Exhibit 10.19
ASSET PURCHASE AGREEMENT
By and Between
ELIANCE CORPORATION,
▇▇▇▇▇▇▇.▇▇▇ INC.
and
▇▇▇▇▇▇.▇▇▇ INC.
TABLE OF CONTENTS
SECTION PAGE
1. Sale and Delivery of the Assets to be Sold; Release......................................2
1.1 Delivery of the Assets to be Sold...............................................2
1.2 Further Assurances..............................................................4
1.3 Purchase Price..................................................................4
1.4 Assumption of Liabilities.......................................................4
1.5 The Closing.....................................................................4
1.6 General Procedure...............................................................5
2. Representations of the Seller............................................................5
2.1 Organization and Standing.......................................................5
2.2 Authority for Agreement; No Conflict............................................5
2.3 Governmental Consents...........................................................6
2.4 Ownership of the Assets to be Sold..............................................6
2.5 Intellectual Property...........................................................6
2.6 Tangible Properties.............................................................7
2.7 Contracts and Commitments.......................................................8
2.8 Litigation......................................................................9
2.9 Employees and Consultants.......................................................9
2.10 Disclosures.....................................................................9
2.11 Investment......................................................................9
2.12 Experience......................................................................9
3. Representations of the Parent and Buyer.................................................10
3.1 Organization and Standing......................................................10
3.2 Authority for Agreement; No Conflict...........................................10
3.3 Governmental Consents..........................................................11
3.4 Capitalization.................................................................11
3.5 Securityholder Lists and Agreements............................................12
3.6 Issuance of Shares.............................................................12
3.8 Absence of Undisclosed Liabilities.............................................12
3.9 Ownership of Assets............................................................12
3.10 Intellectual Property..........................................................12
3.11 Tangible Properties............................................................13
3.13 Taxes..........................................................................13
3.14 Litigation.....................................................................13
3.15 Compliance.....................................................................14
3.16 Permits........................................................................14
3.17 Environmental Matters..........................................................14
3.18 Insurance......................................................................15
3.19 Employees and Consultants......................................................15
3.20 ERISA..........................................................................15
3.21 Year 2000 Compliance...........................................................15
3.22 Subsidiaries, Etc..............................................................15
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4. Access to Information; Public Announcements.............................................15
4.1 Access to Management, Properties and Records...................................15
4.2 Confidentiality................................................................15
4.3 Public Announcements...........................................................16
5. Pre-Closing Covenants...................................................................16
5.1 Conduct of Business............................................................16
5.2 Absence of Material Changes....................................................16
5.3 Taxes..........................................................................17
6.1 Conditions to the Obligations of the Buyer..............................................17
6.1 Consents; Absence of Legal Proceedings.........................................17
6.2 Accuracy of Representations and Warranties.....................................17
6.3 Performance....................................................................17
6.4 Compliance Certificates........................................................18
6.5 Certificates and Documents.....................................................18
7. Condition to the Obligations of the Seller..............................................19
7.1 Consents; Absence of Legal Proceedings.........................................19
7.2 Accuracy of Representations and Warranties.....................................19
7.3 Performance....................................................................19
7.4 Compliance Certificates........................................................19
7.5 Certificates and Documents.....................................................20
8. Transfer of Shares......................................................................21
8.1 Restricted Shares..............................................................21
8.2 Requirements for Transfer......................................................21
8.3 Legend.........................................................................21
9. Indemnification.........................................................................21
9.1 By the Seller..................................................................21
9.2 By the Parent and the Buyer....................................................22
9.3 Claims for Indemnification.....................................................22
9.4 Defense by Indemnifying Party..................................................23
9.5 Payment of Indemnification Obligation..........................................23
9.6 Survival of Representations; Claims for Indemnification........................23
9.7 Limitations....................................................................23
10. Post-Closing Agreements.................................................................24
10.1 Proprietary Information........................................................24
10.2 Non-Competition Agreement......................................................24
10.3 Cooperation in Litigation......................................................24
10.4 Transition.....................................................................25
10.5 Insurance......................................................................25
10.7 Employee Stock Options.........................................................25
Stockholders Meeting....................................................................25
Employees...............................................................................25
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11. Termination of Agreement................................................................25
11.1 Termination by Lapse of Time...................................................25
11.2 Termination by Agreement of the Parties........................................26
11.3 Effect of Termination..........................................................26
12. Transfer Taxes, Governmental Fees and Charges; Certain Income Taxes.....................26
13. Other Provisions........................................................................26
13.1 Successors and Assigns.........................................................26
13.2 Expenses.......................................................................26
13.3 Brokers........................................................................27
13.4 Severability...................................................................27
13.5 Specific Performance...........................................................27
13.6 Governing Law..................................................................27
13.7 Notices........................................................................27
13.8 Complete Agreement.............................................................28
13.9 Amendments and Waivers.........................................................28
13.10 Pronouns.......................................................................29
13.11 Counterparts; Facsimile Signatures.............................................29
13.12 Section Headings...............................................................29
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Exhibits
A-1 - List of Intangible Properties
A-2 - List of Tangible Properties
A-3 - List of Assumed Contracts and Assumed Liabilities
A-4 - July 4, 1999 Agreement
A-5 - Seller Consulting Agreement
A-6 - Parent Consulting Agreement
A-7 - Annex I to November 26, 1999 Agreement
B - Instrument of Assumption of Liabilities
C - ▇▇▇▇ of Sale
D-1 - Seller's Disclosure Schedule
D-2 - Buyer's Disclosure Schedule
E-1 - Form of Seller's Non-Disclosure of Proprietary Information Agreement
E-2 - Form of Seller's Non-Competition and Non-Solicitation Agreement
F - Certificate of Amendment to the Buyer's Certificate of Incorporation
G - Software License
H - Corporate Services Agreement
I - Internet Services Agreement
J - Share Escrow Agreement
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ASSET PURCHASE AGREEMENT
Agreement made as of December 29, 1999, among eliance Corporation, a
Delaware corporation with its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Seller"), ▇▇▇▇▇▇▇.▇▇▇ Inc., a Delaware
corporation formerly known as BlueSky Ventures Inc. with its principal office at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "Parent"), and
▇▇▇▇▇▇.▇▇▇ Inc., a Delaware corporation and a wholly owned subsidiary of Parent
with its principal office at, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "Buyer").
PRELIMINARY STATEMENT
WHEREAS, Seller and Parent, deeming it to be advisable and in the best
interests of both companies to combine their internet operations and technology,
including Seller's eBus transaction engine and Parent's system architecture for
its web site, ▇▇▇▇▇▇▇.▇▇▇, and expertise in the operation thereof, and to
thereby create valuable synergies, entered into an agreement on July 4, 1999,
pursuant to which Parent was to acquire common stock of Seller in exchange for
Parent's contribution of certain assets and the employment of Parent's
stockholders, ▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and ▇▇▇▇ ▇▇▇▇▇▇▇
("Cumming"), with Seller (the "July 4, 1999 Agreement");
WHEREAS, ▇▇▇▇▇, Hantho and Cumming resigned from their employment with
Seller effective November 21, 1999;
WHEREAS, Seller and Parent, deeming it to be advisable and in the best
interests of both companies to restructure the transaction set forth in the July
4, 1999 Agreement, entered into an agreement on November 29, 1999, pursuant to
which Seller was to acquire Common Stock, $.01 par value ("Parent Common
Stock"), of Parent, in exchange for Seller's contribution of certain assets
which were to be used with Parent's ▇▇▇▇▇▇▇.▇▇▇ web site under the July 4, 1999
Agreement and for other consideration, including Seller's licensing of the eBus
transaction engine to the Buyer, certain services to be provided to Parent and
Parent's agreement to employ ▇▇▇▇▇, ▇▇▇▇▇▇ and Cumming ("November 29, 1999
Agreement");
WHEREAS, Seller and Parent have deemed it to be advisable and in the
best interests of both companies to restructure the transaction set forth in the
November 29, 1999 Agreement in order to remove the liens on certain hardware and
other properties to be transferred by Seller to Parent and for other reasons;
and
WHEREAS, the Buyer desires to purchase, and the Seller desires to sell,
certain assets of the Seller described herein for the consideration set forth
below and the assumption of certain of the Seller's liabilities set forth below,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual premises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. SALE AND DELIVERY OF THE ASSETS TO BE SOLD; RELEASE
1.1 (a) Delivery of the Assets to be Sold
Subject to and upon the terms and conditions of this
Agreement, at the closing of the transactions contemplated by this Agreement
(the "Closing"), the Seller shall sell, transfer, convey, assign and deliver to
the Buyer and the Buyer shall purchase and acquire from the Seller, all of
Seller's right, title and interest, as of the date of Closing, in and to all of
the assets of Seller identified below, free and clear of all Encumbrances (as
defined in Section 2.4):
(i) All fixtures, furniture, equipment, computer hardware
and tangible embodiments of computer software and other tangible property set
forth on EXHIBIT A-2 attached hereto and all of such property located at ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (collectively, the "Tangible
Properties");
(ii) All rights (collectively, the "Contract Rights") of
the Seller under the contracts, agreements, leases, licenses and other
instruments set forth on EXHIBIT A-3 attached hereto, the "face contracts" for
the ▇▇▇▇▇▇▇.▇▇▇ site and the lease for ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (collectively, the "Assumed Contracts");
(iii) The name and URL "▇▇▇▇▇▇▇.▇▇▇" or any combination of
words in which the name "▇▇▇▇▇▇▇.▇▇▇" or "webhelp" appears or any rights
associated with such name or any right to use such name in all jurisdictions in
which Seller either currently uses any such name or has any right to use any
such name; and
(iv) The trademarks "webhelpme", "webhelpme buy",
"webhelpme sell" and "webhelpme shop."
The Tangible Properties, Contract Rights and other assets
and rights described in this paragraph (a) shall be referred to collectively as
the "Assets to be Sold."
(b) RELEASES
(i) Seller, on behalf of itself and each of its directors
or any their respective successors or assigns, or any heirs, executors or
administrators of any of the foregoing persons, on behalf of the Seller, and
their respective successors and assigns, and any heirs, executors and
administrators of any of the foregoing persons (collectively, the "Releasors"),
in consideration of this Agreement and for other good and valuable consideration
received from Parent, receipt of which is hereby acknowledged by Seller, hereby
releases Parent, Buyer and each of Parent's current stockholders, directors,
officers and employees, and their respective successors and assigns, and any
heirs, executors or administrators of any such persons (collectively, the
"Releasees") from all claims, actions, causes of action, suits, debts, dues,
sums of money, accounts, covenants, contracts, controversies, agreements,
promises, damages, judgments, executions and demands whatsoever, in law or
equity (collectively, "Claims"), which (A) any Releasors, or (B) any of Seller's
stockholders, officers or employees or any of their respective successors or
assigns, or any heirs, executors or administrators of any of the foregoing
persons, ever had, now has or hereafter can, shall or may have, in the case of
any person in
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clause (B) on behalf of the Seller to the extent they can be released by the
Seller, against any Releasees arising out of or relating to:
(x) the following agreements, copies of which are attached hereto
as Exhibits: (1) July 4, 1999 Agreement (Exhibit A-4), (2) the
agreement dated October 20, 1999 between Screaming Solutions
Ventures Inc. and the Seller (Exhibit A-5), (3) the agreement
between Screaming Solutions Ventures Inc and the Parent (Exhibit
A-6), and (4) the November 29, 1999 Agreement (Exhibit
A-7);
(y) the following interests: (1) ownership of any of the Assets
to be Sold or the computer software components set forth in
Exhibit A-1, (2) any licensing fees or other amount for the eBus
transaction engine other than pursuant to the terms and
conditions set forth in the Software License, and (3) any fees or
other amounts for the services and space provided by Seller to
Buyer and Parent prior to the Closing except at expressly set
forth in the Corporate Services Agreement; or
(z) Adler's, Hantho's, Cumming's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and ▇▇▇ ▇▇▇▇▇▇'▇
employment with or other provision of services to Seller and the
termination of such employment or other provision of services,
including, without limitation, arising out of or relating to the
covenants set forth in Section 4 of the individual Employment
Agreements between Seller and ▇▇▇▇▇, Hantho and Cumming.
(ii) Each of Parent and Buyer, on behalf of itself and
each of the individuals who were their stockholders, directors or officers on
the day prior to the Closing Date, and their respective successors and assigns
(collectively, the "Seller Releasors"), in consideration of this Agreement and
for other good and valuable consideration received from Seller, receipt of which
is hereby acknowledged by Parent and Buyer, hereby releases Seller and each of
Seller's current stockholders, directors, officers and employees, and their
respective successors and assigns, and any heirs, executors or administrators of
any such persons (collectively, the "Seller Releasees") from all Claims which
any Seller Releasors ever had, now has or hereafter can, shall or may have
against any Seller Releasees arising out of or relating to:
(x) the following agreements, copies of which are attached hereto
as Exhibits: (1) July 4, 1999 Agreement (Exhibit A-4), (2) Seller
Consulting Agreement (Exhibit A-5), (3) Parent Consulting
Agreement (Exhibit A-6), and (4) the November 26, 1999 Agreement
(Exhibit A-7); or
(y) Adler's, Hantho's, Cumming's, ▇▇▇▇▇▇ ▇▇▇▇▇'▇ and ▇▇▇ ▇▇▇▇▇▇'▇
employment with or other provision of services to Seller and the
termination of such employment or other provision of services.
The releases set forth in this Section 1.1(b) does not apply to
any claims, actions, causes of action, suits, debts, dues, sums of money,
accounts, covenants, contracts, controversies, agreements, promises, damages,
judgments, executions and demands whatsoever, in law or equity, which arise out
of or relate to events, acts or occurrences after the date of this Agreement.
The release set forth in Section 1.1(b)(ii) shall not apply to any claims for
indemnification, contribution or advancement of expenses that the Releasors
have, whether at law, by contract or
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pursuant to the Seller's or its subsidiary's certificate of incorporation or
by-laws, in respect of Claims by individuals or entities who are not Seller
Releasees.
1.2 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyer's reasonable request and without further consideration,
the Seller shall promptly execute and deliver such instruments of sale,
transfer, conveyance, assignment and confirmation, and take such other action,
as the Buyer may reasonably request to more effectively transfer, convey and
assign all of the Assets to be Sold, to put the Buyer in actual possession and
operating control thereof, to assist the Buyer in exercising all rights with
respect thereto and to carry out the purpose and intent of this Agreement.
1.3 (a) PURCHASE PRICE. The purchase price for the Assets to be Sold
(the "Purchase Price") shall consist of (i) cash in the amount of $4,500,000
payable by wire transfer or other immediately available funds and (ii) 8,500,000
shares (the "Shares") of the Parent's Common Stock, $0.01 par value (the "Parent
Common Stock"), free and clear of all Encumbrances of any kind; 3,000,000 shares
of Parent Common Stock shall be delivered to the Seller at the Closing and
5,500,000 shares of Parent Common Stock shall be delivered into the Escrow
Account (as defined in the Escrow Agreement) and released in accordance with the
provisions of the Escrow Agreement by and among Parent, Seller, Buyer and
certain stockholders of Parent in the form of Exhibit J hereto (the "Escrow
Agreement"). The Shares shall constitute 17% of all shares of Parent Common
Stock issued and outstanding, on a fully diluted basis (after giving effect to
conversion of the outstanding Series A Convertible Preferred Stock of Parent and
a stock option pool equal to 5% of all such shares on a fully diluted basis),
immediately following the Closing.
(b) ADJUSTMENT TO PURCHASE PRICE. In the event that the Seller is
unable to transfer to the Buyer at the Closing any of the Assets to be Sold free
and clear of all Encumbrances, at the option of the Buyer, the cash portion of
the Purchase Price to be delivered at the Closing shall be reduced in an
aggregate amount equal to the stated value of such encumbered assets as set
forth on Exhibits A-2 or A-3, as the case may be and such assets shall not be
deemed to be Assets to be Sold.
1.4 ASSUMPTION OF LIABILITIES.
(a) The Buyer will execute and deliver to the Seller an Instrument
of Assumption of Liabilities in the form attached hereto as EXHIBIT B, pursuant
to which it shall assume and agree to perform, pay and discharge all obligations
and liabilities arising under the Assumed Contracts from and after the Closing
Date (collectively, the "Assumed Liabilities"). At the Closing, the Buyer shall
deliver such Instrument of Assumption of Liabilities to the Seller.
(b) The Buyer shall not assume or agree to perform, pay or
discharge, and the Seller shall remain unconditionally liable for, all
obligations, liabilities or commitments, fixed or contingent, of the Seller
other than the Assumed Liabilities.
1.5 . The Closing shall take place at the offices of ▇▇▇▇▇▇ &
Whitney LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the second
business day following the satisfaction of the conditions set forth in Articles
6 and 7 or on such other date as is
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mutually agreeable to the Parent and the Seller (the "Closing Date"). The
transfer of the Assets to be Sold by the Seller to the Buyer shall be deemed to
occur at 9:00 a.m., Minneapolis time, on the Closing Date.
1.6 GENERAL PROCEDURE. At the Closing, each party shall deliver to the
party entitled to receipt thereof the documents required to be delivered
pursuant to Sections 6 and 7 hereof and such other documents, instruments and
materials (or complete and accurate copies thereof, where appropriate) as may be
reasonably required in order to effectuate the intent and provisions of this
Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for the receiving party. The
conveyance, transfer, assignment and delivery of the Assets to be Sold shall be
effected by Seller's execution and delivery to Buyer of a ▇▇▇▇ of sale
substantially in the form attached hereto as EXHIBIT C (the "▇▇▇▇ of Sale") and
such other instruments of conveyance, transfer, assignment and delivery as Buyer
shall reasonably request to cause Seller to transfer, convey, assign and deliver
the Assets to be Sold to Buyer.
2. REPRESENTATIONS OF THE SELLER
Except as disclosed by the Seller in its disclosure schedule contained
in EXHIBIT D-1 hereto, the Seller hereby represents and warrants to the Parent
and the Buyer that the following statements are true, complete and correct. The
Seller's disclosures contained in EXHIBIT D-1 shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Section
2, and the disclosures in any paragraph of EXHIBIT D-1 shall qualify only the
corresponding paragraph of this Section 2, unless otherwise specified.
2.1 ORGANIZATION AND STANDING. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own and lease its
properties and assets and to conduct its business as presently conducted and as
proposed to be conducted by it and to enter into and perform this Agreement and
all other agreements required to be executed by the Seller at or prior to the
Closing pursuant to Section 6.5 (the "Seller's Ancillary Agreements") and
pursuant to the other provisions of this Agreement and to carry out the
transactions contemplated by this Agreement and the Seller's Ancillary
Agreements. The Seller is duly qualified to do business as a foreign corporation
and is in good standing in every jurisdiction in which the failure so to qualify
would have a material adverse effect on the business, prospects, assets or
condition (financial or otherwise) of the Seller. The Seller has made available
to the Buyer true and complete copies of its Certificate of Incorporation and
By-Laws, each as amended to date and presently in effect.
2.2 AUTHORITY FOR AGREEMENT; NO CONFLICT. The execution, delivery and
performance by the Seller of this Agreement and the Seller's Ancillary
Agreements, and the consummation by the Seller of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action.
This Agreement has been, and the Seller's Ancillary Agreements when executed at
the Closing will be, duly executed and delivered by the Seller and constitute
valid and binding obligations of the Seller enforceable in accordance with their
respective terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights or by general principles
of equity. The execution of and performance of the transactions contemplated by
this Agreement and the Seller's Ancillary Agreements and compliance with their
respective
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provisions by the Seller will not (a) conflict with or violate any provision of
the Certificate of Incorporation or By-Laws of the Seller, each as amended to
date, (b) conflict with, result in a breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any material contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, document creating or
pertaining to an Encumbrance (as defined in Section 2.4 below) or other
arrangement to which the Seller is a party or by which the Seller is bound or to
which its assets are subject, (c) result in the imposition of any Encumbrance
upon any Assets to be Sold or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Seller or any of the Assets to be
Sold.
2.3 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (each of the foregoing is
hereafter referred to as a "Governmental Entity") is required on the part of the
Seller in connection with the execution and delivery of this Agreement or the
Seller's Ancillary Agreements or the other transactions to be consummated at the
Closing, as contemplated by this Agreement and the Seller's Ancillary
Agreements, except such filings as shall have been made prior to and shall be
effective on and as of the Closing, all of which filings are specified in
EXHIBIT D-1.
2.4 OWNERSHIP OF THE ASSETS TO BE SOLD. SECTION 2.4(I) of EXHIBIT D-1
sets forth a list of all claims, liabilities, liens, mortgages, security
interests, pledges, charges, encumbrances and equities of any kind materially
and adversely affecting the Assets to be Sold (collectively, the
"Encumbrances"). The Seller is, and at the Closing will be, the true and lawful
owner of or have a valid lease, license or right to use the Assets to be Sold,
and at the Closing will have the right to sell and transfer to the Buyer good
and marketable title to the Assets to be Sold owned by the Seller , whether
arising by contract or by operation of law, free and clear of all Encumbrances
of any kind, except for (a) liens for taxes not yet due and payable or (b) such
imperfections of title, easements, mortgages or other Encumbrances, if any, as
are not, individually or in the aggregate, substantial in character, amount or
extent and do not materially detract from the value, or interfere with the
present use, of the property subject thereto or affected thereby, or otherwise
materially impair business operations. The delivery to the Buyer of the
instruments of transfer of ownership contemplated by this Agreement will vest
good and marketable title to the Assets to be Sold owned by the Seller in the
Buyer, free and clear of all Encumbrances.
2.5 INTELLECTUAL PROPERTY.
(a) The Seller owns, free and clear of all Encumbrances, or has the
valid right to use all Intellectual Property (as defined in this Section 2.5)
included as part of the Assets to be Sold. No third party (other than licensors
of software that is generally commercially available, licensors of Intellectual
Property under the
6
agreements disclosed pursuant to paragraph (b) below and non-exclusive licensees
of the Intellectual Property in the ordinary course of the Seller's business)
has any rights (other than patent rights) to any of the Intellectual Property
included as part of the Assets to be Sold. To the Seller's knowledge, no third
party (other than licensors of software that is generally commercially
available, licensors of Intellectual Property under the agreements disclosed
pursuant to paragraph (b) below and non-exclusive licensees of the Intellectual
Property in the ordinary course of the Seller's business) has any patent rights
owned or used by the Seller. To the Seller's knowledge, no third party is
infringing, violating or misappropriating any of the Intellectual Property that
the Seller owns that is included as part of the Assets to be Sold. For purposes
of this Agreement, "Intellectual Property" means all (i) patents, patent
applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility model,
certificate of invention and design patents, patent applications, registrations
and applications for registrations, (ii) trademarks, service marks, trade dress,
logos, trade names and corporate names and registrations and applications for
registration thereof, (iii) copyrights and registrations and applications for
registration thereof, (iv) computer software (in both source code and object
code form), data and documentation, and (v) trade secrets, whether patentable or
unpatentable and whether or not reduced to practice, know-how and copyrightable
works.
(b) EXHIBIT D-1 hereto identifies each agreement with a third party
pursuant to which the Seller obtains rights to Intellectual Property included as
part of the Assets to be Sold (other than software that is generally
commercially available) that is owned by a party other than the Seller. Other
than license fees for software that is generally commercially available, the
Seller is not obligated to pay any royalties or other compensation to any third
party in respect of its ownership, use or license of any of its Intellectual
Property included as part of the Assets to be Sold.
(c) The Seller has taken reasonable precautions (i) to protect its
rights in the Intellectual Property and (ii) to maintain the confidentiality of
its trade secrets, know-how and other confidential intellectual property, and to
the Seller's knowledge, there have been no acts or omissions (other than those
made based on reasonable, good faith business decisions) by the officers,
directors and employees of the Seller the result of which would be to materially
compromise the rights of the Seller to apply for or enforce appropriate legal
protection of the Intellectual Property.
(d) Notwithstanding the foregoing, no action or condition arising
out of the activities of any stockholders of the Parent since they became
employees of the Seller within the scope of their employment shall give rise to
a breach of any of the representations or warranties contained in Sections 2.4
or 2.5.
2.6 TANGIBLE PROPERTIES. All of the Seller's Tangible Properties
included as part of the Assets to be Sold are suitable for the uses in which
they are currently employed, are in good operating condition and are free from
any defects, except such minor defects as do not interfere with the conduct of
the Seller's business.
2.7 CONTRACTS AND COMMITMENTS.
(a) Copies of all Assumed Contracts have previously been delivered
or made available by the Seller to the Buyer.
(b) Except as set forth in EXHIBIT D-1:
7
(i) The Seller is not in material breach of or default under
any Assumed Contract; and
(ii) To the knowledge of the Seller, there is no existing
breach or default by any other party to any Assumed Contract.
(C) EXHIBIT D-1 lists each consent of any third party that is required
under any Assumed Contract, as a result of the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby and, assuming receipt of such consents, the enforceability
of any such contract will not be affected in any adverse manner by the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
(d) EXHIBIT D-1 lists and describes briefly all real property and
personal property leased or subleased to the Seller and included as part of the
Assets to be Sold and lists the term of such lease, any extension and expansion
options, and the rent payable thereunder. The Seller has delivered or made
available to the Buyer correct and complete copies of the leases and subleases
(as amended to date) listed therein. With respect to each such lease and
sublease:
(i) The lease or sublease is legal, valid, binding,
enforceable and in full force and effect;
(ii) The lease or sublease will continue to be legal, valid,
binding, enforceable and in full force and effect immediately following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
(iii) The Seller is not in material breach or material
default, and no event has occurred which, with notice or lapse of time, would
constitute a material breach or material default by Seller or permit
termination, modification, or acceleration thereunder;
(iv) There are no disputes, oral agreements or forbearance
programs in effect as to the lease or sublease;
(v) The Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust or otherwise encumbered any interest in the leasehold
or subleasehold;
(vi) All facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the operation of said
facilities; and
(vii) To the knowledge of Seller, the owner of the facility or
personal property leased or subleased has good and clear record and marketable
title to the parcel of real property or such personal property, free and clear
of any security interest, easement, covenant or other restriction, except for
recorded easements, covenants, and other restrictions which do not impair the
intended uses, occupancy or value of the property subject thereto.
2.8 LITIGATION. There is no action, suit or proceeding, or governmental
inquiry or investigation, pending, or, to the Seller's knowledge, any basis
therefor or threat thereof, against
8
the Seller or any of the Seller's stockholders, which questions the validity of
this Agreement or the right of the Seller to enter into it or perform its
obligations hereunder.
2.9 EMPLOYEES AND CONSULTANTS. All employees and consultants of the
Seller who have access to confidential or proprietary information of the Seller
related to the Assets to be Sold have executed and delivered nondisclosure
agreements in the form of EXHIBIT E-1 and non-competition agreements in the form
of EXHIBIT E-2, and all of such agreements are in full force and effect.
2.10 DISCLOSURES. Neither this Agreement nor any Exhibit hereto, nor
any report, certificate or instrument furnished to the Buyer in connection with
the transactions contemplated by this Agreement when read together, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
2.11 INVESTMENT. The Seller is acquiring the Shares for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same; and, except as contemplated by this Agreement and the Exhibits hereto,
the Seller has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition thereof.
The Seller is an "accredited investor" as defined in Rule 501(a) under the
Securities Act . The Seller has not been organized, reorganized or recapitalized
specifically for the purpose of acquiring the Shares. The Seller has not
participated in any general solicitation or any securities of the Parent.
2.12 EXPERIENCE. The Seller has carefully reviewed the representations
concerning the Parent contained in this Agreement and has made detailed inquiry
concerning Parent, its business and its personnel; the officers of the Parent
have made available to the Seller any and all written information which it has
requested and have answered to the Seller's satisfaction all inquiries made by
the Seller; and the Seller has sufficient knowledge and experience in finance
and business that it is capable of evaluating the risks and merits of its
investment in the Buyer and the Seller is able financially to bear the risks
thereof.
3. REPRESENTATIONS OF THE PARENT AND BUYER. Except as disclosed by the Parent
and Buyer in their disclosure schedule contained in EXHIBIT D-2 hereto, the
Parent and the Buyer hereby jointly and severally represent and warrant to the
Seller that the following statements are true, complete and correct. The Parent
and Buyer's disclosures contained in EXHIBIT D-2 shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Section
3, and the disclosures in any paragraph of EXHIBIT D-2 shall qualify only the
corresponding paragraph of this Section 3, unless otherwise specified.
3.1 ORGANIZATION AND STANDING. Each of the Parent and the Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to own and
lease its properties and assets and to conduct its business as presently
conducted and as proposed to be conducted by it and to enter into and perform
this Agreement and all other agreements required to be executed by the Buyer
9
and/or Parent at or prior to the Closing pursuant to Section 7.5 (the
"Parent/Buyer's Ancillary Agreements") and to carry out the transactions
contemplated by this Agreement and the Parent/Buyer's Ancillary Agreements. On
the Closing Date, the Buyer will be duly qualified to do business as a foreign
corporation and will be in good standing in the States of Minnesota and North
Dakota and in every other jurisdiction in which the failure so to qualify would
have a material adverse effect on the business, prospects, assets or condition
(financial or otherwise) of the Buyer or the Parent. Each of the Parent and the
Buyer has furnished to the Seller true and complete copies of its Certificate of
Incorporation and By-Laws, each as amended to date and presently in effect. Each
of the Parent and the Buyer has at all times complied with all provisions of its
Certificate of Incorporation and By-Laws and is not in default under, or in
violation of, any such provision. EXHIBIT D-2 lists all affiliated entities of
the Parent and Buyer, the assumed names of each such affiliated entity, and a
description of the business and operations of each. Neither the Parent nor the
Buyer have any predecessor entities.
3.2 AUTHORITY FOR AGREEMENT; NO CONFLICT. The execution, delivery and
performance by each of the Parent and the Buyer of this Agreement and the
Parent/Buyer's Ancillary Agreements, and the consummation by each of the Parent
and the Buyer of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary corporate action. This Agreement
has been, and the Parent/Buyer's Ancillary Agreements when executed at the
Closing will be, duly executed and delivered by the Parent and the Buyer and
constitute valid and binding obligations of each of the Parent and the Buyer
enforceable in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights or by general principles of equity. The execution of and
performance of the transactions contemplated by this Agreement and the
Parent/Buyer's Ancillary Agreements and compliance with their respective
provisions by the Parent or the Buyer will not (a) conflict with or violate any
provision of the Certificate of Incorporation or By-Laws of the Parent or the
Buyer, each as amended through the Closing Date, (b) conflict with, result in a
breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any material contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Encumbrance or other arrangement to which the Parent
or the Buyer is a party or by which the Parent or the Buyer is bound or to which
its assets are subject, (c) result in the imposition of any Encumbrance upon any
assets of the Parent or the Buyer or (d) assuming the Seller's representations
and warranties contained in Sections 2.11 and 2.12 are true and correct, violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Parent or the Buyer or any of its properties or assets.
3.3 GOVERNMENTAL CONSENTS. Assuming the Seller's representations and
warranties contained in Sections 2.11 and 2.12 are true and correct, no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any Governmental Entity is required on
the part of the Parent or the Buyer in connection with the execution and
delivery of this Agreement or the Parent/Buyer's Ancillary Agreements, the
offer, issuance, sale and delivery of the Shares, or the other transactions to
be consummated at the Closing, as contemplated by this Agreement and the
Parent/Buyer's Ancillary Agreements, except such filings as shall have been made
prior to and shall be effective on and as of the
10
Closing and such filings required to be made after the Closing under applicable
U.S. federal and state securities laws and Canadian Securities Laws, all of
which filings are specified in EXHIBIT D-2. Based on the representations made by
the Seller in Section 2 of this Agreement, the offer and sale of the Shares will
be in compliance with applicable U.S. federal and state securities laws.
3.4 CAPITALIZATION. The authorized capital stock of the Parent
(immediately prior to the Closing, after giving effect to the filing of an
amendment to the Parent's Certificate of Incorporation in the form of EXHIBIT F
attached hereto) will consist of 55,000,000 shares of Common Stock, of which
24,000,000 shares are issued and outstanding, 2,500,000 shares of which have
been reserved for issuance pursuant to the ▇▇▇▇▇▇▇.▇▇▇ Inc. 1999 Long Term
Incentive Plan (the "Parent's Incentive Plan") and 8,500,000 shares of which
have been reserved for issuance to the Seller pursuant to the terms of this
Agreement, and 16,000,000 shares of Preferred Stock, $0.01 par value per share,
of which 15,000,000 shares will be issued and outstanding prior to the Closing
and designated as Series A Convertible Preferred Stock. All of the issued and
outstanding shares of Common Stock and Preferred Stock have been duly authorized
and validly issued and are fully paid and nonassessable. Except as set forth in
EXHIBIT D-2 and except as provided in this Agreement or in the Parent's
Incentive Plan, (i) no subscription, warrant, option, convertible security or
other right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Parent is authorized or outstanding, (ii) the Parent has no
obligation (contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute to holders of
any shares of its capital stock any evidences of indebtedness or assets of the
Parent, (iii) the Parent has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other distribution in
respect thereof, and (iv) there are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Parent.
Assuming the Seller's representations and warranties contained in Sections 2.11
and 2.12 are true and correct, all of the issued and outstanding shares of
capital stock of the Parent have been offered, issued and sold by the Parent in
compliance with applicable federal and state securities laws and applicable
securities laws of any province of Canada ("Canadian Security Laws"). The Parent
owns, beneficially and of record, 100% of the capital stock of the Buyer free
and clear of any claims, liens, equities, encumbrances or other restrictions.
3.5 SECURITYHOLDER LISTS AND AGREEMENTS. EXHIBIT D-2 contains a true
and complete list of the securityholders of the Parent, showing the number of
shares of Common Stock or other securities of the Parent held by each
stockholder as of the date of this Agreement and, in the case of options,
warrants and other convertible securities, the exercise price thereof and the
number and type of securities issuable thereunder. Except as described in
EXHIBIT D-2, there are no agreements, written or oral, between the Parent and
any holders of its securities, or to the Parent's knowledge, among any holders
of its securities, relating to the acquisition (including without limitation
rights of first refusal, antidilution or pre-emptive rights), disposition,
registration under the Securities Act of 1933, as amended (the "Securities Act
"), or voting of the capital stock of the Parent.
3.6 ISSUANCE OF SHARES. The issuance, sale and delivery of the Shares
have been, or will be on or prior to the Closing, duly authorized by all
necessary corporate action on the part of
11
the Parent, and all such shares have been duly reserved for issuance. The Shares
when so issued, sold and delivered against the stated consideration therefor in
accordance with the provisions of this Agreement will be duly and validly
issued, fully paid and nonassessable.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in all of
the Sections of EXHIBIT D-2, the Parent does not have any material liability
(whether known or unknown and whether absolute or contingent), except for
liabilities which have arisen since the Parent's Balance Sheet Date in the
ordinary course of business.
3.8 OWNERSHIP OF ASSETS. SECTION 3.9 of EXHIBIT D-2 sets forth a list
of all Encumbrances materially and adversely affecting the Parent's assets. The
Parent is, and at the Closing will be, the true and lawful owner of, or shall
have a valid right to use, all assets used in its business. The Buyer does not
own any assets.
3.9 INTELLECTUAL PROPERTY.
(a) The Parent owns, free and clear of all Encumbrances, or has the
valid right to use all Intellectual Property (as defined in Section 2.5) used by
it in its business as currently conducted or as currently proposed to be
conducted. The Buyer does not own or use any Intellectual Property. To the
knowledge of the Parent, no third party has any rights (other than patent
rights) to any of the Intellectual Property owned or used by the Parent. To the
Parent's knowledge, no third party has any patent rights owned by the Parent. To
the Parent's knowledge, no third party is infringing, violating or
misappropriating any of the Intellectual Property that the Parent owns.
(b) None of the activities or business conducted by the Parent
infringes, violates or constitutes a misappropriation of any Intellectual
Property of any other person or entity. The Parent has not received any
complaint, claim or notice alleging any such infringement, violation or
misappropriation.
(c) EXHIBIT D-2 hereto identifies all Intellectual Property used by
the Parent in its business as currently conducted or currently proposed to be
conducted, including each (i) patent that has been issued or assigned to the
Parent with respect to any of its Intellectual Property, (ii) pending patent
application that the Parent has made with respect to any of its Intellectual
Property, (iii) any copyright or trademark registration or application with
respect to the Parent's Intellectual Property, and (iv) license or other
agreements pursuant to which the Parent has granted any rights to any third
party with respect to any of its Intellectual Property.
(d) EXHIBIT D-2 hereto identifies each agreement with a third party
pursuant to which the Parent obtains rights to Intellectual Property material to
the business of the Parent (other than software that is generally commercially
available) that is owned by a party other than the Parent. Other than license
fees for software that is generally commercially available, the Parent is not
obligated to pay any royalties or other compensation to any third party in
respect of its ownership, use or license of any of its Intellectual Property.
(e) The Parent has taken reasonable precautions (i) to protect its
rights in its Intellectual Property and (ii) to maintain the confidentiality of
its trade secrets, know-how and other confidential Intellectual Property, and to
the Parent's knowledge, there have been no acts
12
or omissions (other than those made based on good faith business decisions) by
the officers, directors and employees of the Parent the result of which would be
to materially compromise the rights of the Parent to apply for or enforce
appropriate legal protection of the Parent's Intellectual Property. 3.10
3.10 TANGIBLE PROPERTIES.
(a) Neither the Parent nor the Buyer owns any real property.
(b) The Parent's furniture, fixtures, computer hardware and
tangible embodiments of software, equipment and other tangible personal property
are suitable for the uses in which they are currently employed, are in good
operating condition and are free from any defects, except such minor defects as
do not interfere with the conduct of the Parent's business.
3.11 TAXES. The Parent has filed or has obtained presently effective
extensions with respect to all federal, state, provincial, county, local and
foreign tax returns which are required to be filed by it, such returns, if any,
are true and correct in all material respects and all taxes, if any, shown
thereon to be due have been timely paid with exceptions not material to the
Parent. Federal income tax returns of the Parent, if any, have not been audited
by the Internal Revenue Service, and no controversy with respect to taxes of any
type is pending or, to the Parent's knowledge, threatened. Neither the Parent
nor any of its stockholders has ever filed (a) an election pursuant to Section
1362 of the Code, that the Parent be taxed as an S Corporation or (b) consent
pursuant to Section 341(f) of the Code relating to collapsible corporations.
3.12 LITIGATION. There is no action, suit or proceeding pending, or, to
the Parent's knowledge, governmental inquiry or investigation threatened against
the Parent, the Buyer or any of the Parent's stockholders, which questions the
validity of this Agreement or the right of the Parent to enter into it or
perform its obligations hereunder, or which might result, either individually or
in the aggregate, in a material adverse effect on the business, prospects,
assets or condition (financial or otherwise) of the Parent nor is there any
litigation pending, or, to the Parent's knowledge, any basis therefor or threat
thereof, against the Parent or any of the Parent's stockholders by reason of the
past employment relationships of any of the Parent's stockholders, the proposed
activities of the Parent, or negotiations by the Parent and/or any of the
Parent's stockholders with possible investors in the Parent. The Parent is not
subject to any outstanding judgment, order or decree.
3.13 COMPLIANCE. Neither the Parent nor the Buyer is in violation of or
default under any law, regulation or order applicable to it, the effect of
which, individually or in the aggregate with such other violations and defaults,
could reasonably be expected to have a material adverse effect on the business
or financial condition of its present business.
3.14 PERMITS. EXHIBIT D-2 sets forth a list of all Permits from any
Governmental Entity issued to or held by the Parent or Buyer. Such listed
Permits are the only Permits that are required for the Parent or Buyer to
conduct its business as presently conducted, except for those the absence of
which would not have a material adverse effect on its financial condition of its
present business. Each such Permit is in full force and effect and, to the
knowledge of the
13
Parent, no suspension or cancellation of such Permit is threatened and there is
no reasonable basis for believing that such Permit will not be renewable upon
expiration.
3.15 ENVIRONMENTAL MATTERS.
(a) The Parent has complied in all material respects with all
applicable Environmental Laws. There is no pending or, to the knowledge of the
Parent, threatened civil or criminal litigation, written notice of violation,
formal administrative proceeding, or investigation, inquiry or information
request by any Governmental Entity, relating to any Environmental Law involving
the Parent. For purposes of this Agreement, "Environmental Law" means (x) any
U.S. federal, state or local law, statute, rule or regulation or the common law
relating to the protection of human health or the environment, including without
limitation CERCLA (as defined below), the Resource Conservation and Recovery Act
of 1976, any statute, regulation or order pertaining to (i) treatment, storage,
disposal, generation and transportation of industrial, toxic or hazardous
materials or substances or solid or hazardous waste; (ii) air, water and noise
pollution; (iii) groundwater and soil contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous
materials or substances, or solid or hazardous waste, including without
limitation, emissions, discharges, injections, spills, escapes or dumping of
pollutants, contaminants, or chemicals; (v) the protection of wild life, marine
life and wetlands, including without limitation all endangered and threatened
species; (vi) storage tanks, vessels, abandoned or discarded barrels, containers
and other closed receptacles; (vii) health and safety of employees and other
persons; and (viii) manufacture, processing, use, distribution, treatment,
storage, disposal, transportation or handling of pollutants, contaminants, toxic
or hazardous materials or substances or oil or petroleum products or solid or
hazardous waste or (y) any similar Canadian law. As used in this Section 2.27,
the terms "release" and "environment" shall have the meaning set forth in the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA").
(b) Neither the Parent nor the Buyer has ever owned, operated or
controlled any parcel of real property or any facility.
(c) The Parent is not aware of any material environmental
liability of the solid and hazardous waste transporters and treatment, storage
and disposal facilities that have been utilized by the Parent and has not
undertaken any independent investigation relating to the same.
3.16 INSURANCE. As of the date of this Agreement, neither the Parent
nor the Buyer maintains any insurance policies.
3.17 EMPLOYEES AND CONSULTANTS. Neither the Parent nor the Buyer has
ever had any employees.
3.18 ERISA. EXHIBIT D-2 hereto lists any employees benefit plans (as
defined in Section 3(3) of ERISA) maintained by the Parent. Each of such
employee benefit plans complies in all material respects with (i) all applicable
requirements of ERISA and (ii) all applicable requirements of the Code.
3.19 YEAR 2000 COMPLIANCE. The Parent has reviewed its operations and
those of its subsidiaries, to evaluate the extent to which the business or
operations of the Parent or any of its
14
subsidiaries will be affected by the Year 2000 Problem. As a result of such
review, the Parent has no reason to believe and does not believe, that the Year
2000 Problem will have a material adverse effect on the business or condition
(financial or otherwise) of the Parent.
3.20 SUBSIDIARIES, ETC. Except for the Buyer, the Parent has no
subsidiaries and does not own any shares of capital stock of or any interest in
or control, directly or indirectly, any other corporation or any partnership,
joint venture or other non-corporate business enterprise. The Buyer was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated by this
Agreement.
3.21 DISCLOSURES. This Agreement and the Exhibits hereto, when read
together, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
and therein, in light of the circumstances under which they were made, not
misleading.
4. ACCESS TO INFORMATION; PUBLIC ANNOUNCEMENTS
4.1 ACCESS TO MANAGEMENT, PROPERTIES AND RECORDS. From the date of this
Agreement until the Closing Date, each of the Seller and the Parent shall afford
the officers, attorneys, accountants and other authorized representatives of the
other party access to its offices, facilities, records and personnel upon
reasonable notice and during normal business hours so that the other party may
have a reasonable opportunity to make such inquiry as the other party shall
reasonably need to make in connection with this Agreement.
4.2 CONFIDENTIALITY. All information not concerning the Assets to be
Sold or the Assumed Liabilities not previously disclosed to the public or
generally known to persons engaged in the respective businesses of the Seller,
the Parent or the Buyer which shall have been furnished by the Seller, the
Parent or Buyer to the other party in connection with the transactions
contemplated hereby or as provided pursuant to this Section 4 shall not be
disclosed (i) to any person other than their respective employees, directors,
attorneys, accountants or financial advisors who have been advised of the
provisions of this Agreement and only for purposes of evaluating and
effectuating the transactions contemplated hereby or (ii) otherwise than as
contemplated herein. In the event that the transactions contemplated by this
Agreement shall not be consummated, all such information which shall be in
writing shall be returned to the party furnishing the same, including, to the
extent reasonably practicable, all copies or reproductions thereof which may
have been prepared, and neither party shall at any time thereafter disclose to
third parties, or use, directly or indirectly, for its own benefit, any such
information, written or oral, about the business of the other party hereto.
Notwithstanding the above, to the extent required by law (a) the Parent or Buyer
may include in any Registration Statement or periodic report filed by either of
them with the Securities and Exchange Commission or any state securities
commission or any stock market and (b) each party may otherwise disclose, to the
extent reasonably advised by counsel as being required by applicable law, any
information regarding the Assets to be Sold, the Seller and/or the terms of this
Agreement. If either party intends to make any such disclosure, it shall provide
a copy to the other party prior to such disclosure and provide the other party
with an opportunity to comment on such disclosure if the other party wishes to
do so.
15
4.3 PUBLIC ANNOUNCEMENTS. Except as otherwise required by law, the
parties agree not to make any public announcements or other public
communications concerning this Agreement and the purchase of the Assets to be
Sold by the Buyer without the prior written approval of the other party,
provided, however, that a party making a public disclosure which it believes in
good faith to be required by law shall use its best efforts to advise the other
party prior to making the disclosure and provide such other party with an
opportunity to comment on such public disclosure if it wishes to do so.
5. PRE-CLOSING COVENANTS. From and after the date hereof and until the Closing
Date:
5.1 CONDUCT OF BUSINESS. Each of the Seller and the Parent shall
operate its business (except, in the case of the Seller, its business unrelated
to the Assets to be Sold, so long as the operation of such unrelated business
does not have or could not reasonably be expected to have an adverse effect on
the Assets to be Sold) in a manner consistent with past practice. All of the
property of each party shall be used, operated, repaired and maintained in a
normal business manner materially consistent with past practice.
5.2 ABSENCE OF MATERIAL CHANGES. Without the prior written consent of
the other parties, no party shall until the Closing:
(a) Sell, assign or transfer any of its assets, except in the
ordinary course of business (or, in the case of the Seller, a sale, assignment
or transfer of any assets not included as part of the Assets to be Sold, so long
as such sale, assignment or transfer of such unincluded assets does not have or
could not reasonably be expected to have an adverse effect on the Assets to be
Sold);
(b) Mortgage, pledge, or subject any of its assets (other than, in
the case of the Seller, assets not included as part of the Assets to be Sold, so
long as the mortgage, pledge or encumbrance of such unrelated assets does not
have or could not reasonably be expected to have an adverse effect on the Assets
to be Sold) to any lien, charge or any other Encumbrance (except for Permitted
Encumbrances and except for subsequently acquired property becoming subject to
Encumbrances under bank financing arrangements in effect on the date hereof);
(c) Merge or consolidate with or into any corporation or other
entity;
(d) Modify or amend any of the Assumed Contracts or Contract
Rights; or
(e) Commit or agree to do any of the foregoing.
5.3 TAXES. Subject to Section 12 hereof, each of the Seller and the
Buyer will, on a timely basis, file all tax returns for and pay any and all
taxes which shall become due or shall have accrued on account of the ownership
of its assets on or prior to the Closing Date (including personal property and
excise taxes payable with respect to the Assets to be Sold).
16
6. CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The obligation of the Buyer to
purchase the Assets to be Sold at the Closing is subject to the fulfillment, or
the waiver by the Buyer, of each of the following conditions on or before the
Closing:
6.1 CONSENTS; ASBENCE OF LEGAL PROCEEDINGS. The Seller shall have
obtained (and shall have provided copies thereof to the Buyer) all of the
waivers, permits, consents, approvals or other authorizations, and effected all
of the registrations, filings and notices, which are required on the part of the
Seller, except for any the failure of which to obtain or effect would not have a
material adverse effect on the Seller or on the ability of the parties to
consummate the transactions contemplated by this Agreement. No legal proceeding
shall be pending wherein an unfavorable judgment, order, decree, stipulation or
injunction would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation or (iii) have a
material adverse effect, and no such judgment, order, decree, stipulation or
injunction shall be in effect.
6.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in Section 2 shall be true and correct in all material
respects on and as of the date of this Agreement and the Closing Date with the
same effect as though made on and as of the Closing Date, except to the extent
such representations and warranties are specifically made as of a particular
date or as of the date of this Agreement (in which case such representations and
warranties shall be true and correct as of such date).
6.3 PERFORMANCE. The Seller shall have performed and complied in all
material respects with its agreements and covenants contained in this Agreement
required to be performed or complied with by the Seller prior to or at the
Closing.
6.4 COMPLIANCE CERTIFICATES. The Seller shall have delivered to the
Buyer a certificate, executed by the Chairman of the Board of the Seller, dated
the Closing Date, certifying to the fulfillment of the conditions specified in
Sections 6.2 and 6.3 of this Agreement.
6.5 CERTIFICATES AND DOCUMENTS. The Seller shall have delivered to the
Buyer:
(a) The ▇▇▇▇ of Sale;
(b) A software license agreement, substantially in the form
attached hereto as EXHIBIT G (the "Software License"), duly executed by Seller;
(c) A corporate service agreement, substantially in the form
attached hereto as EXHIBIT H (the "Corporate Services Agreement"), duly executed
by Seller;
(d) An internet services agreement, substantially in the form
attached hereto as EXHIBIT I (the "Internet Services Agreement"), duly executed
by Seller;
(e) Such assignments of patents and trademarks and other
instruments of conveyance, assignment and transfer, if any, in form and
substance reasonably satisfactory to the Buyer, as are appropriate to convey,
transfer and assign to, and to vest in, the Buyer or its subsidiaries, good and
marketable title to the Assets to be Sold;
17
(f) Executed UCC termination statements or amendments with respect to
all UCC financing statements that relate to the Assets to be Sold, if any;
(g) Executed releases with respect to any Encumbrances, if any,
relating to the Assets to be Sold created in connection with any financings;
(h) Tax lien waivers from any Governmental Entities which may be
required, if any;
(i) A certificate of the Secretary of State of the State of Delaware as
to the legal existence and good standing of the Seller in Delaware;
(j) Certificates, as of the most recent practicable dates, as to the
corporate good standing of the Seller issued by the Secretary of State of the
State of Minnesota and the Secretary of State of the State of North Dakota;
(k) Resolutions of the Board of Directors of the Seller, authorizing
and approving all matters in connection with this Agreement and the transactions
contemplated hereby, certified by the Secretary or Assistant Secretary of the
Seller as of the applicable closing date;
(l) Certificates of the Secretary, Assistant Secretary or other
appropriate officer of the Seller attesting to the incumbency of the Seller's
officers; and
(m) Such other certificates of each Seller's officers and such other
documents as the Buyer has reasonably requested;
(n) The Escrow Agreement, executed by the Seller;
(o) Releases from the directors of the Seller and their affiliates in
the form of Section 2.1(b)(i);
(p) Agreements by each of the directors of the Seller and their
affiliates and all preferred stockholders of the Seller to attend and vote in
favor of this Agreement and transactions contemplated hereby at any meeting of
stockholder of the Seller;
(q) The Order Granting Motion for Ex Parte Temporary Injunction in
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ VS. ELIANCE CORPORATION (Civ. No. 51-99-C 01321) shall have been
lifted and there shall be no similar order in place and such case shall be
dismissed with prejudice.
7. CONDITION TO THE OBLIGATIONS OF THE SELLER. The obligations of the Seller to
be performed at the Closing are subject to fulfillment, or the waiver, of the
following conditions, on or before the Closing:
7.1 CONSENTS; ABSENCE OF LEGAL PROCEEDINGS. The Parent shall have
obtained (and shall have provided copies thereof to the Seller) all of the
waivers, permits, consents, approvals or other authorizations, and effected all
of the registrations, filings and notices, which are required on the part of the
Parent or the Buyer, except for any the failure of which to obtain or effect
would not have a material adverse effect on the Parent or the Buyer or on the
ability of the
18
parties to consummate the transactions contemplated by this Agreement. No legal
proceeding shall be pending wherein an unfavorable judgment, order, decree,
stipulation or injunction would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation or (iii)
have a material adverse effect, and no such judgment, order, decree, stipulation
or injunction shall be in effect.
7.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 3 shall be true and correct in all material
respects on and as of the date of this Agreement and the Closing Date with the
same effect as though made on and as of the Closing Date, except to the extent
such representations and warranties are specifically made as of a particular
date or as of the date of this Agreement (in which case such representations and
warranties shall be true and correct as of such date).
7.3 PERFORMANCE. The Parent and the Buyer shall have performed or
complied in all material respects with its agreements and covenants contained in
this Agreement required to be performed or complied with by the Parent and/or
the Buyer prior to or at the Closing Date.
7.4 COMPLIANCE CERTIFICATES. The Parent and the Buyer shall have
delivered to the Seller a certificate, executed by the President of the Parent
and the Buyer, respectively, dated the Closing Date, certifying as to the
fulfillment of the conditions specified in Sections 7.2 and 7.3 of this
Agreement.
7.5 CERTIFICATES AND DOCUMENTS. The Seller or the Escrow Agent (as
defined in the Escrow Agreement), as the case may be, shall have received each
of the following documents on the Closing Date:
(a) Stock certificates representing the Shares, as provided in
Section 1.3;
(b) The Instrument of Assumption of Liabilities executed by the
Buyer and countersigned by the Seller;
(c) The Software License, duly executed by Buyer;
(d) The Corporate Services Agreement, duly executed by the Parent;
(e) The Internet Services Agreement, duly executed by Buyer;
(f) The Escrow Agreement, executed by the Buyer, the Parent,
certain stockholders of the Parent and ▇▇▇▇ ▇▇▇▇▇▇;
(g) The Certificate of Incorporation of each of the Parent and the
Buyer, as amended and in effect as of the closing date certified by the
Secretary of State of the State of Delaware;
(h) By-Laws of each of the Parent and the Buyer, certified by its
Secretary as of the closing date;
19
(i) A certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing of each of the Parent and
the Buyer in Delaware;
(j) Certificates, as of the most recent practicable dates, as to
the corporate good standing of the Parent and Buyer issued by the Secretaries of
State of the States of Minnesota and North Dakota.
(k) Resolutions of the Board of Directors of each of the Parent and
the Buyer, authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby, certified by the Secretary
of each of the Parent and the Buyer, respectively, as of the closing date;
(l) A certificate of the Secretary of each of the Parent and the
Buyer, respectively, attesting to the incumbency of the Parent and the Buyer's
respective officers;
(m) Such certificates of the Parent or the Buyer's officers and
such other documents as the Seller have reasonably requested.
8. TRANSFER OF SHARES.
8.1 RESTRICTED SHARES. "Restricted Shares" means (i) the Shares and
(ii) any other shares of capital stock of the Parent issued in respect of such
shares (as a result of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); PROVIDED, HOWEVER, that shares of Parent
Common Stock which are Restricted Shares shall cease to be Restricted Shares (x)
upon any sale pursuant to a registration statement under the Securities Act,
Section 4(1) of the Securities Act or Rule 144 under the Securities Act or (y)
at such time as they become eligible for sale under Rule 144(k) under the
Securities Act.
8.2 REQUIREMENTS FOR TRANSFER.
(a) Restricted Shares shall not be sold or transferred unless
either (i) they first shall have been registered under the Securities Act, or
(ii) the Parent first shall have been furnished with an opinion of legal
counsel, reasonably satisfactory to the Parent, to the effect that such sale or
transfer is exempt from the registration requirements of the Securities Act .
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for a transfer by the Seller to its stockholders, a
transfer by a holder to an affiliate, spouse or child or by a holder which is a
corporation to a wholly owned subsidiary of such corporation, a transfer by a
holder which is a partnership to a partner of such partnership or a retired
partner of such partnership who retires after the date hereof, or to the estate
of any such partner or retired partner, or a transfer by a holder which is a
limited liability company to a member of such limited liability company or a
retired member who resigns after the date hereof or to the estate of any such
member or retired member; provided that the transferee in each case agrees in
writing to be subject to the terms of this Section 8 to the same extent as if it
were the original holder hereunder.
8.3 LEGEND. Each certificate representing Restricted Shares shall bear
a legend substantially in the following form:
20
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be offered, sold or otherwise transferred, pledged or
hypothecated unless and until such shares are registered under
such Act or an opinion of counsel satisfactory to the issuer is
obtained to the effect that such registration or qualification is
not required."
The foregoing legend shall be removed from the certificates representing any
Restricted Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Securities Act .
9. INDEMNIFICATION
9.1 BY THE SELLER. From and after the Closing Date, subject to the
provisions of this Section 9, the Seller hereby agrees to indemnify and hold
harmless the Parent and the Buyer and their respective officers, directors and
agents against all claims, damages, losses, liabilities, costs and expenses
(including, without limitation, settlement costs and any legal, accounting or
other expenses for investigating or defending any actions or threatened actions)
(collectively, "Loss") reasonably incurred by the Parent or the Buyer in
connection with each and all of the following:
(a) Any breach by the Seller of any representation or warranty made
by it in this Agreement;
(b) Any breach of any covenant, agreement or obligation of the
Seller contained in this Agreement or any other agreement, instrument or
document contemplated by this Agreement;
(c) Any misrepresentation contained in any statement, certificate
or schedule furnished by the Seller pursuant to this Agreement or in connection
with the transactions contemplated by this Agreement; and
(d) Except for the Assumed Liabilities, any claims, damages, or
liabilities arising out of the conduct of the business and operations of the
Seller or any other liabilities or obligations of the Seller.
9.2 BY THE PARENT AND THE BUYER. From and after the Closing Date,
subject to the provisions of this Section 9, each of the Parent and the Buyer,
jointly and severally, hereby agrees to indemnify and hold harmless the Seller
and its officers, directors and agents against all Loss reasonably incurred by
the Seller in connection with each and all of the following:
(a) Any breach by the Parent or Buyer of any representation or
warranty made by it in this Agreement;
(b) Any breach of any covenant, agreement or obligation of the
Parent or Buyer contained in this Agreement or any other agreement, instrument
or document contemplated by this Agreement;
21
(c) Any misrepresentation contained in any statement, certificate or
schedule furnished by the Parent or Buyer pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement; and
(d) Any claims, damages, or liabilities arising out of the conduct
of the business and operations of the Parent or the Buyer, or the Assumed
Liabilities.
9.3 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification hereunder the party seeking indemnification (the "Indemnified
Party") shall promptly notify the party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld,
unless suit shall have been instituted against it and the Indemnifying Party
shall not have taken control of such suit after notification thereof as provided
in Subsection 9.4 of this Agreement.
9.4 DEFENSE BY INDEMNIFYING PARTY. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding, provided that
such assumption of the defense shall not constitute a waiver of the Indemnifying
Party's right to challenge the existence or extent of its obligation to
indemnify with respect to such claim or legal proceedings. The Indemnified Party
shall be entitled to participate in (but not control) the defense of any such
action, with its counsel and at its own expense. If the Indemnifying Party does
not assume the defense of any such claim or litigation resulting therefrom
within 20 days after the date such claim is made, (a) the Indemnified Party may
defend against such claim or litigation, in such manner as it may deem
appropriate, including, but not limited to, settling such claim or litigation,
after giving notice of the same to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate, and (b) the Indemnifying Party shall be
entitled to participate in (but not control) the defense of such action, with
its counsel and at its own expense. If the Indemnifying Party thereafter seeks
to question the manner in which the Indemnified Party defended such third-party
claim or the amount or nature of any such settlement, the Indemnifying Party
shall have the burden to prove by a preponderance of the evidence that the
Indemnified Party did not defend or settle such third-party claim in a
reasonably prudent manner.
9.5 PAYMENT OF INDEMNIFICATION OBLIGATION. All indemnification by the
Parent, the Buyer or the Seller hereunder shall be effected by payment of cash
or delivery of a cashier's or certified check in the amount of the
indemnification liability; provided that the Buyer shall have the right to
offset any amounts due to Buyer hereunder against amounts due from Buyer under
the Instrument of Assumption of Liabilities and in accordance with the Escrow
Agreement.
22
9.6 SURVIVAL OF REPRESENTATIONS; CLAIMS FOR INDEMNIFICATION. All
representations and warranties made by the parties herein or in any
instrument or document furnished in connection herewith shall survive the
signing of this Agreement and any investigation at any time made by or on
behalf of the parties hereto. All such representations and warranties shall
expire on the second anniversary of the Closing Date, except for claims, if
any, asserted in writing prior to such second anniversary of the Closing
Date, which shall survive until finally resolved and satisfied in full. All
claims and actions for indemnity pursuant to this Section 9 for breach of any
representation or warranty shall be asserted or maintained in writing by a
party hereto within two years after the Closing Date.
9.7 LIMITATIONS. Notwithstanding anything to the contrary herein,
the aggregate liability of each of the Seller and the Parent under this
Article 9 shall include only that portion of the aggregate damages of the
Indemnified Party which exceeds $50,000.
10. POST-CLOSING AGREEMENTS
The Seller and the Parent agree that from and after the Closing Date:
10.1 PROPRIETARY INFORMATION. The Seller shall hold in confidence, and
use its best efforts to have all of the Seller's officers, directors, managers,
members and personnel hold in confidence, all knowledge and information of a
secret or confidential nature with respect to the Assets to be Sold and shall
not disclose, publish or make use of the same without the consent of the Parent,
except to the extent that such information shall be required by law or valid
legal process or shall have become public knowledge other than by breach of this
Agreement by the Seller.
10.2 NON-COMPETITION AGREEMENT.
(a) As a material and valuable inducement for the Parent and the
Buyer to enter into this Agreement, pay and deliver the Purchase Price and
consummate the transactions provided for herein, the Seller agrees that, without
the prior approval of the Parent, for a period of five years after the Closing
Date, the Seller shall not engage directly or indirectly in the business of
designing, developing, manufacturing, marketing or selling products or services
which are competitive with the business being conducted by the Parent on the
Closing Date in the United States or Canada.
(b) The parties hereto agree that the duration and geographic
scope of the non-competition provision set forth in this Subsection 10.2 are
reasonable. In the event that any court determines that the duration or the
geographic scope, or both, are unreasonable and that such provision is to that
extent unenforceable, the parties hereto agree that the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable. The parties intend that this
non-competition provision shall be deemed to be a series of separate covenants,
one for each and every county of each and every state of the United States of
America and each and every political subdivision of each and every country
outside the United States of America where this provision is intended to be
effective. The Seller agrees that damages are an inadequate remedy for any
breach of this provision and that the Parent shall, whether or not it is
pursuing any potential remedies at law, be entitled to equitable relief in the
23
form of preliminary and permanent injunctions without bond or other security
upon any actual or threatened breach of this non-competition provision.
10.3 COOPERATION IN LITIGATION. Each party hereto will fully cooperate
with the others in the defense or prosecution of any litigation or proceeding
already instituted or which may be instituted hereafter against or by such party
relating to or arising out of the conduct of the business by the Seller prior to
or after the Closing Date (other than litigation or proceedings arising out the
transactions contemplated by this Agreement). The party requesting such
cooperation shall pay the reasonable out-of-pocket expenses (including legal
fees and disbursements), as incurred, of the party providing such cooperation
and of its officers, directors, managers, members, employees and agents
reasonably incurred in connection with providing such cooperation, but shall not
be responsible to reimburse the party providing such cooperation for such
party's time spent in such cooperation or the salaries or costs of fringe
benefits or similar expenses paid by the party providing such cooperation to its
officers, directors, managers, members, employees and agents while assisting in
the defense or prosecution of any such litigation or proceeding.
10.4 TRANSITION. The Seller will not take any action that is designed
or intended to have the effect of dissuading any licensor, customer, supplier,
or other business associate from maintaining the same business relationships in
regard to the Assets to be Sold with the Buyer after the Closing as it
maintained with the Seller prior to the Closing. The Seller will refer all
customer inquiries relating to the Assets to be Sold to the Buyer from and after
the Closing.
10.5 INSURANCE. The Parent will, and will cause the Buyer to, obtain
and maintain in force such property damage, public liability, directors and
officers liability, business interruption, worker's compensation, indemnity
bonds and other types of insurance as the Parent's executive officers, after
consultation with an accredited insurance broker, shall determine to be
necessary or appropriate to protect the Parent from the insurable hazards or
risks associated with the conduct of the Parent's business. The Parent's
executive officers shall periodically report to the Board of Directors on the
status of such insurance coverage.
All insurance shall be maintained in at least such amounts and to such
extent as shall be determined to be reasonable by the Board of Directors; and
all such insurance shall be effected and maintained in force under a policy or
policies issued by insurers of recognized responsibility, except that the Parent
or any subsidiary may effect worker's compensation or similar insurance in
respect of operations in any state or other jurisdiction either through an
insurance fund operated by such state or other jurisdiction or by causing to be
maintained a system or systems of self-insurance which is in accord with
applicable laws.
10.6 EMPLOYEE STOCK OPTIONS. The Parent agrees to grant to current
employees of the Seller and employees of the Seller who shall have become
employees of the Parent or the Buyer from time to time options to purchase an
aggregate of 500,000 shares of Parent Common Stock on or before December 31,
1999.
10.7 STOCKHOLDERS MEETING. Promptly following the execution hereof, the
Seller shall call a meeting of its stockholders (which shall occur within 20
days of the notice thereof) at
24
which meeting this Agreement and the transactions contemplated hereby shall be
presented to such stockholders for ratification.
10.8 EMPLOYEES. The Parent and the Buyer shall be permitted to offer
employment to the employees of the Seller and its subsidiary from time to time.
11. TERMINATION OF AGREEMENT
11.1 TERMINATION BY LAPSE OF TIME. This Agreement shall terminate at
5:00 p.m., Minneapolis time, on December 31, 1999, if the Closing contemplated
hereby has not been consummated, unless such date is extended by the written
consent of the Buyer and the Seller.
11.2 TERMINATION BY AGREEMENT OF THE PARTIES. This Agreement may be
terminated by the mutual written agreement of the parties hereto.
11.3 EFFECT OF TERMINATION. If any party terminates this Agreement
pursuant to this Section 11 all rights and obligations of the parties hereunder
shall terminate without liability of any party to the other party except for
breach of its covenants hereunder.
12. TRANSFER TAXES, GOVERNMENTAL FEES AND CHARGES; CERTAIN INCOME TAXES.
(a) Notwithstanding any provision of law imposing the burden of
Transfer Taxes (as hereinafter defined) on the Seller or the Buyer, as the case
may be, any sales, use, and other transfer taxes imposed in connection with the
consummation of the transactions contemplated by this Agreement (collectively,
"Transfer Taxes") shall be borne by the Seller. The Seller and the Buyer agree
to cooperate in good faith with each other, and to use their commercially
reasonable efforts, to minimize Transfer Taxes. Without limiting the generality
of the preceding sentence, (i) the Buyer shall promptly and properly complete,
execute and deliver to the Seller resale, exemption, and/or similar certificates
or other documentation necessary or appropriate under any applicable law to
claim and/or evidence that all or any portion of the sale or transfer of the
Assets under this Agreement is exempt from or otherwise not subject to Transfer
Taxes imposed under such applicable law, and (ii) the parties shall consult and
cooperate in good faith on a timely basis in order to effectively handle and
contest any audit, examination, investigation, or administrative court, or other
proceeding relative to Transfer Taxes.
(b) The Seller shall pay and be responsible for all filing,
recordation, transfer or other governmental fees or charges, in each case
relating to the sale or transfer of any of the Assets to be Sold hereunder.
(c) If a party hereto shall fail to pay on a timely basis any
amount such party is responsible for under this Section 12, the other party may
pay such amount to the appropriate governmental authority or authorities or
other appropriate third party or parties, and the party responsible for payment
of such amount shall promptly reimburse the other party for such amount so paid.
(d) The Buyer waives compliance with the provisions of any
applicable bulk sales laws or other similar laws of any jurisdiction as respects
the transactions contemplated by this Agreement.
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13. OTHER PROVISIONS
13.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns.
13.2 EXPENSES. If the Closing occurs, the Seller shall pay all
out-of-pocket expenses incurred by it and by the Parent including, without
limitation, the reasonable fees and disbursements of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP,
counsel to the Seller, and of ▇▇▇▇ ▇▇▇▇▇▇, counsel to the Parent, incurred in
connection with the matters contemplated by this Agreement. If the Closing does
not occur, all expenses shall be borne solely and entirely by the party that has
incurred the same.
13.3 BROKERS. Each of the Seller, the Parent and the Buyer (i)
represents and warrants to the other parties hereto that it has not retained a
finder or broker in connection with the transactions contemplated by this
Agreement, and (ii) will indemnify and save the other party harmless from and
against any and all claims, liabilities or obligations with respect to brokerage
or finders' fees or commissions, or consulting fees in connection with the
transactions contemplated by this Agreement asserted by any person on the basis
of any statement or representation alleged to have been made by such
indemnifying party.
13.4 SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
13.5 SPECIFIC PERFORMANCE. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, the
Buyer shall be entitled to specific performance of the agreements and
obligations of the Seller hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
13.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Minnesota (without
reference to the conflicts of law provisions thereof).
13.7 NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed delivered (i) two
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery, in each case to the intended recipient as set forth below:
To the Parent: ▇▇▇▇▇▇▇.▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
26
With a copy to: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
To the Buyer: ▇▇▇▇▇▇.▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
To the Seller: eliance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
With copies to: ▇▇▇▇▇▇ & Whitney
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
13.8 COMPLETE AGREEMENT. This Agreement (including its Exhibits) and
the Parent/Buyer's and Seller's Ancillary Agreements constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter including, without limitation, that certain letter of intent
dated July 4, 1999, and that certain letter of intent dated November 29, 1999.
13.9 AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended or terminated and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either
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retroactively or prospectively), with the written consent of the Seller and the
Parent. No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.
13.10 PRONOUNS. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
13.11 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which shall constitute one and the same document. This
Agreement may be executed by facsimile signatures.
13.12 SECTION HEADINGS. The section headings are for the convenience of
the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
* * * * *
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
SELLER:
ELIANCE CORPORATION
ATTEST: By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------- -------------------------
Title: Chairman
-------------------------
PARENT:
▇▇▇▇▇▇▇.▇▇▇, INC.
ATTEST: By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
--------------------------- -------------------------
Title: President
-------------------------
BUYER:
▇▇▇▇▇▇.▇▇▇ INC.
ATTEST: By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
--------------------------- -------------------------
Title: President
-------------------------
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