MEMBERSHIP INTEREST PURCHASE AGREEMENT
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AGREEMENT, dated as of September 24, 1998, among Xxxxx Xxxxxx ("Xxxxxx"),
Xxxxxxxx Xxxxxx ("Xxxxxx"), Xxxxxx Xxxxxxxxx ("Xxxxxxxxx"), Xxxxxx Xxxxxxx
("Xxxxxxx"), Xxxxxx Xxxxxx ("Xxxxxx"), Xxxxxx Xxxxxxx ("Xxxxxxx"), Xxxx Xxxxx
("Xxxxx"), Xxxxxxx Xxxxx-Xxxxx and Xxxxxxxx Xxxxx ("Seran"), Xxxxxxx Xxxxxx
("Xxxxxx"), Xxxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx and Xxxxx
Xxxxxxxx ("Xxxxxxxx") and Xxxxxxx Xxxx ("Wood") (Bowman, Rafkin, Gillespie,
Rotella, Swartz, Calabro, Dwyer, Seran, Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxx Xxxxx,
Xxxx Xxxxx, Xxxxxxxx and Xxxx, each a "Seller," and, together, "Sellers"), and
(ii) IBS Interactive, Inc., a Delaware Corporation ("IBS" or the "Buyer").
WHEREAS, DesignFX Interactive, LLC ("DesignFX"), was organized pursuant to
the New Jersey Limited Liability Company Act pursuant to a certificate of
organization filed on April 17, 1996, and an operating agreement among the
Sellers dated November 5, 1996 (the "Operating Agreement");
WHEREAS, Xxxxxx, Xxxxxx and Xxxxxxxxx are the Class A Members (as such
term is defined in the Operating Agreement) of DesignFX, owning, in the
aggregate, 139 Class A Units
(as such term is defined in the Operating Agreement);
WHEREAS, Bowman, Rafkin, Rotella, Swartz, Calabro, Dwyer, Seran, Lerner,
Xxxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxxx and Xxxx are the Class B
Members (as such term is defined in the Operating Agreement) of DesignFX,
owning, in the aggregate, 821 Class B Units (as such term is defined in the
Operating Agreement) (the Class A Units and the Class B Units, together,
"Units");
WHEREAS, the Sellers and Buyer desire to combine the business of DesignFX
with the business IBS;
WHEREAS, to accomplish such combination, the Sellers desire to sell,
assign and transfer their respective Units to Buyer, and Buyer desires to
purchase such Units from Sellers;
WHEREAS, the admission of Buyer, as the sole member of DesignFX, is
subject to the consent of the Class A Members to protect the integrity and
preserve the viability of DesignFX;
WHEREAS, the Class A Members have decided that it is in the best interests
of DesignFX to combine its business with the businesses of Buyer through the
sale of the Units from Sellers to the Buyer;
NOW, THEREFOR, the parties hereto, intending to be legally bound, hereby
and in consideration of the mutual covenants contained herein, agree as follows:
1. Acquisition of Units; Purchase Price.
A. Subject to the terms and conditions of this Agreement, on the Closing
Date (as defined in Section 4), Sellers shall assign, transfer and
sell to Buyer, all of the Units owned, respectively, by each Seller,
and all of each such respective Seller's right, title and interest in
and to the Units and in and to DesignFX, and Buyer shall purchase,
acquire and accept from the Sellers all of the issued and outstanding
Units.
B. The aggregate purchase price for all of the issued and outstanding
Units shall be $1,251,000 (subject to adjustments as set forth in
Sections 1.C and 1.D), payable in 200,160 shares of IBS common stock,
par value $.01 per share (the "Common Stock"), at a price per share of
Six Dollars and Twenty Five Cents ($6.25) (the "Share Price").
C. At the Closing (as defined in Section 4), $20,000 of the purchase
price (the "First Reserved Amount"), payable in shares of Common Stock
(the "First Reserved Shares"), will be held in reserve by Continental
Stock Transfer & Trust Company (the "Escrow Agent"). By March 31, 1999
(the "First Reconciliation Date"), IBS and the Class A Members shall
reconcile the difference, if any, by which, as of January 31, 1999,
the "Current Liabilities" of DesignFX as of the Closing Date (as
defined in Section 4) exceed its "Current Assets" as of the Closing
Date (as defined in Section 4) by more than $25,000. For purposes of
this Agreement: "Current Assets" shall consist of cash on hand,
accounts receivable, unbilled revenues relating to works in process,
domain registration and due from Trinet Services, LLC; and "Current
Liabilities" shall consist of trade accounts payable, customer
deposits, equipment payables, an appropriate reserve for bad debts as
of the Closing Date, any unpaid interest due Commerce Bank as of the
Closing Date (as defined in Section 4) and appropriate and agreed upon
accruals. In the event that Current Liabilities exceed Current Assets
by more than $25,000, then the difference by which Current Liabilities
exceed Current Assets by more than $25,000 shall be subtracted from
the First Reserved Amount, and the Escrow Agent shall deliver to
Sellers, in the aggregate, only that number of First Reserved Shares,
if any, determined by dividing that portion of the First Reserved
Amount which remains, if any, by the Share Price.
D. At the Closing (as defined in Section 4), an additional $125,100 of
the purchase price (the "Second Reserve Amount") payable in shares of
Common Stock (the "Second Reserved Shares") will be held in reserve by
the Escrow Agent. By the last business day prior to the one (1) year
anniversary of the Closing Date (as defined in Section 4) (the "Second
Reconciliation Date"), IBS and the Class A Members shall determine the
dollar value of "Additional Liabilities," if any, to be deducted from
the Second Reserved Amount. For purposes of this Agreement,
"Additional Liabilities" shall include any and all claims, losses,
damages, expenses or liabilities, including, without limitation,
reasonable attorneys', accountants' and other professional fees,
(collectively, the "Additional Liabilities"), which have been asserted
against, sustained, suffered or incurred by the Buyer, or Buyer's
respective officers, directors, shareholders and/or legal
representatives, arising from or by reason of or in connection with:
(i) any breach of the respective representations, warranties and
covenants made by each of Sellers herein, (ii) the operation of
DesignFX on or before the Closing Date, (iii) any taxes owed or
payable by DesignFX with respect to any taxable year or portion
thereof ending on or before the Closing Date to the extent such taxes
are not reflected in the reserve for taxes (if any) shown on the
Balance Sheet (as defined in Section 5.H.(ii)), (v) any and all
principal and accrued interest owed to Equimark, Inc., over the
reserve therefore set forth on the Balance Sheet (as defined in
Section 5.H.(ii)) as of the Balance Sheet Date (as defined in Section
5.H.(ii)), (vi) any threatened or pending legal actions, whether or
not disclosed on Schedule 5.S, and (vi) any other Additional
Liabilities asserted against, sustained or incurred by Buyer or
DesignFX related to, associated with, or arising from any and all
liabilities and obligations of DesignFX, but in all cases Additional
Liabilities shall not include: (a) obligations and liabilities
reserved against on the Balance Sheet or provided for in Section 1.C,
(b) liabilities incurred in connection with the operation of the
business of DesignFX after the Closing Date, or (c) any single
Additional Liability that the claims, losses, damages, expenses or
liabilities for, including, without limitation, reasonable attorneys',
accountants' and other professional fees, amount to less than $5,000
in the aggregate. The number of Second Reserved Shares, in the
aggregate, to be delivered by the Escrow Agent to the Sellers, if any,
shall be determined by dividing that portion of the Second Reserved
Amount which remains, if any, by the Share Price, and Buyer shall
deliver such Second Reserved Shares, if any, to the Custodian, within
one (1) week following the Second Reconciliation Date.
E. The purchase price, less the First Reserved Amount and the Second
Reserved Amount (the "Adjusted Purchase Price"), payable in 176,944
shares of Common Stock (the "Closing Shares"), shall be delivered to
the Sellers at the Closing (as defined in Section 4).
2. TRANSFER OF SHARES. Each of Sellers agrees that each and every sale,
transfer, assignment and/or encumbrance of any of the Closing Shares, the
First Reserved Shares or the Second Reserved Shares (the Closing Shares,
the First Reserved Shares and the Second Reserved Shares are collectively
referred to herein as the "Shares"), respectively, will comply in all
respects with the provisions of Rule 144 of the Securities Act of 1933, as
amended.
3. ASSUMPTION OF LIABILITIES.
A. At the Closing, Buyer shall pay to Xxxxxxx and Xxxxx Xxxxxx $17,311.11
as payment in full of all monies owed to them by DesignFX.
B. With respect to the Equipment Loan Agreement between DesignFX and
Equity National Bank, within sixty (60) days following the Closing
Date (as defined in Section 4), Buyer will provide Sellers with
written proof that: (i) no Seller shall have any further obligations
as a personal guarantor of such loan, or (ii) such loan has been
repaid in full.
C. With respect to the $200,000 face amount loan dated July 14, 1997,
bearing interest at the rate of 9.75% per annum made by Commerce Bank,
NA to DesignFX, which loan certain of the Sellers have personally
guaranteed, Buyer will provide Sellers with written proof of the
repayment of such loan in full within ten (10) business days following
the Closing Date (as defined in Section 4).
4. CLOSING. The closing of the purchase and sale of the Units and the other
matters contemplated by this Agreement (the "Closing") shall take place at
10 a.m. on September 24, 1998, at the offices of DesignFX, or at such other
time and place as mutually agreed upon by the parties, time being of the
essence, (the "Closing Date").
5. REPRESENTATIONS AND WARRANTIES OF SELLERS. The Class A Members (and with
respect to Xxxxxxxxxx 0.X, 0.X, 0.X, 5.D, 5.U and 5.Z, each of the Sellers
but with respect to himself only and not with respect to any other Seller),
severally and jointly, hereby represent and warrant to Buyer as follows,
and acknowledge that the Buyer is relying upon such representations and
warranties, respectively, in connection with the purchase by Buyer of the
Units:
A. LEGAL CAPACITY; NO RESTRICTIONS. Each of Sellers has full legal
capacity, power and authority to execute and deliver this Agreement
and to perform their respective obligations hereunder. All acts
required to be taken by Sellers to enter into this Agreement and to
carry out the transactions contemplated hereby have been properly
taken; and this Agreement constitutes a legal, valid and binding
obligation of each of the Sellers, enforceable in accordance with its
terms. The execution, delivery and performance of this Agreement by
each of the Sellers in accordance with its terms will not, with or
without the giving of notice or the passage of time, or both, conflict
with, result in a default, right to accelerate or loss of rights
under, or result in the creation of any Encumbrance (as defined in
Section 5.B) pursuant to, or require the consent of any third party or
governmental authority pursuant to (a) any provision of the
certificate of organization or Operating Agreement of DesignFX, or (b)
any franchise, mortgage, indenture or deed of trust or any material
lease, license or other agreement or any law, regulation, order,
judgment or decree to which any of the Sellers or DesignFX is a party
or by which any of them (or any of their assets, properties,
operations or businesses) may be bound, subject to or affected.
B. OWNERSHIP. The Sellers own all of the issued and outstanding Units of
DesignFX. Set forth on Schedule 5.D is the name, address, number,
class and percentage interest of Units owned by each of the Sellers.
Each Seller is the sole registered holder and beneficial owner of the
Units, free and clear of any and all Encumbrances (the term
"Encumbrances" as used herein shall mean a mortgage, lien,
encumbrance, security interest, restriction, pledge, options, calls,
assessments, adverse claims or rights with respect to the property
involved). Except as provided in the Operating Agreement, each Seller
has all legal right, title and authority to transfer the Units to
Buyer as contemplated hereby. The assignment, transfer and sale of the
Units to Buyer in accordance with Section 1 hereof will vest in Buyer
full right, title and interest in and to such Units, free and clear of
any and all Encumbrances.
X. XXXXXXX' INTEREST IN SIMILAR BUSINESSES. Except as set forth in
Schedule 5.C to this Agreement, no Seller has any financial interest
in any person, firm or entity (other than DesignFX) which is, or since
November 5, 1996 was, directly or indirectly, engaged in any business
engaged in by DesignFX, or which is a party to any material agreement,
other than the lease agreement between DesignFX and Trinet Services,
LLC, to which DesignFX is also a party. Notwithstanding the foregoing,
Seller shall not be in violation of this Section 5.C solely by owning
or investing in less than 5% of the securities of any publicly traded
company.
D. MEMBERSHIP INTERESTS. The authorized membership interests of DesignFX
consist of 139 Class A Units and 821 Class B Units. The issued and
outstanding Units and the respective holders thereof are as set forth
on Schedule 5.D. All issued Units of DesignFX are duly authorized,
validly issued and fully paid and non-assessable. No options, warrants
or other rights for the purchase of any of the Units of DesignFX or
any security convertible into such Units are authorized and
outstanding. Except for the Operating Agreement, there are no voting
trusts or other contractual commitments or understandings with respect
to the ownership, transfer and voting of the Units. There are no
contracts, commitments or understandings to issue any additional Units
and there are not securities or rights of any kind outstanding which
are convertible into or exchangeable for any Units or other interests
in DesignFX.
E. SUBSIDIARY; INVESTMENTS IN OTHERS. DesignFX has no subsidiaries and
does not: (i) own, directly or indirectly, any capital stock or
membership interests of another corporation; or (ii) have any
interest, directly or indirectly, in any unincorporated association,
partnership, joint venture or other entity, nor has DesignFX made any
commitment to purchase any capital stock of, or otherwise made any
investment in, any other corporation, unincorporated association,
partnership, joint venture or other entity.
F. COMPANY EXISTENCE AND POWER. DesignFX is a limited liability company
duly organized and validly existing and in good standing under the
laws of the State of New Jersey, the only state in which it transacts
business. DesignFX has the power to own, lease or operate its
properties and to carry on its business as now being conducted. The
Class A Members have furnished to Buyer true and complete copies as
the same are currently in effect of (i) the Operating Agreement of
DesignFX and all amendments thereto, certified as true and correct by
each of the Class A Members, and (ii) the certificate of organization
of DesignFX certified by the Secretary of State or other appropriate
governmental official of its jurisdiction of organization.
G. RECORDS. The books of account, minute books and membership list,
including any transfers of membership interest, of DesignFX,
previously delivered by Sellers to Buyer or their representatives, are
complete and correct in all material respects, and there have been no
material transactions involving DesignFX which properly should have
been set forth therein and which have not been so set forth.
H. FINANCIAL STATEMENTS. The Class A Members have delivered to Buyer the
following financial statements, including notes, comments, schedules
(except for prepaid insurance and fixed assets), and supplemental data
therein (collectively called the "Financial Statements"), all of which
have been prepared from the books and records of DesignFX in
accordance with generally accepted accounting principles consistently
applied and maintained throughout the periods indicated, and fairly
present the financial condition of DesignFX as at their respective
dates and the results of the operations of DesignFX for the periods
covered thereby (except its Interim Financial Statements are subject
to normal year-end adjustments and lack footnotes and normal
presentation items):
(i) unaudited balance sheets of DesignFX at December 31, 1996 and
1997, and statements of income, cash flow and changes in members'
equity for the years then ended, all prepared by Xxxxxx X.
Xxxxxxxx & Company, certified public accountants.
(ii) unaudited consolidated balance sheet of DesignFX ("Balance
Sheet") as at September 15, 1998 ("Balance Sheet Date"), and
unaudited consolidated statements of income, cash flow and
changes in members' equity for the eight months and fifteen days
then ended ("Interim Financial Statements").
(iii)the Interim Financial Statements reflect all loan agreements,
indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, equipment obligations,
guaranties and lease purchase agreements to which DesignFX is a
party or by which any of its properties is bound.
(iv) without limiting the generality of the foregoing provisions of
this Section 5.H, the Financial Statements have been prepared on
the following bases:
(a) All fixed assets and equipment have been valued at actual
cost less accumulated depreciation, and no asset has,
directly or indirectly, been written up.
(b) The statements of income do not contain any items of special
or nonrecurring income or any other income not earned in the
ordinary course of business, except as expressly specified
therein.
(c) Pension, benefit and welfare plan payments and severance pay
have been accrued for each employee of DesignFX as of the
Balance Sheet Date, on the basis of benefits customarily
granted. Vacation and sick pay have not been accrued as of
the Balance Sheet Date. DesignFX's aggregate liability for
vacation and sick pay as of the Balance Sheet Date does not
exceed $10,000. Bonuses are not accrued by DesignFX until
year end. All bonuses are discretionary and no employee of
DesignFX has any contractual rights to a bonus for any
period during the fiscal year ending December 31, 1998.
(d) Transactions between DesignFX and any affiliate thereof are
fully disclosed.
(e) Except as set forth on Schedule 5.H(iv).(e), the accounts
receivable of DesignFX included in the Balance Sheet are
collectible in full over the period of usual trade terms (by
use of DesignFX's normal collection methods), and there do
not exist any defenses, counterclaims and set-offs which
would materially adversely affect such net receivables, and
all such receivables are actual and bona fide receivables
representing the total dollar amount thereof shown on the
books of DesignFX.
(f) DesignFX has no liabilities, whether absolute, accrued,
contingent or otherwise, except (A) as and to the extent
reflected or reserved against on the Balance Sheet, and (B)
those incurred in the ordinary course of business and
consistent with prior practices, not in the aggregate
materially adverse, since the Balance Sheet Date or
otherwise disclosed on Schedule S. To each of Xxxxxx'x,
Xxxxxx'x and Xxxxxxxxx'x knowledge, there are no facts or
circumstances existing on the date hereof which could be
reasonably likely to result in the occurrence of any such
liability.
I. TAXES, TAX RETURNS. All federal, state, local and foreign income,
excise, property, sales and other taxes, assessments, governmental
charges, penalties, interest and fines due and payable by DesignFX and
by any other person, firm or corporation which will or may be
liabilities of DesignFX, for all periods ending on or before the
Balance Sheet Date, have been paid in full, or have been fully
reserved against on the Balance Sheet. DesignFX has filed all federal,
state, local and foreign income, excise, property, sales, withholding,
social security, information returns and other tax returns, reports
and related information ("Returns") required to have been filed by it
prior to the date hereof, and no extensions of the time for filing a
Return is presently in effect. The Returns that have been filed have
been accurately prepared and have been duly and timely filed. DesignFX
is not and has never been a member of any affiliated group filing a
consolidated tax return. None of DesignFX's Returns have been examined
by any governmental or other authority exercising any taxing or tax
regulatory authority for any fiscal years or periods since it came
into business. There are no agreements, waivers or other arrangements
providing for an extension of time with respect to the filing of any
Return, or payment of any tax, governmental charge, assessment,
deficiency, penalties, fines or interest by DesignFX. There is no
action, suit, proceeding, investigation or claim now threatened or
pending against DesignFX in respect of taxes, governmental charges or
assessments, or any matter under discussion with any governmental or
other taxing authority relating to taxes, governmental charges or
assessments asserted by any such authority.
J. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet Date,
DesignFX has not:
(i) issued, delivered or agreed to issue or deliver any Units, other
membership interest, bonds or other Company securities, or
granted or agreed to grant any options (including employee stock
options), warrants or other rights for the issue thereto except
as contemplated herein;
(ii) borrowed or agreed to borrow any funds except indebtedness due to
Commerce Bancorp, Inc., not in excess of the amount thereof shown
on the Balance Sheet;
(iii)incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except
current liabilities for trade obligations due to third parties
incurred in the ordinary course of business and consistent with
prior practice;
(iv) discharged or satisfied any Encumbrance other than those then
required to be discharged or satisfied, or paid any obligation or
liability, absolute, accrued, contingent or otherwise, whether
due or to become due, other than current liabilities shown on the
Balance Sheet and current liabilities not in excess of $1,500
incurred since the Balance Sheet Date in the ordinary course of
business and consistent with prior practice;
(v) sold, transferred, leased to others or otherwise disposed of any
assets, except for inventories sold for fair consideration in the
ordinary course of business and assets no longer used or useful
in the conduct of its business, or canceled or compromised any
debt or claim, or waived or released any right of substantial
value;
(vi) except as set forth in Schedule 5.J, received any notice of
termination of any contract, lease or other agreement, or
suffered any damage, destruction or loss (whether or not covered
by insurance) which, in any case or in the aggregate, has had or
might reasonably be expected to have, a material adverse effect
on its condition (financial or otherwise), properties, assets,
liabilities, operations or prospects;
(vii)reduced its inventories or supplies below normal and adequate
levels for the continuation of business in the usual course;
(viii) encountered any labor union organizing activity, had any actual
or threatened employee strikes, work stoppages, slowdowns or
lockouts, or any other labor trouble other than routine grievance
matters none of which is material, or had any material change in
its relations with its employees, agents, customers or suppliers;
(ix) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, trade name, invention or similar
rights, or modified any existing rights with respect thereto;
(x) except as set forth in Schedule 5.J, made any accrual or
arrangement for any payment or any bonus, or any severance or
termination pay to (a) any present or former officer or employee
who is or was receiving compensation at an annual rate in excess
of $10,000; or (b) any person, firm or corporation which is or
was furnishing professional or consulting services to DesignFX;
(xi) increased the rate of compensation payable or to become payable
by it to any of its directors, officers or employees who is or
was receiving compensation at an annual rate in excess of
$10,000; entered into an employment agreement or amended any
employment agreement for any such person; or made any material
increase in any insurance, pension or other employee benefit
plan, payment or arrangement made to, for or with any such
director, officer or employees;
(xii)except as set forth in Schedule 5.J, declared or made, or agreed
to declare or make, any payment of distributions of any assets of
any kind whatsoever to any Seller or any affiliate of any Seller,
or purchased or redeemed, or agreed to purchase or redeem, any of
its Units, or made or agreed to make any payment to any Seller or
any affiliate of any Seller, whether on account or with respect
to long-term debt, management fees or otherwise;
(xiii) suffered any other change, event or condition which, in any
case or in the aggregate, has had or is reasonably expected to
have a material adverse effect on its condition (financial or
otherwise), properties, assets, liabilities, operations, business
or prospects; or,
(xiv)entered into any agreement or made any commitment to take any of
the types of action described in any of the foregoing clauses.
K. TITLE TO PROPERTIES. Set forth on Schedule 5.K is a description of all
real property owned by DesignFX or in which DesignFX has a leasehold
or other interest or which is used by DesignFX in connection with the
operation of its business, together with a description of each lease,
sublease, license or any other instrument under which DesignFX claims
or holds such leasehold or other interest or right to the use thereof
or pursuant to which DesignFX has assigned, sublet or granted any
rights therein, identifying the parties thereto, the rental or other
payment terms, expiration date and cancellation and renewal terms
thereof. DesignFX has good and marketable title to all its properties
and assets, including, without limitation, those reflected in its
books and records and in the Balance Sheet except (a) inventory sold
for fair consideration or consumed after the Balance Sheet Date in the
ordinary course of business, and (b) assets no longer used or useful
in the conduct of its business which in the aggregate do not have a
fair market value in excess of $3,000, the sale of which does not
conflict with or constitute a breach of the representations,
warranties or provisions of this Agreement. None of the properties and
assets of DesignFX are subject to any Encumbrance or adverse claim of
any nature whatsoever, direct or indirect, whether accrued, absolute,
contingent or otherwise, except for (i) those which are set forth in
the Balance Sheet as securing specific liabilities, or (ii) as set
forth in Schedule 5.K. All the properties and assets owned, leased or
used by DesignFX are in good operating condition and repair, are
suitable for the purposes used, and are adequate and sufficient for
all current operations, and meet all applicable laws, rules and
regulations relating to such property. All leases are in full force
and effect and true and complete copies of all leases have been
delivered to the Buyer or their representatives.
L. PERMITS AND LICENSES; Compliance with Law. All licenses, permits,
authorizations, variances, exemptions, orders and approvals from
federal, state, local and foreign governmental and regulatory bodies
held or required to be held by DesignFX in connection with its
ownership and lease of real and personal property and the operation of
its business have been obtained. DesignFX is in compliance in all
material respects with the terms of such licenses, permits,
authorizations, variances, exemptions, orders and approvals held by it
or applicable to it and with all material requirements, standards and
procedures of the federal, state, local and foreign governmental or
regulatory bodies which issued them. Except as set forth in Schedule
5.L, DesignFX is in compliance in all material respects with all
federal, state, local and foreign laws, ordinances, codes,
regulations, orders, requirements and standards of procedures which
are applicable in any material respect to its business. Schedule 5.L
includes, to the extent that any of the following exists: (i) a list
of each adjudged violation; and (ii) a list of each asserted
violation, notice of inspection, inspection report or any other
written report (excluding Returns) delivered by any governmental or
regulatory agency to DesignFX or delivered by DesignFX to any
governmental or regulatory agency relating to enforcement of or
compliance with any of such laws, ordinances, codes, regulations,
orders, requirements, standards and procedures material to DesignFX.
Except as set forth on Schedule 5.L, (i) DesignFX has complied with
all existing federal, state and local laws, rules, regulations,
ordinances, orders, judgments and decrees now or hereafter applicable
to its business, properties or operations as presently conducted, and
neither the ownership nor use of DesignFX's properties nor the conduct
of its business conflicts with the rights of any other person, firm or
corporation or violates, or with or without the giving of notice or
the passage of time, or both, will violate, conflict with or result in
a default, right to accelerate or loss of rights under, any term or
provision of (a) the certificate of organization or Operating
Agreement of DesignFX, as presently in effect, or (b) any mortgage,
indenture, deed of trust or material Encumbrances, lease, license or
agreement or any law, ordinance, rule, regulation, order, judgment or
decree to which DesignFX is a party or by which it or any of its
properties, assets or operations may be bound or affected or which
might materially adversely affect any such properties, assets or
operations; and (ii) Each of Xxxxxx, Xxxxxx and Xxxxxxxxx do not know
of any proposed laws, rules, regulations, ordinances, orders,
judgments, decrees, governmental takings, condemnations or other
proceedings which would be applicable to the business, operations or
properties of DesignFX and which might materially adversely affect its
properties, assets, operations or prospects, either before or after
the Closing Date. Without limiting the generality of the foregoing, to
the best knowledge and belief of Xxxxxx, Xxxxxx and Xxxxxxxxx, neither
Sellers, DesignFX nor any manager, employee or agent of DesignFX has,
directly or indirectly, made, promised to make, or authorized the
making of, an offer, payment or gift of money or anything of value to
any government official, political party or employee, agent or
fiduciary of a customer, to obtain a contract for or to influence a
decision in favor of DesignFX where such offer, payment or gift was or
would be, if made, in violation of any applicable law, nor have they
maintained cash or anything of value, in an account or otherwise, not
properly and accurately accounted for on the books and records of
DesignFX for this purpose.
M. CONTRACTS WITH CUSTOMERS AND OTHERS. Except as set forth in Schedule
5.M, none of the customers or other persons which are parties to any
agreements to which DesignFX is a party has notified DesignFX of any
intention to terminate its contract or arrangement for service, as a
result of the transactions consummated hereby or otherwise.
N. PRODUCT WARRANTIES AND GUARANTEES. Except with respect to product
warranties or guarantees of any nature described in Schedule 5.N and
provided by DesignFX in the ordinary course of business, DesignFX is
not a party to or bound by any agreement of guarantee,
indemnification, assumption or endorsement or any other like
commitment of the obligations, liabilities (contingent or otherwise)
or indebtedness of any other person, firm or corporation.
O. MATERIAL AGREEMENTS; VALIDITY; NO DEFAULT. Schedule 5.O sets forth a
description of (i) all acquisition agreements pursuant to which
DesignFX has any continuing obligation, and any claims by parties
other than DesignFX with respect thereto; (ii) all contracts,
agreements, commitments, purchase orders or other understandings or
arrangements to which DesignFX is a party relating to the sale or
furnishing by it of goods or services where the consideration for such
sale is $5,000 or more, in any single case, any claims by parties
other than DesignFX with respect thereto, and any express product
guarantees or warranties made by DesignFX relating to its goods or
services; (iii) all contracts, agreements, commitments, purchase
orders or other understandings or arrangements to which DesignFX is a
party relating to the purchase by it of goods or services where the
consideration for such purchase is $5,000 or more, in any single case,
and any claims by DesignFX with respect thereto; and (iv) all
contracts, agreements and commitments not yet fully performed,
pursuant to which DesignFX will acquire the business or any
substantial portion of the assets of any other person, firm or
corporation. All the contracts, agreements, leases, licenses and
commitments required to be listed in any of the Schedules are valid
and binding, enforceable in accordance with their respective terms,
and are in full force and effect. Except as set forth in such
Schedules, there is not under any such contract, agreement, lease,
license or commitment (a) any existing material default by DesignFX or
any event which, after notice or lapse of time, or both, would
constitute a material default by DesignFX or result in a right to
accelerate by any other person or a loss of any rights of DesignFX and
(b) to the best of each of Xxxxxx'x, Xxxxxx'x and Xxxxxxxxx'x
knowledge, any default by any other person, or any event which, after
notice or lapse of time, or both, would constitute a default by any
such person or result in a right to accelerate by DesignFX or a loss
of any rights of any such person. DesignFX is not a party to or bound
by any contract, agreement, lease, license or commitment which, upon
performance, is reasonably expected to result in any loss or liability
to DesignFX. True and complete copies of all contracts, agreements,
leases, licenses, commitments and other documents listed on such
Schedules (together with any and all amendments thereto) have been
delivered to Buyer or its representatives.
P. INTELLECTUAL PROPERTY. Set forth on Schedule 5.P is a description of
all patents, patent applications, patent licenses, trademarks,
trademark registrations, and applications therefor, service marks,
service names, trade names, domain names, copyrights and copyright
registrations, and applications therefor of DesignFX (the
"Intellectual Property"). Except as set forth in Schedule 5.P,
DesignFX owns or possesses the royalty-free license or other right to
use all Intellectual Property which are listed on Schedule 5.P or
which are necessary to conduct its business as presently operated
without conflict with or infringement upon any valid rights of others.
To each of the Class A Member's knowledge, no person, firm,
corporation or other entity is entitled to restrain DesignFX from
using any such copyright, trademark, service xxxx, service name, trade
name, domain names or patent. DesignFX has not received any notice
claiming that it is infringing upon or otherwise acting adversely to
any copyrights, trademarks, trademark rights, service marks, service
names, trade names, domain name, patents, patent rights, licenses or
trade secrets owned by any person, firm, corporation or other entity.
Except as set forth on Schedule 5.P, there are no outstanding options,
licenses or agreements of any kind with respect to the Intellectual
Property. None of the Sellers or DesignFX's managers or employees or
any affiliate thereof has any interest in any Intellectual Property.
Q. CONSENTS. Except as set forth in Schedule 5.Q attached hereto, no
consent, approval, exemption or authorization is required to be
obtained from, no notice is required to be given to and no filing is
required to be made with any third party (including, without
limitation, governmental and quasi-governmental agencies, authorities
and instrumentalities of competent jurisdiction) by DesignFX or
Sellers, (i) in order for this Agreement to constitute legal, valid
and binding obligations of Sellers or to authorize or permit the
consummation by Sellers of the transactions contemplated hereby and
thereby or (ii) under or pursuant to any governmental or
quasi-governmental permits, licenses, consents authorizations or
approvals held by or issued to DesignFX (including, without
limitation, environmental, health, safety and operating permits and
licenses) by reason of this Agreement or the consummation of the
transactions contemplated hereby.
R. RECEIVABLES. Except as set forth in Schedule 5.R, all receivables of
DesignFX (including loans receivable and advances) other than accounts
receivable which are reflected in the Balance Sheet, and all such
receivables which have arisen since the Balance Sheet Date,
constituted and will constitute only valid claims against third
parties not affiliated with the Company, arising only from bona fide
transactions in the ordinary course of business and shall be (or have
been) fully collected or collectible when due in accordance with the
usual terms customarily utilized by DesignFX without resort to
litigation and without defense, offset or counterclaim, in the
aggregate face amounts thereof except to the extent of the normal
allowance for doubtful accounts with respect to accounts receivable
computed in a manner consistent with prior practice as reflected on
the Balance Sheet. Sellers have delivered to Buyer an aging schedule
for the accounts receivable of DesignFX at the Balance Sheet Date.
S. LITIGATION. Except as set forth on Schedule 5.S, there is no claim,
legal action, arbitration, governmental investigation or other legal
or administrative proceeding, nor any order, decree or judgment in
progress, pending or in effect, or to the best knowledge of each of
the Class A Members threatened, against or relating to DesignFX, its
properties, assets, business or Units or the transactions contemplated
by this Agreement, and Xxxxxx, Xxxxxx and Xxxxxxxxx do not know of any
basis of the same. Except as disclosed on Schedule 5.R, there is no
continuing order, injunction or decree of any court, arbitrator or
governmental authority to which DesignFX is a party or by which
DesignFX or its assets, properties, business or Units are bound.
T. EMPLOYEE PLANS. Schedule 5.T sets forth a description of all Employee
Plans (as defined below), the financial and actuarial condition of
such plans, the extent to which they are funded, and the actuarial
assumptions utilized in calculating the financial condition thereof.
"Employee Plans" means all pension, retirement, disability, medical,
dental or other health insurance plans, life insurance or other death
benefit plans, profit sharing, deferred compensation, stock options,
bonus or other incentive plans, severance plans, or other employee
benefit plans or arrangements, whether or not funded, covering any of
DesignFX's current or former officers, employees, directors or
consultants or to which DesignFX is a party or bound or otherwise may
have any liability to any person (including any such plan formerly
maintained or in connection with which DesignFX may have any liability
to any person after the Closing, and any such plan which is a
multi-employer plan. No Employee Plan fails to comply in full with
applicable provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA") and regulations issued under ERISA, in such a manner
as to constitute, in the aggregate, a material adverse event. Complete
and correct copies of all determination letters issued by the Internal
Revenue Service relating to any qualified plans under Section 401(a)
of the Internal Revenue Code have previously been delivered to Buyer.
No facts or circumstance, including, without limitation, any
"reportable events" as defined in ERISA and the regulations
promulgated under ERISA, exist in connection with such plans which
constitute, in the aggregate, a material adverse event, or which might
constitute grounds for the termination of any such plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer any such plan,
nor does any such plan have any funding deficiency.
DesignFX has complied with and performed in all material respects
all contractual obligations required by it to be performed with
respect to any Employee Plan or any related trust agreement or
insurance contract. All contributions and other payments required to
be made by DesignFX to any Employee Plan prior to the date hereof has
been made. Except as disclosed in Schedule 5.T, DesignFX has not
communicated generally to its employees regarding any material
increases of benefit levels (or creation of material new benefits)
with respect to any Employee Plan beyond those reflected in the
current Employee Plans.
Except as set forth in Schedule 5.T, DesignFX has not
participated in or incurred an obligation to contribute to any
Multiemployer Plan (as defined in Section 3(37) of ERISA) or incurred
or been notified of any withdrawal liability in respect of any such
plan.
U. INSURANCE. Set forth on Schedule 5.U is a description of all fire,
theft, casualty, liability and other insurance policies insuring
DesignFX, all performance bonds, customs bonds and the like maintained
by, or for the benefit of, DesignFX, and all life insurance policies
maintained for any of its employees, specifying with respect to each
such policy or bond the name of the insurer or issuer, the risk
insured against or covered thereby, the limits of coverage, the
deductible amount (if any), the premium rate or cost and the date
through which coverage will continue by virtue of premiums already
paid. DesignFX maintains adequate insurance coverage for all normal
risks incident to DesignFX's assets, properties and business
operations. Such insurance will continue to be in force as of the
Closing Date.
V. DISCLOSURE. No representation or warranty by Sellers contained in this
Agreement, and no information contained in any Schedule or other
instrument furnished or to be furnished to Buyer pursuant to this
Agreement or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make
the statements contained therein not misleading.
W. BANK ACCOUNTS. Schedule 5.W sets forth the name of each bank or other
financial institution in which DesignFX has an account or safe deposit
box or vault arrangement and the names of all persons authorized to
draw thereon or to have access thereto; and the names of all persons,
if any, holding tax or other powers of attorney from DesignFX and a
summary of the terms thereof.
X. EMPLOYEE MATTERS. Schedule 5.X sets forth (i) the name of each
employee of DesignFX; the amount paid to him for services rendered
during the calendar years 1996 and 1997; the current annual rate of
his compensation; a list of all written contracts of employment of
DesignFX and all consulting agreements with DesignFX and the terms
thereof; (ii) all collective bargaining or other labor agreements, if
any, to which DesignFX is a party; all affirmative action plans or
other such plans in effect since November 5, 1995; (iii) all union
organizing efforts conducted or being conducted or threatened with
respect to employees of DesignFX; all labor-related work stoppages
experienced by DesignFX since November 5, 1995; and (iv) all reports
filed since November 5, 1995 with governmental agencies relating to
equal employment opportunities and employment of protected minorities
(including women and persons over age 40); all decisions rendered by
governmental agencies (including Courts and the Equal Employment
Opportunity Commission) with respect to claims or complaints filed
alleging unlawful, discriminating employment practices; and all such
claims or complaints now pending; and, (v) the managers of DesignFX
now in office. Other than as set forth in Schedule 5.X, DesignFX has
no employment agreements with any of its employees other than At-Will
employment agreements that give DesignFX the right to terminate at any
time any such employee without notice or cause.
Y. FINDERS' AND BROKERS' FEES. Neither Sellers nor DesignFX, nor anyone
on behalf of any such persons, has retained any broker, finder or
agent or agreed to pay any brokerage fee, finder's fee or commission
with respect to the transactions contemplated by this Agreement.
Z. INVESTMENT INTENT.
(i) Each certificate representing the Shares shall be imprinted with
a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND
HAVE BEEN SOLD IN RELIANCE UPON EXEMPTIONS THEREFROM. THESE SECURITIES
MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION COVERING THESE SECURITIES UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
THEREUNDER. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE PURCHASE
AGREEMENT, DATED AS OF SEPTEMBER 24, 1998 AND AS AMENDED AND MODIFIED
FROM TIME TO TIME BETWEEN THE ISSUER (THE "COMPANY") AND CERTAIN
INVESTORS, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER
OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH
RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED
BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST WITHOUT
CHARGE.
(ii) Each of Sellers, respectively, is acquiring the Shares for his,
her or its own account, for investment purposes and not with a
view to, or for sale in connection with, any distribution of such
Shares or any part thereof.
(iii)Each of Sellers, respectively, is (a) an "accredited investor"
as that term is defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended, or (b) is an investor
experienced in the valuation of businesses similar to IBS, and
(c) is able to fend for him, her or its self in the transactions
contemplated by this Agreement, and (d) has such knowledge and
experience in financial, business and investment matters as to be
capable of evaluating the merits and risks of this investment,
and (e) has the ability to bear the economic risks of this
investment, (f) has had access to and has received such
information regarding Buyer as is specified in subparagraph
(b)(2) of Rule 502 promulgated under the Securities Act of 1933,
as amended, and (g) without in any way limiting the Buyer's right
or ability to rely on the representations and warranties made by
Sellers in or pursuant to this Agreement, have been afforded
prior to the Closing the opportunity to ask questions of, and to
receive answers from, IBS and to obtain any additional
information, to the extent IBS has such information or could have
acquired it without unreasonable expense, all as necessary for
each of Sellers, respectively, to make an informed investment
decision with respect to the purchase of the Shares.
(iv) Each of Sellers, respectively, understands and acknowledges that
(a) the Shares to be sold and issued hereunder are unregistered
and may be required to be held indefinitely unless subsequently
registered under the Securities Act of 1933, as amended, or an
exemption from such registration is available; (b) IBS is under
no obligation to file a registration statement with the
Securities and Exchange Commission with respect to the Shares;
and (c) Rule 144 promulgated under the Securities Act of 1933, as
amended ("Rule 144"), which provides for certain limited sales of
unregistered securities, is not presently available with respect
to the Shares.
(v) Each of Sellers, respectively, acknowledges that the
representations and warranties of Buyer in this Agreement or
documents provided for herein represent the sole and exclusive
representations and warranties of Buyer to the Sellers in
connection with the transactions contemplated hereby, and each of
the respective Sellers understands, acknowledges and agrees that
all other representations and warranties of any kind or nature
expressed or implied (including, but not limited to, any relating
to the future or historical financial condition, results of
operations, assets or liabilities of IBS) are specifically
disclaimed by Buyer.
6. COVENANTS OF CLASS A MEMBERS PRIOR TO CLOSING DATE. From the date of this
Agreement until Closing:
A. GENERAL. Each of the Class A Members will use his best efforts to take
all actions and do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set
forth in Sections 9 and 11 of this Agreement).
B. CONDUCT OF BUSINESS PENDING CLOSING. The Class A Members shall, except
as otherwise consented to in writing by IBS, cause DesignFX to
diligently conduct its business only in the ordinary course and
consistent with prior practice and have maintained, kept and preserved
its assets and properties in good condition and repair and maintained
insurance thereon in accordance with present practice. Sellers shall
use their best efforts to preserve the business and organization of
DesignFX intact to keep available to Buyer the services of the present
managers and employees of DesignFX, and to preserve for the benefit of
Buyer the goodwill of the suppliers and customers of DesignFX and
others having business relations with DesignFX. The Class A Members
and/or Sellers shall give Buyer prompt written notice of any material
change in or addition to any of the information contained in the
representations and warranties made herein by the Class A Members
and/or Sellers or in the Schedules to this Agreement which has
occurred prior to the Closing Date. Without limiting the generality of
the foregoing:
(i) DesignFX will not, without IBS' prior written approval, amend,
modify, supplement or otherwise alter its certificate of
organization or Operating Agreement or merge or consolidate or
obligate itself to do so with or into any other entity;
(ii) DesignFX will not, without IBS' prior written approval, enter
into any contract, agreement, commitment or other understanding
or arrangement except for those in the ordinary course of
business which do not result in the incurrence by DesignFX of an
obligation in excess of $5,000.
(iii)DesignFX will comply with all existing laws, rules, regulations,
ordinances, orders, judgments and decrees now or hereafter
applicable to its business, properties or operations as presently
conducted;
(iv) DesignFX will accurately prepare and duly and timely file all
required federal, state, local and foreign Returns of DesignFX
and pay all federal, state, local and foreign taxes (including,
without limitation, taxes on properties, income, franchises,
licenses and payrolls) shown on such Returns as required to be
paid or otherwise payable without the preparation or filing of
any Return;
(v) DesignFX will not, without IBS' prior written approval, declare
or make any payment of distributions to its members or upon or in
respect of any Units, or purchase, retire or redeem, or obligate
itself to purchase, retire or redeem, any Units or securities;
and,
(vi) Neither the Class A Members nor DesignFX will, without IBS' prior
written approval, perform, take any action or incur or permit to
exist any of the acts, transactions, events or occurrences of the
type described in clauses (i) through (xiv) of Section 5.J of
this Agreement.
C. ACCESS, INFORMATION AND DOCUMENTS. Prior to the Closing Date, the
Class A Members shall have given to Buyer and to Buyer's accountants,
counsel and other representatives, full access during normal business
hours to all property, contracts, commitments, books and records of
DesignFX (including minute books and membership lists) and have
furnished to Buyer all such documents and copies of documents
(certified by a manager of DesignFX if requested) and information with
respect to the affairs of DesignFX that Buyer have from time to time
reasonably requested, and have notified Buyer as to any unusual
problems or developments, if any, with respect to the business of
DesignFX prior to the Closing.
D. NO TRANSFERS. Sellers will not sell, assign, deliver or otherwise
transfer any of the Units owned by them to any one or otherwise
encumber or affect such Units, in any manner, except as contemplated
by this Agreement.
E. EXCLUSIVITY. For a period of sixty (60) days from the date of this
Agreement, Sellers will not (i) solicit, initiate or encourage the
submission of any proposal or offer from any person relating to the
acquisition of any equity interest, or any substantial portion of the
assets, of DesignFX (including any acquisition structured as a merger,
consolidation or equity exchange) or (ii) participate in any
discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other
manner, any effort or attempt by any person to do or seek any of the
foregoing. Sellers will notify the Buyer immediately if any person
makes any proposal, offer, inquiry or contact with respect to any of
the foregoing.
F. TRANSACTIONS IN IBS STOCK. Pending the Closing, Sellers shall not,
directly or indirectly, effectuate or cause to be effectuated,
purchases or sales of IBS' Common Stock.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
each of Sellers, as follows:
A. ORGANIZATION AND STANDING. IBS is a corporation duly organized and
validly existing and in good standing under the law of the State of
Delaware.
B. LEGAL CAPACITY; NO RESTRICTIONS. Buyer has full corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. All action required to authorize Buyer to enter
into this Agreement and to carry out the transactions contemplated
hereby has been properly taken; and this Agreement constitutes the
legal, valid and binding obligation of the Buyer, enforceable in
accordance with its terms. The execution, delivery and performance of
this Agreement by Buyer in accordance with its terms will not, with or
without the giving of notice or the passage of time, or both, conflict
with, result in a default, right to accelerate or loss of rights
under, or result in the creation of any Encumbrance pursuant to, or
require the consent of any third party or governmental authority
pursuant to (a) any provision of the Buyer's respective certificates
of incorporation or by-laws, as currently amended and in effect or (b)
any franchise, mortgage, indenture or deed of trust or any material
lease, license or other agreement or any law, regulation, order,
judgment or decree to which Buyer is a party or by which it (or any of
its assets, properties, operations or business) may be bound, subject
to or affected.
C. COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Buyer has complied with
all existing material federal, state and local laws, rules,
regulations, ordinances, orders, judgments and decrees now or
hereafter applicable to its business, properties or operations as
presently conducted, and neither the ownership nor use of Buyer's
properties nor the conduct of their respective businesses conflicts
with the rights of any other person, firm or corporation or violates,
or with or without the giving of notice or the passage of time, or
both, will violate, conflict with or result in a default, right to
accelerate or loss of rights under, any term or provision of their
respective (i) certificates of incorporation or by-laws, as presently
in effect, or (ii) any mortgage, indenture, deed of trust or material
Encumbrances, lease, license or agreement or any law, ordinance, rule,
regulation, order, judgment or decree to which Buyer are a party or by
which they or any of their respective properties, assets or operations
may be bound or affected or which might material adversely affect any
such properties, assets or operations. Without limiting the generality
of the foregoing, to the best knowledge and belief of the Buyer,
neither of the Buyer nor any of their respective officers, directors,
employees or agents has, directly or indirectly, made, promised to
make, or authorized the making of, any offer, payment or gift of money
or anything of value to any governmental official, political party or
employee, agent or fiduciary of a customer, to obtain a contract for
or to influence a decision in favor of Buyer where such offer, payment
or gift was or would be, if made, in violation of any applicable law,
nor has it maintained cash or anything of value, in an account or
otherwise, not properly or accurately accounted for on the respective
books and records of Buyer for this purpose.
D. DISCLOSURE. None of the respective representations or warranties by
the Buyer contained in this Agreement, and no information contained in
any other instrument furnished or to be furnished by Buyer pursuant to
this Agreement or in connection with the transaction contemplated
hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order
to make the statements contained therein not misleading.
E. INVESTMENT INTENT. Buyer are acquiring the Units for their own
respective accounts for investment, and not with a view to the resale
or distribution thereof.
F. FINDERS' AND BROKERS' FEES. Neither IBS nor anyone on behalf of IBS,
has retained any broker, finder or agent or agreed to pay any
brokerage fee, finder's fee or commission with respect to the
transactions contemplated by this Agreement.
G. OPINION OF COUNSEL. Buyer will instruct its counsel to provide, at
Buyer's expense, an opinion of its Counsel which will permit the Rule
144 legend to be removed from a Seller's stock certificate, provided
that the Seller has provided IBS and its counsel with satisfactory
proof that Seller has and will comply with the requirements of Rule
144.
8. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF SELLERS. All
statements contained in this Agreement and any Schedule, document,
certificate or other instrument delivered by or on behalf of Sellers and/or
DesignFX pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed representations, warranties, covenants
and agreements made by Sellers. Each statement, representation, warranty,
covenant and agreement made or deemed made by Sellers shall survive the
Closing Date until 24 months from the Closing Date. The statements,
representations, warranties, covenants and agreements made or deemed made
by Sellers in this Agreement shall not be affected or deemed waived by
reason of the fact that Buyer or their representatives should have known
that any such representation, warranty, covenant or agreement is or might
be inaccurate in any respect unless Sellers can demonstrate that Buyer or
their representatives had actual (and not merely constructive) knowledge
that any such representations, warranty, covenant or agreement is
inaccurate in such respect. Any furnishing of information to Buyer by
Sellers pursuant to, or otherwise in connection with, this Agreement,
including, without limitation, any information contained in any document,
contract, book or record of Sellers or DesignFX to which Buyer shall have
access or any information obtained by, or made available to, Buyer as a
result of any investigation made by or on behalf of Buyer prior to or after
the date of this Agreement, shall not affect Buyer's right to rely on any
statement, representation, warranty, covenant or agreement made or deemed
made by Sellers in this Agreement and shall not be deemed a waiver thereof
unless Sellers can demonstrate that Buyer or its representatives had actual
(and not merely constructive) knowledge that any such statement,
representation, warranty, covenant or agreement is inaccurate in such
respect.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The purchase by Buyer of the
Units is subject to the conditions set forth in this Article for the
exclusive benefit of Buyer to be fulfilled on or prior to the Closing Date.
Buyer may, however, waive the fulfillment of any of these conditions,
either before or after the Closing Date, but any waiver, to be binding upon
Buyer, must be by a writing duly executed by it. Sellers shall use
commercially reasonable efforts to cause each condition to be fulfilled.
A. REPRESENTATIONS. All representations and warranties of Sellers and/or
DesignFX contained in this Agreement or in any Schedule, document,
certificate or other instrument delivered by or on behalf of Sellers
and/or DesignFX pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be true and correct when made
and such representations and warranties shall be deemed to be, as of
the Closing Date, true and correct in all material respects.
B. PERFORMANCE OF AGREEMENTS. All covenants, agreements and obligations
required by the terms of this Agreement to be performed by Sellers
and/or DesignFX at or prior to the Closing Date shall have been duly
and properly performed or fulfilled in all material respects.
C. NO ADVERSE CHANGE. On the Closing Date, there shall have been no
material adverse change in the assets, liabilities, financial
condition or business (financial or otherwise) of DesignFX from that
shown or reflected in the Interim Financial Statements. Between the
date of this Agreement and the Closing Date, there shall not have
occurred an event which, in the reasonable opinion of Buyer,
materially and adversely affects or may materially or adversely affect
the operations, business or prospects of DesignFX.
D. DOCUMENTS. All documents required to be delivered to Buyer at or prior
to the Closing Date shall have been duly delivered.
E. OPINION OF SELLERS' COUNSEL. Buyer shall have received an opinion of
Sellers' counsel, dated the Closing Date, substantially in the form
attached as Exhibit A hereto.
F. NO LITIGATION. On the Closing Date, except as set forth in Exhibit
5.S, no action or proceeding shall be pending or threatened by any
person, firm, corporation, or governmental authority which questions,
or seeks to enjoin or prohibit (a) the purchase and sale of the Units
and the other transactions contemplated by this Agreement or (b) the
right of DesignFX to conduct its operations and carry on its business
in the normal course and in accordance with past practice.
G. NO LEGISLATION. No legislation (whether by statute, regulation or
otherwise) shall have been enacted or introduced subsequent to the
date of this Agreement which, in the reasonable opinion of Buyer,
materially and adversely affects or may materially and adversely
affect the operations, business or prospects of DesignFX.
H. EMPLOYMENT AGREEMENTS. Xxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxx and Xxxx
Xxxxx shall have entered into written employment agreements acceptable
to IBS.
I. CAR LEASE OBLIGATIONS. DesignFX shall have relieved itself of all of
its obligations under any and all car leases.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS. The sale of the Units by
Sellers is subject to the conditions set forth in this Article for the
exclusive benefit of Sellers to be fulfilled on or prior to the Closing
Date. Sellers may, however, waive the fulfillment of any of these
conditions, either before or after the Closing Date, but any waiver, to be
binding upon Sellers, must be by a writing executed by, or on behalf of,
them. Buyer shall use commercially reasonable efforts to cause each
condition to be fulfilled.
A. REPRESENTATIONS. All of the respective representations and warranties
of each of the Buyer contained in this Agreement shall be true and
correct in all material respects when made and such representations
and warranties shall be deemed to be, as of the Closing Date, true and
correct in all material respects.
B. PERFORMANCE OF AGREEMENTS. All covenants, agreements and obligations
required by the terms of this Agreement to be performed by Buyer at or
prior to the Closing Date shall have been duly and properly performed
or fulfilled in all material respects.
C. DOCUMENTS. All documents required to be delivered to Sellers at or
prior to the Closing shall have been duly delivered.
11. DELIVERY BY SELLERS AT THE CLOSING. On the Closing Date, and subject to the
terms and conditions set forth herein, Sellers shall deliver to Buyer:
A. Certificates evidencing all of the outstanding Units, together with
such instruments as Buyer may reasonably request to effect the sale,
transfer and assignment of the Units from Sellers to the Buyer.
B. Executed employment agreements for Xxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxx
and Xxxx Xxxxx.
C. A certificate of the Class A Members (and/or Sellers, where
applicable) certifying that (a) all representations and warranties
made and information furnished in all Schedules, lists, certificates
or other written statements provided pursuant to this Agreement, are
true and correct in all material respects on the Closing Date, and (b)
all covenants, agreements and obligations required by this Agreement
to be performed or complied with by the Class A Members (and/or
Sellers, where applicable) or DesignFX, prior to or at the Closing
Date, have been performed or complied with in all material respects.
D. The opinion of Sellers' counsel.
E. The release from Xxxxxxx and Xxxxx Xxxxxx referenced in Section 3.A.
F. Evidence of approval of this Agreement and the transactions
contemplated hereby by the Class A Members and the Sellers, and all
consents and approvals required by each of the Class A Members, the
Sellers and DesignFX to consummate the transactions contemplated
hereby.
G. The written resignations of Xxxxxx, Xxxxxx and Xxxxxxxxx,
respectively, as managers of DesignFX.
H. Written executed termination by Xxxxxx and Xxxxxx, respectively, of
their existing employment agreements with DesignFX.
I. Executed employment agreements, in form satisfactory to IBS, of
Xxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxx and Xxxx Xxxxx, respectively.
J. Such additional items as Buyer may reasonably request.
K. Audit Letters, in form acceptable to Buyer from the law firms
handling, respectively, any threatened or pending legal matter set
forth on Schedule 5.X.
X. Xxxxxxx shall have procured those third-party consents required in
connection with the transactions contemplated herein.
12. DELIVERY BY BUYER ON THE CLOSING DATE. On the Closing Date, and subject to
the terms and conditions set forth herein, Buyer shall deliver to Sellers:
A. The Closing Shares.
B. Evidence of payment of $17,311.11 to Xxxxxxx and Xxxxx Xxxxxx, as
payment in full of DesignFX's indebtedness to them.
C. Such additional items as Sellers may reasonably request.
13. EXPENSES. Buyer shall bear and pay the legal, accounting and other expenses
of Buyer associated with the consummation of the transactions contemplated
hereby. DesignFX shall bear and pay the legal, accounting and other
expenses of DesignFX associated with the consummation of the transactions
contemplated hereby. Each Seller shall bear and pay his legal, accounting
and other expenses associated with the consummation of the transactions
contemplated hereby.
14. BUYER INDEMNIFICATION. Buyer shall indemnify and hold harmless the Sellers
and their respective heirs, executors and legal representatives ("Seller
Indemnitees") from and against any losses, damages, expenses or
liabilities, including, without limitation, reasonable attorneys',
accountants and other professional fees, which may be sustained, suffered
or incurred by any of the Seller Indemnitees arising from or by reason of
or in connection with any breach of the representations, warranties or
covenants made by Buyer herein. This indemnity shall survive the Closing
Date; provided, however, that any claim for indemnity hereunder must be
presented to the Buyer within twelve (12) months of the Closing Date. The
liability of Buyer pursuant to this Section 14 shall be limited to the
aggregate purchase price of the purchased Units.
15. TERMINATION. This Agreement may be terminated as follows:
A. TERMINATION BY BUYER. Buyer may, without liability to Sellers,
terminate this Agreement by notice to Sellers (i) at any time prior to
the Closing if a default shall be made by any of the Sellers in the
observance or in the due and timely performance of any of the terms
hereof to be performed by Sellers that cannot be cured at or prior to
the Closing, or (i) at the Closing if any of the conditions precedent
to the performance of Buyer's obligations at the Closing shall not
have been fulfilled.
B. TERMINATION BY SELLERS. Sellers may, without liability to Buyer,
terminate this Agreement by notice to Sellers (i) at any time prior to
the Closing if a default shall be made by any of the Buyer in the
observance or in the due and timely performance of any of the terms
hereof to be performed by Buyer that cannot be cured at or prior to
the Closing, or (i) at the Closing if any of the conditions precedent
to the performance of Sellers' obligations at the Closing shall not
have been fulfilled.
C. EFFECT OF TERMINATION. If this Agreement is terminated, this Agreement
(except for this Section 15.C and Sections 13, 16 and 18), shall no
longer be of any force or effect and there shall be no liability on
the part of any party or its respective managers, members, directors,
officers or shareholders except, in the case of termination because of
a material default or material breach resulting from the willful fault
of another party, the aggrieved party or parties may recover from the
defaulting party the amount of expenses incurred by such aggrieved
party or parties in connection with this Agreement and the
transactions contemplated hereby which the aggrieved parties would
otherwise have to bear. If this Agreement shall be terminated, each
party will (i) redeliver all documents, work papers and other
materials of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution of this
Agreement, to the party furnishing the same, and (ii) destroy all
documents, work papers and other materials developed by its
accountants, agents and employees in connection with the transactions
contemplated hereby which embody proprietary information or trade
secrets furnished by any party hereto or deliver such documents, work
papers and other materials to the party furnishing the same or excise
such information or secrets therefrom and all information received by
any party hereto with respect to the business of any other party
(other than information which is a matter of public knowledge or which
has heretofore been or is hereafter published in any publication for
pubic distribution or filed as public information with any
governmental authority) shall not at any time be used for personal
advantage or disclosed by such party to any third person to the
detriment of the party furnishing such information.
16. PUBLICITY. No party shall issue any press release or make any public
announcement relating tot he subject matter of this Agreement or otherwise
publicize the execution and delivery of this Agreement, the provisions
hereof or the transactions contemplated hereby without the prior written
approval of the form and content of such press release or publicity by the
Buyer or Sellers, as applicable; provided, however, that any party may make
any public disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its publicly traded
securities (in which case the disclosing party will use its best efforts to
advise the other party prior to making such disclosure).
17. NOTICES.
A. Any and all notices, requests, demands, consents, approvals or other
communications required or permitted to be given under any provision
of this Agreement shall be in writing and shall be deemed given upon
personal delivery or the mailing thereof by first class certified
mail, return receipt requested, postage pre-paid; or by telecopier or
other electronic means, as follows:
If to Buyer:
IBS Interactive, Inc.
0 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx, Xx., President
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Sellers:
Xxxxx Xxxxxx
Attorney-in-Fact
000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx & Xxxxxxxx, PC
00 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
B. Any party hereto may change its address for the purpose of this
Agreement by notice to the other parties given as aforesaid.
18. MISCELLANEOUS.
A. ENTIRE AGREEMENT; AMENDMENT. This Agreement together with the
Schedules attached hereto and made a part hereof constitutes the
entire agreement of the parties with respect to the subject matter
hereof and the transactions contemplated hereby and supercedes any
prior oral or written understanding or agreement of the Sellers and
Buyer with respect thereto. This Agreement may not be modified,
amended or terminated except by a written agreement specifically
referring to this Agreement signed by all of the parties hereto.
B. SCHEDULES PART OF AGREEMENT. The Schedules referred to herein and
delivered to Buyer pursuant hereto, including any amendments thereto
or changes therein delivered to Buyer on or prior to the Closing Date,
shall be deemed part of this Agreement as fully and effectively as if
set forth at length herein. The terms used in said Schedules shall
have the same meanings as such terms have in this Agreement unless a
contrary intention is clearly manifested therein.
C. SEVERABILITY. In the event that any provision of this Agreement would
be held to be invalid, prohibited or unenforceable in any jurisdiction
for any reason, unless such provision is narrowed by judicial
construction, this Agreement shall, as to such jurisdiction, be
construed as if such invalid, prohibited or unenforceable provision
had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of
this Agreement would be held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, such provision, as
to such jurisdiction for any reason, shall be ineffective to the
extent of such invalidity, prohibition or unenforceability, without
invalidating the remaining portion of such provision or the other
provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
D. NO WAIVER. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature.
E. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of each party hereto, and its successors and assigns. Except
as hereafter provided, this Agreement shall not be assigned by either
Buyer or Sellers and any attempted assignment shall be void.
F. PERSONS HAVING RIGHTS UNDER THIS AGREEMENT. Nothing in this Agreement
expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to,
any person or corporation other than the parties hereto, any right,
remedy, or claim under or by reason of this Agreement or of any
covenant, condition, stipulation, promise or agreement contemplated
hereby. All covenants, conditions, stipulations, promises and
agreements contained in this Agreement shall be for the sole and
exclusive benefit of the parties hereto and their successors and
assigns.
G. HEADINGS. The article and section headings contained herein are for
the purpose of convenience only and are not intended to define or
limit the contents of said articles or sections.
H. GOVERNING LAW. THIS AGREEMENT AND ALL AMENDMENTS THEREOF SHALL, IN ALL
RESPECTS, BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE INTERNAL LAWS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW)
OF THE STATE OF NEW JERSEY.
I. FURTHER ASSURANCES. Sellers and Buyer shall cooperate and take such
actions and execute and deliver such other documents, at or prior to
the Closing or subsequent thereto as may be reasonably requested by
any other party hereto in order to carry out this Agreement and the
transactions contemplated thereby.
J. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more
than one party but all of which taken together shall constitute one
and the same Agreement.
K. RIGHTS AND REMEDIES. All rights, powers and remedies afforded to a
party under this Agreement, by law or otherwise, shall be cumulative
(and not alternative) and shall not preclude assertion or seeking by a
party of any other rights or remedies.
L. CERTAIN DEFINITIONS. As used herein, the word "person" shall include
an individual and entity of any kind.
M. ATTORNEY-IN-FACT. Each Seller hereby appoints Xxxxx Xxxxxx as such
Seller's attorney-in-fact and representative, to do any and all things
and to execute any and all documents, in such Seller's name, place and
stead, in any way which such Seller could do if personally present, in
connection with this Agreement and the transactions contemplated
hereby, including, but not limited to, amending, canceling, extending
or waiving any term of this Agreement, to bring claims for and defend
claims against liabilities and Additional Liabilities pursuant to the
terms of this Agreement and to enter into settlement negotiations and
to settle claims thereunder, and to accept notices pursuant to Section
17 of this Agreement. Each of the other parties hereto shall be
entitled to rely, as being binding upon each Seller, upon any document
reasonably believed by it to be genuine and correct and to have been
signed by the attorney-in-fact, and no other party shall be liable to
any Seller for any action taken or omitted to be taken by it on such
reliance.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
/s/ Xxxxx Xxxxxx /s/ Xxxxxxxx Xxxxxx /s/ Xxxxxx Xxxxxxxxx
--------------------- -------------------- ----------------------
Xxxxx Xxxxxx Xxxxxxxx Xxxxxx Xxxxxx Xxxxxxxxx
/s/ Xxxxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxx
--------------------- -------------------- ----------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxxx Xxxxxx Xxxxxxx
/s/ Xxxx Xxxxx /s/ Xxxxxxx Xxxxx-Xxxxx /s/ Xxxxxxxx Xxxxx
--------------------- -------------------- ----------------------
Xxxx Xxxxx Xxxxxxx Xxxxx-Xxxxx Xxxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxxx Xxxxx /s/ Xxxxxxxxx Xxxxx
--------------------- -------------------- ----------------------
Xxxxxxx Xxxxxx Xxxxxxx Xxxxx Xxxxxxxxx Xxxxx
/s/ Xxxx Xxxxx /s/ Xxxxxxx Xxxxxxxx /s/ Xxxxx Xxxxxxxx
--------------------- -------------------- ----------------------
Xxxx Xxxxx Xxxxxxx Xxxxxxxx Xxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxx
---------------------
Xxxxxxx Xxxx
IBS INTERACTIVE, INC.
By:/s/ Xxxxxxxx Xxxxxxxx
___________________
Xxxxxxxx Xxxxxxxx. President
