Exhibit 10(f)
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EXECUTION COPY
ASSET PURCHASE AGREEMENT
By and Among
XCEED, INC.,
BIG THEORY, LLC,
and
THE INTERESTHOLDERS OF BIG THEORY, LLC
JANUARY 19, 2000
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of this 19th day of
January, 2000, by and among Xceed, Inc., a Delaware corporation ("Xceed"), Big
Theory, LLC, a Delaware limited liability company (the "Company"), the members
of the Company listed on Schedule A hereto (each individually referred to
hereinafter as a "Member" and collectively referred to hereinafter as the
"Members"), and those certain optionholders of the Company listed on Schedule A
hereto who hold options to purchase Class B Non-Voting Units in the Company
(each individually referred to hereinafter as an "Optionholders" and
collectively referred to hereinafter as the "Optionholders").
WITNESSETH:
WHEREAS, the authorized units of membership interest of the Company consist of
100,000 Class A Units of membership interest (the "Class A Units"), 38,571 Class
B Non-voting Units of membership interest (the "Class B Units"), and 4,285 Class
C Convertible Units of membership interest (the "Class C Units"), of which,
100,000 Class A Units, no Class B Units, 4,285 Class C Units and options to
purchase 9,286 Class B Units are issued and outstanding as of the date hereof
(the Class A Units, Class B Units and Class C Units are collectively referred to
hereinafter as the "Company Membership Interests");
WHEREAS, the Company desires to sell, assign, transfer and convey to Xceed,
and Xceed desires to purchase and assume from the Company, pursuant to the terms
and subject to the conditions set forth in this Agreement, all of the Company's
right, title and interest in and to the assets of the Company, including without
limitation, the items set forth in Section 1.1 below (the "Assets");
WHEREAS, the Members are the sole members of the Company and, as such, have
unanimously approved the Company's sale, transfer and conveyance to Xceed of all
of the Company's right, title and interest in and to the Assets pursuant to the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of Xceed deems it advisable and in the best
interests of Xceed (and its stockholders) that Xceed purchase the Assets (the
"Asset Purchase") pursuant to the terms of this Agreement and the applicable
provisions of the laws of the States of Delaware; and
WHEREAS, the Board of Managers of the Company (the "Managers"), the Members
and the Optionholders (the Members and the Optionholders are collectively
referred to hereinafter as the "Interestholders") deem it advisable and in the
best interests of the Company (and the Interestholders) that Xceed purchase the
Assets pursuant to the terms of this Agreement and the applicable provisions of
the laws of the State of Delaware.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements contained herein and for such other good and valuable
consideration, the receipt
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and sufficiency of which are hereby acknowledged, the parties hereto, each
intending to be legally bound hereby, agree as follows:
ARTICLE I
TERMS OF PURCHASE
PURCHASE, SALE AND ASSUMPTION
1.1 Purchase and Sale of Assets. Subject to the terms and conditions set
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forth herein, the Company hereby agrees to sell, assign, transfer and convey to
Xceed, and Xceed hereby agrees to purchase, obtain, acquire and assume from the
Company on the closing date (hereinafter referred to as the "Closing Date" and
defined in Section 2.1 herein), all of the Company's right, title and interest
in and to the Assets of the Company, wherever located, used or held for use by
the Company in connection with its business (the "Business"), including all
assets hereafter acquired by the Company through the Closing Date (collectively
referred to herein as the "Assets"), including and without limitation or
duplication:
(a) Inventory. All inventory, including raw materials, works in
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process, finished works, goods, office supplies, and other supplies;
(b) Products. The concept, design and all proprietary knowledge
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relating to all products currently or heretofore produced by the Company or at
any stage of development by the Company, and all software products, whether
developed or currently under development, that are owned by or licensed to the
Company, including without limitation any and all source and object codes,
binaries, databases, supplements, modifications, ports to hardware platforms,
updates, corrections and enhancements to past and current versions of such
products (collectively, the "Products");
(c) Intellectual Property. All of the Intellectual Property (as
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described and defined in Section 3.1(i) of this Agreement);
(d) Tools. The design and development tools and scripts, and
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modifications and additions to such tools and scripts, which were or are used in
the development, operation or maintenance of the Products, whether developed or
currently under development, that are owned by or licensed to the Company,
including without limitation any and all available source and object codes,
binaries, supplements, modifications, updates, corrections and enhancements to
past and current versions of such tools and scripts and versions of such tools
and scripts under development, and any and all related back-up and archival
media;
(e) Accounts Receivable. All accounts receivable of the Company,
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including all notes receivable of the Company;
(f) Records. All books, records, files, invoices and other similar
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data relating to the Assets, any and all information contained therein and/or
thereon, in any form, including all software and electronic and/or computer
storage devices;
(g) Contract Rights. Except as set forth on Schedule 3.1(o) hereto,
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all rights, privileges and entitlements of the Company under any and all
contracts (including, but not
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limited to, all employment agreements and independent contractor agreements
between the Company and current and former employees and independent contractors
of the Company, respectively, and all invention assignment and confidentiality
agreements executed in connection with such employment agreements and
independent contractor agreements), agreements, or other instruments,
understandings, concessions, commitments, licenses, and leases to which the
Company is a party (the "Leases") which relate to the operation of the Business
(the "Assigned Contracts");
(h) Guarantees. All guarantees, warranties, indemnities and similar
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rights in favor of the Company with respect to the Assets;
(i) Advertising. All advertising literature, packaging materials
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(including inserts) and catalogs used in the Business;
(j) Expenses and Claims. All prepaid expenses and all rights, claims,
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credits, causes of action or rights of set-off of the Company against third
persons relating to the Assets, including without limitation, unliquidated
rights under manufacturers' and vendors' warranties;
(k) Business Items. All machinery, equipment (including, without
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limitation, computers and test, office and manufacturing equipment), furniture,
furnishings, fixtures, vehicles, tools, spare parts and similar property owned,
leased, operated, managed or otherwise used by the Company;
(l) Governmental Authorizations. Except as set forth on Schedule
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3.1(o) hereto, all approvals, consents, licenses, permits, waivers,
certifications, endorsements, qualifications, or other authorizations issued,
granted, given, or otherwise made available to the Company by or under the
authority of any local, state, or federal governmental body;
(m) Miscellaneous Items. The goodwill of the Business and all cash on
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hand, net credit balances of bank deposits and accounts, including demand time
and savings balances with commercial and other depository institutions; and
(n) Office Lease. The office leases under which the Company currently
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leases its principal offices.
1.2 Purchase Price. In consideration of and in exchange for the
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Company's sale, assignment, transfer and conveyance of the Assets, Xceed hereby
agrees to pay to the Interestholders, in accordance with their respective
ownership interests in the Company as set forth on Schedule A hereto, the
purchase price (the "Purchase Price") as hereinafter provided.
(a) Fixed Stock Payment. On the Closing Date, Xceed shall place in
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escrow (hereinafter referred to as the "Escrow" and defined in Section 1.7
herein) pursuant to the terms set forth herein, shares of common stock of Xceed
(the "Common Stock") having an aggregate value equal to an amount (the "Fixed
Stock Payment") calculated as follows: (i) divide the sum of the second (2nd),
third (3rd) and fourth (4th) 1999 fiscal quarter revenues of the Company by
three (3) (the "Average Quarterly Revenue"), (ii) multiply the Average Quarterly
Revenue by four (4) (the "Annualized Revenue"), (iii) multiply the Annualized
Revenue by three and one tenth (3.1) (the "Total Fixed Payment"), and (iv)
subtract Four Million Dollars ($4,000,000) from the Total Fixed Payment. The
number of shares of Common Stock issuable to the Company (or, if so directed by
the Company, the Interestholders, in accordance with their
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respective ownership interests in the Company as set forth on Schedule A hereto)
pursuant to the Fixed Stock Payment (the "Fixed Escrow Shares") shall be
determined by dividing (x) the Fixed Stock Payment by (y) the closing
transaction price of Common Stock on the day immediately preceding the Closing
Date as quoted by the NASDAQ National Market System (the "Stock Price Divisor"),
provided, however, the Stock Price Divisor shall be limited to a maximum value
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of $32.85 and a minimum value of $24.28; provided, further, that the securities
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deliverable by Xceed under Sections 1.2(a) and 1.2(e) herein, and the maximum
and minimum values, shall be equitably adjusted upon the occurrence, after the
date of this Agreement, of a stock split, reverse split, stock dividend, merger,
consolidation, recapitalization, or other event by which each share of
outstanding Common Stock is converted to a greater or lesser number of shares of
Common Stock or into other securities. While held in Escrow, the Fixed Escrow
Shares shall continue to be registered in the name of the Company (or, if so
directed by the Company, in the names of the Interestholders). Based upon the
financial statements attached hereto as Schedule 3.1(d), which have been
reviewed and accepted by Xceed's auditors, the parties agree that the Total
Fixed Payment is equal to $15,024,891.
(b) First Cash Installment. On the Closing Date, Xceed shall pay to
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the Company (or, if so directed by the Company, the Interestholders, in
accordance with their respective ownership interests in the Company as set forth
on Schedule A hereto), One Million Dollars ($1,000,000) in cash (or by
electronic wire transfer of immediately available funds).
(c) Second Cash Installment. On March 31, 2000, Xceed shall pay to
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the Company (or, if so directed by the Company, the Interestholders, in
accordance with their respective ownership interests in the Company as set forth
on Schedule A hereto), the sum of $1,000,000 in cash (or by electronic wire
transfer of immediately available funds).
(d) Third Cash Installment. On June 30, 2000, Xceed shall pay to the
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Company (or, if so directed by the Company, the Interestholders, in accordance
with their respective ownership interests in the Company as set forth on
Schedule A hereto), the sum of $2,000,000 in cash (or by electronic wire
transfer of immediately available funds).
(e) Earnout. In addition to the foregoing, the Interestholders shall
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have the right to receive additional payments, as part of the Purchase Price, as
set forth herein upon the attainment of certain performance targets (the
"Earnout"). The Earnout shall be calculated at the end of each of two
measurement periods: (i) the three-month period ending on March 31, 2000 (the
"First Measurement Period); and (ii) the three-month period ending on June 30,
2000 (the "Second Measurement Period"). The Earnout shall be based on the
financial performance of the business of the Company, which shall be operated,
at least for accounting purposes, as a separate division of Xceed (the "Big
Theory Division") from the Closing Date until the end of the Second Measurement
Period. The Earnout shall be payable in shares of Common Stock and shall be
placed in Escrow pursuant to the terms set forth herein. The Earnout shall be
calculated at the end of each measurement period based on revenue, in accordance
with generally accepted accounting principles, generated during such period.
That is, the Earnout for the First Measurement Period (the "First Earnout")
shall be based on revenue generated during such period (the "First Revenue
Performance"), and the Earnout for the Second Measurement Period (the "Second
Earnout") shall be based on revenue generated during such period (the "Second
Revenue Performance").
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(i) First Earnout.
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(A) First Revenue Performance. If the gross revenues of the
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Company (from January 1, 2000 until the Closing Date) and the Big Theory
Division (after the Closing Date) during the First Measurement Period are in the
amounts set forth in the left column of the chart set forth below, then the
First Earnout shall be in the amount set forth in the corresponding right column
of the chart set forth below.
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FIRST REVENUE PERFORMANCE FIRST EARNOUT
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Less than $990,625 $0
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$990,625 or higher First Revenue Performance * 3.1
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(B) First Earnout Payment. The number of shares of Common Stock
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issuable in connection with the First Earnout (the "First Earnout Escrow
Shares") shall be determined by dividing (x) the First Earnout by (y) the Stock
Price Divisor, provided, however, the Stock Price Divisor shall be limited to a
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maximum value of $32.85 and a minimum value of $24.28. Xceed shall place the
First Earnout Escrow Shares, if any, in Escrow on April 28, 2000, pursuant to
the terms set forth herein. While held in Escrow, the First Earnout Escrow
Shares shall continue to be registered in the name of the Interestholders.
(ii) Second Earnout.
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(A) Second Revenue Performance. If the gross revenues of the Big
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Theory Division during the Second Measurement Period are in the amounts set
forth in the left column of the chart set forth below, then the Second Earnout
shall be in the amount set forth in the corresponding right column of the chart
set forth below.
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SECOND REVENUE PERFORMANCE SECOND EARNOUT
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Less than $1,254,500 $0
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$1,254,500 to 2,258,099 $7,777,900 * ((x - 50) / 40) ,
where x = (Second Revenue Performance/
$25,090)
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$2,258,100 to 2,759,900 Second Revenue Performance * 3.1
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Greater than $2,759,900 $8,555,690 +
(3.5 * (Second Revenue Performance -
$2,759,900))
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(B) Second Earnout Payment. The number of shares of Xceed Common
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Stock issuable in connection with the Second Earnout (the "Second Earnout Escrow
Shares") shall be determined by dividing (x) the Second Earnout by (y) the Stock
Price
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Divisor, provided, however, the Stock Price Divisor shall be limited to a
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maximum value of $32.85 and a minimum value of $24.28. Xceed shall place the
Second Earnout Escrow Shares, if any, in Escrow on July 31, 2000, pursuant to
the terms set forth herein. While held in Escrow, the Second Earnout Escrow
Shares shall continue to be registered in the name of the Interestholders.
1.3 Assumption of Obligations and Liabilities. Xceed hereby assumed,
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agrees to perform and/or discharge all obligations of the Company under (i) the
Assigned Contracts, (ii) the Accounts Payable, (iii) the Intellectual Property,
(iv) the liabilities identified on the Financial Statements (as hereinafter
defined in Section 3.1(d)), (v) the liabilities incurred in the ordinary course
of the Company's business, and (vi) the other provisions of this Agreement
herein (collectively, the Assumed Liabilities"). Other than the foregoing,
Xceed does not assume, agree to perform or discharge, or indemnify the Company
against or otherwise have any responsibility for any obligations of the Company.
Xceed does not assume, agree to perform or discharge, or indemnify the Company
against or otherwise have any responsibility for any liabilities or obligations
of the Company whatsoever, fixed or contingent, and whether arising prior to, on
or after the Closing Date (as hereinafter defined).
1.4 Registration Rights.
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(a) Definitions. For purposes of this Section 1.4:
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(i) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act of 1933, as amended (the
"Securities Act") (and any post-effective amendments filed or required to be
filed) and the declaration or ordering of effectiveness of such registration
statement;
(ii) The term "Registrable Securities" means: (A) the shares
of Common Stock issued in connection with the Asset Purchase; and (B) any
capital stock of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of, the shares of Common Stock
issued in connection with the Asset Purchase; provided, however, that such term
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does notinclude securities which have already been sold by a Holder pursuant to
a registered transaction or a Rule 144 transaction under the Securities Act; and
(iii) The term "Holder" means the Company or any
Interestholder holding Registrable Securities and any other person holding
Registrable Securities to whom the registration rights have been transferred
pursuant to Section 1.4(k) herein.
(b) Piggy-Back Rights. If, during the period commencing on the
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Closing Date and ending on the first anniversary of the Closing Date (the
"Piggy-Back Period"), Xceed shall determine to file a registration statement
relating to the offer and sale of any of its securities (other than a
registration statement on Form S-4 or Form S-8 or their successor forms) which
would permit inclusion of any Registrable Securities, Xceed shall: (i) promptly
give to the Holders written notice thereof (the "Piggy-Back Notice"); and (ii)
subject to subsection 1.4(c) below, include in such registration and in any
underwriting involved therein, all of the Registrable Securities specified in a
written request made by the Holders, within thirty (30) calendar days after
receipt of the Piggy-Back Notice from Xceed.
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(c) Underwriting. If the subject registration relates to an
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underwritten offering, Xceed shall so advise the Holders as a part of the Piggy-
Back Notice. In such event, the right of a Holder to registration pursuant
hereto shall be conditioned upon such Holder's participation in, and agreement
with, the terms of such underwriting. Each Holder shall (together with Xceed
and the other stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter (or underwriters) selected for underwriting by Xceed and shall
arrange for all documents and opinions reuired to be delivered thereunder in
respect of their participation as selling stockholders to be delivered. If the
total amount of Registrable Securities that all Holders request to be included
in such offering exceeds the amount of securities that the underwriters
reasonably believe compatible with the success of the offering, Xceed shall be
required to include in the offering only the number of Registrable Securities of
the Holders, if any, as the underwriters believe will not jeopardize the success
of the offering (the Registrable Securities so included, if any, to be
apportioned pro rata among the selling Holders according to the total amount of
Registrable Securities owned by such selling Holders).
(d) Demand Rights. In the event that Xceed has not filed a
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registration statement including all of the Registrable Securities during the
Piggy-Back Period (other than by reason of a Holder having declined inclusion of
his, her or its shares of Registrable Securities therein after receipt of the
Piggy-Back Notice), then the Holders owning at least fifty-one percent (51%) of
the shares of the Registrable Securities shall be entitled on one (1) occasion,
commencing on the date immediately following the first anniversary of the
Closing Date, to cause Xceed to: (i) include for resale such shares of
Registrable Securities in a registration statement filed with the Securities and
Exchange Commission (the "Commission"); (ii) use its best efforts to have such
registration statement declared effective by the Commission under the Securities
Act as soon as practicable thereafter; and (iii) keep such registration
statement effective for 90 days, by providing to Xceed written notice (the
"Demand Notice") demanding that Xceed file such a registration statement. Xceed
shall, upon receipt of the Demand Notice, notify the remaining Holders in
writing of its receipt of the Demand Notice (the "Registration Notice") and
shall indicate therein that such other Holders may include in such registration
statement the Registrable Securities. Those Holders seeking to include their
Registrable Securities shall, within thirty (30) calendar days of the date of
the Registration Notice (the "Notice Period"), notify Xceed in writing of their
desire to have their Registrable Securities included in such registration.
Xceed shall thereafter, within thirty (30) calendar days of expiration of the
Notice Period, file a registration statement (on a form deemed appropriate by
Xceed's counsel) with the Commission including all of the Registrable Securities
which the Holders shall request in writing (the "Demand Rights"). Inclusion of
all or any portion of a Holder's Registrable Securities pursuant to the Demand
Notice shall constitute exercise of the Demand Rights in full. Notwithstanding
such registration, the Holders shall not, while employees of Xceed, sell their
Registrable Securities during a period in which Xceed has imposed restrictions
on the ability of its employees to effect trading in the Common Stock; provided,
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however, if such restrictions exist, any rights shall be extended for a period
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corresponding to the period that such restrictions are in effect.
Notwithstanding the foregoing: (x) Xceed shall not be obligated to effect a
registration pursuant to this Section 1.4(d) during the period starting with the
date sixty (60) days prior to Xceed's estimated dates of filing of, and ending
on a date six (6) months following the effective date of, a registration
statement pertaining to an underwritten public offering of securities for the
account of Xceed, provided that Xceed is actively employing in good faith all
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reasonable efforts to cause such registration statement to become effective and
that Xceed's estimate of the date of filing such registration
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statement is made in good faith; and (y) if Xceed shall furnish to such Holders
a certificate signed by the Chief Executive Officer of Xceed stating that in the
good faith judgment of the Board of Directors of Xceed it would be seriously
detrimental to Xceed or its shareholders for a registration statement to be
filed in the near future, then Xceed's obligation to use its best efforts to
file a registration statement shall be deferred for a period not to exceed six
(6) months. Xceed shall be obligated to effect only one registration pursuant to
this Section 1.4(d).
(e) Obligations of Xceed. Whenever required pursuant to Sections
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1.4(b) or 1.4(d) herein to use its best efforts to effect the registration of
any Registrable Securities, Xceed shall, as expeditiously as reasonably
possible:
(i) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become and remain effective; provided,
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however, that in connection with any proposed registration intended to permit an
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offering of any securities from time to time (i.e., a "shelf registration"),
Xceed shall be obligated to cause any such registration to remain effective for
ninety (90) days;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(iii) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them; and
(iv) use its best efforts to register and qualify the securities
covered by such registration statement under such other federal or state
securities laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement, provided
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that Xceed shall not be required in connection therewith or as a condition
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thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, and further provided that (anything
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in this Agreement to the contrary notwithstanding with respect to the bearing of
expenses) if any jurisdiction in which the securities shall be qualified shall
require that expenses incurred in connection with the qualification of the
securities in that jurisdiction be borne by selling shareholders, then such
expenses shall be payable by selling shareholders pro rata, to the extent
required by such jurisdiction.
(f) Information of Holders. It shall be a condition precedent to the
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obligations of Xceed pursuant to Section 1.4 herein that the Holders furnish to
Xceed any information regarding them, the Registrable Securities held by them,
the intended method of disposition of such Registrable Securities and any other
information which Xceed shall reasonably request and is required to consummate
the registrations contemplated herein.
(g) Expenses of Registration. All expenses incurred in connection
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with a registration pursuant to Section 1.4 herein (excluding underwriters'
discounts and commission), including without limitation all registration and
qualification fees, printers', accounting and legal fees and disbursements shall
be borne by Xceed.
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(h) Indemnification. In the event any Registrable Securities are
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included in a registration statement under Section 1.4:
(i) To the extent permitted by law, Xceed will indemnify and hold
harmless each Holder requesting or joining in a registration, any underwriter
(as defined in the Securities Act) for it, and each person, if any, who controls
such Holder or underwriter within the meaning of the Securities Act, against any
losses, claims, damages, or liabilities, joint or several, to which they may
become subject under the Securities Act or otherwise, insofar as such losses,
claim, damages, or liabilities (or actions in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary prospectus
or final prospects contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading or arise out of any violation by Xceed of any
rule or regulation promulgated under the Securities Act applicable to Xceed and
relating to action or inaction required of Xceed in connection with any such
registration; and will reimburse each such Holder, such underwriter, or
controlling person for any legal or other expenses readably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
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in this subsection 1.4(h)(i) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of Xceed (which consent shall not be unreasonably
withheld) nor shall Xceed be liable in any such case for any such action, claim,
damage, liability, or action to the extent that it arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in reliance
upon and in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, underwriter, or
controlling person.
(ii) To the extent permitted by law, each Holder requesting or
joining in a registration will indemnify and hold harmless Xceed, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls Xceed within the meaning of the Securities Act, and
each agent and any underwriter for Xceed (within the meaning of the Securities
Act) against any losses, claims, damages, or liabilities to which Xceed or any
such director, officer, controlling person, agent, or underwriter may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such registration statement, preliminary or final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder will reimburse any
legal or other expenses reasonably incurred by Xceed or any such director,
officer, controlling person, agent, or underwriter in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
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1.4(h)(ii) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement
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is effected without the consent of such Holder (which consent shall not be
unreasonably withheld).
(iii) Promptly after receipt by an indemnified party under this
paragraph of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this paragraph, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties. The failure to
notify an indemnifying party promptly of the commencement of any such action, if
prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
paragraph, but the omission so to notify the indemnifying party will not relieve
him of any liability that he may have to any indemnified party otherwise than
under this Section 1.4(h).
(i) Reports Under Securities Exchange Act of 1934. With a view to
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making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of Xceed to the public without registration,
Xceed agrees to use its best efforts to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144;
(ii) furnish to any Holder so long as such Holder owns any of the
Registrable Securities forthwith upon request a written statement by Xceed that
it has complied with the reporting requirements of Rule 144, and of the
Securities Act and the 1934 Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly report of
Xceed, and such other reports and documents so filed by Xceed as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
permitting the selling of any such securities without registration.
(j) Lockup Agreement. In consideration for Xceed agreeing to its
----------------
obligations under this Section 1.4, each Holder who participates in a
registration pursuant to this Section 1.4 and then owns more than one percent
(1%) of the outstanding voting securities of Xceed agrees in connection with any
registration of Xceed's securities that, upon the request of Xceed or the
underwriters managing any underwritten offering of Xceed's securities, not to
sell, make any short sale of, loan, grant any option for the purchase of, of
otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of Xceed or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as Xceed
or the underwriters may specify.
(k) Transfer of Registration Rights. The registration rights granted
-------------------------------
to the Company under this Section 1.4 may be transferred to any Interestholder
and by any Interestholder to any party to whom Registrable Securities are
transferred in a transaction complying with this Agreement and exempt from
registration under the Securities Act; provided, however, that Xceed shall be
-------- -------
given written notice of such transfer stating the name and address
11
of the transferee and identifying the securities with respect to which the
rights under this Section 1.4 are being assigned.
1.5 Lockup. The shares of Common Stock issued hereunder shall be subject
------
to a lockup as provided herein.
(a) Fixed Stock Payment Lockup. One-third (1/3) of the Fixed Escrow
--------------------------
Shares shall be subject to a lockup for a period of twelve (12) months beginning
on the Closing Date, and two-third (2/3) of the Fixed Escrow Shares shall be
subject to a lockup for a period of fifteen (15) months beginning on the Closing
Date. As the applicable lockup period to which the Fixed Escrow Shares are
subject expires, the appropriate amount of Fixed Escrow Shares no longer subject
to such lockup shall be released from Escrow as set forth in Section 1.7 herein.
(b) First Earnout Lockup. One-third (1/3) of the First Earnout Escrow
--------------------
Shares, if any, shall be subject to a lockup for a period of twelve (12) months
beginning on April 28, 2000, and two-third (2/3) of the First Earnout Escrow
Shares, if any, shall be subject to a lockup for a period of fifteen (15) months
beginning on April 28, 2000. As the applicable lockup period to which the First
Earnout Escrow Shares are subject expires, the appropriate amount of First
Earnout Escrow Shares no longer subject to such lockup shall be released from
Escrow as set forth in Section 1.7 herein.
(c) Second Earnout Lockup. One-third (1/3) of the Second Earnout
---------------------
Escrow Shares, if any, shall be subject to a lockup for a period of twelve (12)
months beginning on July 31, 2000, and two-third (2/3) of the Second Earnout
Escrow Shares, if any, shall be subject to a lockup for a period of fifteen (15)
months beginning on July 31, 2000. As the applicable lockup period to which the
Second Earnout Escrow Shares are subject expires, the appropriate amount of
Second Earnout Escrow Shares no longer subject to such lockup shall be released
from Escrow as set forth in Section 1.7 herein.
1.6 Restrictions on Resale of Common Stock. The shares of Common Stock
--------------------------------------
issuable pursuant to this Agreement may not be sold, assigned, pledged,
hypothecated or transferred or any interest therein conveyed to any other
person, except in accordance with the registration provisions of the federal and
state securities laws or applicable exemption therefrom, and the certificates
representing such shares of Common Stock shall contain an appropriate legend to
that effect.
1.7 Escrow.
------
(a) Escrow Agreement. Xceed shall place: (i) on the Closing Date, the
----------------
Fixed Escrow Shares; (ii) on April 28, 2000, the First Earnout Escrow Shares, if
any; and (iii) on July 31, 2000, the Second Earnout Escrow Shares, if any, in
escrow (the "Escrow") in accordance with the terms of an escrow agreement (the
"Escrow Agreement") by and among the parties hereto and American Stock Transfer
& Trust Company, Inc., as escrow agent (the "Escrow Agent"), a copy of which is
attached hereto as Exhibit 1.7 and is incorporated herein by reference. All
Common Stock held in Escrow shall be available to satisfy indemnification claims
of Xceed specified in Article VI hereof. The parties hereto acknowledge and
agree that the execution of this Agreement by each of such parties constitutes
their acceptance of the terms of the Escrow Agreement, and such Escrow Agreement
shall become effective upon execution of
12
this Agreement by the parties hereto and execution of the Escrow Agreement by
the Escrow Agent.
(b) Release of Fixed Escrow Shares. Pursuant to the terms set forth
------------------------------
in the Escrow Agreement, one-third (1/3) of the Fixed Escrow Shares shall be
released from Escrow on the date twelve (12) months after the Closing Date; and
two-thirds (2/3) of the Fixed Escrow Shares shall be released from Escrow on the
date fifteen (15) months after the Closing Date.
(c) Release of First Earnout Escrow Shares. Pursuant to the terms set
--------------------------------------
forth in the Escrow Agreement, one-third (1/3) of the First Earnout Escrow
Shares shall be released from Escrow on April 28, 2001; and two-thirds (2/3) of
the Fixed Escrow Shares shall be released from Escrow on July 31, 2001.
(d) Release of Second Earnout Escrow Shares. Pursuant to the terms set
---------------------------------------
forth in the Escrow Agreement, one-third (1/3) of the Second Earnout Escrow
Shares shall be released from Escrow on July 31, 2001; and two-thirds (2/3) of
the Fixed Escrow Shares shall be released from Escrow on October 31, 2001.
(e) Other Provisions. Notwithstanding Section 1.7(b) through (d)
----------------
above, Common Stock having an aggregate value equal to the value of all
unresolved indemnification claims asserted under Article VI hereof shall be
retained in Escrow until such claims are resolved. Xceed, the Company and the
Interestholders agree that they shall instruct the Escrow Agent to charge any
valid indemnification claims against the Interestholders' accounts pro rata
according to their respective percentage interest in the Company set forth on
Schedule A hereto, except that claims involving several liability shall be
charged severally to the Interestholder responsible therefor. Xceed, the
Company and the Interestholders further agree to give the Escrow Agent
instructions consistent with the provisions of this Agreement.
ARTICLE II
CLOSING
2.1 Closing. Subject to the terms and conditions set forth herein, the
-------
closing (the "Closing") of the Asset Purchase shall take place on January 31,
2000 at the law offices of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P. in
Washington, D.C., simultaneously with the execution of this Agreement, or at
such other place, time and date as the parties hereto may agree (the "Closing
Date").
2.2 Deliveries of Instruments. The following documents, instruments and
-------------------------
other materials shall be executed and delivered on or prior to the Closing Date:
(a) Instruments of Transfer. The Company shall execute and deliver to
-----------------------
Xceed such bills of sale, assignments, endorsements, and other instruments and
documents reasonably satisfactory in form and substance to Xceed and its counsel
as shall be effective to vest in Xceed on the Closing Date good and indefeasible
title to the Assets (or, as to the Property, as hereinafter defined, and Leases,
good and valid leasehold interests therein or, as to the Intellectual Property,
as applicable, good and valid license interests therein), free and clear of any
and all adverse claims, mortgages, pledges, liens, charges, security interests
or other rights, interests or encumbrances, other than those which comprise the
Assumed Liabilities. All such instruments
13
of transfer and any other agreement, certificate or other document delivered by
the Company, Xceed or their respective representatives in connection with this
Agreement or consummation of the transactions contemplated hereby may be
hereinafter referred to as the "Ancillary Documents."
(b) Payment Due at Closing. At the Closing, Xceed shall pay the
----------------------
Company (or, if so directed by the Company, the Interestholders, in accordance
with their respective ownership interests in the Company as set forth on
Schedule A hereto), One Million Dollars ($1,000,000) in cash (or by electronic
wire transfer of immediately available funds) and shall place in Escrow
certificates representing the shares of Common Stock issuable on the Closing
Date.
(c) Employment Agreements. At the Closing, Xceed and each of ▇▇▇▇▇ ▇.
---------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇ shall
execute and deliver the employment agreements described in Section 5.1(f) hereof
(the "Employment Agreements").
2.3 Use of Name. Immediately after the Closing, the Company shall cease
-----------
using the name "Big Theory" and any variants thereof except as required to
identify the prior name of the Company. The Company shall, within two (2) weeks
after the Closing Date, change the name of the Company to a name which, in the
reasonable judgment of Xceed, is not confusingly similar thereto.
2.4 Notices of Sale. The Company shall prepare and mail, with copies to
---------------
Xceed, on or prior to the Closing Date, such notices to and requests for the
consent (where required) of the other party under each of the Assigned
Contracts, including the Leases, and any other agreements assigned by the
Company as are necessary or may be reasonably required by Xceed. Such notice
shall advise such other party that the subject agreements have, to the extent
permitted, been assigned to Xceed and shall direct such other party to send to
Xceed all future notices and correspondence relating to such agreements. The
Company shall execute and deliver on a timely basis to all appropriate federal,
state and local governments or governmental entities, with a copy to Xceed, all
notices, assignments or transfers of rights, reports, and other authorizations
or documentation as may be necessary to assure the continued effectiveness and
transfer to Xceed of all existing permits, approvals, licenses, and
authorizations in effect with respect to operation of the Business and the
Assets in compliance with applicable law and regulations.
2.5 Bulk Sales Requirements. The Company shall have complied with all
-----------------------
of the bulk sales requirements applicable to the transfer of the Assets as
contemplated hereby in each and every state in which the Company's ownership of
the Assets or conduct of the Business renders the Company subject to the same,
except where failure to do so will not have a material adverse effect on the
Assets or the Business.
14
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company and the Interestholders.
---------------------------------------------------------------------
The Company and the Interestholders, jointly and severally, except as
specifically provided herein, represent and warrant to Xceed as follows:
(a) Authorization. The execution, delivery and performance of this
-------------
Agreement and consummation of the transactions contemplated hereby have been
duly authorized, adopted and approved by the Company and by each of the
Interestholders individually. The Company has taken all necessary action and has
all of the necessary power to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company on its behalf and, assuming that this
Agreement is the valid and binding obligation of Xceed, is the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect, or by legal or equitable principles, relating to or limiting creditors'
rights generally and except that the remedy of specific performance and
injunctive and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. Each Interestholder severally represents and warrants that he or
she, as appropriate, and the Company have the ability to consummate the
transactions contemplated hereby, that this Agreement has been duly executed and
validly delivered by him or her, as appropriate, and that this Agreement is the
valid and binding obligation of such Interestholder, enforceable against such
Interestholder in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect, or by legal or equitable
principles, relating to or limiting creditors' rights generally and except that
the remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(b) Organization. The Company is a limited liability company duly
------------
organized and validly existing under the laws of the State of Delaware. The
Company has the power and authority to own and lease its properties and assets
and to carry on its business as it is now being conducted and is duly qualified
to do business as a foreign company in each jurisdiction where it owns or leases
property or conducts the Business, except where the failure to be so qualified
would not have a material adverse effect on the Business, Assets, operations,
earnings, prospects or condition (financial or otherwise) of the Company. Set
forth on Schedule 3.1(b) hereto is a true and correct list of each jurisdiction
in which the Company is qualified to do business. The Company does not own any
shares of capital stock or other interest in any corporation, Company,
association or other entity.
(c) Capitalization. The capitalization of the Company as of the date
--------------
hereof is as set forth above in the recitals to this Agreement. The outstanding
units of Company Membership Interests have been duly authorized, validly issued
and are fully paid and non-assessable. Each Interestholder hereby severally
represents and warrants that he or she, as appropriate, is the sole legal and
beneficial owner of the number of units of Company Membership Interests as set
forth in the recitals to this Agreement, which units, in the aggregate,
represent all of the issued and outstanding units of membership interests of the
Company. Other than as set forth in the Company's First Amended and Restated
Limited Liability Company Agreement, each Interestholder hereby severally
represents and warrants that the issued and outstanding units of Company
Membership Interests owned by such Interestholder are owned
15
(including the community property interest of each Interestholder's spouse) free
of preemptive rights and free and clear of any and all adverse claims, liens,
mortgages, charges, security interests, encumbrances and other restrictions or
limitations of any kind whatsoever. The Company has not issued any units of
membership interests which could give rise to claims for violation of any
federal or state securities laws (including any rules or regulations promulgated
thereunder) or the securities laws of any other jurisdiction (including any
rules or regulations promulgated thereunder). Except with respect to those
certain options to purchase Company Membership Interests held by the
Optionholders, as of the date hereof, there are no options, warrants, calls,
convertible securities or commitments of any kind whatsoever relating to the
units of Company Membership Interests subject hereto or any of the unissued
units of membership interests of the Company Stock subject hereto or any of the
unissued units of membership interests of the Company, and there are no voting
trusts, voting agreements, stockholder agreements or other agreements or
understandings of any kind whatsoever which relate to the voting of the
membership interests of the Company.
(d) Financial Statements. The Company has heretofore delivered to
--------------------
Xceed unaudited financial statements as of and for the twelve (12) months ended
December 31, 1999 (the "Financial Statements"). The Financial Statements present
fairly, in all material respects, the financial position of the Company as of
the respective dates indicated and the results of operations and cash flows of
the Company for the respective periods indicated. The Financial Statements are
in conformity with generally accepted accounting principles applied on a
consistent basis except as set forth on Schedule 3.1(d) hereto.
(e) Owned Real Property. The Company does not own (of record or
-------------------
beneficially), nor does it have any interest in, any real property other than
the leased real property set forth below.
(f) Leased Real Property; Tenancies. Set forth on Schedule 3.1(f)
-------------------------------
hereto is a true, correct and complete list of all of the Leases (including
subleases) with respect to property leased by the Company as lessee and used in
the conduct of the Business or otherwise (the "Property"). Also set forth on
Schedule 3.1(f) is a true, correct and complete list of the monthly or annual
rental payments due thereunder as of the date hereof and the expiration dates
thereof. The Company has delivered to Xceed true, correct and complete copies
of each of the Leases. Except as set forth on Schedule 3.1(f), the Company is
not required pursuant to the provisions of any of the Leases (or otherwise) to
obtain the consent of any lessor prior to or in connection with consummation of
the transactions contemplated hereby. Neither the Company nor, to the Company's
or each Interestholder's knowledge, any third party is in default under any of
the Leases. There are no subleases or subtenancies for any part of the Property
that shall remain in effect after the Closing Date and there is no third party
which has any right to purchase, use or otherwise possess all or any part of the
Property.
(g) Title. The Company: (i) holds a valid and enforceable leasehold
-----
interest in the Property; and (ii) owns good and indefeasible title to all of
the Assets (or as to the Property and Leases, good and valid leasehold interests
therein or, as to the Intellectual Property, as applicable, good and valid
license interests therein). Except as set forth on Schedule 3.1(g) hereto, to
the best knowledge of the Company and each Interestholder, the Property is
leased free of all adverse claims, liens, mortgages, charges, security
interests, encumbrances and other restrictions or limitations of any kind
whatsoever, except: (A) as stated in the Financial Statements (including the
notes thereto); (B) for liens for taxes or assessments not yet due and
16
payable or which are being contested by the Company in good faith (of which
Xceed has been notified); (C) for minor liens imposed by law for sums not yet
due or which are being contested by the Company in good faith (of which Xceed
has been notified) and (D) for imperfections of title, adverse claims, charges,
restrictions, limitations, encumbrances, liens or security interests that are
minor and which do not detract from the value of the Property subject thereto or
which do not impair the operations of the Business or the Company or affect the
present use of the Property. There is no condemnation or eminent domain
proceeding pending or, to the Company's or each Interestholder's knowledge,
threatened against the Property (or any part thereof). The Company has not made
any commitments or received any notice, oral or written, from any public
authority or other entity with respect to the taking or use of the Property (or
any part thereof), whether temporarily or permanently, for easements, rights-of-
way or other public or quasi-public purposes or for any other purpose whatsoever
nor is there any proceeding pending or, to the Company's or each
Interestholder's knowledge, threatened which could adversely affect the zoning
classification relating to such property or its use by the Company as of the
date hereof. Except as set forth on Schedule 3.1(g) hereto, the Assets are owned
free and clear of all adverse claims, liens, mortgages, charges, security
interests, encumbrances and other restrictions or limitations of any kind
whatsoever, except: (A) as stated in the Financial Statements (including the
notes thereto); (B) for liens for taxes or assessments not yet due and payable
or which are being contested by the Company in good faith (of which Xceed has
been notified); (C) for minor liens imposed by law for sums not yet due or which
are being contested by the Company in good faith of which Xceed has been
notified; (D) for imperfections of title, adverse claims, charges, restrictions,
limitations, encumbrances, liens or security interests that are minor and which
do not detract in any material respect from the value of any of the Assets or
which do not impair the operations of the Business or the Company in any
material respect or affect the present use of the Assets in any material
respect; and (E) those adverse claims, liens, mortgages, charges, security
interests, encumbrances and other restrictions and limitations that constitute
Assumed Liabilities. For purposes of clarification only, the preceding sentence
does not address claims, liens, security interests or other encumbrance arising
under the documents evidencing an Asset to the extent such liens are upon the
Asset so documented or upon the subject matter of such documentation, such as
mechanics' or materialmen's liens. The Company has not made any commitments or
received any notice, oral or written, from any public authority or other entity
with respect to the taking or use of any of the Assets, whether temporarily or
permanently, for any purpose whatsoever, nor to the knowledge of the Company or
each Interestholder, is there any proceeding pending or threatened which could
adversely affect any Asset.
(h) Condition of Assets. The Leases and all other documents and
-------------------
agreements pursuant to which the Company has obtained a right with respect to
the Property and Assets, are valid and enforceable in all respects in accordance
with their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect, or by legal or equitable principles, relating
to or limiting creditors' rights generally and except that the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. All licenses, permits and
authorizations related to the location or operation of the Business are in good
standing and are valid and enforceable in all respects in accordance with their
respective terms. There is not, under any of the foregoing instruments,
documents or agreements, any existing default, nor is there any event which,
with notice or lapse of time or both, would constitute a default arising through
the Company, or to the knowledge of the Company, to any third party which could:
(i) have a material adverse effect on the Business, Assets, operations,
earnings,
17
prospects or condition (financial or otherwise) of the Company; or (ii)
materially adversely affect its use of the Property or the title to the Assets.
To the Company's and each Interestholder's knowledge, the Company is not in
violation of and has complied with all applicable zoning, building or other
codes, statutes, regulations, ordinances, notices and orders of any governmental
authority with respect to the occupancy, use, maintenance, condition, operation
and improvement of the Property or Assets, except where the failure to comply
would not have a material adverse effect on the Business, Assets, operations,
earnings, prospects or condition (financial or otherwise) of the Company. The
Company's use of any improvements for the purposes for which any of the Property
or Assets are being used as of the date hereof does not violate any such code,
statute, regulation, ordinance, notice or order. The Company possesses all
licenses, certificates of occupancy, permits and authorizations required to be
obtained by the Company with respect to the Company's operation and maintenance
of the Property or Assets for all uses for which such property is or assets are
operated or used by the Company as of the date hereof, except where the failure
to do so would not have a material adverse effect on the Business, Assets,
operations, earnings, prospects or condition (financial or otherwise) of the
Company. All of the Property and Assets (whether owned or leased by the Company)
of the Company are in good operating condition and repair, subject to normal
wear and use and each such item is usable in a manner consistent with current
use by the Company.
(i) Intellectual Property.
----------------------
(i) Schedule 3.1(i) hereto, to the knowledge of the Company, sets
forth a true, correct and complete list (including where applicable, the date of
registration and the serial or registration number) of all registered domain
names, registered and unregistered trademarks, service marks and trade names
(including any applications for the same), registered copyrights, and computer
programs and software (whether or not protected by patent, copyright or
otherwise) which are owned by, licensed by, used in or are material to the
business of the Company (the "Intellectual Property") . With respect to each of
the foregoing items, there is listed on Schedule 3.1(i) hereto the following:
(A) the extent of the Company's interest therein; (B) each agreement and all
other documents evidencing the Company's interest therein; (C) the extent of the
interest of any third party therein; and (D) each agreement and all other
documents evidencing the interest of any third party therein.
(ii) Except as set forth on Schedule 3.1(i) hereto, the Company's
right, title or interest in the Intellectual Property is free and clear of
adverse claims, liens, mortgages, charges, security interests and encumbrances
or other restrictions or limitations of any kind whatsoever known to the
Company.
(iii) To the knowledge of the Company and each Interestholder, the
Company has not committed any acts of unfair competition or directly,
indirectly, contributorily or by inducement, infringed upon any patent,
trademark, service ▇▇▇▇, trade name, copyright, computer program or software, or
any other intellectual property, nor has the Company misappropriated any of the
foregoing from any other person or entity or received from any other person or
entity any notice, charge, claim or other assertion with respect thereto. The
foregoing shall not be deemed to include any past, unauthorized use of software
and/or computer programs by employees of the Company. In that regard, however,
to the knowledge of the Company and each Interestholder, as of the date hereof,
the Company is properly licensed and authorized to use all software and computer
programs currently utilized in the Business.
18
(iv) The Company has not sent or otherwise communicated to any
other person or entity any notice, charge, claim or other assertion of, nor has
the Company any knowledge of, any present, impending or threatened infringement
upon any of the Intellectual Property by any other person or entity, or
misappropriation of any of the foregoing by any other person or entity, or any
commission of acts of unfair competition against the Company by any other person
or entity.
(j) Accounts Receivable. Schedule 3.1(j) hereto sets forth a true,
-------------------
correct and complete list of the accounts receivable (the "Accounts Receivable")
as of January 19, 2000. The Accounts Receivable and are valid, arose out of bona
fide transactions in the ordinary course of business, and are the valid and
binding obligations of and are enforceable against the respective account
debtors thereunder, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect. There is no contest, claim or right of set-off contained in
any written agreement with any account debtor relating to the amount or validity
of any Account Receivable.
(k) Accounts Payable. Schedule 3.1(k) hereto sets forth a true,
----------------
correct and complete list of the Company's accounts payable (the "Accounts
Payable") as of January 19, 2000. Prior to the Closing Date, all outstanding
Accounts Payable will have been paid by the Company in a manner consistent with
past practice.
(l) Absence of Undisclosed Liabilities. Except as set forth on
----------------------------------
Schedule 3.1(l) and Schedule 3.1(bb) hereto or on the Financial Statements, the
Company has not had nor does it have any indebtedness, loss or liability of any
nature whatsoever (other than as incurred in the ordinary course of business),
whether accrued, absolute, contingent or otherwise and whether due or become
due, which is material to the Business, Assets, operations, prospects, earnings
or condition (financial or otherwise) of the Company; provided that as to
-------- ----
Intellectual Property, the representation made by the Company in this Section
3.1(l) is limited to the knowledge of the Company.
(m) Absence of Certain Changes or Events. Except as set forth on
------------------------------------
Schedule 3.1(m) and except as expressly set forth in this Agreement, the Company
has not, since December 31, 1999:
(i) issued, sold, granted or contracted to issue, sell or grant
any interest in or to any membership units, notes, bonds or other
securities of the Company or any option to purchase the same;
(ii) amended its certificate of formation or operating agreement;
(iii) made any capital expenditures or commitments for the
acquisition or construction of any property, plant or equipment other than
in the ordinary course of business;
(iv) entered into any material transaction in any way
inconsistent with the past practices of the Business or conducted the
Business in any manner inconsistent with its past practices;
19
(v) incurred any damage, destruction or any other loss to any of
its property or assets in an aggregate amount exceeding Fifty Thousand
Dollars ($50,000) whether or not covered by insurance;
(vi) suffered any loss in an aggregate amount exceeding Fifty
Thousand Dollars ($50,000) and, neither the Company nor any Interestholder
has become aware of any intention on the part of any client, dealer or
supplier to discontinue its current relationship with the Company, the loss
or discontinuance of which, alone or in the aggregate, could have a
material adverse effect on the Business, Assets, operations, earnings,
prospects or condition (financial or otherwise) of the Company;
(vii) modified, amended or altered any contractual arrangement
with any client, dealer or supplier, the modification, amendment or
alteration of which, alone or in the aggregate, could have a material
adverse effect on the Business, Assets, operations, earnings, prospects or
condition (financial or otherwise) of the Company;
(viii) incurred any material liability or obligation (absolute or
contingent) or made any material expenditure other than in the ordinary
course of business or expenses of the transaction contemplated hereby;
(ix) experienced any material adverse change in the Business,
Assets, operations, earnings, prospects or condition (financial or
otherwise) of the Company or experienced or have knowledge of any event
which could have a material adverse effect on the Business, Assets,
operations, earnings, prospects or condition (financial or otherwise) of
the Company;
(x) declared, set aside or paid any dividend or other
distribution in respect of the units of Company Membership Interests of the
Company;
(xi) redeemed, repurchased, or otherwise acquired any of its
securities or entered into any agreement with respect to the foregoing;
(xii) granted, conveyed, transferred, assigned or made any sale
of Accounts Receivable or any accrual of liabilities outside of the
ordinary course of business;
(xiii) granted, conveyed, transferred, assigned or made any sale
of any material interest in the Intellectual Property;
(xiv) purchased, disposed of or contracted to purchase or dispose
of, or granted or received an option or any other right to purchase or
sell, any of the Property or the Assets, except in the ordinary course of
business;
(xv) increased the rate of compensation payable or to become
payable to any executive or employee of the Company, or increased the
amounts paid or payable to such executive or employee under any bonus,
insurance, pension or other benefit plan, or made any arrangements therefor
with or for any of said individuals except for increases consistent with
the ordinary course of business or increases resulting from the application
20
of existing formulas under existing plans, agreements or policies relating
to employee compensation:
(xvi) adopted or amended any collective bargaining, bonus,
profit-sharing, compensation, option, pension, retirement, deferred
compensation or other plan, agreement, trust, fund or arrangement for the
benefit of its employees, except as otherwise required or permitted herein;
or
(xvii) changed any material accounting principle, procedure or
practice followed by the Company or changed the method of applying such
principle, procedure or practice.
(n) Agreements. To the knowledge of the Company, set forth on Schedule
----------
3.1(n) hereto is a true, correct and complete list of all of the Assigned
Contracts, which are all contracts, agreements and other instruments related to
operation of the Business. Copies of all such contracts, agreements and other
instruments have heretofore been delivered or made available by the Company to
Xceed. Other than as set forth on Schedule 3.1(n) and 3.1(f), there is no
contract, agreement or other instrument to which the Company or any
Interestholder is a party, which affects the Business or the Assets. None of the
foregoing agreements limits the freedom of the Company to compete in any line of
business or with any person or other entity in any geographic region within or
outside of the United States of America.
Neither the Company, the Interestholders (each severally and not
jointly), nor to the knowledge of the Company, any third party is in material
default and no event has occurred which, with notice or lapse of time or both,
could cause or become a material default by the Company, the Interestholders or
to the knowledge of the Company, any third party, under any Assigned Contract.
Each Assigned Contract is enforceable, in accordance with its terms, against all
other parties thereto, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect, or by legal or equitable principles, relating to or
limiting creditors' rights generally and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(o) Non-Contravention; Consents. Neither the execution and delivery of
---------------------------
this Agreement by the Company and the Interestholders, nor consummation of the
transactions contemplated hereby, does or will: (i) violate or conflict with any
provision of the certificate of formation or operating agreement of the Company;
(ii) violate or, with the passage of time, result in the violation of any
provision of, or result in the acceleration of or entitle any party to
accelerate any obligation under, or result in the creation or imposition of any
lien, charge, pledge, security interest or other encumbrance upon any of the
Property or Assets pursuant to any provision of any mortgage, lien, lease,
agreement, permit, indenture, license, instrument, law, order, arbitration
award, judgment or decree to which the Company or any Interestholder is a party
or by which they or the Property or Assets are bound, the effect of which
violation, acceleration, creation or imposition could have a material
21
adverse effect on the Business, Assets, operations, earnings, prospects or
(financial or otherwise) of the Company; (iii) violate or conflict with any
other restriction of any kind whatsoever to which the Company or any
Interestholder is subject or by which any of their properties or assets
(including the Property and the Assets) may be bound, the effect of any of which
violation or conflict could have a material adverse effect on the Business,
Assets, operations, earnings, prospects or (financial or otherwise) of the
Company; or (iv) constitute an event permitting termination by a third party of
any agreement to which the Company or any Interestholder is a party or is
subject, which termination could have a material adverse effect on the Business,
Assets, operations, earnings, prospects or condition (financial or otherwise) of
the Company. Except as set forth on Schedule 3.1(o) hereto, no consent,
authorization, order or approval of, or filing or registration with, any
governmental commission, board or other regulatory body is required in
connection with the execution, delivery and performance of the terms of this
Agreement and consummation of the transactions contemplated hereby.
(p) Employee Benefit Plans. Schedule 3.1(p) hereto sets forth a true,
----------------------
correct and complete list of all "employee benefit plans" as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (the "Benefit Plans") covering the employees of the Company
(the "Employees"). Each Benefit Plan is in compliance in all material respects
with all applicable provisions of law, including ERISA and the Internal Revenue
Code of 1986, as amended (the "Code"). There are no pending or, to the Company's
or each Interestholder's knowledge, threatened claims against any Benefit Plan
(except for claims for benefits payable in the normal operation of the Benefit
Plans) that could give rise to any material liability to the Company. All
material reports, notices and returns required to be filed with any governmental
agency or provided to any person or entity with respect to the Benefit Plans
have been timely filed. The Company has never had and does not now have any
Benefit Plan that is an employee pension plan (as defined in Section 3(2) of
ERISA) nor does the Company contribute to any multiemployer pension or
multiemployer welfare benefit plan (within the meaning of Section 3(37) of
ERISA).
(q) Labor Relations. There are no agreements with or pending petitions
---------------
for recognition of any labor union or association as the exclusive bargaining
agent for any or all of the employees of the Company and no such petition has
been pending at any time during the two years prior to the date hereof. To the
Company's and each Interestholder's knowledge, there has not been any organizing
effort by any union or other group seeking to represent any employees of the
Company as its exclusive bargaining agent at any time during the two years prior
to the date hereof. There are no labor strikes, work stoppages or other labor
disputes now pending or threatened against the Company, nor has there been any
such labor strike, work stoppage or other labor dispute or grievance at any time
during the two (2) years prior to the date hereof. Neither the Company nor any
Interestholder has any knowledge that any executive, key employee or any group
of employees of the Company has any plans to terminate his/her employment with
the Company.
(r) Insurance. Schedule 3.1(r) hereto sets forth a true, correct and
---------
complete list of all insurance policies or binders of insurance or programs of
self-insurance which relate to the Business as of the date hereof. The coverage
under each such policy and binder is in full force and effect. Neither the
Company nor any Interestholder has knowledge of nor has the Company or any
Interestholder received any notice of cancellation, termination, nonrenewal or
disallowance of any claim thereunder or with respect thereto. Neither the
Company nor any of the Interestholders have knowledge of any claim against the
Company relating to its business, assets, properties or operations which could
increase the insurance premiums payable by the Company under such policy or
binder in excess of normal increases consistent with industry practices.
22
(s) Tax Matters. Neither the Company nor any of the Interestholders is
-----------
a member of an affiliated group, within the meaning of Section 1504 of the Code
(an ''Affiliated Group"). The Company has filed when due and will file if and
when due prior to the Closing Date (after giving effect to any extensions
granted by the requisite legal or regulatory authority) all returns, reports,
elections, estimates, declarations, schedules, forms and other documents ("Tax
Returns") relating to taxes required to be filed by the Code or by any
applicable federal, state, county, municipal, local, foreign or other laws,
including, without limitation, consolidated, combined or unitary returns, for
any taxable period ending prior to or on the Closing Date (the "Pre-Closing Tax
Period"). The taxable year of the Company for federal and state income and
business tax purposes currently ends on December 31 of each year. All taxes
shown on any Tax Return required to be filed with respect to the Company for any
Pre-Closing Tax Period have been, or will have been, paid or accrued prior to
the Closing. The Company has heretofore delivered to Xceed all Tax Returns
filed on each Company's behalf for the fiscal year ended December 31, 1999. The
Company has fully accrued on its books all taxes for any periods, which are not
yet due. No tax liens have been filed, and no material claims have been or are
being asserted or, to the Company's or each Interestholder's knowledge,
threatened against the Company or any of the Interestholders with respect to any
taxes. No Tax Returns of the Company or any of the Interestholders have been
audited by any taxing authority, no deficiencies or claims have been proposed,
assessed or claimed (including interest and penalties) against the Company or
any of the Interestholders which have not been paid or accrued, and neither the
Company nor any of the Interestholders has waived or extended any statute of
limitations with respect to the assessment of any taxes. There are no suits,
actions, proceedings, claims or investigations now pending against the Company
or any Interestholder with respect to any taxes. The Company has withheld or
collected from each payment made to each of its employees, consultants,
contractors and other payees the amount of all taxes (including, but not limited
to, federal income taxes, state and local income and wage taxes, payroll taxes,
workers' compensation and unemployment taxes) required to be withheld or
collected therefrom for all Pre-Closing Tax Periods and the Company has timely
paid or accrued and reported the same in respect of its employees, consultants,
contractors and other payees to the proper tax receiving offices. The Company
does not have any liability for any taxes of any nature whatsoever other than as
shown on the Financial Statements (except for liabilities for taxes accruing
after the date of such balance sheet in the ordinary course of business) and
none of the Interestholders nor the Company is aware of any basis for any
additional liabilities for taxes for any Pre-Closing Tax Period. The reserve for
accrued but unpaid taxes for the period ending December 31, 1999 includes
adequate provision for all taxes which have been assessed or which will be due
and payable by the Company for all Pre-Closing Tax Periods. Neither the Company
nor any of the Interestholders files any state or local tax returns on a unitary
or combined basis with any other member of an Affiliated Group. Except as
specifically set forth in Section 1.2(b) above, to the extent that the
Interestholders may incur tax liability in connection with the transactions
contemplated hereby, each Interestholder, and not Xceed or the Company, will be
responsible for fulfilling any obligations or liabilities with respect thereto.
Notwithstanding the foregoing, however, the Interestholders shall not be
responsible for fulfilling any obligation or liability with respect to tax
liability incurred in connection with or resulting from an election or action
taken by Xceed on or after the Closing Date.
The term "taxes" or "tax" as used in this section or referred to
elsewhere in this Agreement shall mean all taxes, charges, fees, levies,
penalties, or other assessments, including without limitation, income, capital
gain, profit, gross receipts, ad valorem, excise, property, payroll,
withholding, employment, severance, social security, workers' compensation,
23
occupation, premium, customs duties, windfall profits, sales, use, and franchise
taxes, imposed by the United States, or any state, county, local or foreign
government or any subdivision or agency thereof, and including any interest,
penalties or additions attributable thereto.
(t) Compliance with Applicable Law. To the knowledge of the Company
------------------------------
and each Interestholder, the Company has been and is in compliance with all
foreign, federal, state and local laws, statutes, ordinances, rules and
regulations applicable to the Business, except where the failure to comply
therewith would not materially adversely affect the Business, Assets,
operations, earnings, prospects or condition (financial or otherwise) of the
Company. The Company has complied with the rules and regulations of all
governmental agencies having authority over the Business and operations of the
Company, including without limitation, agencies concerned with intra-state and
interstate commerce, occupational safety and employment practices, except where
the failure to comply would not have a material adverse effect on the Business,
Assets, operations, earnings, prospects or condition (financial or otherwise)
of the Company. Neither the Company nor any Interestholder has any knowledge of
or received any notice of violation of any such rule or regulation during the
two (2) years prior to the date hereof which could result in any liability for
penalties or damages or which could subject the Company to any injunction or
government writ, order or decree. To the knowledge of the Company and each
Interestholder, there are no facts, events or conditions that could interfere
with, prevent continued compliance with or give rise to any liability under any
foreign, federal, state or local governmental laws, statutes, ordinances or
regulations applicable to the Business, Assets, operations, earnings, prospects
or condition (financial or otherwise) of the Company, except where the failure
to do so would not have a material adverse effect on the Business, Assets,
operations, earnings, prospects or condition (financial or otherwise) of the
Company.
(u) Litigation. Except as set forth on Schedule 3.1(u) hereto, there
----------
is no action, suit, proceeding or investigation pending or, to the Company's or
each Interestholder's knowledge, threatened, which could restrict the Company or
each Interestholder's ability to perform his respective obligations hereunder or
could have a material adverse effect on the Business, Assets, operations,
earnings, prospects or condition (financial or otherwise) of the Company.
Neither the Company nor any Interestholder is in default in respect of any
judgment, order, writ, injunction or decree of any court or any federal, state,
local or other governmental agency, authority, body, board, bureau, commission,
department or instrumentality which could have a material adverse effect on the
Business, Assets, operations, earnings, prospects or condition (financial or
otherwise) of the Company.
(v) Permits. The Company holds all permits, licenses, orders and
-------
approvals of all federal, state or local governmental or regulatory authorities,
agencies or bodies required for the conduct and operation of the Business as
currently conducted, except where the failure to do so would not have a material
adverse effect on the Business, Assets, operations, earnings, prospects or
condition (financial or otherwise) of the Company. All such permits, licenses,
orders, and approvals are in full force and effect and no suspension,
termination or revocation of any of the foregoing is threatened. None of such
permits, licenses, orders or approvals will be materially adversely affected by
consummation of the transactions contemplated by this Agreement. Neither the
Company nor any Interestholder has any knowledge of nor have any of them
received any notice of violation of any of such rules or regulations during the
two (2) years prior to the date hereof which would result in any liability of
the Company for penalties or damages or which would subject the Company to any
injunction or governmental writ, order or decree.
24
(w) Warranties. Except as required or implied by federal or state law
----------
or as otherwise disclosed on Schedule 3.1(w) hereto, the Company has not made,
extended or otherwise represented that it would provide any express warranty
with respect to the products or services sold, distributed or leased to its
clients or customers.
(x) Executives and Employees. Schedule 3.1(x) hereto sets forth a
------------------------
true, correct and complete list of all of the executives and employees of the
Company as of the date hereof, including their respective names, titles,
salaries and bonuses since inception of the Company. The Company has also
provided true, correct and complete copies of any employment agreements between
the Company and any of the foregoing individuals in effect as of the date
hereof.
(y) Loans to or from Affiliates. Except as set forth on Schedule
---------------------------
3.1(y) hereto, there exist no outstanding loans by the Company to any current or
former executives, employees, consultants or Interestholders (past or present)
or any affiliate of any of the foregoing. There are no outstanding loans to the
Company by any current or former executives, employees, consultants or
Interestholders (past or present) of the Company.
(z) Clients, Vendors, Suppliers and Service Providers. The Company has
-------------------------------------------------
provided to Xceed a true, correct and complete list of the clients, vendors,
suppliers and service providers of the Company. Since November 30, 1999, there
has not been any material adverse change in the business relationship of the
Company with any of the persons or entities listed on Schedule 3.1(z).
(aa) Books and Records.
-----------------
(i) The books of account and other financial records of the
Company are complete and correct and have been maintained in accordance with
good business practices.
(ii) All material action of the Company required to be approved
by the Managers or by the Interestholders, since the date of formation of the
Company has been authorized, approved and/or ratified in the minute books of the
Company.
(bb) Bank Accounts. Set forth on Schedule 3.1(bb) is a true, correct
-------------
and complete list of the names of each bank, savings and loan, or other
financial institution, at which the Company maintains any account (including any
cash contribution or similar accounts) and the names of all persons authorized
to draw thereon or who have access thereto. Schedule 3.1 (bb) includes a true,
correct and complete list of each credit or loan facility or guaranty
established and/or maintained by or on behalf of the Company, including the
amounts available to the Company under each such facility, the outstanding
principal balance thereunder as of the date hereof, the interest rate applicable
thereto and the maturity date thereof.
(cc) Solvency. Since its formation and through the Closing Date, the
--------
Company and each of the Interestholders has been and will be solvent. "Solvent"
shall mean, for purposes of application of this provision, that: (i) the fair
saleable value of the such person's property is in excess of the total amount of
such person's debts; and (ii) is able to pay its debts as they mature.
25
(dd) Investment Purpose. The Company and each Interestholder
------------------
represents that each is acquiring and will acquire, as the case may be, the
shares of Common Stock issuable to it pursuant hereto solely for its own account
for investment purposes only and not with a view toward resale or distribution
thereof other than pursuant to an effective registration statement or applicable
exemption from the registration requirements of the Securities Act. The Company
and the Interestholders understand that such shares of Common Stock will be
issued in reliance upon an exemption from the registration requirements of the
Securities Act and that subsequent sale or transfer of such securities is
prohibited absent registration or exemption from the provisions of the
Securities Act. The Company and the Interestholders hereby agree not to sell,
assign, transfer, pledge or otherwise convey any of the shares of the Common
Stock issuable to it pursuant hereto, except in compliance with the provisions
of the Securities Act and in accordance with any transfer restrictions or
similar terms set forth on the certificates representing such securities or
otherwise set forth herein. The Company and each Interestholder has relied upon
an independent investigation made by it and/or their representatives and has not
relied on any information or representations made by third parties or on any
oral or written representations or assurances from Xceed or any representative
or agent of Xceed other than the representations of Xceed set forth herein. The
Company and each Interestholder has had a reasonable opportunity to ask
questions of, and receive answers from, Xceed concerning Xceed, the Common Stock
and the Asset Purchase. The Company and each Interestholder acknowledges that
the terms of the Asset Purchase have been determined by negotiation based in
substantial part on the market price for the Common Stock, and that it does not
necessarily bear any relationship to the assets, book value or potential
performance of Xceed or any other recognized criteria of value. Neither such
inquiries nor any other due diligence investigations conducted by the Company
and each Interestholder, its representatives and advisors, if any, shall modify,
amend or affect the Company's and each Interestholder's right to rely on Xceed's
representations and warranties contained in Section 3.2 below. The Company and
each Interestholder acknowledge that each has had sufficient and ample
opportunity to review this Agreement and the Ancillary Documents and to
evaluate the transactions contemplated herein and therein with their own legal
counsel and investment and tax advisors. Except for any statements or
representations of Xceed made in this Agreement and the Ancillary Documents, the
Company and each Interestholder is relying solely on its counsel and advisors
and not on any statements or representations of Xceed or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement and the
Ancillary Documents or the securities laws of any jurisdiction.
(ee) Agreements with Affiliates. Except as set forth on Schedule
--------------------------
3.1(ee) hereto, the Company is not a party to any agreement, written or oral,
with any executive or partner (past or present) of the Company.
(ff) Accuracy of Information Furnished. The Company and the
---------------------------------
Interestholders (severally and not jointly with respect to those statements,
representations and warranties made severally and not jointly by such
Interestholders) represent that no statement by the Company or the
Interestholders set forth herein or in the exhibits or the schedules hereto, and
no statement set forth in any certificate or other instrument or document
required to be delivered by or on behalf of the Company or the Interestholders
pursuant hereto or in connection with the consummation of the transactions
contemplated hereby, contained, contains or will contain any untrue statement of
a material fact, or omits, omitted or will omit to state any material fact which
is necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
26
3.2 Representations and Warranties of Xceed. Xceed represents and warrants
---------------------------------------
to the Company and the Interestholders as follows:
(a) Authorization. The execution, delivery and performance of this
-------------
Agreement and consummation of the transactions contemplated hereby have been
duly authorized, adopted and approved by the board of directors of Xceed. Xceed
has taken all necessary corporate action and has all of the necessary corporate
power to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the officers of Xceed on behalf of Xceed and, assuming that this
Agreement is the valid and binding obligation of the Company and the
Interestholders, is the valid and binding obligation of Xceed, enforceable
against it in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect, or by legal or equitable
principles, relating to or limiting creditors' rights generally and except that
the remedy of specific performance and injunctive and other forms of equitable
relief are subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(b) Organization. Xceed is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware. Xceed has
the corporate power and authority to own and lease its properties and assets,
and to carry on its business as it is now being conducted. Xceed is duly
qualified to do business as a foreign corporation in each jurisdiction where it
owns or leases real property or conducts business, except where the failure to
be so qualified would not have a material adverse effect on the business,
operations, earnings, prospects, assets or condition (financial or otherwise) of
Xceed.
(c) Capitalization. The authorized capital stock of Xceed as of the
--------------
date hereof consists of 30,000,000 shares of Common Stock, par value $.01 per
share (of which 18,713,390 shares are issued and outstanding as of the date
hereof) and 1,000,000 shares of preferred stock, par value $.05 per share (of
which 30,000 shares are issued and outstanding as of the date hereof). The
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable. As of the date hereof, the number of
shares of capital stock that Xceed is authorized to issue is adequate to permit
Xceed to fulfill its obligations hereunder with respect to issuance of the
shares of Common Stock pursuant hereto. On the Closing Date, the shares of
Common Stock issuable pursuant to the Fixed Stock Payment as set forth in
Section 1.2 herein shall be duly authorized, validly issued, fully paid and
nonassessable. On the applicable dates the shares of Common Stock issuable
pursuant to the Earnout are placed in Escrow as set forth in the Escrow
Agreement, such shares of Common Stock shall be duly authorized, validly issued,
fully paid and nonassessable. Xceed has not issued any shares of capital stock
which would give rise to claims for violation of any federal or state securities
laws (including any rules or regulations promulgated thereunder) or the
securities laws of any other jurisdiction (including any rules or regulations
promulgated thereunder). As of the date hereof, there are no options, warrants,
calls, convertible securities or commitments of any kind whatsoever relating to
the shares of Common Stock issuable pursuant hereto.
(d) Non-Contravention; Consents. Neither the execution and delivery of
---------------------------
this Agreement, nor consummation of the transactions contemplated hereby, does
or will: (i) violate or conflict with any provision of the certificate of
incorporation or bylaws of Xceed; (ii) violate or conflict with any material
provision of any mortgage, lien, lease, agreement, permit, indenture,
27
license, instrument, law, order, arbitration award, judgment or decree to which
Xceed is a party or by which it or the property or assets which are material to
its business or operation are bound, the effect of any of which violation would
have a material adverse effect on the business, assets, operations, earnings,
prospects (financial or otherwise) of Xceed; (iii) violate or conflict with any
other restriction to which Xceed is subject or by which any of the property or
assets which are material to the business or operation of Xceed may be bound,
the effect of any of which violation or conflict would have a material adverse
effect on the business, assets, operations, earnings, prospects (financial or
otherwise) of Xceed; or (iv) constitute an event permitting termination of any
agreement to which Xceed is subject by any other party thereto, if in any such
circumstance such termination could have a materially adverse effect on the
ability of Xceed to fulfill its respective obligations hereunder. Other than as
provided herein, no consent, authorization, order or approval of, or filing or
registration with, any governmental commission, board or other regulatory body
is required in connection with the execution, delivery and performance of the
terms of this Agreement by Xceed and consummation by Xceed of any of the
transactions contemplated hereby.
(e) Litigation. There is no action, suit, proceeding or investigation
----------
pending against or related to Xceed, nor, to the best knowledge of Xceed, has
Xceed been threatened with any such action, suit, proceeding or investigation,
which would restrict the ability of Xceed to perform its obligations hereunder
or which would have a material adverse effect on the business, assets,
operations, earnings, prospects or condition (financial or otherwise) of Xceed.
Xceed is not in default in respect of any judgment, order, writ, injunction or
decree of any court or any federal, state, local or other governmental agency,
authority, body, board, bureau, commission, department or instrumentality which
could have a material adverse effect on the business, assets, operations,
earnings, prospects or condition (financial or otherwise) of Xceed.
(f) Accuracy of Information Furnished. No statement by Xceed set forth
---------------------------------
herein or in the exhibits or the schedules hereto, and no statement set forth in
any certificate or other instrument or document required to be delivered by or
on behalf of Xceed pursuant hereto or in connection with consummation of the
transactions contemplated hereby, contained, contains or will contain any untrue
statement of a material fact, or omitted, omits or will omit to state any
material fact which is necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading.
(h) Compliance with Applicable Law. Xceed has been and is in
------------------------------
compliance with all foreign, federal, state and local laws, statutes,
ordinances, rules and regulations (including without limitation the Securities
Act and the Securities Exchange Act of 1934, as amended) as of the date hereof,
the failure to comply with which could materially adversely affect the business,
assets, operations, earnings, prospects or condition (financial or otherwise) of
Xceed or which would subject any officer or director of Xceed to civil or
criminal penalties or imprisonment. Xceed has complied with the rules and
regulations of all governmental agencies having authority over its business or
its operations, including without limitation, agencies concerned with intra-
state and interstate commerce, occupational safety, environmental protection and
employment practices, except where the failure to comply would not have a
material adverse effect on the business, operations, earnings, prospects, assets
or condition (financial or otherwise) of Xceed. Xceed has no knowledge of and
has not received any notice of violation of any such rule or regulation during
the two (2) years prior to the date hereof which could result in any liability
of Xceed for penalties or damages or which could subject it to any injunction or
government writ, order or decree. To the best knowledge of Xceed, there are no
28
facts, events or conditions that could interfere with, prevent continued
compliance with or give rise to any liability under any foreign, federal, state
or local governmental laws, statutes, ordinances or regulations applicable to
the business, assets, operations, earnings, prospects or condition (financial or
otherwise) of Xceed, except where the failure to do so would not have a material
adverse effect on the business, operations, earnings, prospects, assets or
condition (financial or otherwise) of Xceed.
(i) Employee Benefit Plans. Schedule 3.2(i) hereto sets forth a true,
----------------------
correct and complete list of all "employee benefit plans" as such term is
defined in Section 3(3) of the ERISA (the "Xceed Benefit Plans") covering the
employees of Xceed (the "Xceed Employees"). Each Xceed Benefit Plan is in
compliance in all material respects with all applicable provisions of law,
including ERISA and the Code. There are no pending or, to Xceed's knowledge,
threatened claims against any Xceed Benefit Plan (except for claims for benefits
payable in the normal operation of the Xceed Benefit Plans) that could give rise
to any material liability to Xceed. All material reports, notices and returns
required to be filed with any governmental agency or provided to any person or
entity with respect to the Xceed Benefit Plans have been timely filed. Xceed has
never had and does not now have any Xceed Benefit Plan that is an employee
pension plan (as defined in Section 3(2) of ERISA) nor does Xceed contribute to
any multiemployer pension or multiemployer welfare benefit plan (within the
meaning of Section 3(37) of ERISA).
(j) No Material Adverse Change. No material adverse change in the
--------------------------
business, operations, affairs, prospects, properties, assets, existing and
potential liabilities, obligations, profits or condition (financial or
otherwise) of Xceed has occurred since August 31, 1999.
3.3 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties set forth in Sections 3.1 and 3.2 hereof shall survive until the
close of business on the sixtieth (60th ) day following the first anniversary of
the Closing Date, provided that, notice or demand with respect to any alleged
-------- ----
breach thereof is given as required pursuant to Article VI hereof; and further
-------
provided that, with respect to claims for damages arising out of any
-------- ----
misrepresentation or breach of warranty made by the Company and the
Interestholders relating to taxes, notice shall have been given on or before the
close of business on the sixtieth (60) day following the later to occur of: (i)
the expiration date of the statute of limitations applicable to any indemnified
federal, state or local tax liability; and (ii) the final determination of any
such tax liability, including the final administrative and/or judicial
determination thereof.
ARTICLE IV
COVENANTS
4.1 Covenants of the Company and the Interestholders.
------------------------------------------------
(a) Notification. Each of the Company and the Interestholders shall
------------
give prompt notice to Xceed of: (i) receipt of any notice or other communication
by the Company or any Interestholder prior to the Closing Date relating to a
material default or an event which, with notice or lapse of time or both would
become a material default under this Agreement or under any other material
contract, agreement or instrument to which the Company is a party, by which the
Company or any of its properties or assets (including the Property and the
Assets) are bound
29
or to which the Company or any of its properties or assets (including the
Property and the Assets) are subject; (ii) any event which becomes known to such
person, which, with notice or lapse of time or both, would cause any warranty or
representation of the Company or any Interestholder under this Agreement to be
inaccurate, untrue, incomplete or misleading in any material respect; (iii) any
notice or other communication from any third party which becomes known to such
person, which becomes known to such person, alleging that the consent of such
third party was, is or may be required in connection with the transactions
contemplated by this Agreement; and (iv) any material adverse change in the
Business, Assets, operations, earnings, prospects or condition (financial or
otherwise) of the Company, which becomes known to such person.
(b) Intentionally left blank.
(c) Intentionally left blank.
(d) Intentionally left blank.
(e) Conduct of Business; Certain Covenants. Prior to and through the
--------------------------------------
Closing Date, the Company shall conduct and operate the Business and will not,
without prior written consent of Xceed, which consent shall not be unreasonably
withheld, take any action other than in accordance with the ordinary and usual
course of business. The Company and the Interestholders will use their best
efforts to preserve intact the Business and the operation, organization and
relationships of the Company with its employees, independent contractors,
agents, suppliers, clients and others having business dealings with it. Prior to
and through the Closing Date, without the prior written consent of Xceed, which
consent shall not be unreasonably withheld, the Company shall not, and the
Interestholders shall not permit the Company to:
(i) amend the certificate of formation and the limited liability
company agreement;
(ii) issue or otherwise grant or enter into any agreement relating
to the issuance or grant of any interest in any stock, notes, bonds or other
securities of the Company or any other rights calling for or permitting the
issue, transfer, sale or delivery of any of the foregoing:
(iii) set aside, pay or declare any dividend or other distribution
with respect to its securities;
(iv) issue, transfer, sell or deliver any additional shares of
capital stock or any securities convertible into or exchangeable for, with or
without additional consideration, such securities;
(v) redeem, purchase or otherwise acquire for any consideration
any outstanding shares of capital stock or any securities convertible into or
exchangeable for, with or without additional consideration, such securities;
(vi) incur any indebtedness for borrowed money, except in the
ordinary course of business or pursuant to existing agreements which the Company
or the Interestholders have previously disclosed or made available to Xceed;
30
(vii) permit the occurrence or continuance of any material default
under any Assigned Contract;
(viii) make any acquisition of the capital stock or all or
substantially all of the assets of any entity;
(ix) merge, combine or consolidate with any other entity or enter
into any joint venture arrangement with any third party;
(x) enter into any employment or similar contract with or
increase the compensation payable to any executive or employee of the Company,
except in the ordinary course of business and in a manner consistent with the
Company's past practices;
(xi) alter, amend or otherwise modify any material term or
provision of any material contract or agreement with any of its clients,
suppliers or vendors;
(xii) adopt, amend or modify in any material respect or terminate
any Benefit Plan, severance plan or collective bargaining agreement or make
awards or distributions under any Benefit Plan or severance plan except in a
manner consistent with the Company' s past practices or as otherwise
contemplated herein;
(xiii) sell, enter into any contract to sell or grant any option to
purchase, any of its assets other than in the ordinary course of business;
(xiv) create, assume or permit to exist any lien, pledge, security
interest, encumbrance or mortgage of any kind whatsoever on any of its
properties or assets other than:
(A) liens existing on the date hereof which the Company or
the Interestholders previously disclosed to Xceed or which are otherwise
permitted hereby;
(B) any mortgage, pledge, lien or other security interest in
or upon any property or asset hereafter acquired by the Company in the ordinary
course of business, which mortgage, pledge, lien or other security interest is
entered into contemporaneously with such acquisition to secure or provide for
the payment of any part of the purchase price therefor, or the assumption by the
Company of any mortgage, pledge, lien or other security interest in or upon any
property or asset hereafter acquired by the Company which mortgage, pledge, lien
or other security interest existed at the time of such acquisition; provided
that, each such mortgage, pledge, lien or other security interest shall not
extend to or cover any property or asset of the Company other than such property
or asset hereafter acquired;
(C) any mortgage, pledge, lien or other security interest
created for the sole purpose of renewing or refunding any mortgage, pledge, lien
or other security interest allowed under clause (B) above; provided that, the
principal amount of indebtedness secured thereby shall not exceed the principal
amount of indebtedness so secured at the time of such renewal or refunding and
that such renewed or refunded mortgage, pledge, lien or other security interest
shall not extend the mortgage, pledge, lien or other security interest renewed
or refunded to any additional property or asset;
31
(D) the pledge by the Company of any property or asset
(including the Property and the Assets) as security required by law or
governmental regulation as a condition to the transaction of any business or the
exercise of any privilege, license or right;
(E) a banker's lien or right of offset on funds of the
Company deposited with a lender or holder in the ordinary course of business in
favor of any lender of funds or holder of the Company's commercial paper in the
ordinary course of business;
(F) liens for taxes, assessments and governmental charges or
levies imposed upon the Company or upon its income or profit, or upon any of its
property or assets if the same shall not at the time be due or are being
contested in good faith in appropriate proceedings; and
(G) liens imposed by law, such as those of carriers,
warehousemen and mechanics, for sums not yet due or are being contested in good
faith in appropriate proceedings.
(xv) except in the ordinary course of business, enter into any
contract, including but not limited to assignments, licenses, transfers of
exclusive rights, "work for hire" agreements, special commissions, employment
contracts, purchase orders, sales orders, mortgages and security agreements,
which:
(A) contain a grant or other transfer, whether present,
retroactive, prospective or contingent, by the Company of any rights in any
Intellectual Property;
(B) contain a promise made by or to the Company to pay any
consideration, lump sum, royalty or other payment with respect to the
acquisition, practice or use of any rights in any Intellectual Property;
(xvi) except in the ordinary course of business or arising out of
or relating to this Agreement, initiate any legal proceedings involving the
Company, including suits and administrative proceedings in the United States or
any foreign country;
(xvii) file with any federal, state or local governmental agency or
regulatory body, any cancellation, reduction, modification, change or amendment
of or addition to any schedule of tariffs currently on file with such agency or
regulatory body, or file with such governmental agency or regulatory body any
schedule of tariffs for services which are not covered by the tariff schedules
on file therewith as of the date hereof; or
(xviii) take any action that would cause any representation or
warranty contained herein to be inaccurate, untrue, incomplete or misleading.
(f) Proposals; Other Offers. Prior to the Closing Date, neither the
-----------------------
Company nor any Interestholder shall, directly or indirectly (whether through an
employee, a representative, an agent or otherwise) solicit or encourage any
inquiries or proposals, engage in negotiations for or consent to or enter into
any agreement providing for the acquisition of all or any part of the Assets
(except in the ordinary course of business) or the Business. The Company and
each Interestholder shall promptly notify Xceed upon its receipt or other
knowledge of any such request, inquiry or proposal. Neither the Company nor any
Interestholder shall, directly or
32
indirectly (whether through an employee, a representative, an agent or
otherwise) disclose any nonpublic information relating to the Company or afford
access to any of the books, records or other properties of the Company to any
person or entity that is considering, has considered or is making any such
acquisition inquiry or proposal.
(g) Best Efforts and Cooperation; Further Assurances. Prior to the
------------------------------------------------
Closing Date, with the cooperation of Xceed where appropriate, the Company
shall:
(i) timely comply with all filing requirements which federal,
state or local law may impose on the Company with respect to the transactions
contemplated by this Agreement;
(ii) use its diligent efforts to take all actions necessary to be
taken, make any filing and obtain any consent, authorization or approval of or
exemption by any governmental authority, regulatory agency or any other third
party (including, without limitation, any landlord or lessor of the Company and
any party to whom notification is required to be delivered or from whom any form
of consent is required) which is required to be filed or obtained by the Company
in connection with the transactions contemplated by this Agreement;
(iii) make full and timely payment of all fees and annuities and
take all other action appropriate to maintain in full force and effect any and
all domain name, patent, trademark and service ▇▇▇▇ registrations and
applications for registration as set forth in Schedule 3.1(h) or otherwise owned
or controlled by the Company.
(h) Access to Additional Agreements and Information. Prior to the
-----------------------------------------------
Closing Date, the Company shall deliver to Xceed at Xceed's request any and all
agreements, contracts, documents and other instruments material to the operation
of the Business and the Company, including, without limitation, those to which
the Company is a party and those by which any of the Property or Assets are
bound and including without limitation, any and all materials relating to the
Intellectual Property referred to in Subsection 3.1(i), the agreements set forth
in Subsection 3.1(n), the consents and waivers referred to in Subsection 3.1(o),
the Benefit Plans set forth in Subsection 3.1(p), the insurance materials
referred to in Subsection 3.1(r), the Tax Returns set forth in Subsection
3.l(s), the licenses and permits referred to in Subsection 3.l(v), any documents
relating to the loans referred to in Subsection 3.1(y), the invoices, purchase
orders or other similar documents pertaining to the Company's clients, vendors,
suppliers and service providers set forth in Subsection 3.l(z), and any
materials relating to the Company's bank accounts and credit facilities referred
to in Subsection 3.1(bb). Notwithstanding the foregoing, nothing in this Section
4.1(h) shall obligate the Company to breach any covenants of confidentiality
made for the benefit of third parties.
(i) Confidentiality. Prior to the Closing Date and at all times
---------------
hereafter in the event that the transactions contemplated hereby are not
consummated or this Agreement is otherwise terminated, the Company shall, except
as may be otherwise required by applicable law, hold confidential all
information obtained in connection with the transactions contemplated by this
Agreement with respect to Xceed. In the event that this Agreement is terminated,
the Company shall return to Xceed all of such information as shall be in
documentary or other tangible form, including all copies thereof.
33
(j) Non-Competition. As an inducement for Xceed to enter into this
---------------
Agreement and as additional consideration for payment of the purchase price
hereunder, each of the Interestholders has agreed to be subject to and be bound
by the non-competition provisions which have been included in each of the
respective Employment Agreements.
4.2 Covenants of Xceed.
------------------
(a) Notification. Xceed shall give prompt notice to the Company and
------------
the Interestholders of: (i) receipt of any notice or other communication by
Xceed prior to the Closing Date relating to a default hereunder or event which,
with notice or lapse of time or both, would become a default hereunder or under
any material contract, agreement or instrument to which Xceed is a party, by
which it or any of its properties or assets are bound or to which it or any of
its properties or assets are subject which would prevent the consummation of the
transactions contemplated hereby; (ii) any event which, with notice or lapse of
time or both, would cause any representation or warranty of Xceed under this
Agreement to be inaccurate or misleading in any respect; (iii) any notice or
other communication by any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement; and (iv) any adverse change in the business, assets, operations,
earnings, prospects or conditions (financial or otherwise) of Xceed.
(b) Third Party Consents. Xceed shall use its best efforts to obtain
--------------------
any consent, authorization or approval of, or exemption by, any governmental
authority or agency or other third party required to be obtained or made by it
in connection with this Agreement or the consummation of the transactions
contemplated hereby.
(c) Best Efforts and Cooperation: Further Assurances. Prior to the
------------------------------------------------
Closing Date, with the cooperation of the Company and the Interestholders where
appropriate, Xceed shall:
(i) timely comply with all filing requirements which federal,
state or local law may impose on Xceed with respect to the transactions
contemplated by this Agreement;
(ii) use its diligent efforts to take all actions necessary to be
taken, make any filing and obtain any consent, authorization or approval of or
exemption by any governmental authority, regulatory agency or any other third
party which is required to be filed or obtained by Xceed in connection with the
transactions contemplated by this Agreement; and
(iii) not take any action that would cause any representation or
warranty contained herein to be inaccurate, untrue, incomplete or misleading.
(d) Access to Additional Information and Agreements. Prior to the
-----------------------------------------------
Closing Date, Xceed shall make available or otherwise deliver to the Company or
the Interestholders, upon request, any and all agreements, contracts, documents
or other information material to its business or operations.
(e) Confidentiality. Prior to the Closing Date and at all times
---------------
hereafter in the event that the transactions contemplated hereby are not
consummated or this Agreement is otherwise terminated, Xceed shall, except as
may be otherwise required by applicable law, hold confidential all information
obtained in connection with the transactions contemplated by this
34
Agreement with respect to the Company. In the event that this Agreement is
terminated, Xceed shall return to the Company all of such information as shall
be in documentary or other tangible form, including all copies thereof.
4.3 Governmental Filings and Consents. The Company, the Interestholders
---------------------------------
and Xceed shall cooperate with one another in filing any necessary applications,
reports or other documents with any federal or state agencies, authorities or
bodies having jurisdiction with respect to the business of the Company or the
transactions contemplated by this Agreement, and in seeking any necessary
approval, consultation or prompt favorable action of, with or by any of such
agencies, authorities or bodies.
4.4 Publicity. The Company, the Interestholders and Xceed will consult
---------
with each other party hereto prior to making, releasing or otherwise
disseminating any public announcements with respect to the transactions
contemplated by this Agreement. Any public announcements permitted hereunder
shall be made only at such time and in such manner as the Company and the
Interestholders (collectively acting as one) and Xceed shall mutually agree,
except that any party hereto shall be free to make such public announcements as
it shall reasonably deem necessary to comply with federal or state laws,
provided that such announcement is simultaneously delivered to the other parties
hereto.
4.5 Right to Investigate.
--------------------
(a) Obligation of the Company and the Interestholders. The Company
-------------------------------------------------
shall afford to the officers and authorized representatives and agents of Xceed,
during what are currently the regular business hours of the Company and upon
prior notice, free and full access to any office, warehouse, plant, property,
inventory, accounts, books and records of the Company such as to afford Xceed
the full opportunity to make such investigations as it shall desire or deem
appropriate with respect to the affairs of the Company; provided, however, that:
-------- -------
(i) the parties hereto acknowledge that not all of the employees of the Company
have knowledge of the transaction contemplated hereby; and (ii) Xceed agrees to
cooperate with the Company's reasonable requests to maintain the confidentiality
of the transaction contemplated hereby from the employees of the Company until
the Company discloses, within a reasonable time, such transaction to its
employees as a group. The Interestholders shall furnish Xceed with such
additional financial and operating data and other information relating to the
Business and operation of the Company as Xceed shall from time to time request.
(b) Effectiveness of Representations Notwithstanding Investigation.
--------------------------------------------------------------
Notwithstanding any party's undertaking or conduct of any investigation pursuant
hereto, or any party's failure to so investigate, the representations,
warranties and agreements of each of the parties hereto shall be operative and
effective and shall survive the Closing Date to the extent previously set forth
in Section 3.3. In the event that a party hereto becomes aware or knows prior to
the Closing that a representation or warranty made herein by another party
hereto is untrue, such party shall express such knowledge by written notice
thereof to the party rendering such representation or warranty on or prior to
the Closing Date. Knowledge on the part of Xceed on or prior to the Closing that
a representation or warranty of the Company or the Interestholders is untrue or
knowledge on the part of the Company or the Interestholders on or prior to the
Closing Date that a representation or warranty of Xceed is untrue, shall render
that specific representation or warranty inoperative and ineffective and such
other party shall not have any liability in respect thereof pursuant to Article
VI hereof; provided that, such knowledge is expressed by written
-------- ----
35
notice thereof to the party rendering such representation or warranty on or
prior to the Closing Date.
ARTICLE V
CONDITIONS
5.1 Conditions to Obligations of Xceed. The obligation of Xceed to
----------------------------------
consummate the transactions contemplated by this Agreement is subject to the
fulfillment of each of the following conditions, which may be waived in whole or
in part by Xceed to the extent permitted by applicable law:
(a) No Material Adverse Change. Since December 31, 1999, no material
--------------------------
adverse change in the Business, Assets, operations, earnings, prospects or
condition (financial or otherwise) of the Company, and no event which would
materially and adversely affect the Business, Assets, operations, earnings,
prospects or condition (financial or otherwise) of the Company shall have
occurred.
(b) Accuracy of Representations and Warranties; Performance of
----------------------------------------------------------
Covenants. Each of the representations and warranties of the Company and each of
---------
the Interestholders set forth in this Agreement was true, correct and complete
in all material respects when made and shall also be true, correct and complete
in all material respects at and as of the Closing Date, with the same force and
effect as if made at and as of the Closing Date (except financial and
statistical information, which shall be made as of the date as of which such
information speaks). The Company and the Interestholders shall have performed
and complied in all material respects with all agreements and covenants required
by this Agreement to be performed by the Company and each of the Interestholders
at or prior to the Closing Date.
(c) Delivery of Certificates. The Company and each of the
------------------------
Interestholders shall have delivered to Xceed certificates, dated the Closing
Date, and signed by an executive officer of the Company (with respect to the
Company) and by each of the Interestholders, individually, representing and
affirming that: (i) the representations and warranties made by each of the
Company and the Interestholders jointly and/or severally as set forth in Section
3.1 of this Agreement and referred to hereinabove were and are true, correct and
complete as required hereby and the conditions set forth in this Section 5.1
have been satisfied.
(d) Consents and Waivers. On or prior to the Closing Date, any and all
--------------------
necessary consents, authorizations, orders or approvals described in Subsection
3.1(p) above shall have been obtained, except as the same shall have been waived
by Xceed.
(e) Litigation. On the Closing Date, there shall be no effective
----------
injunction, writ or preliminary restraining order or any order of any kind
whatsoever with respect to the Company or the Interestholders issued by a court
or governmental agency (or other governmental or regulatory authority) of
competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated hereby or making consummation thereof unduly
burdensome to the Company or the Interestholders. On the Closing Date and
immediately prior to consummation of the transactions contemplated by this
Agreement, no proceeding or lawsuit shall have been commenced, be pending or
have been threatened by any governmental or
36
regulatory agency or authority or any other person with respect to the
transactions contemplated by this Agreement.
(f) Employment Agreements. Each of Messrs. Freeman, Adams, Malakoff
---------------------
and ▇▇▇▇▇▇▇ shall have entered into an Employment Agreement providing for each
such individual's employment with Xceed.
(g) Delivery of Documents and Other Information. Prior to the Closing
-------------------------------------------
Date, the Company shall have delivered to Xceed all of the agreements,
contracts, documents and other instruments required to be delivered pursuant to
the provisions of this Agreement, including the Ancillary Documents.
5.2 Conditions to Obligations of the Company and the Interestholders. The
----------------------------------------------------------------
obligations of the Company and the Interestholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment of
each of the following conditions, which may be waived in whole or in part by the
Company and/or the Interestholders (by the approval of a majority of the
Members) to the extent permitted by law:
(a) Copies of Resolutions. At the Closing, Xceed shall have furnished
---------------------
the Company with certified copies of resolutions duly adopted by the board of
directors of Xceed authorizing the execution, delivery and performance of the
terms of this Agreement (including the execution, delivery and performance of
the Employment Agreements referred to in Section 5.1(f) above and Section 5.2(g)
below and the issuance of the certificates referred to in Section 5.2(d) below)
and all other necessary or proper corporate action to enable Xceed to comply
with the terms of this Agreement.
(b) Accuracy of Representations and Warranties; Performance of
----------------------------------------------------------
Covenants. Each of the representations and warranties of Xceed was true, correct
---------
and complete in all material respects when made and shall also be true, correct
and complete in all material respects at and as of the Closing Date, with the
same force and effect as if made at and as of the Closing Date (except financial
and statistical information, which shall be made as of the date as of which such
information speaks). Xceed shall have performed and complied with, in all
material respects, all agreements and covenants required by this Agreement to be
performed by Xceed at or prior to the Closing Date.
(c) Delivery of Officers' Certificates. Xceed shall have delivered to
----------------------------------
the Company certificates, dated the Closing Date and signed by an executive
officer of Xceed, affirming that: (i) the representations and warranties of
Xceed as set forth in Section 3.2 of this Agreement and referred to hereinabove
above were and are true, correct and complete as required hereby; and (ii) the
conditions set forth in this Section 5.2 have been satisfied. Xceed shall also
have delivered a certificate signed by the Secretary of Xceed with respect to
the authority and incumbency of the officers of Xceed executing this Agreement
and any documents required to be executed or delivered in connection therewith.
(d) Cash and Stock Certificates. At the Closing, Xceed shall have paid
---------------------------
$1,000,000 in cash (by electronic wire transfer of immediately available funds)
and issued and delivered certificates representing the shares of Common Stock
issuable pursuant to Section 2.2 hereto.
37
(e) Consents and Waivers. On or prior to the Closing Date, any and all
--------------------
necessary consents, authorizations, orders or approvals described in Subsection
3.2(d) above shall have been obtained, except as the same shall have been waived
by the Company and the Interestholders.
(f) Litigation. On the Closing Date, there shall be no effective
----------
injunction, writ or preliminary restraining order or any order of any kind
whatsoever with respect to Xceed issued by a court or governmental agency (or
other governmental or regulatory authority) of competent jurisdiction
restraining or prohibiting the consummation of the transactions contemplated
herein or making the consummation thereof unduly burdensome to Xceed. On the
Closing Date and immediately prior to consummation of the transactions
contemplated by this Agreement, no proceeding or lawsuit shall have been
commenced, be pending or have been threatened or by any governmental or
regulatory agency or authority or any other person with respect to the
transactions contemplated by this Agreement.
(g) Employment Agreements. Xceed shall have entered into an Employment
---------------------
Agreement with each of Messrs. Freeman, Adams, Malakoff and ▇▇▇▇▇▇▇ as set forth
in Section 5.1(f) above upon mutually acceptable terms.
ARTICLE VI
INDEMNIFICATION AND CLAIMS
6.1 Indemnification by the Company and the Interestholders.
------------------------------------------------------
(a) Subject to Sections 4.5(b), 6.1(b) and 6.1(c) hereof, the
Interestholders hereby agree, jointly and severally, except as otherwise
specifically provided throughout this Agreement with respect to representations
and warranties made severally and not jointly by each Interestholder as to which
each such Interestholder hereby severally and not jointly agrees and, also
subject to such sections, the Company agrees, to indemnify and hold harmless
Xceed against and in respect of all damages, claims, losses and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
reasonably incurred by Xceed (all such amounts may hereinafter be referred to as
the "Damages") arising out of: (i) any misrepresentation or breach of any
representation or warranty made by the Company or the Interestholders pursuant
to the provisions of this Agreement or in any statement, certificate or other
document furnished by the Company or the Interestholders pursuant to this
Agreement; and (ii) the nonperformance or breach of any covenant, agreement or
obligation of the Company or the Interestholders contained in this Agreement
which has not been waived by Xceed in writing.
(b) Subject to Section 3.3 hereof, the Interestholders shall be
obligated to indemnify Xceed pursuant to this Section 6.1 with respect to claims
for Damages as to which Xceed shall have given written notice to the Company and
the Interestholders on or before the close of business on the sixtieth (60) day
following the first anniversary of the Closing Date. The Interestholders shall
be obligated to indemnify Xceed with respect to claims for Damages arising out
of any misrepresentation or breach of warranty made by the Company or the
Interestholders relating to Subsection 3.1(s) as to which Xceed shall have given
notice on or before the close of business on the sixtieth (60) day following the
later of: (i) the expiration date of the statute of limitations applicable to
any indemnified federal, state, foreign or local tax liability; or (ii) the
38
final determination of any such tax liability, including the final
administrative and/or judicial determination thereof.
(c) Notwithstanding the indemnification provided pursuant to
Subsections 6.1 (a) and 6.1(b) above, no amount shall be payable by the
Interestholders in indemnification hereunder or under any other provision of
this Agreement unless the aggregate amount of such Damages in respect of which
the Interestholders or the Company would be liable, but for operation and
application of the provisions of this Section 6.1(c), exceeds on a cumulative
basis Fifty Thousand Dollars ($50,000) and then only to the extent of such
excess up to the maximum amount set forth in Section 6.5 herein (the "Cap");
provided, however, that the amount payable by each Interestholder in
-------- -------
indemnification hereunder shall be limited to a percentage of the Cap, which
percentage shall be equal to his or her percentage ownership interest in the
Company, as set forth on Schedule A hereto. As between themselves, the
Interestholders agree that they shall be entitled to contribution from each
other for any payments made pursuant to this Agreement in an equitable manner,
taking into account their relative fault associated with all payments made
pursuant hereto.
(d) In any case where the Interestholders have indemnified Xceed for
any Damages and Xceed recovers from a third party all or any part of the amount
so indemnified by the Interestholders, Xceed shall promptly reimburse to the
Interestholders the amount so recovered.
6.2 Claims Against Xceed. With respect to claims or demands by third
--------------------
parties, whenever Xceed shall have received notice that such a claim or demand
has been asserted or threatened which, if valid, would be subject to
indemnification under Section 6.1 hereof, Xceed shall as soon as reasonably
possible, notify the Interestholders of such claim or demand and of all relevant
facts within its knowledge which relate thereto. The Interestholders shall then
have the right at their own expense to undertake the defense of any such claims
or demands utilizing counsel selected by the Interestholders, as the case may
be, and approved by Xceed, which approval shall not be unreasonably withheld.
In the event that the Interestholders should fail to give notice of the
intention to undertake the defense of any such claim or demand within sixty (60)
days after receiving notice that it has been asserted or threatened, Xceed shall
have the right to defend, satisfy and discharge the same by payment, compromise
or otherwise and shall give written notice of any such payment, compromise or
settlement to the Interestholders.
6.3 Indemnification by Xceed.
------------------------
(a) Subject to Section 4.5(b) and 6.3(b) hereof, Xceed hereby agrees
to indemnify and hold harmless the Company and the Interestholders against and
in respect of all damages, claims, losses and expenses (including without
limitation, reasonable attorneys' fees and disbursements) reasonably incurred by
the Interestholders with respect thereto (all such amounts may hereinafter be
referred to as " Interestholder Damages") arising out of: (i) any
misrepresentation or breach of any representation or warranty made by Xceed
pursuant to the provisions of this Agreement or in any statement, certificate or
other document furnished by Xceed pursuant to this Agreement; and (ii) the
nonperformance or breach of any covenant, agreement or obligation of Xceed which
has not been waived by the Interestholders collectively in writing.
39
(b) Subject to Section 3.3 hereof, Xceed shall be obligated to
indemnify the Interestholders pursuant to this Section 6.3 only with respect to
claims for Interestholder Damages as to which the Interestholders shall have
given written notice to Xceed on or before the close of business on the sixtieth
(60) day following the first anniversary of the Closing Date.
(c) Notwithstanding the indemnification provided pursuant to
Subsection 6.3(a) above, no amount shall be payable by Xceed in indemnification
hereunder or under any other provision of this Agreement unless the aggregate
amount of Interestholder Damages in respect of which Xceed would be liable, but
for operation and application of the provisions of this subsection, exceeds on a
cumulative basis Fifty Thousand Dollars ($50,000) and then only to the extent of
such excess, and then only to the extent of such excess up to the Cap.
(d) In any case where Xceed has indemnified the Interestholders for
any Interestholder Damages and the Interestholders recover from a third party
all or any part of the amount so indemnified by Xceed, the Interestholders shall
promptly reimburse to Xceed the amount so recovered.
6.4 Claims Against the Interestholders. With respect to claims or demands
----------------------------------
by third parties, whenever the Interestholders shall have received notice that
such a claim or demand has been asserted or threatened, which, if valid, would
be subject to indemnification under Section 6.4 hereof, the Interestholders
shall as soon as reasonably possible, notify Xceed of such claim or demand and
of all relevant facts within its knowledge which relate thereto. Xceed shall
have the right at their own expense to undertake the defense of any such claim
or demand utilizing counsel selected by Xceed and approved by the
Interestholders. In the event that Xceed should fail to give notice of its
intention to undertake the defense of any such claim or demand within sixty (60)
days after receiving notice that it has been asserted or threatened, the
Interestholders shall have the right to defend, satisfy and discharge the same
by payment, compromise or otherwise and shall give written notice of any such
payment, compromise or settlement to Xceed.
6.5 Limitation of Liability. Xceed, the Company and the Interestholders
-----------------------
agree that the respective liability of each of Xceed, the Company and the
Interestholders under this Agreement shall be limited to Thirty Million Dollars
($30,000,000), subject to the provisions set forth in this Article VI.
6.6 Subrogation. Each of Xceed, the Company and the Interestholders shall
-----------
make a good faith attempt (which shall not be deemed to include an obligation to
commence any litigation) to seek indemnification from any third parties,
including insurers, who may be liable upon any claims made against Xceed, the
Company or the Interestholders and for which the other party would be liable
under this Agreement. To the extent a party hereto indemnifies another party
hereto for claims upon which third parties, including insurers, may be liable,
the indemnified party shall, to the extent permissible, subrogate to the
indemnifying party its rights against such third parties with respect to such
claims; provided, however, that to the extent a third party from which
-------- -------
indemnification is sought hereunder cannot satisfy all claims brought against
such third party, the obligations of the indemnifying party under this Article
VI shall continue in effect to the satisfaction of any portion of such claims
not satisfied by such third party.
6.7 Remedies for Breaches of Representations and Warranties Exclusive.
-----------------------------------------------------------------
The parties hereto agree that the exclusive remedies for breaches of
representations and warranties and
40
covenants to be performed before or at the
Closing herein or in any other agreement required to be delivered by any party
hereto at the Closing shall be those set forth in this Article VI.
ARTICLE VII
TERMINATION AND REMEDIES FOR BREACH OF THIS AGREEMENT
7.1 Termination by Mutual Agreement. This Agreement may be terminated at
-------------------------------
any time prior to the Closing by unanimous consent of the parties hereto,
provided that such consent to terminate is manifested in writing and is signed
by each of the parties hereto.
7.2 Termination for Failure to Close. This Agreement may be terminated by
--------------------------------
any of the parties hereto if the Closing shall not have occurred by January 31,
2000, provided that, the right to terminate this Agreement pursuant to this
section shall not be available to any party whose failure to fulfill any of its
obligations hereunder has been the cause of or resulted in the failure to
consummate the transactions contemplated hereby by the foregoing date.
7.3 Termination by Operation of Law. This Agreement may be terminated by
-------------------------------
any of the parties hereto if, in the reasonable opinion of counsel to the
respective parties hereto, there shall be any statute, rule or regulation that
renders consummation of the transactions contemplated hereby illegal or
otherwise prohibited, or a court of competent jurisdiction or any government (or
governmental authority) shall have issued an order, decree or ruling, or has
taken any other action restraining, enjoining or otherwise prohibiting the
consummation of such transactions and such order, decree, ruling or other action
shall have become final and nonappealable.
7.4. Termination for Failure to Perform Covenants or Conditions. This
----------------------------------------------------------
Agreement may be terminated prior to the Closing Date:
(a) by Xceed if: (i) any of the representations and warranties made in
this Agreement by the Company or the Interestholders shall not be true and
correct in any material respect, when made or at any time prior to consummation
of the transactions contemplated hereby as if made at and as of such time and it
is not practical for such breach to be cured prior to the Closing Date; (ii) any
of the conditions set forth in Section 5.1 hereof have not been fulfilled or
waived by the Closing Date; (iii) the Company or the Interestholders shall have
failed to observe or perform any of their respective material obligations under
this Agreement and it is not practical for such breach to be cured prior to the
Closing Date; or (iv) as otherwise set forth herein; or
(b) by the Company or the Interestholders if: (i) any of the
representations and warranties of Xceed shall not be true and correct in any
material respect, when made or at any time prior to consummation of the
transactions contemplated hereby as if made at and as of such time and it is not
practical for such breach to be cured prior to the Closing Date; (ii) any of the
conditions set forth in Section 5.2 hereof have not been fulfilled by the
Closing Date; (iii) Xceed shall have failed to observe or perform any of its
respective material obligations under this Agreement and it is not practical for
such breach to be cured prior to the Closing Date; or (iv) as otherwise set
forth herein.
41
7.5 Effect of Termination or Default; Remedies. In the event of
------------------------------------------
termination of this Agreement as set forth above, this Agreement shall forthwith
become void and there shall be no liability on the part of any Non-Defaulting
Party (as defined below). The foregoing shall not relieve any Defaulting Party
from liability for damages actually incurred as a result of such party's breach
of any term or provision of this Agreement.
7.6 Remedies; Specific Performance. In the event that any party shall fail
------------------------------
or refuse to consummate the transactions contemplated by this Agreement (except
pursuant to Sections 7.1, 7.2, 7.3 or 7.4 above) or if any default under or
breach of any representation, warranty, covenant or condition of this Agreement
on the part of any party (the "Defaulting Party") shall have occurred that
results in the failure to consummate the transactions contemplated hereby, then
in addition to the other remedies provided herein, the non-defaulting party (the
"Non-Defaulting Party") shall be entitled to seek and obtain money damages from
the Defaulting Party and/or may seek to obtain an order of temporary or
permanent injunctive relief or specific performance thereof against the
Defaulting Party from a court of competent jurisdiction, provided that, the Non-
Defaulting party seeking any injunctive relief or specific performance must file
its request with such court within forty-five (45) days after it becomes aware
of the Defaulting Party's failure, refusal, default or breach and further
provided, that in no event shall a Defaulting Party be liable for special,
incidental or consequential damages. In addition, the Non-Defaulting Party shall
be entitled to obtain from the Defaulting Party court costs and reasonable
attorneys' fees incurred in connection with or in pursuit of enforcing the
rights and remedies provided hereunder.
ARTICLE VIII
MISCELLANEOUS
8.1 Fees and Expenses. In the event that the transactions contemplated
-----------------
hereby are not consummated, the Company and the Interestholders shall
respectively pay their own expenses, and Xceed shall pay its own expenses
incident to negotiation, execution, delivery and performance of the terms of
this Agreement and the consummation of the transactions contemplated hereby.
The expenses incurred by the Company in connection with the Asset Purchase,
which expenses shall not exceed $17,000, may be paid prior to or after the
Closing from Company funds.
8.2 Modification, Amendments and Waiver. The parties hereto may amend,
-----------------------------------
modify or otherwise waive any provision of this Agreement by unanimous consent,
provided that such consent and any amendment, modification or waiver is in
writing and is signed by each of the parties hereto.
8.3 Assignment. Except as otherwise contemplated by this Agreement, none
----------
of the parties hereto shall have the authority to assign its respective rights
or obligations under this Agreement without the prior written consent of the
other parties hereto; except that Xceed may assign this Agreement to any
affiliate, subsidiary or division thereof or to any successor in interest
without the prior consent of the Company or the Interestholders; provided,
--------
however, that such assignment shall be to a publicly-traded company.
-------
42
8.4 Burden and Benefit. This Agreement shall be binding upon and, to the
------------------
extent permitted in this Agreement, shall inure to the benefit of the parties
and their respective successors and assigns. In the event of a default by the
Company or the Interestholders of any of their respective obligations hereunder,
the sole and exclusive recourse and remedy of Xceed shall be against the Company
and the Interestholders, as the case may be, and any of the Company's or the
Interestholder's assets. In the event of a default by Xceed of any of its
obligations hereunder, the sole and exclusive recourse and remedy of the
Interestholders and the Company shall be against Xceed and its assets; under no
circumstances shall any officer, director, stockholder or affiliate of Xceed be
liable in law or equity for any obligations of Xceed hereunder.
8.5 Brokers. The Company and the Interestholders represent and warrant to
-------
Xceed that there are no brokers or finders entitled to any brokerage or finder's
fee or other commission or fee based upon arrangements made by or on behalf of
the Company or the Interestholders or any other person in connection with this
Agreement or any of the transactions contemplated hereby. Xceed represents and
warrants to the Company and the Interestholders that no broker or finder is
entitled to any brokerage or finder's fee or other commission or fee based upon
arrangements made by or on behalf of Xceed in connection with this Agreement or
any of the transactions contemplated hereby, other than fees or commissions for
which Xceed shall be solely responsible.
8.6 Entire Agreement. This Agreement and the schedules, exhibits, lists
----------------
and other documents referred to herein contain the entire agreement among the
parties hereto with respect to the transactions contemplated hereby and
supersede all prior agreements with respect thereto, whether written or oral.
8.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
8.8 Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any party hereto shall be in writing and delivered
personally, by facsimile transmission or telex, or sent by commercial expedited
delivery service or registered or certified mail (return receipt requested),
postage prepaid, addressed as follows:
If to the Company
or the Interestholders: Big Theory, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
43
If to Xceed: Xceed, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
with a copy to: Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
or to such other persons or addresses as may be designated in writing by the
party to receive such notice. If sent as aforesaid, such notice shall be deemed
to have been delivered on the date of transmission of a facsimile, e-mail or
telex, the day after delivery to a commercial overnight delivery service, or
five days after delivery into a United States Postal facility.
8.9 Counterparts. This Agreement may be executed in two (2) or more
------------
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.
8.10 Rights Cumulative. All rights, powers and privileges conferred
-----------------
hereunder upon the parties, unless otherwise provided, shall be cumulative and
shall not be restricted to those given by law. Failure to exercise any power
given any party hereunder or to insist upon strict compliance by any other party
shall not constitute a waiver of any party's right to demand exact compliance
with any of the terms or provisions hereof.
8.11 Severability of Provisions. The provisions of this Agreement shall be
--------------------------
considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise unenforceable.
Such invalid, void or otherwise unenforceable provisions shall be automatically
replaced by other provisions which are valid and enforceable and which are as
similar as possible in term and intent to those provisions deemed to be invalid,
void or otherwise unenforceable. Notwithstanding the foregoing, the remaining
provisions hereof shall remain enforceable to the fullest extent permitted by
law.
8.12 Headings. The headings set forth in the articles and sections of this
--------
Agreement and in the exhibits and the schedules to this Agreement are inserted
for convenience of reference only and shall not be deemed to constitute a part
hereof.
8.13 Knowledge Standard. When used in this Agreement, the phrase "to the
------------------
best knowledge of, " "knowledge of, " "known to" or similar phrases shall mean
the actual knowledge of: (i) with respect to Xceed, the officers and directors
of Xceed; (ii) with respect to the Company, the officers and the Managers; and
(iii) with respect to the Interestholders, the actual knowledge of each specific
Interestholder.
8.14 Facsimile and Copies. For purpose of this Agreement and any
--------------------
Ancillary Documents, facsimiles or photostatic copies of signatures shall be
deemed to be original signatures. In addition, if any of the parties sign
facsimile copies of this Agreement or any Ancillary Documents, such copies shall
be deemed originals.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date and year first above written.
ATTEST: XCEED, INC.
________________________________ By: /s/▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
ATTEST: BIG THEORY, LLC
________________________________ By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
WITNESS: INTERESTHOLDERS
________________________________ By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITNESS:
________________________________ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
WITNESS:
________________________________ By: /s/▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇
WITNESS:
________________________________ By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________ By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇
45
WITNESS:
________________________________ By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
WITNESS:
________________________________ By: /s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
WITNESS:
________________________________ By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
46