,
suits, proceedings, orders, investigations or claims pending against or
affecting the Issuer or any Subsidiary during the past three years that
individually or in the aggregate have a Material Adverse Effect; and, to
the best of the Issuer's knowledge, there is no reasonable basis for any of
the foregoing. Neither the Issuer nor any Subsidiary is subject to any
judgment, order or decree of any court or Governmental Authority which
could have a Material Adverse Effect.
SECTION 3.17 Brokerage. Except as set forth on the attached
Brokerage Schedule, for which Issuer shall be solely responsible, there are
no claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by this Agreement based on
any arrangement or agreement binding upon the Issuer or any Subsidiary. The
Issuer shall pay, and hold each Purchaser harmless against, any liability,
loss or expense (including, without limitation, reasonable attorneys' fees
and out-of-pocket expenses) arising in connection with any such claim.
SECTION 3.18 Governmental Consent, etc. No permit, license,
consent, approval or authorization of, or declaration to or filing with,
any governmental authority or any other Person is required in connection
with the execution, delivery and performance by the Issuer of this
Agreement or the other agreements contemplated hereby, or the consummation
by the Issuer of any other transactions contemplated hereby or thereby,
except as set forth on the attached Consents Schedule.
SECTION 3.19 Insurance. Neither the Issuer nor any Subsidiary is
in default with respect to its obligations under any insurance policy
maintained by it, and since January 1, 1996 neither the Issuer nor any
Subsidiary has been denied insurance coverage. The insurance coverage of
the Issuer and its Subsidiaries is consistent with the best insurance
practices for corporations of similar size engaged in similar lines of
business, is adequate and sufficient to cover all material liabilities
encountered in the ordinary course of business of the Issuer and all
material liabilities reasonably foreseen or projected by the Issuer, and
includes, without limitation, insurance in respect of pollution and
environmental liability, and personal injury liability. All of the insurers
through which the Issuer has sought insurance coverage in the past 10 years
have been and remain solvent. Except as set forth on Schedule 3.19, and
excluding deductibles under the Issuer's current insurance policies,
neither the Issuer nor its Subsidiaries have any self-insurance or
co-insurance programs.
SECTION 3.20 Employees. The Issuer is not aware that any executive
or key employee of the Issuer or any Subsidiary or any group of employees
of the Issuer or any Subsidiary has any plans to terminate employment with
the Issuer or any Subsidiary. The Issuer and each Subsidiary have complied
in all material respects with all laws relating to the employment of labor
(including, without limitation, provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes), and the Issuer is not aware that it or any
Subsidiary has any material labor relations problems or concerns
(including, without limitation, any union organization activities,
threatened or actual strikes or work stoppages or material grievances).
Except as disclosed on the Contracts Schedule, neither the Issuer, its
Subsidiaries nor, to the best of the Issuer's knowledge, any of their
employees is subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreements relating to, affecting or in
conflict with the present or proposed business activities of the Issuer and
its Subsidiaries, except for agreements between the Issuer and its present
and former employees.
SECTION 3.21 ERISA.
(a) 3.21 sets forth an accurate and complete list of each
"employee benefit plan" (as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is material to the Issuer and each other employee benefit plan, program or
arrangement that is material to the Issuer maintained, sponsored, or
contributed to by the Issuer at any time in the last three years, or with
respect to which the Issuer has any material actual or potential liability.
Each such item listed on such attached schedule is referred to herein as a
"Benefit Plan" and collectively as the "Benefit Plans."
(b) All material contributions to and payments from any
Benefit Plan that may have been required to be made in accordance with the
terms of the Benefit Plan, any applicable collective bargaining agreement,
and Section 302 of ERISA or Section 412 of the Code have been timely made
in all material respects. There has been no application for or waiver of
the minimum funding standards imposed by Section 412 of the Code with
respect to any Benefit Plan, and the Issuer is not aware of any facts or
circumstances that would materially change the funded status of any such
Benefit Plan at any time in the last three years. To the knowledge of the
Issuer, no asset of the Issuer is or is reasonably likely to become subject
to any lien under ERISA or the Code, and the Issuer has not incurred any
material liability under Title IV of ERISA (other than for contributions
not yet due) or to the Pension Benefit Guaranty Corporation (other than for
payment of premiums not yet due).
(c) Except as set forth on Schedule 3.21, each Benefit
Plan that is intended to be qualified under Section 401(a) of the Code has
received a determination from the IRS that such Benefit Plan is so
qualified, and, to the best knowledge of the Issuer, nothing has occurred
since the date of such determination that could adversely affect the
qualified status of such Benefit Plan.
(d) Each of the Benefit Plans and all related trusts,
insurance contracts and funds have been maintained, funded and administered
in compliance in all material respects with their terms and the terms of
any applicable collective bargaining agreements and in compliance in all
material respects with the applicable provisions of ERISA, the Code, and
any other applicable laws. To the knowledge of the Issuer, there are no
pending or threatened actions, suits, investigations or claims with respect
to any Benefit Plan (other than routine claims for benefits) that could
reasonably be expected to have a Material Adverse Effect. With respect to
each Benefit Plan, all required material payments, premiums, contributions,
distributions, or reimbursements for all periods ending prior to or as of
the Closing Date have been made or properly accrued in all material
respects.
(e) To the knowledge of the Issuer, neither the Issuer
nor any other "disqualified person" (within the meaning of Section 4975 of
the Code) or any "party in interest" (within the meaning of Section 3(14)
of ERISA) has engaged in any "prohibited transaction" (within the meaning
of Section 4975 of the Code or Section 406 of ERISA) with respect to any of
the Benefit Plans which could subject any of the Benefit Plans, the Issuer,
or any officer, director or employee of any of the foregoing to a penalty
or tax under Section 502 of ERISA or Section 4975 of the Code that could
reasonably be expected to have a Material Adverse Effect.
(f) Except as set forth otherwise on the Contracts
Schedule, each Benefit Plan which is subject to the health care
continuation requirements of Part 6 of Subtitle B of Title I of ERISA or
Section 4980B of the Code ("COBRA") has been administered in compliance in
all material respects with such requirements. No Benefit Plan provides
medical or life or other welfare benefits to any current or future retired
or terminated employee (or any dependent thereof) of the Issuer other than
as required pursuant to COBRA or applicable State law.
(g) To the knowledge of the Issuer, no Benefit Plan
subject to Title IV of ERISA which is a "multiemployer plan" (as such term
is defined in Section 3(37) of ERISA) (a "Multiemployer Plan") has been
terminated; to the knowledge of the Issuer, no proceeding has been
initiated to terminate any such Multiemployer Plan and there has been no
"reportable event" (within the meaning of Section 4043(c) of ERISA) with
respect to any such Multiemployer Plan; to the knowledge of the Issuer, no
Multiemployer Plan is in reorganization as described in Section 4241 of
ERISA and, to the knowledge of the Issuer, no Multiemployer Plan is
insolvent as described in Section 4245 of ERISA. To the knowledge of the
Issuer, the Issuer has not incurred any liability on account of a "partial
withdrawal" or a "complete withdrawal" (within the meaning of Sections 4205
and 4203, respectively, of ERISA) from any Multiemployer Plan, no such
liability has been asserted, and, to the knowledge of the Issuer, there are
no events or circumstances which could result in any such partial or
complete withdrawal. The Issuer is not bound by any contract or agreement
nor does it have any obligation or liability described in Section 4204 of
ERISA.
(h) With respect to each Benefit Plan, upon request, the
Issuer will provide the Purchaser with true, complete and correct copies of
(to the extent applicable): (i) all documents pursuant to which the Benefit
Plan is maintained, funded and administered (including the plan and trust
documents, any amendments thereto, the summary plan descriptions, and any
insurance contracts or service provider agreements); (ii) the three most
recent annual reports (Form 5500 series) filed with the IRS (with
applicable attachments); (iii) the most recent actuarial valuation report;
and (iv) the most recent determination letter received from the IRS.
(i) The Issuer has no liability with respect to any
"employee benefit plan" (as defined in Section 3(3) of ERISA) solely by
reason of being treated as a single employer under Section 414 of the Code
with any trade, business or entity other than the Issuer.
SECTION 3.22 Compliance with Laws. Each of the Issuer and each
Subsidiary has operated its business and conducted its activities in
compliance in all material respects with all laws, regulations and
governmental requirements, which the failure to be in compliance with would
reasonably be expected to have a Material Adverse Effect and neither the
Issuer nor any Subsidiary has violated any law or any governmental
regulation or requirement which violation has had or would reasonably be
expected to have a Material Adverse Effect, and neither the Issuer nor any
Subsidiary has received notice of any such violation.
SECTION 3.23 Environmental and Safety Matters.
(a) For purposes of this Agreement, the term "Environmental
and Safety Requirements" shall mean all federal, state and
local statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and
administrative orders and determinations, all contractual
obligations and all common law, in each case concerning
public health and safety, worker health and safety and
pollution or protection of the environment (including,
without limitation, all those relating to the presence, use,
production, generation, handling, transport, treatment,
storage, disposal, distribution, labeling, testing,
processing, discharge, Release, threatened Release, control
or cleanup of any hazardous or otherwise regulated
materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation); "Release"
shall have the meaning set forth in CERCLA (as defined
below); and "Environmental Lien" shall mean any Lien,
whether recorded or unrecorded, in favor of any governmental
entity, relating to any liability of the Issuer or any
Subsidiary arising under any Environmental and Safety
Requirements.
(b) Except as set forth on the attached Environmental
Schedule:
(i) The Issuer and its Subsidiaries have complied in all
material respects with and are currently in compliance
in all material respects with all Environmental and
Safety Requirements, which the failure to be in
compliance with would have a Material Adverse Effect,
and since January 1, 1997, neither the Issuer nor its
Subsidiaries have received any oral or written notice,
report or information regarding any liabilities (whether
accrued, absolute, unliquidated or otherwise) or any
corrective, investigatory or remedial obligations
arising under Environmental and Safety Requirements,
which liabilities or obligations would have a Material
Adverse Effect and which relate to the Issuer or its
Subsidiaries or any of their properties or facilities.
(ii) Without limiting the generality of the foregoing,
the Issuer and its Subsidiaries have obtained and
complied in all material respects with and are currently
in compliance in all material respects with, all
Environmental Permits. A list of all such permits,
licenses and other authorizations which are material to
the Issuer and its Subsidiaries is set forth on the
attached Environmental Schedule ("Environmental
Permits").
(iii) None of the following exists at any property or
facility owned, occupied or operated by the Issuer or
any of its Subsidiaries:
(1) underground storage tanks or surface impoundments;
(2) asbestos-containing materials in any form or
condition; or
(3) materials or equipment containing polychlorinated
biphenyls;
the existence of which could reasonably be expected to
have a Material Adverse Effect.
(iv) To the knowledge of the Issuer, neither the Issuer
nor any of its Subsidiaries has treated, stored,
disposed of, arranged for or permitted the disposal of,
transported, handled or Released any hazardous substance
or owned, occupied or operated any facility or property,
so as to give rise to liabilities of the Issuer or its
Subsidiaries for response costs, natural resource
damages or attorneys fees pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), as amended, or any other
Environmental and Safety Requirements.
(v) Without limiting the generality of the foregoing, to
the knowledge of the Issuer, no facts, events or
conditions relating to the past or present properties,
facilities or operations of the Issuer or its
Subsidiaries shall prevent, hinder or limit continued
compliance with Environmental and Safety Requirements,
give rise to any corrective, investigatory or remedial
obligations pursuant to Environmental and Safety
Requirements or give rise to any other liabilities
pursuant to Environmental and Safety Requirements
(including, without limitation, those liabilities
relating to onsite or offsite Releases or threatened
Releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources)
damage that could reasonably be expected to have a
Material Adverse Effect.
(vi) Neither the Issuer nor any of its Subsidiaries has,
either expressly or by operation of law, assumed or
undertaken any material liability or corrective,
investigatory or remedial obligation of any other Person
relating to any Environmental and Safety Requirements
that could reasonably be expected to have a Material
Adverse Effect.
(vii) No Environmental Lien has attached to any property
owned, leased or operated by the Issuer or any of its
Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.24 Affiliated Transactions. Except as set forth on the
attached Affiliated Transactions Schedule or in the Issuer's SEC Reports,
no officer, director, significant stockholder or Affiliate of the Issuer or
any Subsidiary, to the knowledge of the Issuer, or any member of such
individual's immediate family or any entity in which any such Person or
individual owns any beneficial interest (other than less than 5% of the
outstanding securities of a publicly traded company), is a party to any
agreement, contract, commitment or transaction with the Issuer or any
Subsidiary or has any material interest in any material property used by
the Issuer or any Subsidiary.
SECTION 3.25 Disclosure. Neither this Agreement nor any of the
exhibits, schedules, attachments, written statements, documents,
certificates or other items prepared or supplied to any Purchaser by or on
behalf of the Issuer with respect to the transactions contemplated hereby
contain any untrue statement of a material fact or omit a material fact
necessary to make each statement contained herein or therein not
misleading; provided that with respect to the financial projections
furnished to the Purchasers by the Issuer, the Issuer represents and
warrants only that such projections were based upon assumptions reasonably
believed by the Issuer to be reasonable and fair as of the date the
projections were prepared in the context of the Issuer's history and
current and reasonably foreseeable business conditions. There is no fact
which the Issuer has not disclosed to the Purchasers in writing and of
which any of its officers, directors or executive employees is aware (other
than general economic conditions) and which has had or would reasonably be
expected to have a Material Adverse Effect.
SECTION 3.26 Customers and Suppliers.
(a) The attached Customer/Supplier Schedule lists the ten
(10) largest customers and suppliers of the Issuer (on a
consolidated basis) for each of the two most recent fiscal
years and sets forth opposite the name of each such customer
or supplier the amount of revenues to such customer in the
case of any such customer or the amount of expenditures to
such supplier in the case of any such supplier. The
Customer/Supplier Schedule also lists any additional current
customers and suppliers which the Issuer anticipates shall
be among the ten (10) largest customers or suppliers for the
current fiscal year.
(b) Since the date of the Latest Balance Sheet, no Supplier
set forth on the Customer/Supplier Schedule has stopped or
materially decreased the rate of or indicated that it shall
stop, or materially decrease the rate of, supplying
materials, products or services to the Issuer or any
Subsidiary, and no customer listed on the Customer/Supplier
Schedule has stopped or materially decreased or, to the
Issuer's knowledge, indicated that it shall stop, or
materially decrease the rate of, buying materials, products
or services from the Issuer or any Subsidiary.
SECTION 3.27 Reports with the Securities and Exchange Commission.
Since January 1, 1997, the Issuer has filed with the Commission all forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by it under the Securities Act
and the Exchange Act, all of which complied when filed in all material
respects with all applicable requirements of the appropriate act and the
rules and regulations thereunder. Upon request, the Issuer will furnish the
Purchasers with complete and accurate copies of its annual report on Form
10-K for its three most recent fiscal years, all other reports or documents
required to be filed by the Issuer pursuant to Section 13(a) or 15(d) of
the Exchange Act since the filing of the most recent annual report on Form
10-K and its most recent annual report to its stockholders (collectively,
the "Issuer SEC Reports"). Such reports and filings did not as of the date
of filing contain any material false statements or any misstatement of any
material fact and do not omit to state any fact necessary to make the
statements set forth therein not misleading. The Issuer has made all
filings with the Commission which it is required to make, and the Issuer
has not received any request from the Commission to file any amendment or
supplement to any of the reports described in this paragraph.
SECTION 3.28 Regulatory Matters.
(a) Except as disclosed in the Litigation Schedule, the
Issuer and its Subsidiaries have all requisite power and authority and hold
or have applied for all Licenses required under any Applicable Law to own
and operate their properties and to carry on the business of the Issuer and
its Subsidiaries as such business is conducted on the date hereof and as
proposed to be conducted. Each material License issued to the Issuer or its
Subsidiaries is validly issued and is in full force and effect. The Issuer
does not know of any reason why any Governmental Authority might revoke any
License. The Issuer does not know of any party who has a current filing
pending in specific opposition to or expressed an interest in opposing the
grant of the material Licenses held or applied for by the Issuer or its
Subsidiaries, or of any reason why any Governmental Authority might not
grant any of the material Licenses or that have been applied for.
(b) Except as disclosed on the Litigation Schedule, none of
the Issuer or its Subsidiaries is a party to nor, to the best knowledge of
the Issuer and each Subsidiary, is there threatened any investigation,
notice of apparent liability, violation, show cause order, forfeiture or
other notice, order or complaint issued by or before any Governmental
Authority, or of any other proceeding (other than proceedings of general
applicability) that could in any manner threaten or adversely affect the
validity, future grant or continued effectiveness of the material Licenses
of the Issuer and its Subsidiaries. None of the Issuer and its Subsidiaries
has any reason to believe that each of the material Licenses will not be
renewed in the ordinary course.
SECTION 3.29 No Vote Required. Subject to Section 5.07 hereof, no
approval of the holders of the Issuer's capital stock is required by
Applicable Law, the rules of the NASDAQ National Market or otherwise, with
respect to the filing of the Certificate of Designation, the issuance of
the Series B Shares pursuant to and as contemplated by this Agreement or
the issuance of Common Stock upon conversion of the Series B Shares.
SECTION 3.30 Knowledge. As used in this Section 3, the terms
"knowledge" or "aware" shall mean and include the actual knowledge or
awareness, following due inquiry, of the executive officers of the Issuer.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally represents and warrants to the
Issuer as of the date hereof and as of the Closing Date that:
(a) Such Purchaser understands that the offering and sale of
the Securities is intended to be exempt from registration
under the Securities Act pursuant to Section 4(2) of the
Securities Act and any applicable state securities or blue
sky laws.
(b) The Securities to be acquired by such Purchaser pursuant
to this Agreement are being acquired for its own account and
without a view to the resale or distribution of such
Securities or any interest therein other than in a
transaction exempt from registration under the Securities
Act.
(c) Such Purchaser is an "Accredited Investor" as such term
is defined in Regulation D under the Securities Act.
(d) Such Purchaser has sufficient knowledge and experience
in financial and business matters so as to be capable of
evaluating the merits and risks of its investment in the
Securities and such Purchaser is capable of bearing the
economic risks of such investment, including a complete loss
of its investment in the Securities. Such Purchaser
understands that Purchaser's investment in the Securities
involves a high degree of risk.
(e) Such Purchaser has been furnished with and carefully
read a copy of the Issuer SEC Reports and this Agreement
(including the Schedules hereto) and has been given the
opportunity to ask questions of, and receive answers from,
the Issuer concerning the terms and conditions of the
Securities and other related matters. To such Purchaser's
knowledge, the Issuer has made available to such Purchaser
or its agents all documents and information relating to an
investment in the Securities requested by or on behalf of
such Purchaser.
(f) Such Purchaser understands that the Securities shall
bear a restrictive legend in a form agreed between the
parties.
ARTICLE 5
COVENANTS OF THE ISSUER
The Issuer agrees that:
SECTION 5.1 Access to Information.
(a) From the date hereof until the Closing Date, the Issuer
will (i) furnish to each Purchaser and its authorized
representatives such financial and operating data and other
information relating to the Issuer and its Subsidiaries as
such Persons may reasonably request and (ii) instruct its
officers, employees, counsel, independent accountants and
financial advisors to cooperate with such Purchaser and its
authorized representatives in its investigation of the
Issuer and its Subsidiaries. Any investigation pursuant to
this Section shall be conducted in a manner that does not
interfere unreasonably with the conduct of the business of
the Issuer and its Subsidiaries.
(b) After the Closing Date, for so long as the Purchasers,
in the aggregate, own 20% of the Series B Shares issued to
the Purchasers at the Closing, the Purchasers shall be
entitled to (i) receive, within 90 days of the issuer's
financial year end, audited annual financial statements, and
receive within 45 and 30 days of the relevant respective
periods, unaudited quarterly and monthly financial
statements, (ii) receive all information made available to
shareholders of the Issuer or members of the Board of
Directors, in each case, at the same time as such materials
are distributed to the shareholders or directors, as the
case may be, (iii) designate up to two persons who shall be
entitled to observation rights at all meetings of the
Issuer's Board of Directors (in addition to any rights that
the Purchasers may have to appoint persons to the Issuer's
Board of Directors), (iii) meet on a quarterly basis with
members of senior management, (v) receive copies of
management reports, and (vi) have reasonable access to the
Issuer's outside auditors.
(c) Each Purchaser agrees that any nonpublic information
furnished to such Purchaser pursuant to this Section 5.01
shall be deemed confidential information and shall not be
used by it as the basis for any market transactions in the
securities of the Issuer unless and until such information
is made generally available to the public.
SECTION 5.2 Certificate of Designation. Prior to the Closing,
subject to the terms of this Agreement, the Issuer shall cause to be filed
the Certificate of Designation as required pursuant to the laws of the
State of Utah.
SECTION 5.3 Restrictions Pending the Closing. After the date
hereof and prior to the Closing Date, except as expressly provided for in
this Agreement or as consented to in writing by the Purchasers, the Issuer
shall not:
(i) amend its Articles of Incorporation or bylaws;
(ii) split, combine or reclassify any shares of its
capital stock without appropriately adjusting the
conversion price and/or ratio and exercise price
applicable to the Series B Shares and the Warrants,
respectively, prior to their issuance at the Closing;
(iii) declare or pay any dividend or distribution
(whether in cash, stock or property) in respect of its
Common Stock;
(iv) take any action, or knowingly omit to take any
action, that could reasonably be expected to result in
(A) any of the representations and warranties of the
Issuer set forth in Article 3 becoming untrue or (B) any
of the conditions to the obligations of the Purchasers
set forth in Section 8.01 or 8.02 not being satisfied;
or
(v) enter into any agreement or commitment to do any of
the foregoing.
SECTION 5.4 Reservation of Shares. For so long as any of the
Securities are outstanding, the Issuer shall keep reserved for issuance a
sufficient number of shares of Common Stock to satisfy its conversion
obligations under the Certificate of Designation and its issuance
obligations under the Warrants.
SECTION 5.5 Tax Consistency. The Issuer will not treat the Series
B Shares as "preferred stock" for Tax purposes, unless otherwise required
pursuant to a final determination or a change in Applicable Law.
SECTION 5.6 Use of Proceeds. The Issuer shall use the proceeds
received upon the sale of the Series B Shares at Closing solely for the
following purposes as follows:
(a) $20.1 million shall be applied toward repayment of
indebtedness of the Issuer and its Subsidiaries under the
Credit Agreement, as set forth on Schedule 5.06(a); and
(b) the remainder shall be applied, in the following order,
toward (i) satisfaction of any claims pursuant to the class
action settlement agreement, Superior Court of California -
County of San Diego, case no. 720794, as approved by order
of Hon. J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ dated May 4, 2000, (ii) payments to
Corporate Express, Inc. for the payment of certain claims
related to workers compensation claims, (iii) if required by
its terms, repayment of indebtedness of the Issuer under the
convertible note issued by the Issuer to J. Iver & Company
dated April 25, 2000, and (iv) general working capital of
the Issuer.
SECTION 5.7 Shareholder Approval. At the next meeting of
shareholders of the Issuer to be held following the Closing, the Issuer
shall (a) seek the ratification by its Shareholders of the issue and
purchase of the Series B Shares and all other Securities (including the
exercise of the Warrants by the Purchasers) and the applicable terms
thereof, and (b) take all reasonable steps in its power to ensure that the
Board of Directors of the Issuer recommend to the shareholders that such
actions of the Company be ratified.
SECTION 5.8 Insurance Review. Following the Closing, the Issuer
will co-operate in good faith with the Purchasers and conduct a review of
all the Issuer's insurance coverage, policies and arrangements. The Issuer
shall consult with the Purchasers regarding the results of such review and
shall take all necessary steps to ensure that its insurance arrangements
are to the reasonable satisfaction of the Purchasers.
ARTICLE 6
COVENANTS OF THE PURCHASERS
SECTION 6.1 Confidentiality. Each Purchaser will hold, and will
use its reasonable best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors, financing sources,
financial institutions, and agents (the "Representatives") to hold, in
confidence, unless required to disclose by judicial or administrative
process or by other requirements of law, regulation or national stock
exchange, all confidential documents and information concerning the Issuer
or any of its Affiliates that are furnished to such Purchaser, except to
the extent that such information can be shown to have been (i) previously
known on a nonconfidential basis by such Purchaser or such Representatives,
(ii) in the public domain through no fault of such Purchaser or its
Representatives (with respect to information received in their capacity as
such) or (iii) later acquired by such Purchaser or such Representatives
from sources other than the Issuer or any of its Affiliates not known by
such Purchaser or such Representatives, as applicable, to be bound by any
confidentiality obligation; provided that such Purchaser may disclose such
information to any of its Representatives in connection with the
transactions contemplated by this Agreement and the Certificate of
Designation so long as such Persons are informed by such Purchaser of the
confidential nature of such information and are directed by such Purchaser
to treat such information confidentially. The obligation of each Purchaser
to hold and to cause its Representatives to hold any such information in
confidence shall be satisfied if such Purchaser exercises the same care
with respect to such information as such Purchaser would take to preserve
the confidentiality of its own similar information. If any Purchaser or any
of its Representatives is requested to disclose any confidential
information by judicial or administrative process or by other requirements
of law or a national stock exchange, such Purchaser will promptly notify
the Issuer of such request so that the Issuer may seek an appropriate
protective order. Each Purchaser agrees that it will not, and will use its
reasonable best efforts to cause its Representatives not to, use any
confidential documents or information for any purpose other than monitoring
and evaluating its investment in the Issuer and in connection with the
transactions contemplated by this Agreement and the Certificate of
Designation. If this Agreement is terminated, each Purchaser will, and will
use its reasonable best efforts to cause its Representatives to, destroy or
deliver to the Issuer, upon request, all documents and other materials, and
all copies thereof, obtained by such Purchaser or on its behalf from the
Issuer, or any of the Representatives, in connection with this Agreement
that are subject to such confidence.
ARTICLE 7
COVENANTS OF THE ISSUER AND THE PURCHASERS
SECTION 7.1 Required Regulatory Approvals; Reasonable Best
Efforts; Further Assurances. The Issuer and the Purchasers acknowledge that
certain regulatory or governmental approvals may be required to lawfully
consummate the transactions contemplated by this Agreement and the
Certificate of Designation. Subject to the terms and conditions of this
Agreement, the Issuer and each Purchaser will, and will cause their
Affiliates to, use their reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement, the Certificate of Designation
and the Certificate of Designation. The Issuer and each Purchaser agree to
execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the
transactions contemplated by this Agreement and the Certificate of
Designation.
SECTION 7.2 Certain Filings. The Issuer and each Purchaser will,
and will cause their Affiliates to, cooperate with one another (i) in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by
this Agreement and the Certificate of Designation, the conversion by such
Purchaser of such Purchaser's Series B Shares or the exercise by such
Purchaser of such Purchaser's Warrants and (ii) in taking such actions or
making any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such actions, consents,
approvals or waivers. Without limiting the generality of the foregoing, the
Issuer and each Purchaser obligated to file a notification under the HSR
Act shall promptly after the date of this Agreement prepare and file the
notifications required under the HSR Act in connection with the
transactions contemplated by this Agreement. The Issuer and each Purchaser
shall (A) give the other parties prompt notice of the commencement of any
action, suit, litigation, arbitration, preceding or investigation by or
before any governmental body with respect to the transactions contemplated
by this Agreement and the Certificate of Designation, (B) keep the other
parties informed on a current basis as to the status of any such action,
suit, litigation, arbitration, preceding or investigation, and (C) promptly
inform the other parties of any communication to or from the Department of
Justice or any other governmental body regarding the transactions
contemplated by this Agreement and the Certificate of Designation.
SECTION 7.3 Public Announcements. In connection with the execution
of this Agreement, the Issuer shall issue a press release (a "Signing
Release") and shall file with the Commission a Report on Form 8-K with
respect to the transactions contemplated hereby (the "Signing 8-K" and
together with the Signing Release, the "Agreed Disclosure"). The Signing
Release shall be in form and substance as agreed by the parties hereto. The
Signing 8-K shall be provided to the Purchasers prior to filing and the
Purchasers shall be given a reasonable opportunity to comment thereon. The
Issuer shall accept all reasonable changes suggested by the Purchasers. If
the Issuer does not accept any changes suggested in good faith by the
Purchasers, the provisions of this Section 7.03 shall immediately terminate
and be of no further force or effect as to the Purchasers. If the Issuer
accepts all such changes, the Agreed Disclosure shall serve as the basis
for any public disclosure by the parties of the transactions contemplated
hereby and neither the Issuer nor any Purchaser shall make any statement or
representation regarding the transactions contemplated hereby, publicly or
in a manner which could reasonably be expected to result in its public
dissemination, which is materially inconsistent with the Agreed Disclosure.
Except as otherwise permitted pursuant to this Section 7.03, the Issuer
shall not use or refer to the name of any Purchaser in any public statement
or disclosure without the consent of such Purchaser.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING
SECTION 8.1 Conditions to Each Party's Obligations. The obligation
of each party hereto to consummate the Closing is subject to the
satisfaction, at or prior to the Closing Date, of the following conditions:
(a) All filings with, notifications to and consents from
Governmental Authorities required for the consummation of
the Closing shall have been made or obtained, as applicable;
and
(b) No provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the
consummation of the Closing.
SECTION 8.2 Conditions to Each Purchaser's Obligations. The
obligation of each Purchaser to consummate the Closing is further subject
to the satisfaction, at or prior to the Closing Date, of the following
additional conditions:
(a) The representations and warranties of the Issuer
contained herein that are qualified as to materiality or
Material Adverse Effect shall be true and correct in all
respects on and as of the Closing Date and the
representations and warranties of the Issuer contained
herein that are not so qualified shall be true and correct
in all material respects on and as of the Closing Date, in
each case as if made on and as of such date; the Issuer
shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement
to be performed or complied with by it at or prior to the
Closing Date; and such Purchaser shall have received a
certificate dated the Closing Date signed by an authorized
officer of the Issuer to the foregoing effect;
(b) The Certificate of Designation shall have been filed
with the Division of Corporations and Commercial Code of the
State of Utah in accordance with the law of the State of
Utah;
(c) The Registration Rights Agreement shall have been
executed and delivered by the parties thereto and be in full
force and effect;
(d) Such Purchaser shall have received opinions, dated the
Closing Date, of counsel to the Issuer, addressing such
matters as shall be reasonably requested by the Purchasers;
(e) No action, suit, investigation, litigation or proceeding
challenging this Agreement or the transactions contemplated
hereby or seeking to prohibit, alter, prevent or materially
delay the Closing or which could have an adverse affect on
the ability of the Issuer to perform its obligations under
this Agreement shall have been instituted by any
Governmental Authority before any court, arbitrator or
governmental body, agency or official binding on any party
hereto and be pending;
(f) Each Purchaser shall have received all documents
reasonably requested by it relating to the existence of
Issuer, the corporate authority for Issuer entering into,
and the validity of, this Agreement, the Certificate of
Designation, the Warrants and the Series B Shares, all in
form and substance reasonably satisfactory to it; and
(g) The Issuer shall have received all consents and waivers
by third parties that are required for the issuance of the
Securities and the consummation of the transactions
contemplated hereby on terms reasonably satisfactory to
Purchaser (including (i) waivers of all shareholders'
contractual or other preemptive and similar rights, and (ii)
any consents required in order that the transactions
contemplated hereby do not constitute a breach of, a default
under, or a termination or modification of any material
agreement to which the Issuer or any Subsidiary is a party
or to which any portion of the property of the Issuer or any
Subsidiary is subject).
SECTION 8.3 Conditions to Issuer's Obligations. The obligation of
the Issuer to consummate the Closing is further subject to the
satisfaction, at or prior to the Closing Date, of the following additional
conditions:
(a) The representations and warranties of each Purchaser
contained herein shall be true and correct in all respects
on and as of the Closing Date each Purchaser shall have
performed and complied in all material respects with all
covenants and agreements required by this Agreement to be
performed or complied with by such Purchaser at or prior to
the Closing Date; and the Issuers shall have received a
certificate dated the Closing Date signed by an authorized
officer of such Purchaser to the foregoing effect; and
(b) No proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit,
alter, prevent or materially delay the Closing shall have
been instituted by any Governmental Authority before any
court, arbitrator or governmental body, agency or official
binding on any party hereto and be pending;
(c) The Issuer shall have received all consents and waivers
by third parties that are required for the issuance of the
Securities and the consummation of the transactions
contemplated hereby on terms reasonably satisfactory to
Purchaser (including (i) waivers of all shareholders'
contractual or other preemptive and similar rights, and (ii)
any consents required in order that the transactions
contemplated hereby do not constitute a breach of, a default
under, or a termination or modification of any material
agreement to which the Issuer or any Subsidiary is a party
or to which any portion of the property of the Issuer or any
Subsidiary is subject).
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party at its
address or facsimile number set forth below, or such other address or
facsimile number as such party may hereinafter specify for the purpose to
the party giving such notice. Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified pursuant to this
Section 9.01 and the appropriate confirmation is received, (ii) if given by
mail, three days after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iii) if given by
any other means, when delivered at the address specified below:
The Company: United Shipping & Technology, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Purchasers: TH ▇▇▇.▇▇▇▇▇▇ Internet Partners, L.P.
TH ▇▇▇.▇▇▇▇▇▇ Internet Parallel Partners, L.P.
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.2 No Waivers; Amendments.
(a) No failure or delay on the part of any party in
exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies
provided by law.
(b) Any provision of this Agreement may be amended or waived
if, but only if, such amendment or waiver is in writing and
is signed by all the parties hereto.
SECTION 9.3 Survival. All representations and warranties contained
herein or made in writing by any party in connection herewith shall survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby for a period of 2 years following the
Closing, regardless of any investigation made by any Purchaser or on its
behalf; provided, however, that the representations and warranties
contained in Sections 3.01, 3.02, and 3.04 shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby indefinitely.
SECTION 9.4 Indemnification. Effective upon the Closing, the
Issuer hereby indemnifies each Purchaser and its Affiliates against and
agrees to hold such Purchaser and its Affiliates harmless from any and all
actions, causes of action or suits brought by third parties ("Third Party
Claims") damages, losses, liabilities and expenses (including, without
limitation, reasonable expenses of investigation and reasonable attorneys'
fees and expenses in connection with any action, suit or proceeding)
("Damages") arising from such Third Party Claim incurred or suffered by
such Purchaser or its Affiliates arising out of any misrepresentation or
breach of warranty, covenant or agreement made or to be performed by the
Issuer pursuant to this Agreement.
SECTION 9.5 Procedures. The party seeking indemnification under
Section 9.04 (the "Indemnified Party") agrees to give prompt notice to the
party against whom indemnity is sought (the "Indemnifying Party") and to
all other Purchasers of the assertion of any claim, or the commencement of
any suit, action or proceeding in respect of which indemnity may be sought
under such Section. The Indemnifying Party may at its election participate
in and control the defense of any such suit, action or proceeding at its
own expense. The Indemnifying Party shall not be liable under Section 9.04
for any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder.
SECTION 9.6 Accounts Receivable and Goodwill Indemnification. With
respect to the audit of the Company conducted in accordance with GAAP for
the fiscal year ended June 30, 2000, the Company agrees to indemnify the
Purchasers as follows:
(a) if the aggregate of (a) the Issuer's reserves for
accounts receivable, and (b) any write-offs for accounts
receivable of the Issuer, as respectively disclosed on the
Issuer's audited balance sheet for its fiscal year ended
June 30, 2000 (such aggregate being the "Write-Off Amount"),
exceeds $3,000,000, the Company shall indemnify the
Purchasers for the amount by which the Write-Off Amount
exceeds $3,000,000 (the "Receivables Indemnification
Amount"), by adjusting the exercise price of the Additional
Warrants in accordance with the terms of the Additional
Warrants. Should the Receivables Indemnification Amount
(together with any Goodwill Indemnification Amount pursuant
to (b) below) exceed the amount by which the purchase price
under the Additional Warrants may be adjusted, after making
such adjustment under the terms of the Additional Warrant,
the balance shall be satisfied by, at the Issuer's option,
either the payment in cash to the Purchasers of such
balance, or by the issue by the Issuer to one or more
parties nominated by the Purchasers, of that number of
shares of Common Stock determined by dividing such balance
by $9.00 per share;
(b) if the Issuer's audited balance sheet for its fiscal
year ended June 30, 2000 discloses a write-off of goodwill
of the Issuer in excess of $2,000,000 (the "Goodwill
Write-Off"), the Issuer shall indemnify the Purchasers for
the amount of the difference between $2,000,000 and the
Goodwill Write-Off (the "Goodwill Indemnification Amount")
by adjusting the exercise price of the Additional Warrants
in accordance with the terms of the Additional Warrants.
Should the Goodwill Indemnification Amount (together with
any Receivables Indemnification Amount pursuant to (a)
above) exceed the amount by which the purchase price under
the Additional Warrants may be adjusted, after making such
adjustment under the terms of the Additional Warrant, the
balance shall be satisfied by, at the Issuer's option,
either the payment in cash to the Purchasers, of such
balance, or by the issue by the Issuer to one or more
parties nominated by the Purchasers, of that number of
shares of Common Stock determined by dividing such balance
by $9.00 per share.
SECTION 9.7 Termination.
(a) This Agreement may be terminated at any time prior to
the Closing:
(i) by mutual written agreement of the Issuer and each
Purchaser;
(ii) by the Issuer or the Purchasers if there shall be
any law or regulation that makes consummation of the
transactions contemplated hereby illegal or otherwise
prohibited or if consummation of the transactions
contemplated hereby would violate any nonappealable,
final order, decree or judgment of any court or
governmental body having competent jurisdiction; or
(iii) by the Issuer or the Purchasers if the Closing has
not occurred on or before the end of business on June
15, 2000 (the "Scheduled Termination Date").
The party desiring to terminate this Agreement pursuant to clauses
9.07(a)(ii) or (iii) shall give notice of such termination to the other
parties hereto.
(b) If this Agreement is terminated as permitted by Section
9.07(a), such termination shall be without liability of
either party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party)
to the other parties to this Agreement; provided that if
such termination shall result from the willful (i) failure
by any party to fulfill a condition to the performance of
the obligations of the other parties, (ii) failure by any
party to perform a covenant of this Agreement or (iii)
breach by any party hereto of any representation, warranty,
covenant or agreement contained herein, such party shall be
fully liable for any and all Damages incurred or suffered by
the other parties as a result of such failure or breach. The
provisions of Sections 6.01, 9.01, 9.08, 9.10, 9.11, 9.12,
9.13, 9.14, 9.15, 9.16 and 9.17 shall survive any
termination hereof pursuant to Section 9.07(a).
SECTION 9.8 Expenses; Documentary Taxes. The Issuer shall
reimburse each Purchaser at the Closing (or, in relation to obtaining any
consents required under the HSR Act, following such consent being obtained,
whether before or after the Closing) for
(a) all of their respective reasonable out-of-pocket
expenses, including, without limitation, the fees and
disbursements of their counsel incurred in connection with
the negotiation, preparation, execution and delivery of this
Agreement (including the exhibits hereto) and the
consummation of the transactions contemplated by this
Agreement, up to a maximum of $100,000; and
(b) any fees or expenses relating to obtaining consent under
the HSR Act.
The Issuer shall pay any and all stamp, transfer and other similar
taxes payable or determined to be payable in connection with the execution
and delivery of this Agreement or the Certificate of Designation or the
issuance of the Securities or any shares of Common Stock issued upon
conversion or exercise of the Securities.
SECTION 9.9 Successors and Assigns. No party may assign any of its
rights and obligations hereunder without the prior written consent of the
other parties hereto. This Agreement shall be binding upon the parties
hereto and their respective successors and permitted assigns.
SECTION 9.10 GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO TRIAL BY JURY IN
RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY
PARTY HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS
AGREEMENT EACH HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF A ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE
PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 9.11 JURISDICTION. THE PARTIES HERETO AGREE THAT ANY SUIT,
ACTION OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH, THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY MAY ONLY BE BROUGHT IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY, AND EACH OF THE PARTIES HEREBY CONSENTS TO
THE EXCLUSIVE JURISDICTION OF SUCH COURTS (AND OF THE APPROPRIATE APPELLATE
COURTS THEREFROM) IN ANY SUCH SUIT, ACTION OR PROCEEDING AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING IN ANY SUCH COURT OR THAT ANY SUCH SUIT, ACTION OR PROCEEDING
WHICH IS BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE SERVED ON ANY
PARTY ANYWHERE IN THE WORLD, WHETHER WITHIN OR WITHOUT THE JURISDICTION OF
ANY SUCH COURT. WITHOUT LIMITING THE FOREGOING, EACH PARTY AGREES THAT
SERVICE OF PROCESS ON SUCH PARTY AS PROVIDED IN SECTION 9.01 SHALL BE
DEEMED EFFECTIVE SERVICE OF PROCESS ON SUCH PARTY.
SECTION 9.12 Counterparts. This Agreement may be executed in any
number of counterparts each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 9.13 Entire Agreement. This Agreement, the Registration
Rights Agreement, the Certificate of Designation, the Warrants and any
other documents executed concurrently herewith constitute the entire
agreement and understanding among the parties hereto and supersede any and
all prior agreements and understandings, written or oral, relating to the
subject matter hereof.
SECTION 9.14 Remedies. Each holder of Securities and Common Stock
issuable upon conversion or exercise thereof shall have all rights and
remedies set forth in this Agreement, the Warrants, the Articles of
Incorporation and the Certificate of Designation and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a
bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by
law.
SECTION 9.15 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held
to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.
SECTION 9.16 Descriptive Headings; Interpretation. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. The use of the word
"including" in this Agreement shall be by way of example rather than by
limitation.
SECTION 9.17 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto,
and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any of the provisions of this
Agreement.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date first written above.
UNITED SHIPPING & TECHONOLOGY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
Name:
Title:
TH ▇▇▇.▇▇▇▇▇▇ INTERNET PARTNERS, L.P.
By: TH ▇▇▇.▇▇▇▇▇▇ Internet Advisors L.P.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________
Name:
Title:
TH ▇▇▇.▇▇▇▇▇▇ INTERNET PARALLEL
PARTNERS, L.P.
By: TH ▇▇▇.▇▇▇▇▇▇ Internet Advisors L.P.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________
Name:
Title:
