1
EXHIBIT 10.12
STOCK PURCHASE AGREEMENT
BY AND AMONG
ADVANTIX, INC.,
PROTIX, INC.
AND
SHAREHOLDERS OF PROTIX, INC.
EFFECTIVE OCTOBER 16, 1998
2
TABLE OF CONTENTS
Page
1. DEFINITIONS .............................................................. 1
2. SALE AND TRANSFER OF SHARES; CLOSING ..................................... 1
2.1 Shares ........................................................ 1
2.2 Purchase Price ................................................ 1
2.3 Closing ....................................................... 2
2.4 Closing Deliveries ............................................ 3
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ............................ 4
3.1 Organization and Good Standing ................................ 4
3.2 Authority; No Conflict ........................................ 5
3.3 Capitalization ................................................ 6
3.4 Financial Statements .......................................... 6
3.5 Books and Records ............................................. 6
3.6 Title to Properties; Encumbrances ............................. 7
3.7 Condition and Sufficiency of Assets ........................... 7
3.8 Accounts Receivable ........................................... 7
3.9 Inventory ..................................................... 8
3.10 No Undisclosed Liabilities .................................... 8
3.11 Taxes ......................................................... 8
3.12 No Material Adverse Change .................................... 8
3.13 Employee Benefits ............................................. 9
3.14 Compliance with Legal Requirements; Governmental Authorizations 9
3.15 Legal Proceedings; Orders ..................................... 10
3.16 Absence of Certain Changes and Events ......................... 11
3.17 Contracts; No Defaults ........................................ 12
3.18 Insurance ..................................................... 15
3.19 Environmental Matters ......................................... 16
3.20 Employees ..................................................... 18
3.21 Labor Relations; Compliance ................................... 18
3.22 Intellectual Property ......................................... 18
3.23 Certain Payments .............................................. 20
3.24 Disclosure .................................................... 21
3.25 Relationships With Related Persons ............................ 21
3.26 Brokers or Finders ............................................ 21
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS ............................ 21
4.1 Title to Shares ............................................... 21
4.2 Authority; No Conflict ........................................ 21
4.3 Restricted Securities ......................................... 22
4.4 Investment Intent ............................................. 22
3
4.5 Questionnaire .............................................. 22
4.6 Purchaser Representations .................................. 23
4.7 Residence .................................................. 23
4.8 Legends .................................................... 23
5. REPRESENTATIONS AND WARRANTIES OF BUYER ............................... 23
5.1 Organization and Good Standing ............................. 23
5.2 Authority; No Conflict ..................................... 24
5.3 Capitalization ............................................. 24
5.4 Financial Statements ....................................... 25
5.5 No Undisclosed Liabilities ................................. 25
5.6 No Material Adverse Change ................................. 25
5.7 Disclosure ................................................. 25
5.8 Investment Intent .......................................... 26
5.9 Brokers or Finders ......................................... 26
6. COVENANTS AND FURTHER AGREEMENTS ...................................... 26
6.1 Sellers' Representative .................................... 26
6.2 Additional Sellers ......................................... 27
6.3 Holdback Agreement ......................................... 27
6.4 Tax Elections .............................................. 27
6.5 Further Assurances ......................................... 28
6.6 Employee Bonuses ........................................... 28
6.7 Rule 144 ................................................... 29
6.8 Termination of Stock Repurchase Agreement .................. 29
7. INDEMNIFICATION; REMEDIES ............................................. 29
7.1 Survival; Right to Indemnification Not Affected by Knowledge 29
7.2 Indemnification and Payment of Damages by the Sellers ...... 30
7.3 Indemnification and Payment of Damages by Buyer ............ 31
7.4 Time Limitations ........................................... 31
7.5 Limitations on Amount--Sellers ............................. 32
7.6 Limitations on Amount--Buyer ............................... 32
7.7 Right of Set-Off ........................................... 32
7.8 Procedure for Indemnification--Third Party Claims .......... 33
7.9 Procedure for Indemnification--Other Claims ................ 34
7.11 Sole Remedy ................................................ 34
8. GENERAL PROVISIONS .................................................... 35
8.1 Public Announcements ....................................... 35
8.2 Notices .................................................... 35
8.3 Dispute Resolution ......................................... 36
8.4 Waiver ..................................................... 36
8.5 Entire Agreement and Modification .......................... 36
8.6 Assignments, Successors, and No Third-Party Rights ......... 37
2
4
8.7 Severability ............................................... 37
8.8 Section Headings, Construction.............................. 37
8.9 Time of Essence ............................................ 37
8.10 Governing Law .............................................. 37
8.11 Equitable Remedies ......................................... 37
8.12 Effect of Amendment or Waiver............................... 37
8.13 Opportunity to Consult Counsel.............................. 37
8.14 Counterparts ............................................... 37
3
5
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of October
16, 1998, by and among Advantix, Inc., a Delaware corporation ("Buyer"), ProTix,
Inc., a Wisconsin corporation ("Company"), and the shareholders of the Company
as listed on the signature pages of this Agreement who become parties to this
Agreement (individually, "Seller", and collectively, "Sellers").
R E C I T A L S
A. Sellers own one hundred percent (100%) of the issued and
outstanding shares of capital stock of the Company.
B. Buyer desires to purchase all of the shares of capital stock of
the Company owned by the Sellers (the "Shares"), and the Sellers desire to sell
the Shares, on the terms and conditions set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the terms set forth in Exhibit 1
shall have the meanings specified or referred to therein.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares. Subject to the terms and conditions of this Agreement,
at the Closing, each of the Sellers will sell and transfer to Buyer, and Buyer
will purchase from Sellers, that number of Shares set forth below each Seller's
respective signature on the signature page hereto, which in the aggregate shall
constitute at least one hundred percent (100%) of the outstanding shares of
capital stock of the Company, in exchange for their pro rata share of the
Purchase Price.
2.2 Purchase Price. The purchase price (the "Purchase Price") for
the Shares will consist of the following:
(a) Cash payments at Closing (the "Closing Cash Payment") which
shall equal the product of (x) the Participating Percentage, times (y) the
result of $1,620,340 (i) plus (an amount equal to the remainder, if any, of
$2,910,746 minus the debt of the Company repaid by Buyer pursuant to Sections
2.4(c) and 2.4(d)), (ii) minus (an amount equal to the remainder, if any, of the
debt of the Company repaid by Buyer pursuant to Sections 2.4(c) and 2.4(d) minus
$2,910,746) and (iii) minus the amount by which Net Working Capital as of the
Closing Date ("Closing Date Net Working Capital") is less than zero. At the
Closing, the Closing Date Net Working Capital will be
4
6
estimated, by mutual agreement of Buyer and the Company, based on the Company's
Net Working Capital as of September 30, 1998, and the amount paid at the Closing
shall be based on such estimate. Within 60 days after the Closing Date, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP will determine the actual Closing Date Net Working Capital. If the
Sellers' Representative, on behalf of the Sellers, disputes the determination of
the actual Closing Date Net Working Capital by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, an
independent public accounting firm mutually agreeable to Buyer and Sellers'
Representative will be selected within 14 days of notice of such dispute and
such firm will determine, at Sellers' expense, the actual Closing Date Net
Working Capital, which determination shall be final and binding on the parties
hereto. If the amount by which the actual Closing Date Net Working Capital is
less than zero is greater than the amount estimated at the Closing, Buyer shall
advise the Sellers' Representative of the amount of such difference (the
"Deferred Cash Shortfall") and shall deduct from the Deferred Cash Payment an
amount equal to the product of the Participating Percentage times the Deferred
Cash Shortfall. If the amount by which the actual Closing Date Net Working
Capital is less than zero is less than the amount estimated at the Closing,
Buyer shall advise the Sellers' Representative of the amount of such difference
and shall, within 10 business days after determination of the actual Closing
Date Net Working Capital, pay to the Sellers' Representative on behalf of the
Sellers the product of the Participating Percentage times the amount of such
difference.
(b) Shares of common stock of Buyer delivered at Closing equal to
the product of (x) the Participating Percentage, times (y) 714,969 (the "Buyer
Stock").
(c) Cash payment on the first anniversary of the Closing Date by
Buyer to the Sellers' Representative on behalf of the Sellers (the "Deferred
Cash Payment") which shall equal the product of (x) the Participating
Percentage, times (y) Four Hundred Thousand Dollars ($400,000).
(d) Warrants to purchase common stock of Buyer delivered at Closing
in substantially the form of Exhibit 2.2(d) (the "Warrants") representing in the
aggregate the right to purchase (subject to vesting) that number of shares equal
to the product of (x) the Participating Percentage, times (y) 1,435,406.
(e) Promissory notes delivered at Closing in substantially the form
of Exhibit 2.2(e) (the "Notes") in the aggregate principal amount equal to the
product of (x) the Participating Percentage, times (y) One Million Two Hundred
Ninety-Seven Thousand Dollars ($1,297,000).
The final Purchase Price determined pursuant to this Section 2.2 shall be
allocated pro rata among the Sellers in proportion to the number of Shares sold
to Buyer.
2.3 Closing. The purchase and sale provided for in this Agreement
(the "Closing") will take place at the offices of Buyer's counsel at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. (local
time) on October 15, 1998 or at such other time and date as the parties may fix.
For Buyer's purchase accounting and financial reporting purposes, the
acquisition of the Shares by Buyer pursuant to this Agreement shall be deemed to
have occurred on September 30, 1998.
5
7
2.4 Closing Deliveries. At the Closing:
(a) The Company and Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to Buyer;
(ii) employment agreements in substantially the forms of
Exhibits 2.4(a)(ii)(1)-(4), executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (collectively,
"Employment Agreements");
(iii) confidentiality, nondisclosure and noncompetition
agreements in substantially the form of Exhibit 2.4(a)(iii) executed
by ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (collectively,
"Confidentiality Agreements");
(iv) a noncompetition agreement in substantially the form of
Exhibit 2.4(a)(iv), executed by ▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Noncompetition
Agreement");
(v) a security agreement in substantially the form of Exhibit
2.4(a)(v) (the "Security Agreement"), executed by the Sellers'
Representative; and
(vi) an opinion of Reinhart, Boerner, Van Deuren, ▇▇▇▇▇▇ &
Rieselbach in a form reasonably acceptable to Buyer.
(b) Buyer will deliver to the Sellers' Representative on behalf of
the Sellers:
(i) a bank cashier's or certified check payable to each Seller
in an amount equal to such Seller's pro rata share of the Closing
Cash Payment;
(ii) a stock certificate for each Seller equal to such Seller's
pro rata share of the Buyer Stock;
(iii) a warrant for each Seller equal to such Seller's pro rata
share of the Warrants;
(iv) a promissory note for each Seller equal to such Seller's
pro rata share of the Notes;
(v) the Employment Agreements, executed by Buyer or ProTix
Access Control, LLC, as applicable;
(vi) the Confidentiality Agreements, executed by Buyer;
(vii) the Noncompetition Agreement, executed by Buyer;
(viii) the Security Agreement, executed by Buyer and the
Company; and
6
8
(ix) an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP in a form reasonably
acceptable to the Company.
(c) Concurrent with, and as a condition to, the Closing, the Buyer
shall repay approximately $430,000 of outstanding debt of the Company due to
certain shareholders of the Company.
(d) Concurrent with, and as a condition to, the Closing, the Buyer
shall pay off an aggregate of approximately $2,600,000 of existing debt of the
Acquired Companies due to Fleet Bank, Firstar Bank of Madison, NA and S&T Bank
under various credit agreements.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company's Schedule (which lists
exceptions to the following representations and warranties and also contains
matters required to be disclosed pursuant to this Section 3, each of which
corresponds to the numbered sections contained in this Section 3), the Company
represents and warrants to Buyer as set forth in this Section 3. The parties
hereto acknowledge and agree that for purposes of this Agreement, if a document
or a matter is disclosed in any Section of the Company's Schedule, such
disclosure shall suffice, without specific repetition and with or without
cross-reference, as a response to any other section of the Company's Schedule if
such response is apparent from such disclosure.
3.1 Organization and Good Standing.
(a) Section 3.1 of the Company's Schedule contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction of
organization, other jurisdictions in which it is qualified to do business, and
its capitalization (including the identity of each stockholder, partner or
member and the number of shares or percentage interest held by each). Except as
set forth in Section 3.1(a) of the Company's Schedule, each Acquired Company is
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of organization, with full corporate, partnership or limited
liability company, as applicable, power and authority to conduct its business as
it is now being conducted and to own or use the properties and assets that it
purports to own or use. Each Acquired Company is duly qualified to do business
as a foreign entity and is in good standing under the laws of each state or
other jurisdiction in which either the ownership or use of the properties owned
or used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to so qualify will not have a material
adverse effect on the business of such Acquired Company.
(b) The Company has delivered to Buyer copies of the Organizational
Documents of each Acquired Company, as currently in effect.
3.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that enforcement may be
7
9
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general principles of equity. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement.
(b) Except as set forth in Section 3.2 of the Company's Schedule,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) materially contravene, conflict with, or result in a
violation of (A) any provision of the Organizational Documents of
the Acquired Companies, or (B) any resolution adopted by the board
of directors or the stockholders of any Acquired Company;
(ii) materially contravene or conflict in any material respect
with, or result in a material violation of, or give any Governmental
Body or other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which any Acquired Company, or
any of the assets owned or used by any Acquired Company, may be
subject;
(iii) materially contravene or conflict in any material respect
with, or result in a material violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by any Acquired Company or that otherwise
relates to the business of, or any of the assets owned or used by,
any Acquired Company;
(iv) materially contravene, materially conflict with, or result
in a material violation or material breach of any provision of, or
give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Applicable Contract, except where
the effect thereof would not, individually or in the aggregate, have
a material adverse effect on the business, financial condition or
results of operations of the Company; or
(v) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by any Acquired
Company.
Except as set forth in Section 3.2 of the Company's Schedule, no Acquired
Company is or will be required to give any notice to or obtain any Consent from
any Person in connection with the execution and delivery of this Agreement or
the consummation or performance of any of the Contemplated Transactions.
3.3 Capitalization. The authorized equity securities of the Company
consist of 56,000 shares of common stock, par value $1.00 per share, of which
19,517.04 shares (collectively, the "Company Stock") are issued and outstanding
(such issued and outstanding shares are referred to collectively hereinafter as
the "Company Stock"). Each of the Sellers is the record owner of that number of
Shares set forth below their respective signatures on the signature page to this
Agreement.
8
10
With the exception of the Company Stock, all of the outstanding equity
securities and other securities of each Acquired Company are owned of record and
beneficially by one or more of the Acquired Companies, free and clear of all
Encumbrances. No legend or other reference to any purported Encumbrance appears
upon any certificate representing equity securities of any Acquired Company. All
of the outstanding equity securities of each Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable, except to
the extent otherwise provided by Section 180.0622 of the Wisconsin Statutes.
Except as set forth in Section 3.3 of the Company's Schedule, there are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of any Acquired Company. None of the outstanding equity
securities or other securities of any Acquired Company was issued in violation
of the Securities Act or any other Legal Requirement. No Acquired Company owns,
or has any Contract to acquire, any equity securities or other securities of any
Person (other than Acquired Companies) or any direct or indirect equity or
ownership interest in any other business.
3.4 Financial Statements. The Company has delivered to Buyer: (a) an
unaudited consolidated balance sheet of the Acquired Companies as of December
31, 1996, and the related unaudited consolidated statements of income, changes
in stockholders' equity, and cash flow for the fiscal year then ended, (b) an
unaudited consolidated balance sheet of the Acquired Companies as of December
31, 1997 (the "Company Balance Sheet"), and the related unaudited consolidated
statements of income, changes in stockholders' equity, and cash flow for the
fiscal year then ended, and (c) an unaudited consolidated balance sheet of the
Acquired Companies as of July 31, 1998 (the "Company Interim Balance Sheet") and
the related unaudited consolidated statements of income, changes in
stockholders' equity, and cash flow for the seven months then ended. Except as
set forth in Section 3.4 of the Company's Schedule, such financial statements
fairly present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Acquired Companies as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, subject, in the case of interim
financial statements, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) and the
absence of notes (that, if presented, would not differ materially from those
included in the Company Balance Sheet). The financial statements referred to in
this Section 3.4 reflect the consistent application of such accounting
principles throughout the periods involved. Except as set forth in Section 3.4
of the Company's Schedule, no financial statements of any Person other than the
Acquired Companies are required by GAAP to be included in the consolidated
financial statements of the Company. Immediately prior to the Closing, total
debt and capital lease obligations of the Acquired Companies did not exceed
$3,100,000.
3.5 Books and Records. The books of account, minute books, stock
record books, and other records of the Acquired Companies, all of which have
been made available to Buyer, are complete and correct in all material respects.
The minute books of the Acquired Companies contain, in all material respects,
accurate and complete records of all meetings held of, and corporate action
taken by, the stockholders, the Boards of Directors, and committees of the
Boards of Directors of the Acquired Companies. At the Closing, all such books
and records will be in the possession of the Acquired Companies.
9
11
3.6 Title to Properties; Encumbrances. Section 3.6 of the Company's
Schedule contains a complete and accurate list of all real property, real
property leaseholds, or other interests therein owned by any Acquired Company.
The Acquired Companies own (with good and marketable title in the case of real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that they purport to own, including all of the properties and
assets reflected in the Company Interim Balance Sheet (except for assets held
under capitalized leases disclosed or not required to be disclosed in Section
3.6 of the Company's Schedule and personal property sold since the date of the
Company Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by the Acquired Companies since the date of the Company Interim Balance Sheet
(except for personal property acquired and sold since the date of the Company
Interim Balance Sheet in the Ordinary Course of Business and consistent with
past practice). Except as set forth in Section 3.6 of the Company's Schedule,
all material properties and assets reflected in the Company Interim Balance
Sheet are free and clear of all Encumbrances.
3.7 Condition and Sufficiency of Assets. The buildings, plants,
structures, and equipment of the Acquired Companies are in all material respects
in good condition and working order (reasonable wear and tear excepted), and are
adequate for the uses to which they are being put. Except as set forth in
Section 3.7 of the Company's Schedule, to the Knowledge of the Company, none of
such buildings, plants, structures, or equipment is in need of maintenance or
repairs, except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
3.8 Accounts Receivable. All accounts receivable of the Acquired
Companies that are reflected on the Company Interim Balance Sheet or on the
accounting records of the Acquired Companies as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date collectible net of the
reserves shown on the accounting records of the Acquired Companies as of the
Closing Date. Except as set forth in Section 3.8 of the Company's Schedule, to
the Knowledge of the Company, there is no contest, claim, or right of set-off,
other than returns in the Ordinary Course of Business, under any Contract with
any obligor of an Accounts Receivable relating to the amount or validity of such
Accounts Receivable. Section 3.8 of the Company's Schedule contains a complete
and accurate list of all Accounts Receivable as of the date of the Company
Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
3.9 Inventory. All inventory of the Acquired Companies reflected in
the Company Balance Sheet, the Company Interim Balance Sheet or acquired since
that date, consists of a quality and quantity usable and salable in the Ordinary
Course of Business, except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the Company Balance Sheet or the Company Interim Balance Sheet or on
the accounting records of the Acquired Companies as of the Closing Date, as the
case may be. Except as set forth in Section 3.9 of the Company's Schedule, all
inventories not written off have been priced at the lower of cost or market on a
first in, first out basis. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are reasonable in the present
circumstances of the Acquired Companies.
10
12
3.10 No Undisclosed Liabilities. Except as set forth in Section 3.10
of the Company's Schedule, the Acquired Companies have no liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) which in the aggregate are material to the
financial condition, assets, properties or business of the Company taken as a
whole, except for (a) liabilities or obligations reflected or reserved against
in the Company Interim Balance Sheet, (b) current liabilities incurred in the
Ordinary Course of Business since the date thereof and (c) liabilities or
obligations disclosed pursuant to any other Section of the Company's Schedule if
such liabilities are apparent from such disclosure.
3.11 Taxes. Except as set forth in Section 3.11 of the Company's
Schedule, all tax returns and reports required to be filed by the Acquired
Companies, either separately or as a member of a group of corporations
(collectively, the "Returns"), including, without limitation, returns for
applicable Federal, state and local income, franchise, sales, use, gross
receipts, occupation, withholding, transfer, real and personal property,
employment, excise and other taxes with respect to the Acquired Companies and
their operations, collectively ("Taxes"), have been filed. The Returns were
correct and complete in all material respects. Except as set forth in Section
3.11 of the Company's Schedule: (a) all Taxes, charges and levies required to be
paid as of the date hereof by the Acquired Companies, (as reported on the
Returns) have been paid in full before such payment became delinquent and no
deficiencies have been or, to the Knowledge of the Company, will be assessed
with respect thereto; (b) no notice of deficiency or assessment with respect to
Taxes has been received by the Company; (c) no notice of audit or examination
has been received by the Company with respect to the Returns; and (d) there are
no pending audits of the Returns and there are no claims which have been or, to
the Knowledge of the Company, are reasonably expected to be asserted relating to
the Returns. There are no outstanding agreements or waivers extending the
statutory periods applicable for any Returns for any prior period. There is no
tax sharing agreement that will require any payment by any Acquired Company
after the date of the Agreement.
3.12 No Material Adverse Change. Since the date of the Company
Interim Balance Sheet, there has not been any material adverse change in the
business, operations, properties, assets, or financial condition of any Acquired
Company, and, to the Knowledge of the Company, no event has occurred or
circumstance exists that is reasonably expected to result in such a material
adverse change.
3.13 Employee Benefits. Except as set forth in Section 3.13 of the
Company's Schedule:
(a) none of the Acquired Companies or any ERISA Affiliate, has any
actual or contingent, direct or indirect, material liability in respect of any
employee benefit plan or arrangement, including any plan subject to ERISA, other
than to make contributions under or pay benefits pursuant to the plans listed in
Section 3.13 of the Company's Schedule (collectively, the "Plans");
(b) all of the Plans are in material compliance with all applicable
Legal Requirements;
11
13
(c) no Plan (i) is subject to Title IV of ERISA, or is otherwise a
defined benefit plan, or is a multiple employer plan (within the meaning of IRC
ss. 413(c)) or (ii) provides for post-retirement welfare benefits or a
"parachute payment" (within the meaning of IRC ss. 280G(b)); and
(d) the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions (i) will not result in any
prohibited transaction within the meaning of Section 406 of ERISA or IRC ss.
4975 or (ii) in the payment, vesting or acceleration of any benefit.
3.14 Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Section 3.14 of the Company's Schedule:
(i) each Acquired Company is in compliance with all Legal
Requirements, the violation of which would have a material adverse
effect on such Acquired Company;
(ii) No action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice has been filed,
commenced, or, to the Knowledge of the Company, threatened against
any Acquired Company alleging any failure to so comply.
(b) Section 3.14 of the Company's Schedule contains a complete and
accurate list of each Governmental Authorization that is held by any Acquired
Company. Each Governmental Authorization listed or required to be listed in
Section 3.14 of the Company's Schedule is valid and in full force and effect.
Except as set forth in Section 3.14 of the Company's Schedule, no Acquired
Company has received, at any time since January 1, 1996, any written notice from
any Governmental Body or any other Person regarding:
(i) any actual, alleged or potential violation of or failure to
comply with any term or requirement of any Governmental
Authorization; or
(ii) any actual proposed or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any
Governmental Authorization
(iii) any actual, proposed or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any
Governmental Authorization.
The Governmental Authorizations listed in Section 3.14 of the Company's Schedule
collectively constitute all of the Governmental Authorizations necessary to
permit the Acquired Companies to lawfully conduct and operate their businesses
in the manner they currently conduct and operate such businesses and to permit
the Acquired Companies to own and use their assets in the manner in which they
currently own and use such assets.
3.15 Legal Proceedings; Orders.
(a) Except as set forth in Section 3.15 of the Company's Schedule,
there is no pending Proceeding:
12
14
(i) that has been commenced by or against any Acquired Company
or that otherwise relates specifically to the business of, or any of
the assets owned or used by, any Acquired Company; or
(ii) that challenges, or that is reasonably expected to have the
effect of preventing, delaying, making illegal, or otherwise
materially interfering with, any of the Contemplated Transactions.
To the Knowledge of the Company, (1) no such Proceeding has been Threatened, and
(2) no event has occurred or circumstance exists that is reasonably expected to
give rise to or serve as a basis for the commencement of any such Proceeding.
The Company has delivered to Buyer copies of all pleadings, correspondence, and
other documents relating to each Proceeding listed in Section 3.15 of the
Company's Schedule. The Proceedings listed in Section 3.15 of the Company's
Schedule are not reasonably expected to have a material adverse effect on the
business, operations, assets, condition, or prospects of any Acquired Company.
(b) Except as set forth in Section 3.15 of the Company's Schedule:
(i) there is no Order to which any of the Acquired Companies, or
any of the assets owned or used by any Acquired Company, is subject;
(ii) to the Knowledge of the Company, no officer, director,
agent, or employee of any Acquired Company is subject to any Order
that prohibits such officer, director, agent, or employee from
engaging in the business of any Acquired Company.
(c) Except as set forth in Section 3.15 of the Company's Schedule:
(i) each Acquired Company is, and at all times since January 1,
1997 has been, in compliance with all of the terms and requirements
of each Order to which it, or any of the assets owned or used by it,
is or has been subject;
(ii) to the Knowledge of the Company, no event has occurred or
circumstance exists that may constitute or result in (with or
without notice or lapse of time) a violation of or failure to comply
with any term or requirement of any Order to which any Acquired
Company, or any of the assets owned or used by any Acquired Company,
is subject; and
(iii) no Acquired Company has received, at any time since
January 1, 1997, any written notice or other communication from any
Governmental Body or any other Person regarding any actual, alleged,
or potential violation of, or failure to comply with, any term or
requirement of any Order to which any Acquired Company, or any of
the assets owned or used by any Acquired Company, is or has been
subject.
3.16 Absence of Certain Changes and Events. Except as set forth in
Section 3.16 of the Company's Schedule, since the date of the Company Interim
Balance Sheet, the Acquired
13
15
Companies have conducted their businesses only in the Ordinary Course of
Business and there has not been any:
(a) change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or,
except in the Ordinary Course of Business, employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
(e) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to any Acquired Company of at least
$10,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of any Acquired
Company or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of any Acquired Company, including the sale,
lease, or other disposition of any of the Intellectual Property;
(h) cancellation or waiver of any claims or rights with a value to
any Acquired Company in excess of $5,000 individually, or $15,000 in the
aggregate;
(i) material change in the accounting methods used by any Acquired
Company; or
(j) agreement by any Acquired Company to do any of the foregoing.
14
16
3.17 Contracts; No Defaults.
(a) Section 3.17 of the Company's Schedule contains a complete and
accurate list, and the Company has delivered to Buyer true and complete copies,
of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by one or more Acquired
Companies of an amount or value in excess of $15,000 annually;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to, or employment by, one
or more Acquired Companies of an amount or value in excess of
$25,000 annually;
(iii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or
receipts of one or more Acquired Companies in excess of $25,000
annually;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use of,
or any leasehold or other interest in, any real or personal property
(except personal property leases and installment and conditional
sales agreements having a value per item or aggregate payments of
less than $10,000 annually and with terms of less than one year);
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
non-disclosure of any of the Intellectual Property;
(vi) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative
of a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by any Acquired Company with any other Person;
(viii) each Applicable Contract containing covenants that
materially restrict the business activity of any Acquired Company or
limit materially the freedom of any Acquired Company to engage in
any line of business or to compete with any Person;
(ix) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct
payments for goods;
(x) each power of attorney that is currently effective and
outstanding;
15
17
(xi) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express
undertaking by any Acquired Company to be responsible for
consequential damages;
(xii) each Applicable Contract for capital expenditures in
excess of $25,000 annually;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by any
Acquired Company other than in the Ordinary Course of Business; and
(xiv) each amendment, supplement and modification in respect of
any of the foregoing.
(b) Except as set forth in Section 3.17(b) of the Company's
Schedule:
(i) no Seller (and no Related Person of any Seller) has or may
acquire any rights under, and no Seller has or may become subject to
any obligation or liability under, any Contract that relates
specifically, and is material, to the business of, or any of the
assets owned or used by, any Acquired Company; and
(ii) to the Knowledge of the Company, no officer, director,
agent, employee, consultant, or contractor of any Acquired Company
is bound by any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor to (A)
engage in or continue any conduct, activity, or practice relating to
the business of any Acquired Company, or (B) assign to any Acquired
Company or to any other Person any rights to any invention,
improvement, or discovery.
(c) Except as set forth in Section 3.17(c) of the Company's
Schedule, each Applicable Contract is in full force and effect and is valid and
enforceable in accordance with its terms, except where the failure of such
Applicable Contract to be in full force and effect or valid and enforceable
would not, individually or in the aggregate, have a material adverse effect on
the business, financial condition or results of operations of the Company.
(d) Except as set forth in Section 3.17(d) of the Company's
Schedule:
(i) each Acquired Company is, and at all times since January 1,
1997 has been, in material compliance with all applicable terms and
requirements of each Applicable Contract, except where the failure
to be in such compliance would not, individually or in the
aggregate, have a material adverse effect on the business, financial
condition or results of operations of the Company;
(ii) to the Knowledge of the Company, each other Person that has
or had any obligation or liability under any Applicable Contract,
and at all times since January 1, 1997 has been, in material
compliance with all applicable terms and requirements of such
16
18
Applicable Contract, except where the failure to be in such
compliance would not, individually or in the aggregate, have a
material adverse effect on the business, financial condition or
results of operations of the Company;
(iii) to the Knowledge of the Company, no event has occurred or
circumstance exists that (with or without notice or lapse of time)
will materially contravene, conflict with, or result in a material
violation or material breach of, or give any Acquired Company or
other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Applicable Contract, except where
the effect thereof would not, individually or in the aggregate, have
a material adverse effect on the business, financial condition or
results of operations of the Company; and
(iv) no Acquired Company has given to or received from any other
Person, at any time since January 1, 1997, any notice regarding any
actual, alleged, possible, or potential violation or breach of, or
default under, any Contract, except where the effect of such a
violation, breach or default would not, individually or in the
aggregate, have a material adverse effect on the business, financial
condition or results of operations of the Company.
(e) There are no renegotiations of, or outstanding rights to
renegotiate any material amounts paid or payable to any Acquired Company under
any Applicable Contracts with any Person and, to the Knowledge of the Company,
no such Person has made written demand for such renegotiation.
(f) The Applicable Contracts relating to the sale, design,
manufacture, or provision of products or services by the Acquired Companies have
been entered into in the Ordinary Course of Business.
3.18 Insurance.
(a) The Company has delivered to Buyer:
(i) true and complete copies of all policies of insurance to
which any Acquired Company is a party or under which any Acquired
Company, or any director of any Acquired Company, is or has been
covered at any time within the three years preceding the date of
this Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of any Acquired Company's
financial statements with regard to the adequacy of such entity's
coverage or of the reserves for claims.
(b) Section 3.18(b) of the Company's Schedule describes:
17
19
(i) any written self-insurance arrangement by or affecting any
Acquired Company, including any reserves established thereunder; and
(ii) all obligations of the Acquired Companies to third parties
with respect to insurance (including such obligations under leases
and service agreements) and identifies the policy under which such
coverage is provided.
(c) Section 3.18(c) of the Company's Schedule sets forth, by year,
for the current policy year and the preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance policy
for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all claims
that were self-insured, including the number and aggregate cost of
such claims.
(d) Except as set forth in Section 3.18(d) of the Company's
Schedule:
(i) All policies to which any Acquired Company is a party or
that provide coverage to any Acquired Company, or any director or
officer of an Acquired Company:
(A) are, to the Knowledge of the Company, valid,
outstanding, and enforceable;
(B) are, to the Knowledge of the Company, issued by an
insurer that is financially sound and reputable;
(C) are sufficient for compliance with all Legal
Requirements and Contracts to which any Acquired Company is a
party or by which any of them is bound;
(D) will continue in full force and effect following the
consummation of the Contemplated Transactions; and
(E) do not provide for any retrospective premium adjustment
or other experienced-based liability on the part of any Acquired
Company.
18
20
(ii) No Acquired Company has received (A) any refusal of
coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any
other indication that any insurance policy is no longer in full
force or effect or will not be renewed or that the issuer of any
policy is not willing or able to perform its obligations thereunder.
(iii) The Acquired Companies have paid all premiums due, and, to
the Knowledge of the Company, have otherwise performed all of their
respective obligations, under each policy to which any Acquired
Company is a party or that provides coverage to any Acquired Company
or director thereof.
(iv) To the Knowledge of the Company, the Acquired Companies
have given notice to the insurer of all claims that may be insured
thereby.
3.19 Environmental Matters. Except as set forth in Section 3.19 of
the Company's Schedule:
(a) Each Acquired Company is, and at all times has been, in material
compliance with, and has not been and is not in violation of or liable under any
Environmental Laws, except for violations which are not reasonably expected to
have a material adverse effect on any Acquired Company or its business. The
Company has not received any notice, nor does the Company have any Knowledge,
that any Acquired Company is not in material compliance with any Environmental
Laws.
(b) There are no actions pending, or to the Knowledge of the
Company, actions, claims or investigations threatened against any Acquired
Company, which in any case asserts or alleges that:
(i) such Acquired Company violated any Environmental Law or
Environmental Permit or is in default with respect to any
Environmental Permit or any order, writ, judgment, variance, award
or decree of any government authority;
(ii) such Acquired Company is required to clean up or take
remedial or other responsive action due to the disposal, discharge
or other release of any Hazardous Substance on the Real Property or
elsewhere; or
(iii) such Acquired Company is required to contribute to the
cost of any past, present or future clean up or remedial or other
response action which arises out of or is related to the disposal,
discharge or other release of any Hazardous Substance by an Acquired
Company.
No Acquired Company is subject to any judgment, stipulation, order, decree or
other agreement arising under any Environmental Laws.
19
21
(c) With respect to the period during which one or more of the
Acquired Companies occupied the real property described in Section 3.4 of the
Company's Schedule (the "Real Property") and, to the Knowledge of the Company,
with respect to the time before one or more of the Acquired Companies owned or
occupied the Real Property:
(i) no Hazardous Substances has been treated, recycled or
disposed of (intentionally or unintentionally) on, under or at the
Real Property in violation of Environmental Laws;
(ii) there has been no release or threatened release of any
Hazardous Substance at, on or from the Real Property in violation of
Environmental Laws;
(iii) there has not been nor are there now any materials
containing asbestos or PBC on the Real Property; and
(iv) there have been no activities on the Real Property which
would subject Buyer or any subsequent owner or lessee of the Real
Property to material damages, penalties, injunctive relief, or
cleanup costs under any Environmental Laws. To the Knowledge of the
Company, no property currently abutting the Real Property has every
been used for the treatment, recycling or disposal ( intentional or
unintentional) of Hazardous Substances, nor has there been a release
or threatened release of any Hazardous Substances from such
currently abutting property.
(d) The Company has delivered to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by any Acquired Company pertaining to hazardous materials or hazardous
activities in, on, or under the Facilities, or concerning compliance by any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, with Environmental Laws.
3.20 Employees.
(a) Section 3.20 of the Company's Schedule contains a complete and
accurate list of the following information for each employee or director of the
Acquired Companies, including each employee on leave of absence or layoff
status: employer; name; job title; current compensation paid (except part-time
employees); and vacation accrued.
(b) To the Knowledge of the Company, no employee or director of any
Acquired Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that materially adversely affects or will
materially and adversely affect (i) the performance of his duties as an employee
or director of the Acquired Companies, or (ii) the ability of any Acquired
Company to conduct its business. To the Knowledge of the Company, no director,
officer, or other key employee of any Acquired Company intends to terminate his
employment with such Acquired Company.
20
22
3.21 Labor Relations; Compliance. Since January 1, 1997, no Acquired
Company has been or is a party to any collective bargaining or other labor
Contract. Since January 1, 1997, there has not been, there is not presently
pending or existing, and, to the Knowledge of the Company, there is not
Threatened: (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process; (b) any Proceeding against any Acquired Company relating to
the alleged violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting any of the Acquired
Companies or their premises; or (c) any application for certification of a
collective bargaining agent. To the Knowledge of the Company, no event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by any
Acquired Company, and no such action is contemplated by any Acquired Company. To
the Knowledge of the Company, each Acquired Company has complied in all material
respects with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. No Acquired Company is liable for the
payment of any compensation, damages, taxes, fines, penalties, or other amounts,
however designated, for failure to comply with any of the foregoing Legal
Requirements.
3.22 Intellectual Property.
(a) Except as set forth in Section 3.22 of the Company's Schedule,
each of the Acquired Companies is the owner of, or has a valid license or right
to use, sell and license all of, the Copyrights, Patents, Trade Secrets,
Trademarks, Internet Assets, Software and its other proprietary rights
(collectively, "Intellectual Property") that are used in connection with its
business in the manner currently being used, sold or licensed, free and clear of
all Encumbrances.
(b) Section 3.22 of the Company's Schedule sets forth all of the (i)
Copyrights material to the business of the Acquired Companies, Trademarks and
Patents owned by, and filings and applications for any of the above filed by,
any of the Acquired Companies, and (ii) all Software applications developed by
the Acquired Companies that are material to the business of the Acquired
Companies. None of the Intellectual Property listed in Section 3.22 of the
Company's Schedule (except as specified thereon) is subject to any outstanding
Order, and no Proceeding is pending or, to the Knowledge of the Company,
Threatened, which challenges the validity, enforceability, use or ownership of
the item.
(c) Section 3.22 of the Company's Schedule sets forth all
Intellectual Property licenses, sublicenses and other agreements under which any
Acquired Company is either a licensor or licensee, except such licenses,
sublicenses and other agreements (i) relating to off-the-shelf software and
which are commercially available on a retail basis or (ii) that provide for the
license by the Acquired Company to any customer thereof that involve an amount
less than $5,000 annually and are otherwise not material to the business of the
Acquired Companies. Each Acquired Company has substantially performed all
obligations imposed upon it to date thereunder, and no Acquired Company is, nor
to the Knowledge of the Company is any other party thereto, in breach of or
default
21
23
thereunder in any respect, nor is there any event which with notice or
lapse of time or both would constitute a default thereunder. All of the
Intellectual Property licenses listed in Section 3.22 of the Company's Schedule
are valid, enforceable and in full force and effect, and will continue to be so
on substantially identical terms immediately following the Closing except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(d) To the Knowledge of the Company, other than as set forth in
Section 3.22 of the Company's Schedule none of the Intellectual Property
currently sold or licensed by the Acquired Companies to any Person or used by or
licensed to the Acquired Companies violates any Intellectual Property rights of
others.
(e) No Proceeding is pending and no written claim has been made
against any Acquired Company or, to the Knowledge of the Company, is Threatened,
contesting the right of an Acquired Company to sell or license to any Person or
use the Intellectual Property presently sold or licensed to such Person or used
by the Acquired Companies.
(f) Except as set forth in Section 3.22 of the Company's Schedule,
to the Knowledge of the Company, no Person is infringing upon or otherwise
violating the Intellectual Property rights of any Acquired Company.
(g) Except as set forth in Section 3.22 of the Company's Schedule,
no Acquired Company is a party to or bound by, any license or other agreement
requiring the payment of any material royalty payment, excluding such agreements
relating to software licensed for use solely on the computers of the Acquired
Companies.
(h) Except as described in Section 3.22 of the Company's Schedule,
none of the Acquired Companies has entered into any agreement, license or
release that restricts the right of any of the Acquired Companies to use the
ProTix Products in any material way. The Software within the ProTix Products is
fully eligible for protection under applicable copyright law and has not been
forfeited to the public domain and the source code and system specifications
have been maintained in confidence, except where the failure to be so eligible
or where the failure to maintain such confidence would not have a materially
adverse effect on the Company. As used in this Agreement, "ProTix Products"
means products currently marketed or proposed to be marketed, in connection with
the performance of ticketing services or other business of the Acquired
Companies, including without limitation the Prologue Ticketing System.
(i) Except as set forth in Section 3.22 of the Company's Schedule,
to the Knowledge of the Company, none of the Trade Secrets, wherever located,
the value of which is contingent upon maintenance of confidentiality thereof,
has been disclosed to any Person other than employees, representatives and
agents of the Acquired Companies, except as required by law or pursuant to the
filing of a patent application by the Acquired Companies, where such disclosure
would have a material adverse effect on the business, financial condition or
results of operations of the Company.
22
24
(j) Except as set forth in Section 3.22 of the Company's Schedule,
(a) the Software utilized by the Acquired Companies in their ticketing services
will deliver, receive, store and process date information in the same manner
before, during and after January 1, 2000 and (b) no material expenditures are
contemplated by the Acquired Companies or, to the Company's Knowledge, are
necessary to remediate such Software in connection with processing date
information.
3.23 Certain Payments. Since January 1, 1995, no Acquired Company or
director, officer, agent or employee of any Acquired Company or, to the
Knowledge of the Company, any other Person associated with or acting for or on
behalf of any Acquired Company, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment in violation of any Legal Requirement to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of any Acquired Company or any
Affiliate of an Acquired Company, or (iv) in violation of any Legal Requirement,
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Acquired Companies.
3.24 Disclosure. No representation or warranty of Sellers or the
Company in this Agreement and no statement in the Company's Schedule omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
3.25 Relationships With Related Persons. No Seller or any Related
Person of Sellers or of any Acquired Company has, or has had, any interest in
any material property (whether real, personal, or mixed and whether tangible or
intangible), used in or pertaining to the Acquired Companies' businesses. Except
as set forth in Section 3.25 of the Company's Schedule, to the Knowledge of the
Company, no Seller or any Related Person of Sellers or of any Acquired Company
is, or since January 1, 1997 has owned (of record or as a beneficial owner) an
equity interest or any other material financial or profit interest in, a Person
that has (a) had business dealings or a material financial interest in any
transaction with any Acquired Company, or (b) engaged in competition with any
Acquired Company with respect to any line of the products or services of such
Acquired Company (a "Competing Business") in any market presently served by such
Acquired Company except for less than one percent of the outstanding capital
stock of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market. Except as set forth in Section 3.25
of the Company's Schedule, no Seller or any Related Person of Sellers or of any
Acquired Company is a party to any Contract with, or has any claim or right
against, any Acquired Company.
3.26 Brokers or Finders. Sellers, the Acquired Companies and their
agents have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
23
25
4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller severally represents and warrants to Buyer as follows:
4.1 Title to Shares. Seller is the owner of the number of Shares
indicated below such Seller's signature on the signature page to this Agreement.
No other person or entity has any right, title, or interest, beneficially or of
record, in or to the Shares owned by such Seller and such Shares are free and
clear of any claims, liens, encumbrances, security agreements, equities,
options, charges, or restrictions, and can be delivered and surrendered to Buyer
pursuant hereto without obtaining the consent or approval of any other person or
governmental authority. Upon the transfer and delivery of such Shares to Buyer
in accordance with this Agreement and payment therefor, Buyer will become the
owner and holder of all of such Shares free and clear of all liens,
encumbrances, pledges, claims, charges and restrictions on transfer.
4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against such Seller in accordance with its
terms, except that enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general principles of equity. Upon the execution and delivery by Seller
of the Noncompetition Agreement (collectively, the "Seller's Closing
Documents"), the Seller's Closing Documents will constitute the legal, valid,
and binding obligations of Seller, enforceable against Seller in accordance with
their respective terms. Seller has the right, power, authority, and capacity to
execute and deliver this Agreement and the Seller's Closing Documents and to
perform its or his obligations under this Agreement and the Seller's Closing
Documents.
(b) To the Knowledge of Seller, neither the execution and delivery
of this Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time) contravene, conflict with, or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Seller, or any of the assets owned or used by
Seller, may be subject.
(c) Such Seller is not required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.3 Restricted Securities. Seller understands that the Buyer Stock,
the Notes, the Warrants, the shares of common stock of Buyer issuable upon
exercise of the Warrants, and any other securities issued by Buyer under this
Agreement (collectively, the "Securities") will be issued by Buyer without
registration under the Securities Act and without qualification and/or
registration under applicable state securities laws pursuant to exemptions from
registration and/or qualification contained in the Securities Act and applicable
state securities laws. Such Seller understands that the foregoing exemptions
depend upon, among other things, the bona fide nature of such Seller's
investment intent as expressed herein. None of the Securities nor any interest
in the Securities will
24
26
be sold, transferred, or otherwise disposed of by such Seller without
registration and/or qualification under the Securities Act and applicable state
securities laws unless the sale or other disposition is made in compliance with
exemptions from such registration and qualification requirements with respect to
such resale or disposition and, upon the request of Buyer, such Seller, prior to
consummation of any such resale or disposition, provides Buyer an opinion of
counsel reasonably satisfactory to Buyer to the effect that the contemplated
transfer may be made without violating the Securities Act or applicable state
securities laws.
4.4 Investment Intent. Seller is acquiring the Securities for
investment purposes only, for Seller's own account and not with a view to or for
sale in connection with any distribution of the Securities to others within the
meaning of the Securities Act.
4.5 Questionnaire. The information contained in the Confidential
Offeree Questionnaire provided by Seller to the Company in connection with this
transaction is true and correct as of the date hereof and Buyer may rely upon
such information in determining whether exemptions from registration under
federal and applicable state securities laws are available in connection with
any issuance of Securities under this Agreement.
4.6 Purchaser Representations. Seller has received all of the
information Seller considers necessary or appropriate to evaluate the risks and
merits of an investment in Buyer, including, but not limited to, Buyer's
Confidential Private Offering Memorandum, dated September 30, 1998, and has had
an opportunity to discuss Buyer's business, management, financial affairs and
prospects with Buyer's management. Seller is able to bear the economic risks
related to a purchase of the Securities. Seller, together with Seller's
purchaser representative, if applicable, have such Knowledge and experience in
financial and business matters that will enable Seller to use the information
made available to Seller in connection with the Contemplated Transactions to
evaluate the merits and risks of acquiring the Securities.
4.7 Residence. Seller's principal residence is shown below such
Seller's signature on the signature page to this Agreement.
4.8 Legends. Seller acknowledges that the certificates representing
any of the Securities to be issued to such Seller will contain legends which
prohibit an offer to transfer or a transfer of all or any portion of the
Securities unless the Securities are registered under the Securities Act or
unless an exemption from registration is available with respect to such resale
or disposition.
Buyer need not register, and may instruct its transfer agent not to effect, a
transfer of any Securities unless the conditions set forth in this Section 4 are
satisfied.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the Buyer's Schedule (which lists exceptions
to the following representations and warranties and also contains matters
required to be disclosed pursuant to this Section 5, each of which corresponds
to the numbered sections contained in this Section 5), Buyer represents and
warrants to Sellers as set forth in this Section 5. The parties hereto
acknowledge and
25
27
agree that for purposes of this Agreement, if a document or a matter is
disclosed in any Section of the Buyer's Schedule or in Buyer's Confidential
Private Offering Memorandum dated September 30, 1998, such disclosure shall
suffice, without specific repetition and with or without cross-reference, as a
response to any other section of the Buyer's Schedule if such response is
apparent from such disclosure.
5.1 Organization and Good Standing.
(a) Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use. Buyer is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each state or other jurisdiction in which either
the ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification.
(b) Buyer has delivered to the Company copies of its Organizational
Documents as currently in effect.
5.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except that enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general principles of equity. Upon the execution and delivery by Buyer of
the Employment Agreements and the Warrants (collectively, the "Buyer's Closing
Documents"), the Buyer's Closing Documents will constitute the legal, valid, and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the Buyer's
Closing Documents.
(b) Except as set forth in Section 5.2 of the Buyer's Schedule,
neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer
may be bound.
26
28
Except as set forth in Section 5.2 of the Buyer's Schedule, Buyer is not and
will not be required to obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions.
5.3 Capitalization. The authorized equity securities of the Buyer
consist of 100,000,000 shares of common stock, par value $.0001, of which
15,424,094 shares are issued and outstanding, (ii) 8,440,002 shares of Series A
Preferred Stock of the Buyer, par value $.0001, of which 8,440,002 shares are
issued and outstanding, and which are convertible into 8,440,002 shares of
common stock of the Buyer, (iii) 9,500,000 shares of Series B Preferred Stock of
the Buyer, par value $.0001, of which 9,499,874 shares are issued and
outstanding, and which are convertible into 9,499,874 shares of common stock of
the Buyer, and (iv) 11,597,112 shares of Series C Preferred Stock of the Buyer,
par value $.0001, of which 11,597,112 shares are issued and outstanding, and
which are convertible into 11,597,112 shares of Common Stock of the Buyer.
Except as set forth in Section 5.3 of the Buyer's Schedule, there are no
options, warrants, conversion privileges, preemptive rights, subscription or
purchase rights presently outstanding to purchase or otherwise acquire any
authorized but unissued, unauthorized or treasury shares of the Buyer's capital
stock. The Buyer Stock is duly authorized, and when issued and sold to the
Sellers pursuant to this Agreement, will be validly issued, fully paid and
nonassessable. The shares of common stock of Buyer issuable upon conversion of
the Warrants are duly authorized and, when issued in compliance with the terms
thereof, will be validly issued, fully paid and nonassessable.
5.4 Financial Statements. The Buyer has delivered to the Company:
(a) a consolidated balance sheet of Buyer as of December 31, 1997 (including the
notes thereto, the "Buyer Balance Sheet"), and the related consolidated
statements of income, changes in stockholders' equity, and cash flow for the
fiscal year then ended, together with the report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent certified public accountants, and (b) an unaudited consolidated
balance sheet of Buyer as of June 30, 1998 (the "Buyer Interim Balance Sheet")
and the related unaudited consolidated statements of income, changes in
stockholders' equity, and cash flow for the six months then ended, including in
each case the notes thereto. Such financial statements and notes fairly present
the financial condition and the results of operations, changes in stockholders'
equity, and cash flow of Buyer as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP, subject,
in the case of interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the Buyer Balance Sheet); the financial
statements referred to in this Section 5.4 reflect the consistent application of
such accounting principles throughout the periods involved. No financial
statements of any Person other than Buyer are required by GAAP to be included in
the consolidated financial statements of the Buyer.
5.5 No Undisclosed Liabilities. Except as set forth in Section 5.5
of the Buyer's Schedule, Buyer has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) which in the aggregate are material to the financial condition,
assets, properties or business of Buyer taken as a whole, except for liabilities
or obligations reflected or reserved against in the Buyer Balance Sheet or the
Buyer Interim Balance
27
29
Sheet and current liabilities incurred in the Ordinary Course of Business since
the respective dates thereof.
5.6 No Material Adverse Change. Since the date of the Buyer Balance
Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of Buyer, and no event
has occurred or circumstance exists that may result in such a material adverse
change.
5.7 Disclosure. No representation or warranty of Buyer in this
Agreement and no statement in the Buyer's Schedule or the Confidential Private
Offering Memorandum contains an untrue statement of material fact or omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
5.8 Investment Intent. Buyer is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act.
5.9 Brokers or Finders. Buyer and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify and hold Sellers harmless from any such
payment alleged to be due by or through Buyer as a result of the action of Buyer
or its officers or agents.
6. COVENANTS AND FURTHER AGREEMENTS
6.1 Sellers' Representative.
(a) In order to administer efficiently the rights and obligations of
the Sellers under this Agreement, the Sellers hereby designate and appoint ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ as the Sellers' Representative, to serve as the Sellers' agent and
attorney-in-fact for the limited purposes set forth in Section 6.1(b) of this
Agreement.
(b) Each of the Sellers hereby appoints the Sellers' Representative
as such Seller's agent, proxy and attorney-in-fact, with full power of
substitution, for all purposes set forth in this Agreement, including, without
limitation, the full power and authority on such Seller's behalf (i) to
consummate the transactions contemplated by this Agreement, (ii) to disburse any
funds received hereunder to the Sellers, (iii) to execute and deliver any
certificates representing the Shares and execution of such further instruments
of assignment as Buyer shall reasonably request, (iv) to enter into the Security
Agreement on behalf of the Sellers, (v) to execute and deliver on behalf of each
Seller any amendment or waiver under this Agreement, the Notes, Warrants or
Security Agreement, (vi) to retain legal counsel and other professional
services, at the expense of the Sellers, in connection with the performance by
the Sellers' Representative of this Agreement, (vii) to execute financing
statements, termination statements and other documents on behalf of Sellers
under the Security Agreement, (viii) to do each and every act and exercise any
and all rights which such Seller or Sellers are permitted or required to do or
exercise under this Agreement and the other agreements, documents and
certificates executed in connection herewith. Each of the Sellers agrees that
such
28
30
agency and proxy are coupled with an interest, are therefore irrevocable
without the consent of the Sellers' Representative and shall survive the death,
bankruptcy or other incapacity of any Seller.
(c) Each of the Sellers hereby agrees that any amendment or waiver
under this Agreement, the Security Agreement or the Securities, and any action
taken on behalf of the Sellers to enforce the rights of the Sellers under this
Agreement, the Notes and the Warrants, and any action taken with respect to any
indemnification claim pursuant to Section 7 (including any action taken to
object to, defend, compromise or agree to the payment of such claim), shall be
effective if approved in writing by the Sellers' Representative and the holders
of a majority of the Shares (including any Shares held by the Sellers'
Representative), or, in the case of any amendment or waiver made or given or
action taken after the Closing, if so approved by persons who were the holders
of a majority of the Shares immediately prior to the Closing, and that each and
every action so taken shall be binding and conclusive on every Seller, whether
or not such Seller had notice of, or approved, such amendment or waiver.
(d) Upon signing of this Agreement, each Seller shall deliver to the
Sellers' Representative a certificate or certificates representing the Shares
being sold by such Seller under this Agreement, duly endorsed (or accompanied by
duly executed stock powers), with signatures guaranteed by a commercial bank or
by a member of the New York Stock Exchange for delivery by the Sellers'
Representative to Buyer at the Closing.
(e) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall serve as the Sellers' Representative
until he resigns or is otherwise unable or unwilling to serve. In the event that
a Sellers' Representative resigns from such position or is otherwise unable or
unwilling to serve, the remaining Sellers shall select, by the vote of the
holders of a majority of the Shares, a successor representative to fill such
vacancy, shall provide prompt written notice to Buyer of such change and such
substituted representative shall then be deemed to be the Sellers'
Representative for all purposes of this Agreement.
6.2 Additional Sellers. The parties agree that additional
shareholders of the Company may become parties to this Agreement after the
Closing Date. In such event, (i) each such shareholder shall become a "Seller"
for purposes of this Agreement and entitled to all of the rights and subject to
all of the obligations of a Seller under this Agreement, (ii) the Participating
Percentage shall be adjusted to reflect the inclusion of such shareholder, (iii)
such shareholder shall immediately receive a cash payment equal to such
shareholder's ratable interest in the Closing Cash Payment, shares of common
stock of Buyer equal to such shareholder's ratable interest in the Buyer Stock,
a promissory note equal to such shareholder's ratable portion of the Notes, and
a warrant equal to such shareholder's ratable portion of the Warrants.
6.3 Holdback Agreement. If and to the extent requested by the
managing underwriter in the case of an underwritten public offering by the Buyer
of its common stock, each Seller agrees not to affect any sale, short sale,
loan, grant any option for the purchase of, or otherwise dispose of any Buyer's
Stock or any shares of Buyer's Common Stock received upon exercise of the
Warrants, including a sale pursuant to Rule 144 under the Securities Act of
1933, as amended, during (i) with respect to an initial public offering, the
180-day period or such shorter period agreed upon by such Seller and the
requesting underwriter or (ii) in any other case the 90- day period or such
shorter
29
31
period agreed upon by such Seller and any underwriter, beginning on the
effective date of the applicable registration statement. The Buyer may impose
stop-transfer instructions with respect to such securities subject to the
foregoing registration until the end of such period.
6.4 Tax Elections. With respect to the acquisition of Shares
hereunder, Buyer shall make a timely election under Section 338(g) of the IRC
and Sellers and Buyer shall jointly make an election under Section 338(h)(10) of
the Code (and any corresponding elections under state or local tax law)
(collectively, a "Section 338(h)(10) Election"). Sellers and Buyer shall (i)
take, and cooperate with each other to take, all actions necessary and
appropriate (including filing such forms, returns, elections, schedules and
other documents as may be required ) to effect and preserve a timely Section
338(h)(10) Election in accordance with Section 338 of the IRC and the temporary
regulation thereunder, or any successor provisions as promptly as practicable
following the Closing Date, but not later than the date which is the latest date
for making such Section 338(h)(10) Election, and from time to time thereafter,
and (ii) Sellers and Buyer shall report the sale of the Shares pursuant to this
Agreement consistent with the Section 338(h)(10) Election and shall take no
position contrary thereto or inconsistent therewith in any tax return, any
discussion with or proceeding before any taxing authority, or otherwise. Sellers
and Buyer agree to use reasonable efforts to minimize any adverse tax
consequences to Sellers resulting from the election contemplated by this Section
6.4, specifically including allocating the Purchase Price among the Acquired
Companies' assets in such a way as to eliminate, to the maximum extent legally
permissible, the treatment of the Sellers' gain on receipt of the Purchase Price
as ordinary income rather than capital gain; provided, however, that in no event
shall Buyer be required to take any action, other than such allocation of the
Purchase Price, which could result in any adverse consequences to the Buyer.
6.5 Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
6.6 Employee Bonuses.
(a) Buyer agrees that, no later than May 15, 2000, Buyer shall cause
the Company to pay cash bonuses to the employees of the Company named below,
which in the aggregate equal the product of (i) $140,000 times (ii) the
percentage of total Warrants issued pursuant to this Agreement which vest and
become exercisable pursuant to their terms (the "Cash Bonus"). The Cash Bonus
shall be allocated among the following employees based on the percentage set
forth opposite their respective names; provided, however, that no employee shall
be entitled to receive their share of the Cash Bonus if they do not remain
employees of the Company through March 31, 2000.
Name %
---- ---
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 16.67
▇▇▇▇ ▇▇▇▇▇▇▇▇ 13.89
▇▇▇▇ ▇▇▇▇▇ 13.89
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 11.11
30
32
▇▇▇▇ ▇▇▇▇ 5.55
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 4.16
▇▇▇▇ ▇▇▇▇▇▇▇ 4.16
▇▇▇▇ ▇▇▇▇▇▇▇ 2.78
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2.78
▇▇▇▇ ▇▇▇▇▇ 2.78
▇▇▇ ▇▇▇▇▇▇ 2.78
▇▇▇▇ ▇▇▇ 2.78
▇▇▇▇ ▇▇▇▇▇▇ 2.78
▇▇▇ ▇▇▇▇▇▇▇▇ 2.78
▇▇▇▇▇ ▇▇▇▇▇ 2.78
▇▇▇ ▇▇▇▇▇▇▇▇ 1.67
▇▇▇▇▇▇▇ ▇▇▇▇ 1.39
▇▇▇▇ ▇▇▇▇▇▇ 1.39
▇▇▇ ▇▇▇▇▇▇▇▇▇ 1.39
▇▇▇▇▇▇▇▇ ▇▇▇▇ .83
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ .83
▇▇▇▇ ▇▇▇▇▇▇▇ .83
------
100.00%
To the extent that the aggregate bonuses earned and paid pursuant hereto, plus
the related employer portion of payroll taxes, are less than $150,000, the
difference between the aggregate amount of such bonuses and related payroll
taxes and $150,000 shall be paid by Buyer to the Sellers' Representative on
behalf of the Sellers for distribution to the Sellers in an amount equal to each
Seller's pro rata share of the Purchase Price.
(b) Buyer agrees to cause the Company to pay the employee bonuses of
approximately $210,000, which were accrued but not paid prior to the Closing, no
later than the end of the first full pay period of the Company following the
Closing.
6.7 Rule 144. Buyer agrees that after its initial public offering,
it will file the reports required to be filed by it under the Securities Act,
and the Securities Exchange Act of 1934, as amended, and the rules and
regulations adopted by the Securities and Exchange Commission thereunder, and
will take such further action as any Seller may reasonably request, all to the
extent required from time to time to enable such Seller to sell the Buyer Stock
and the shares of Buyer Common Stock issuable upon exercise of the Warrants
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144.
6.8 Termination of Stock Repurchase Agreement. The Company and
certain of the Sellers are parties to a Stock Repurchase Agreement dated
September 18, 1991 (the "Repurchase Agreement"). The Company and those Sellers
who are a party to the Repurchase Agreement hereby waive any claim with respect
to prior breaches thereof, consent to the transaction contemplated by this
Agreement and agree that, pursuant to Section 18 of the Repurchase Agreement,
immediately prior to the Closing, the Repurchase Agreement shall terminate and
be of no further force or effect.
31
33
7. INDEMNIFICATION; REMEDIES
7.1 Survival; Right to Indemnification Not Affected by Knowledge.
Except for the representations and warranties set forth in Sections 3.3, 3,10,
3.11, 3.13, 3.17, 3.19, 4.1, 5.3 or 5.5 or in the Company's Schedule or the
Buyer's Schedule relating to the foregoing Sections, which shall survive the
Closing for a period of three (3) years as provided in Section 7.4, all
representations and warranties in this Agreement, the Company's Schedule, the
Buyer's Schedule, and any other certificate or document delivered pursuant to
this Agreement will survive the Closing for a period of one year as provided in
Section 7.4 below. Upon expiration of such representations and warranties, no
party shall have any right to make a claim or seek indemnification under this
Section 7, or otherwise, with respect to such expired representations or
warranties, except with respect to claims for indemnification which were timely
made in accordance with Section 7.4. All covenants and obligations in this
Agreement and the agreements executed and delivered pursuant to this Agreement
will survive the Closing indefinitely. The right to indemnification, payment of
Damages (as defined below) or other remedy based on such representations,
warranties, covenants, and obligations will not be affected by any investigation
conducted with respect to, or any Knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. The waiver of
any condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
7.2 Indemnification and Payment of Damages by the Sellers. Each
Seller (pro rata in accordance with the percentage of the Purchase Price
received by each such Seller with respect to paragraphs (a), (c), (e) and (f) of
this Section 7.2, but such Seller shall be solely responsible for all of the
Damages with respect to the indemnification obligations of such Seller under
paragraphs (b) and (d) of this Section 7.2) will indemnify and hold harmless
Buyer, the Acquired Companies, and their respective Representatives,
stockholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage, expense (including reasonable costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by the Company
in this Agreement, the Company's Schedule, or any other certificate or document
delivered by the Company pursuant to this Agreement;
(b) any Breach of any representation or warranty made by such Seller
in Section 4 of this Agreement;
(c) any Breach by the Company of any covenant or obligation of the
Company in this Agreement;
32
34
(d) any Breach by such Seller of any covenant or obligation of such
Seller in this Agreement;
(e) any Deferred Cash Shortfall in excess of the Deferred Cash
Payment; or
(f) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any Seller or any Acquired
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
Except as expressly provided in this Section 7.2, after the Closing the Company
and Sellers shall have no obligation or liability to Buyer or the other
Indemnified Persons, and such parties shall have no claim or recourse against
the Company or any Seller, arising out of or in connection with the transactions
contemplated by this Agreement, it being understood and agreed by the parties
that the remedies provided in this Section 7.2 shall be the sole and exclusive
remedies for any such claim by Buyer and/or any other Indemnified Person for any
such matters, whether such claims are framed in contract, tort or otherwise.
7.3 Indemnification and Payment of Damages by Buyer. Buyer will
indemnify and hold harmless the Sellers, and will pay to Sellers the amount of
any Damages arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Buyer in
this Agreement, the Buyer's Schedule or in any certificate or document delivered
by Buyer pursuant to this Agreement;
(b) any Breach by Buyer of any covenant or obligation of Buyer in
this Agreement; or
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
Except as expressly provided in this Section 7.3, after the Closing the Company
and Buyer shall have no obligation or liability to Sellers, and such parties
shall have no claim or recourse against the Company or the Buyer, arising out of
or in connection with the transactions contemplated by this Agreement, it being
understood and agreed by the parties that the remedies provided for in this
Section 7.3 shall be the sole and exclusive remedies for any such claim by
Sellers for any such matters, whether such claims are framed in contract, tort
or otherwise.
7.4 Time Limitations. Sellers will have no liability (for
indemnification or otherwise) with respect to any representation or warranty,
other than those in Sections 3.3, 3.10, 3.11, 3.13, 3.17, 3.19 or 4.1, unless on
or before October 15, 1999, Buyer notifies Sellers' Representative of a claim in
writing specifying the factual basis of that claim in reasonable detail,
together with a good faith estimate of the amount of such claim, to the extent
then known by Buyer. Sellers will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, in
33
35
Sections 3.3, 3.10, 3.11, 3.13, 3.17, 3.19 or 4.1, unless on or before October
15, 2001, Buyer notifies Sellers' Representative of a claim in writing
specifying the factual basis of that claim in reasonable detail, together with a
good faith estimate of the amount of such claim, to the extent then known by
Buyer. Buyer will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, other than those in Sections 5.3 or
5.5, unless on or before October 15, 1999 Seller notifies Buyer of a claim in
writing specifying the factual basis of that claim in reasonable detail,
together with a good faith estimate of the amount of such claim, to the extent
then known by Sellers. Buyer will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, in Sections 5.3 or
5.5, unless on or before October 15, 2001, Sellers notify Buyer of a claim in
writing specifying the factual basis of that claim in reasonable detail,
together with a good faith estimate of the amount of such claim, to the extent
then known by Sellers.
7.5 Limitations on Amount--Sellers. The Sellers will have no
liability hereunder (for indemnification or otherwise) until the total of all
Damages with respect to such matters exceeds $75,000 plus one-half of the amount
of any positive Closing Date Net Working Capital (such amount in the aggregate
is referred to hereinafter as the "Basket"), and then only for the amount by
which such Damages exceed the Basket. Furthermore, any liability of the Sellers
hereunder (for indemnification or otherwise) shall terminate at such time as the
aggregate amount of Damages paid to Buyer by Sellers equals $7,452,000 less (a)
an amount equal to (i) $2,511,961 times (ii) the percentage of total Warrants
issued pursuant to this Agreement which expire without vesting pursuant to
paragraph 4 of Annex B of the Warrants, and (b) if the fair market value of the
Common Stock of Buyer on the date the applicable claim for indemnification is
made is less than $1.75 per share, the product of (i) the number of shares of
Buyer Stock issued pursuant to Section 2.2(b) of this Agreement plus the number
of Warrants which have not expired without vesting pursuant to paragraph 4 of
Annex B of the Warrants times (ii) the difference between $1.75 and the fair
market value of the Common Stock of Buyer on such date, (such amount being
referred to herein as the "Cap"). Each Seller's liability hereunder (for
indemnification or otherwise) shall be limited to such Seller's pro rata share
of the Cap (in accordance with the percentage of the Purchase Price received by
such Seller, the "Percentage Interest"). Other than claims for indemnification
pursuant to Section 7.2(b) or (d), each Seller's liability for any claim for
indemnification shall be limited to the Seller's Percentage Interest with
respect to such claim.
7.6 Limitations on Amount--Buyer. Buyer will have no liability
hereunder (for indemnification or otherwise) until the total of all Damages with
respect to such matters exceeds $75,000, and then only for the amount by which
such Damages exceed $75,000. Furthermore, any liability of the Buyer hereunder
(for indemnification or otherwise) shall terminate at such time as the aggregate
amount of Damages paid to Sellers by Buyer equals $7,452,000 less an amount
equal to (i) $2,511,961 times (ii) the percentage of total Warrants issued
pursuant to this Agreement which expire without vesting pursuant to paragraph 4
of Annex B of the Warrants.
7.7 Right of Set-Off. Upon written notice to Sellers' Representative
specifying in reasonable detail the basis for such set-off and Buyer's
reasonable good faith estimate of the amount of such claim, Buyer may set-off
such amount against (i) amounts otherwise payable under Section 2.2(c) and (ii)
amounts, up to a maximum of $150,000, payable under the Notes issued pursuant to
Section 2.2(e), provided that any set-off against the Notes shall be pro rata
among the
34
36
Sellers in accordance with the principal amount of Notes held and no
right of set-off shall exist for an amount in excess of the $150,000 maximum.
Notwithstanding the foregoing, if Buyer wishes to set-off any amount to which it
may be entitled under this Section 7 against amounts otherwise payable under
Section 2.2(c) or (e) (a "Set-Off") and the Sellers' Representative notifies
Buyer within 20 days of receiving notice from the Buyer specifying the basis for
such Set-Off that Sellers' Representative disputes such claim, the amount of the
Set-Off sought shall be placed in escrow by the Buyer with an independent third
party acceptable to Buyer and Sellers' Representative until such dispute is
resolved. Except as provided in this Section 7, Buyer shall have no right of
set-off against amounts otherwise payable to Sellers pursuant to this Agreement.
Neither the exercise of nor the failure to exercise such right of set-off will
constitute an election of remedies or limit Buyer in any manner in the
enforcement of any other remedies that may be available to it.
7.8 Procedure for Indemnification--Third Party Claims.
(a) Promptly after receipt by an indemnified party under Section 7.2
or 7.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnified party's failure to give
such notice.
(b) If any Proceeding referred to in Section 7.8(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves Taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate due to a probable conflict of interest in
the defenses available to the parties, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 7 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) no compromise or
settlement of such claims may be effected by the indemnifying party without the
indemnified party's consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other claims that may be made against the indemnified party,
and (B) the sole relief provided is monetary damages that are paid in full by
the indemnifying party; and (ii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within twenty days after the
indemnified party's notice is given, give notice to the
35
37
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party; provided that no
compromise or settlement of the claim may be effected without the indemnifying
party's consent, which will not be unreasonably withheld. Notwithstanding the
foregoing, notice of any claim made against the Company or the Sellers, other
than those arising as result of a breach of the representations and warranties
made in Section 4, shall be provided to the Sellers' Representative, who shall
have sole authority to respond to and compromise such claim in accordance with
the foregoing provisions. Likewise, the Sellers' Representative shall have the
sole authority to seek indemnification from Buyer pursuant to this Section 7 on
behalf of the Sellers.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
7.9 Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by written notice to the party from whom indemnification is sought.
7.10 No Contribution. Each Seller waives, and acknowledges and
agrees that such Seller shall not have and shall not exercise or assert or
attempt to exercise or assert, any right of contribution or right of indemnity
or any right or remedy against the Acquired Companies in connection with any
indemnification obligation or any other liability to which such Seller may
become subject under this Agreement or otherwise in connection with any of the
Contemplated Transactions, except for any right or remedy against the Acquired
Companies arising out of a breach of any covenant or agreement, which breach
occurs after the Closing.
7.11 Sole Remedy. The remedies provided in this Section 7 will be
the exclusive remedy of the parties hereto with respect to the Contemplated
Transaction and this Agreement.
8. GENERAL PROVISIONS
8.1 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Buyer and the
Shareholders' Representative mutually determine. The Company and Sellers'
Representative will consult with each other concerning the means by which the
Acquired
36
38
Companies' employees, customers, and suppliers and others having
dealings with the Acquired Companies will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
8.2 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
To Buyer: Advantix, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
To the Company: ProTix, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Reinhart, Boerner, Van Deuren, ▇▇▇▇▇▇ &
Rieselbach
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
To the Sellers: At the address for each
such Seller shown on
the signature page
37
39
To the Sellers' ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Representative: c/o AccuGlass
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 Dispute Resolution. Any controversy, dispute, or claim arising
out of or relating to the interpretation, performance or breach of this
Agreement shall be finally determined, at the request of any party, by binding
arbitration conducted in accordance with the then existing rules for commercial
arbitration of the American Arbitration Association, and judgment upon any award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Such arbitration shall be conducted in Orange County, California. The
arbitrator shall award to the prevailing party, in addition to the costs of the
proceeding, that party's reasonable attorney's fees.
8.4 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
8.5 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including the Letters of Intent between Buyer and the Company dated July 2,
1998 and September 15, 1998) and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may be amended or modified in whole or in part at any time by an agreement in
writing among Buyer, the Company and the Sellers' Representative.
8.6 Assignments, Successors, and No Third-Party Rights. No party may
assign any of its rights under this Agreement without the prior consent of the
other parties, which will not be unreasonably withheld. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and
38
40
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
8.7 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
8.8 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
8.9 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
8.10 Governing Law. This Agreement will be governed by the laws of
the State of California without regard to conflicts of laws principles.
8.11 Equitable Remedies. In addition to legal remedies, to the
extent allowed pursuant to this Agreement or by law, in recognition of the fact
that remedies at law may not be sufficient, the parties hereto (and their
successors) shall be entitled to equitable remedies including, without
limitation, specific performance and injunction.
8.12 Effect of Amendment or Waiver. Each Seller acknowledges that by
operation of Sections 6.1 and 8.5, the Sellers' Representative will have the
right and power to diminish or eliminate rights of such Seller under this
Agreement.
8.13 Opportunity to Consult Counsel. Each Seller acknowledges that
such Seller has had full and adequate opportunity to have this Agreement
reviewed by such Seller's independent counsel and to discuss this Agreement with
such counsel.
8.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
39
41
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement effective as of the date first written above.
"BUYER"
Advantix, Inc., a Delaware corporation
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: EVP, Finance & Chief Financial
------------------------------------
Officer
"COMPANY"
ProTix, Inc., a Wisconsin corporation
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: President
------------------------------------
40
42
The undersigned Sellers have executed this Agreement effective as of
the Closing Date.
"SELLERS"
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Number of Shares Owned: 4,181.83
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Number of Shares Owned: 3,770.00
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Number of Shares Owned: 3,163.35
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
41
43
/s/ ▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.
Number of Shares Owned: 1,518.18
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Number of Shares Owned: 1,454.54
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Number of Shares Owned: 427.27
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
42
44
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. Caves
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇▇▇ ▇. Caves
Number of Shares Owned: 572.73
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Number of Shares Owned: 245.45
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Number of Shares Owned: 545.45
Address: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
43
45
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Number of Shares Owned: 477.28
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Number of Shares Owned: 477.27
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Number of Shares Owned: 252.50
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
44
46
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Number of Shares Owned: 252.50
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Number of Shares Owned: 252.50
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
45
47
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Number of Shares Owned: 208.34
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
N/A
--------------------------------------------
Signature of Seller's Spouse
Printed Name:
Number of Shares Owned: 208.33
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Number of Shares Owned: 181.82
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
46
48
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Number of Shares Owned: 181.82
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Number of Shares Owned: 158.70
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Signature of Seller's Spouse
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Number of Shares Owned: 150.00
Address: ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
47
49
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
--------------------------------------------
Signature of Seller's Spouse
Printed Name: ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Number of Shares Owned: 56.50
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Number of Shares Owned: 390.34
Address: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Signature of Seller
Printed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Number of Shares Owned: 390.34
Address: ▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
48
50
EXHIBIT 1
"ACQUIRED COMPANIES"--the Company and its Subsidiaries,
collectively.
"APPLICABLE CONTRACT"--any Contract to which an Acquired Company is
a party.
"BASKET"--as defined in Section 7.5.
"BEST EFFORTS"--the reasonable efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible.
"BREACH"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"BUYER"--as defined in the first paragraph of this Agreement.
"BUYER BALANCE SHEET"--as defined in Section 5.4.
"BUYER'S CLOSING DOCUMENTS"--as defined in Section 5.2(a).
"BUYER'S SCHEDULE"--the schedule delivered by Buyer to the Company
and Sellers concurrently with the execution and delivery of this Agreement.
"BUYER STOCK"--as defined in Section 2.2.
"CLOSING"--as defined in Section 2.3.
"CLOSING CASH PAYMENT"--as defined in Section 2.2.
"CLOSING DATE"--the date and time as of which the Closing actually
takes place.
"COMPANY"--as defined in the first paragraph of this Agreement.
"COMPANY BALANCE SHEET"--as defined in Section 3.4.
"COMPANY INTERIM BALANCE SHEET"--as defined in Section 3.4.
"COMPANY STOCK"--as defined in Section 3.3.
"COMPANY'S SCHEDULE"--as defined in the introductory language to
Section 3.
1
51
"CONSENT"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS"--all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer and the sale of the
Buyer Stock and Warrants by Buyer to Sellers;
(b) the execution, delivery, and performance of the Employment
Agreements, the Confidentiality Agreements, the Noncompetition Agreements,
Sellers' Releases, and the
Warrants;
(c) the performance by Buyer, the Company and Sellers of their
respective covenants and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise of
control over the Acquired Companies.
"CONTRACT"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"COPYRIGHTS" --any foreign or United States copyright registrations
and applications for registration thereof, and any non-registered copyrights.
"DAMAGES"--as defined in Section 7.2.
"DEFERRED CASH PAYMENT"--as defined in Section 2.2.
"EMPLOYMENT AGREEMENTS"--as defined in Section 2.4(a)(iii).
"ENCUMBRANCE"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership, except for such imperfections of title and encumbrances, if any, that
are not insubstantial in character, amount or extent, and do not individually or
in the aggregate materially detract from the value, or interfere with the
present or intended use, of the property or assets subject thereto or affected
thereby, or otherwise materially impair the business of the Acquired Companies,
and except for tax liens for amounts not yet due or liens with respect to
indebtedness shown on the financial statements described in Section 3.4 hereof.
"ENVIRONMENTAL LAWS"--any Legal Requirement designed to minimize,
prevent, punish or remedy the consequences of actions that damage or threaten
the environment or public health and safety.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
2
52
"ERISA AFFILIATE"--any person that, together with the Company, would
be treated as a single employer under IRC ss. 414.
"FACILITIES"--any real property, leaseholds, or other interests
currently or formerly owned or operated by any Acquired Company and any
buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by any Acquired
Company.
"GAAP"--generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Company Balance Sheet
and the other financial statements referred to in Section 3.4(b) were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"HAZARDOUS SUBSTANCES"--all hazardous and toxic materials or wastes
(including, without limitation, petroleum products, asbestos and raw materials
which include hazardous constituents), fumes, smoke, soot, acids, alkalis,
chemicals, liquids, gases, vapors, wastes and materials; any pollutants or
contaminants; and any other similar substances or materials which are regulated
under Environmental Laws.
"INTELLECTUAL PROPERTY"--as defined in Section 3.22.
"INTERNET ASSETS"--any registered internet domain names and other
proprietary computer used identifiers and any proprietary rights in and to sites
on the worldwide web, including rights in and to any text, graphics, audio and
video files and html or other code incorporated in such sites.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
3
53
"KNOWLEDGE"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. The Company will be deemed to have "Knowledge" of a
particular fact or other matter if ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇
has, or at any time had, Knowledge of such fact or other matter. Buyer will be
deemed to have "Knowledge" of a particular fact or other matter if W. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ has, or at any
time had, Knowledge of such fact or other matter.
"LEGAL REQUIREMENT"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"NET WORKING CAPITAL"--total consolidated current assets of the
Acquired Companies minus total consolidated current liabilities of the Acquired
Companies, determined in accordance with GAAP, except that total consolidated
current assets of the Acquired Companies will exclude notes receivable, accounts
receivable from, and advances to Related Persons and shareholders of the
Acquired Companies and total consolidated current liabilities of the Acquired
Companies will exclude all amounts related to notes payable and obligations
under capital leases and $224,000 of accrued bonus and the employer portion of
payroll taxes and matching 401(k) contributions related thereto.
"NONCOMPETITION AGREEMENTS"--as defined in Section 2.4(a)(iv).
"ORDER"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS"--an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) and is not required to be specifically authorized by the
parent company (if any) of such Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a
4
54
limited partnership; (d) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
"PARTICIPATING PERCENTAGE"--the percentage of the issued and
outstanding shares of capital stock of the Company as of the Closing Date which
are sold to Buyer under the Agreement.
"PATENTS"-- any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified or resubmitted.
"PERSON"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PLAN"--as defined in Section 3.13.
"PROCEEDING"--any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"PROPRIETARY RIGHTS AGREEMENT"--as defined in Section 3.20.
"PURCHASE PRICE"--as defined in Section 2.2.
"REAL PROPERTY"--as defined in Section 3.19.
"RELATED PERSON"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
5
55
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves as
a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse, (iii) any other natural person who
is related to the individual or the individual's spouse within the second
degree, and (iv) any other natural person who resides with such individual, and
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 5% of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least 5% of the outstanding equity securities or equity
interests in a Person.
"REPRESENTATIVE"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECTION 338(h)(10) ELECTION"--as defined in Section 6.5.
"SECURITIES ACT"--the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"SELLERS"--as defined in the first paragraph of this Agreement.
"SELLER'S CLOSING DOCUMENTS"--as defined in Section 4.2.
"SHARES"--as defined in the Recitals of this Agreement.
"SOFTWARE" -- any computer software programs, source code, object
code, data and documentation related thereto.
"SUBSIDIARY"--with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of the Company. The term "Subsidiary" shall include ProTix
Connecticut General Partnership, a Wisconsin general partnership; ProTix Limited
Partnership I, a Wisconsin limited partnership; ProTix Access Control, LLC, a
Wisconsin limited liability company; and ProTix Australia Pty, Ltd., an
Australian corporation.
6
56
"TAX RETURN"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREATENED"--a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
"TRADEMARKS"-- any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.
"TRADE SECRETS"-- any trade secrets, including, without limitation,
proprietary research records, processes, procedures, manufacturing formulae,
technical know-how, technology, blue prints, designs, plans, inventions (whether
patentable and whether reduced to practice), invention disclosures and
improvements thereto.
"WARRANTS"--as defined in Section 2.2.
7
57
LIST OF EXHIBITS
TO
STOCK PURCHASE AGREEMENT
BY AND AMONG
ADVANTIX, INC.,
PROTIX, INC.
AND
SHAREHOLDERS OF PROTIX, INC.
Exhibit 1 Definitions
Exhibit 2.2(d) Common Stock Purchase Warrant
Exhibit 2.2(e) Non-Negotiable Promissory Note
Exhibit 2.4(a)(ii)(1) ▇▇▇▇▇▇ Employment Agreement
Exhibit 2.4(a)(ii)(2) ▇▇▇▇▇▇ Employment Agreement
Exhibit 2.4(a)(ii)(3) ▇. ▇▇▇▇▇▇▇ Employment Agreement
Exhibit 2.4(a)(ii)(4) ▇. ▇▇▇▇▇▇▇ Employment Agreement
Exhibit 2.4(a)(iii) Confidentiality Agreement
Exhibit 2.4(a)(iv) Noncompetition Agreement
Exhibit 2.4(a)(v) Security Agreement
8