STOCK PURCHASE AGREEMENT
BY AND AMONG
THE TRANSLATION GROUP, LTD.,
AND
EACH OF THE SHAREHOLDERS OF
PLANET ACCESS NETWORKS, INC.,
Dated: April __, 1999
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of April __, 1999 (the
"Agreement"), among The Translation Group, Ltd., a corporation organized under
the laws of the State of Delaware (the "Purchaser") with an office at ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, and Planet Access Networks
Inc., a corporation organized under the laws of the State of New Jersey (the
"Company") with an office at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ("Seller"), an individual residing at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇,▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("Seller"), an individual residing at ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ("Seller"), an individual
residing at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Seller"),
an individual residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (the
four individuals collectively referred to as the "Sellers").
W I T N E S S E T H:
The Sellers collectively hold 100% the Company's shares (the
"Shares") of common stock, with no par value per share (the "Common Stock"), of
the Company, a corporation organized under the laws of the State of New Jersey,
which shares of Common Stock constitute all of the issued and outstanding shares
of Common Stock of the Company;
The Purchaser desires to acquire from the Sellers, and the
Sellers collectively desire to sell to the Purchaser, for the consideration
hereinafter provided, the Shares; and
Certain terms used in this Agreement are defined in Section
11.2 of this Agreement;
NOW, THEREFORE, in consideration of the promises and mutual
covenants and agreements hereinafter contained, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. SALE AND PURCHASE OF SHARES; THE CLOSING.. SALE AND
PURCHASE OF SHARES; THE CLOSING.
1.1. SALE AND PURCHASE OF SHARES.1. SALE AND PURCHASE OF
SHARES.
Subject to the terms and conditions of this Agreement and on
the basis of the representations, warranties, covenants and agreements herein
contained, on the Closing Date, each Seller shall sell, assign and convey to the
Purchaser, and the Purchaser shall purchase, acquire and accept from each
Seller, the Shares of such Seller set forth opposite such Seller's name on
Schedule 1.1 hereto. At the Closing, each Seller shall deliver one or more stock
certificates representing the Shares of such Seller duly endorsed for transfer
to the Purchaser.
1.2. THE CLOSING..2. THE CLOSING.
Subject to the termination of this Agreement as provided in
Section 8 hereof, the consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Purchaser on
May __, 1999(the "Closing Date").
2. CONSIDERATION. CONSIDERATION.
2.1. CONSIDERATION.1. CONSIDERATION.
(a) CONSIDERATION PAYABLE AT CLOSING. At the Closing,
Purchaser shall deliver as consideration for the Shares an aggregate of 416,666
shares of common stock, par value $.001 per share, of Purchaser (the "Purchaser
Shares") allocated to each Seller on a pro rata basis with the other Sellers
based on the number of Shares sold by each Seller.
(b) DEFERRED CONSIDERATION. On or before September 15, 1999,
the Purchaser shall pay to the Sellers, pro rata according to their percentage
ownership of the Company prior to the Closing, the aggregate amount of
$900,000.00, (the "Deferred Purchase Price"). To secure the Purchaser's
obligation to pay the Deferred Purchase Price, the Purchaser shall pledge to the
Sellers the Shares pursuant to the Stock Pledge Agreement, dated the date of
Closing, substantially in the form attached as Exhibit "A".
2.2 PIGGY BACK RIGHTS.
The parties acknowledge that as part of the consideration
provided hereunder, the Sellers shall be proportionedly given the "piggy-back"
rights similar to the registration of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or any assigns as set forth
in paragraph 5.1 below.
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3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS..
REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
The Sellers, jointly and severally, as to the Company and as
to each of the Sellers, hereby represent and warrant to the Purchaser as
follows:
3.1. ORGANIZATION AND GOOD STANDING..1. ORGANIZATION AND GOOD
STANDING.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey and has
full corporate power and authority to own, lease and operate its properties and
to carry on its business as it is now conducted. The Company is duly qualified
or authorized to do business as a foreign corporation and is in good standing
under the laws of (i) each jurisdiction in which it leases real property and
(ii) each other jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or authorization, except
where the failure to so qualify would not result in a Material Adverse Change.
(b) The minute books of the Company, as previously made
available to the Purchaser and its counsel, contain accurate records of all
meetings and all other material corporate action of the Company's board of
directors (including any committees thereof) and its stockholders since the date
of the Company's incorporation.
3.2.AUTHORIZATION OF AGREEMENT. 2.AUTHORIZATION OF AGREEMENT.
The Company and each of the Sellers has all requisite
capacity, power and authority to execute and deliver this Agreement, the
Employment Agreement, and each other agreement, document, instrument or
certificate contemplated by this Agreement or to be executed by such Seller in
connection with the consummation of the transactions contemplated by this
Agreement (this Agreement, the Employment Agreements, the Pledge Agreement, and
the other agreements, documents, instruments or certificates delivered pursuant
to this Agreement are hereinafter referred to
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as the "Transaction Documents"), and to perform fully its or his obligations
hereunder and thereunder. This Agreement has been, and each of the other
Transaction Documents will be (when executed and delivered by the Company and
each of the Sellers), duly and validly authorized, executed and delivered by the
Company and each of the Sellers and (assuming the due authorization, execution
and delivery of the other parties hereto and thereto) this Agreement
constitutes, and each of the other Transaction Documents will constitute (when
executed and delivered by the Company and each of the Sellers), legal, valid and
binding obligations of the Company and each of the Sellers, enforceable against
the Company and each of the Sellers in accordance with their respective terms,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
3.3. SUBSIDIARIES. 3. SUBSIDIARIES.
The Company has no subsidiaries and does not own any other
capital stock or other proprietary interest, directly or indirectly, in any
corporation, association, trust, partnership, joint venture or other entity or
have any agreement to acquire any such capital stock or other proprietary
interest.
3.4. NO CONFLICTS; CONSENTS OF THIRD PARTIES.4. NO CONFLICTS;
CONSENTS OF THIRD PARTIES.
(a) The execution and delivery by the Company and each of the
Sellers of this Agreement and the other Transaction Documents, the consummation
of the transactions contemplated hereby or thereby, and the compliance by the
Company and each of the Sellers with any of the provisions hereof or thereof
does not and will not (i) conflict with, or result in the breach of, any
provision of the certificate of incorporation or by-laws of the Company; (ii)
conflict with, violate, result in the breach or termination of, or constitute a
default or give rise to any "takeback" right or right of termination or
acceleration or right to increase the obligations or otherwise modify the terms
thereof under any Contract, Permit or Order to which the Company or any of the
Sellers is a party or by which the Company or any of the Sellers or the
properties or assets of any of the Sellers or the Company are bound; (iii)
constitute a violation of any Law applicable to the Company or any of the
Sellers; or (iv) result in the creation of any Lien upon the properties or
assets of the Company or any of the Sellers. Except as set forth on Schedule
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3.4 of the Disclosure Schedule, no consent, waiver, approval, Order, Permit or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of the Company or any of the
Sellers in connection with the execution and delivery of this Agreement or the
other Transaction Documents, or the compliance by the Company and any of the
Sellers, with any of the provisions hereof or thereof.
(b) Neither the Company nor any of the Sellers is a party to
any agreement, contract or covenant limiting the freedom of the Company or any
of the Sellers 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.
3.5. CAPITALIZATION. 5.CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
1000 shares of Common Stock. As of the date hereof, 1000 shares of Common Stock
are issued and outstanding, all of which are owned of record and beneficially by
the Sellers and constitute the Shares. The number of shares held by each Seller
is as set forth opposite such Seller's name on Schedule 1.1. The Shares are
validly issued, fully paid and non-assessable. There is no existing option,
warrant, call, right, commitment or other agreement of any character to which
the Company is a party requiring, and there are no securities of the Company
outstanding which upon conversion or exchange would require, the issuance, sale
or transfer of any additional shares of capital stock or other equity securities
of the Company or other securities convertible into, exchangeable for or
evidencing the right to subscribe for or purchase shares of capital stock or
other equity securities of the Company. Neither the Company nor any of the
Sellers is a party to any voting trust or other voting agreement with respect to
any shares of capital stock or to any agreement relating to the issuance, sale,
redemption, transfer or other disposition of capital stock of the Company.
(b) The Shares purchased by the Purchaser will, at the
Closing, constitute all of the issued and outstanding capital stock of the
Company on a fully diluted basis.
3.6. FINANCIAL STATEMENTS. 6. FINANCIAL STATEMENTS.
Sellers have delivered to the Purchaser (i) copies of the
Company's audited balance sheet as at December 31, 1998 and the related audited
statement of income and of cash flows for the year ended December 31, 1998 (the
"Audited Statement"), and its reviewed balance sheets as at December 31, 1997,
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December 31, 1996 and December 31, 1995 and the related reviewed statements of
income and of cash flows for the years ended December 31, 1997, December 31,
1996 and December 31, 1995 (the "Reviewed Statements") and (ii) copies of its
unaudited balance sheet at March 31, 1999 and the related unaudited statements
of income and cash flows for the three month period ended March 31, 1999 (the
"Latest Financials") (the Latest Financials, including the related notes and
schedules thereto, the Audited Statement and the Reviewed Statements, are
referred to herein as the "Financial Statements"). Each of the Financial
Statements was prepared in good faith from the books and records of the Company,
is complete and correct in all material respects, has been prepared in
accordance with generally accepted accounting principles and in conformity with
the practices consistently applied by the Company and presents fairly the
financial position, results of operations and cash flows of the Company as at
the dates and for the periods indicated. The books of account and other
financial records of the Company from which the Financial Statements have been
prepared are complete and correct.
3.7. NO UNDISCLOSED LIABILITIES. 7. NO UNDISCLOSED LIABILITIES.
Except to the extent set forth in the Financial Statements, or
as set forth on Schedule 3.7 of the Disclosure Schedule which sets forth with
specificity each liability of the Company in excess of $1,000 (whether accrued,
absolute, contingent or otherwise, and whether due or to become due or asserted
or unasserted), the Company has no Indebtedness and there is no basis for the
assertion of any claim or material liability of any nature against the Company,
except obligations under Contracts described on Schedule 3.13 of the Disclosure
Schedule or under Contracts that are not required to be disclosed thereon as a
result of dollar thresholds specified in Section 3.13.
3.8. ABSENCE OF CERTAIN DEVELOPMENTS. 8. ABSENCE OF CERTAIN DEVELOPMENTS.
Except as expressly set forth on Schedule 3.8 of the
Disclosure Schedule, since December 31, 1998:
(a) There has not been any Material Adverse Change nor has
any event occurred which could result in any Material Adverse Change;
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(b) There has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the property and assets of
the Company having a replacement cost of more than $1,000 for any single loss or
$2,500 for all such losses;
(c) There has not been (i) any declaration, setting aside
or authorizing the payment of, any dividend or other distribution in respect of
any shares of capital stock of the Company or any repurchase, redemption or
other acquisition by the Company of any of the outstanding shares of capital
stock or other securities of, or other ownership interest in, the Company or
(ii) any amount or asset paid or otherwise distributed to any of the Sellers,
whether as compensation or otherwise;
(d) The Company has not (i) awarded or paid any bonuses to
(A) any of the Sellers or (B) other employees of the Company in excess of $1,000
individually, or $2,500 in the aggregate, (ii) entered into or modified or
amended any employment, deferred compensation, severance or similar agreement,
(iii) increased or agreed to increase the compensation payable or to become
payable by it to any of the Company's directors, officers, employees, agents or
Representatives or (iv) increased or agreed to increase the coverage or benefits
available under any severance pay, termination pay, vacation pay, company
awards, salary continuation for disability, sick leave, deferred compensation,
bonus or other incentive compensation, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with such directors,
officers, employees, agents or Representatives (other than normal increases in
the ordinary course of business consistent with past practice and that in the
aggregate have not resulted in a material increase in the benefits or
compensation expense of the Company);
(e) There has not been any change by the Company in
accounting principles, methods or policies;
(f) The Company has not entered into any Contract
requiring payments in excess of $1,000, or conducted its business other than in
the ordinary course of business consistent with past practice;
(g) The Company has not (i) incurred or repaid any
Indebtedness, (ii) made any loans, advances or capital contributions to any
other Person or (iii) assumed, guaranteed, endorsed or otherwise became liable
for the obligations of any other Person.
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(h) The Company has not failed to promptly pay and
discharge any current liabilities except where disputed in good faith by
appropriate proceedings;
(i) The Company has not mortgaged, pledged or subjected to
any Lien any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets of the Company
(other than the sale of inventory in the ordinary course of business consistent
with past practice);
(j) The Company has not discharged or satisfied any Lien,
or paid any obligation or liability (fixed or contingent), except in the
ordinary course of business consistent with past practice and which, in the
aggregate, would not be material to the Company;
(k) The Company has not canceled or compromised any debt
or claim or amended, canceled, terminated, relinquished, waived or released any
(i) Contract to which any of the Sellers or any Affiliate of any of the Sellers
is a party or (ii) any other Contract or right except (in the case of this
clause (ii)) in the ordinary course of business consistent with past practice
and which, in the aggregate, would not be material to the Company;
(l) The Company has not suffered any Extraordinary Loss or
Extraordinary Losses (as defined in Opinion No. 30 of the Accounting Principles
Board of the American Institute of Certified Public Accountants and any
amendments thereto);
(m) The Company has not transferred, or granted any rights
under any concessions, leases, licenses, agreements, any Patents (as defined in
Section 3.12), Marks (as defined in Section 3.12), Copyrights (as defined in
Section 3.12), trade secrets, know how, manufacturing processes, inventions,
designs, web sites, computer programs or other tangible or intangible
proprietary information used by the Company in its business;
(n) The Company has not made or committed to make any
capital expenditures or capital additions or betterments in excess of $1,000
individually or $2,500 in the aggregate;
8
(o) The Company has not instituted or settled any Legal
Proceeding;
(p) There have not been any amendments or changes in the
certificate of incorporation or the by-laws of the Company;
(q) The Company has not entered into any Contract to take
any action which, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement untrue or incorrect as of
the date when made;
(r) The Company has caused to be done all things necessary
to maintain, preserve and renew its corporate existence and all material
licenses, authorizations and permits necessary to the conduct of its business;
and
(s) The Company has maintained and kept its properties in
good repair, working order and condition, normal wear and tear excepted.
3.9. TAXES. 9. TAXES.
Except as set forth on SCHEDULE 3.9 of the Disclosure
Schedule:
(a) The Company (i) has timely, completely and accurately
filed, or caused to be filed, with all appropriate U.S. federal, state or local
or foreign governmental agencies, all required tax and information returns, of
whatever nature, related to the Company for tax years ended prior to the date of
this Agreement or requests for extensions have been timely filed and any such
request shall have been granted and not expired, (ii) has duly paid, caused to
be paid, or made adequate provision in the balance sheet included in the Latest
Financials for, all taxes (including, but not limited to, income, sales,
property, payroll, employment, gross receipts, excise and franchise taxes),
assessments, charges, penalties and interest, of whatever nature ("Taxes"), due
and payable with respect to all periods ending on or prior to March 31,
1999,(iii) has made adequate provision for all Taxes with respect to all periods
subsequent to the periods covered by such returns, and (iv) has no "open" years
for any tax or information returns.
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(b) Neither the Sellers nor the Company has received,
directly or indirectly, notice of, and neither of them is otherwise aware of,
any pending, threatened, ongoing or past audit or examination by any
Governmental Body with respect to Taxes relating to the Company; nor are the
Sellers or the Company a party, directly or indirectly, to any action or
proceeding by any Governmental Body for assessment or collection of Taxes
relating to the Company; nor has any claim for assessment and collection, or any
notice of deficiency, been asserted or proposed against the Sellers or the
Company, directly or indirectly, with respect thereto; nor has the Sellers or
the Company executed a waiver of any statute of limitations with respect
thereto.
(c) All material elections with respect to Taxes affecting
the Company as of the date hereof are set forth on Schedule 3.9 of the
Disclosure Schedule.
(d) The Company is not liable for Taxes of any other
Person, is not currently under any contractual obligation to indemnify any
Person with respect to Taxes, and is not a party to any tax sharing agreement or
any other agreement providing for payments by the Company with respect to Taxes.
(e) The Company is not a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for United States federal income tax purposes.
(f) The Company will not be required, as a result of a
change in method of accounting for any period prior to the Closing Date, to
include any adjustment under Section 481 of the Code (or any corresponding
provision of foreign law) in taxable income for any period after the Closing
Date.
(g) SCHEDULE 3.9 of the Disclosure Schedule contains a
list of all jurisdictions in which a tax or information return has been filed by
the Company, and no claim has ever been made by any tax authority in any other
jurisdiction that the Company is subject to taxation or required to file a tax
or information return in such jurisdiction.
3.10. REAL PROPERTY. 10. REAL PROPERTY.
(a) SCHEDULE 3.10 of the Disclosure Schedule sets forth a
complete list of all real property and interests in real property owned by the
Company ("Owned Properties"). The Company has good, marketable and insurable
title in fee simple to all Owned Properties, in each case free and clear of all
Liens of any nature whatsoever except as set forth on Schedule 3.10 of the
Disclosure Schedule.
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(b) SCHEDULE 3.10 of the Disclosure Schedule sets forth a
complete list of all real property and interests in real property leased by the
Company (individually, a "Real Property Lease") and identifies, for each Real
Property Lease, the parties thereto, the address of the property subject
thereto, the rent payable thereunder, the terms of any renewal options, the
substance of any amendments or modifications thereto and any reciprocal easement
or operating agreements relating thereto. The Company has good, marketable and
insurable title to the leasehold estates in all Real Property Leases, in each
case free and clear of all Liens of any nature whatsoever except as set forth on
Schedule 3.10 of the Disclosure Schedule.
(c) None of the Real Property Leases is subject to any
lease, sublease, license or other agreement granting to any other Person any
right to the use, occupancy or enjoyment of the Real Property Leases or any part
thereof.
(d) Each of the Real Property Leases is valid and
enforceable in accordance with its terms, and there is no default under any Real
Property Lease either by the Company or any other party thereto, and no event
has occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder. Each of the Real Property Leases, upon the
consummation of the transactions contemplated hereby and by the other
Transaction Documents, will continue to entitle the Company, as the case may be,
to the use, occupancy and possession of the real property specified in such Real
Property Lease. The Company has delivered or otherwise made available to the
Purchaser true, correct and complete copies of the Real Property Leases,
together with all amendments, modifications, supplements or side letters
affecting the obligations of any party thereunder.
(e) No previous or current party to any Real Property
Lease has given notice of or made a claim with respect to any breach or default
thereunder.
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3.11. TANGIBLE PERSONAL PROPERTY 3.11. TANGIBLE PERSONAL PROPERTY.
(a) Schedule 3.11(a) of the Disclosure Schedule sets forth
all leases of personal property ("Personal Property Leases") involving annual
payments in excess of $1,000 relating to personal property used in the business
of the Company or to which the Company is a party or by which the Company or any
of its respective properties or assets is bound. The Company has delivered or
otherwise made available to the Purchaser true, correct and complete copies of
the Personal Property Leases, together with all amendments, modifications,
supplements or side letters affecting the obligations of any party thereunder.
(b) Each of the Personal Property Leases is in full force
and effect and is valid, binding and enforceable in accordance with its terms,
and there is no default under any Personal Property Lease either by the Company
or by any other party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default thereunder.
(c) The Company has good and marketable title to all of
the material items of tangible personal property that is owned and used by it,
free and clear of any and all Liens ("personal property" shall include all
personal property having a value in excess of $1,000). All items of tangible
personal property which, individually or in the aggregate, are material to the
operation of the business of the Company are in good condition and in a state of
good maintenance and repair (ordinary wear and tear excepted) and are suitable
for the purposes used for the operation of the business of the Company.
(d) Set forth in Schedule 3.11(d), are all personal
property that the Company owns or otherwise has any interest, including but not
limited to, a description and location of the personal property, all liens
and/or encumbrances regarding, arising from, covering and/or concerning the
personal property, the estimated market values of the personal property, taxes
and other assessments regarding, arising from, covering and/or concerning the
personal property and a summary of overhead costs associated with the personal
property.
(e) Appended to Schedule 3.11(d) are all liens and/or
encumbrances regarding, arising from, covering and/or concerning the personal
property, and all other documents regarding and/or concerning the estimated
market values of the personal property, taxes and other assessments regarding,
arising from, covering and/or concerning the personal property and overhead
costs associated with the personal property.
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(f) Set forth in SCHEDULE 3.11(f) is a detailed summary of
all bank accounts owned or that are in force for the benefit of the Company,
including but not limited to, the name and address of the bank where the account
is maintained, the name or names on the account, the amount of money in the
account as of April 15, 1999, the account number, the type of account, the
authorized signatures, and any overdraft or loan agreements relating to the
account.
3.12. Intellectual Property.12. Intellectual Property.
(a) SCHEDULE 3.12(a) of the Disclosure Schedule contains
an accurate and complete list of all domestic and foreign (i) patents, pending
patent applications and patent applications in process but not yet filed, owned
by, assignable to, or licensed to the Company or any of its subsidiaries (the
"Patents"); registered trademarks and service marks and pending applications
therefor and trade names owned by or licensed to the Company or any of its
subsidiaries (the "Marks"); and copyright registrations and pending applications
therefor owned by or licensed to the Company and used by the Company in the
conduct of its business (the "Copyrights"); (ii) written licenses and other
agreements relating to the Patents, Marks and Copyrights, and any other written
licenses and other agreements relating to trade secrets and know-how which are
material to the conduct of the Company's business and (iii) manufacturing,
process, and other technology transfer and license agreements which are material
to the conduct of such business. The Company owns, or has a valid, binding and
enforceable license or otherwise possesses legally enforceable rights to use all
Patents, Marks, Copyrights, and any applications therefor, technology,
inventions, designs, know-how, computer software programs or applications, web
sites and tangible or intangible proprietary information or material that are
used in the businesses of the Company as currently conducted.
(b) Except as disclosed in SCHEDULE 3.12(b) of the
Disclosure Schedule, the Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of the obligations
of the Sellers hereunder, in violation of any licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
is authorized to use any third-party Patents, Marks and Copyrights ("Third-Party
Intellectual Property Rights"). No claims with respect to the Patents,
registered and material unregistered Marks, registered Copyrights, and any
applications therefor owned by the Company or any of its subsidiaries (the
"Company Intellectual Property Rights"), any trade secret material to the
Company, or Third Party Intellectual Property Rights to the extent
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arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through the Company, are currently pending
or, to the knowledge of each of the Sellers, are threatened by any person. None
of the Sellers knows of any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any product as now used,
sold or licensed or proposed for use, sale or license by the Company or any of
its subsidiaries, infringes on any copyright, patent, trademark, service ▇▇▇▇ or
trade secret; (ii) against the use by the Company, of any trademarks, trade
names, trade secrets, copyrights, patents, technology, inventions, designs,
know-how or computer software programs and applications and web sites used in
the business of the Company as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity or effectiveness of any of
the Company Intellectual Property Rights or other trade secret material to the
Company; or (iv) challenging the license or legally enforceable right to use of
the Third Party Intellectual Rights by the Company.
(c) To the best knowledge of each of the Sellers, all
material Patents, Marks and Copyrights held by the Company and its subsidiaries
are valid and subsisting. Except as set forth in Schedule 3.12(c) of the Company
Disclosure Schedule, to the best knowledge of each of the Sellers, there is no
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property by any third party, including any employee or
consultant or former employee or consultant of the Company.
3.13. Material Contracts3.13. Material Contracts.
(a) Except as set forth on Schedule 3.13 of the Disclosure
Schedule, neither the Company nor any of its properties or assets is a party to
or bound by any (i) Contract not made in the ordinary course of business; (ii)
employment, consulting, non-competition, severance, golden parachute or
indemnification Contract (including, without limitation, in each case any
Contract to which the Company is a party involving employees of the Company);
(iii) advertising, public relations, franchise, distributorship or sales agency
Contract; (iv) Contract involving the commitment, payment or receipt of in
excess of $1,000 in the aggregate; (v) Contract granting a right of first
refusal for the acquisition, sale or lease of any assets or capital stock of the
Company; (vi) Contract with any Person involving a sharing of profits; (vii)
mortgage, pledge, conditional sales contract, security agreement, factoring
agreement or other similar Contract with respect to any real or tangible
personal property of the Company; (viii) loan agreement,
14
credit agreement, promissory note, guarantee, subordination agreement, letter of
credit or any other similar type of Contract evidencing Indebtedness; (ix)
Contract with any Governmental Body; (x) Contract with respect to the
inspection, removal or remediation of Hazardous Materials; (xi) retainer
Contract with attorneys, accountants, actuaries, appraisers, investment bankers
or other professional advisers; or (xiii) commitment or agreement to enter into
any of the foregoing. The Company has delivered or otherwise made available to
the Purchaser true, correct and complete copies of the Contracts listed on
Schedule 3.13 of the Disclosure Schedule, together with all amendments,
modifications, supplements or side letters affecting the obligations of any
party thereunder.
(b) (i) Each of the Contracts listed on Schedule 3.13 of
the Disclosure Schedule is valid and enforceable in accordance with its terms,
and there is no default under any Contract listed on Schedule 3.13 of the
Disclosure Schedule by the Company or by any other party thereto, and no event
has occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder.
(ii) No previous or current party to any Contract listed
on Schedule 3.13 has given notice of or made a claim with respect to any breach
or default thereunder.
3.14. EMPLOYEES3. 14. EMPLOYEES; INDEPENDENT CONTRACTORS.
(a) The Company has continuing relationships with its
employees and with its distributors, independent contractors (including, but not
limited to, independent manufacturers) and independent representatives
(collectively, the "Independent Contractors").
(b) No condition or state of facts or circumstances exists
which could materially adversely affect the Company's relations with its
employees or Independent Contractors, including, without limitation, the
consummation of the transactions contemplated by this Agreement or by the other
Transaction Documents.
(c) The Company is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours and is not engaged in any unfair labor practice.
15
(d) No collective bargaining agreement with respect to the
business of the Company is currently in effect or being negotiated. The Company
has not encountered any labor union or collective bargaining organizing activity
with respect to its employees. The Company has no obligation to negotiate any
such collective bargaining agreement, and, to the best knowledge of each of the
Sellers, there is no indication that the employees of the Company desire to be
covered by a collective bargaining agreement.
(e) There are no strikes, slowdowns or work stoppages
pending or, to the best knowledge of each of the Sellers, threatened with
respect to the employees of the Company or any Independent Contractor of the
Company, nor has any such strike, slowdown or work stoppage occurred or, to the
best knowledge of each of the Sellers, been threatened.
(f) Neither the Company nor any of the Sellers has
received notice of the intent of any government, body or agency responsible for
the enforcement of labor or employment laws to conduct an investigation of the
Company, and, to the best knowledge of each of the Sellers, no such
investigation is in progress.
(g) A true and correct copy of a schedule listing, as of
March 31, 1999, the annual base salary or annualized wages of each employee of
the Company whose annual base compensation is more than $10,000 has been
provided to the Purchaser by Sellers.
(h) No employee of the Company is, and the Company is not
in violation of any term of any employment agreement, non-disclosure agreement,
non-compete agreement or any other agreement regarding an employee's employment
with the Company.
(i) A true and correct copy of a schedule listing as of
March 31, 1999, each Independent Contractor of the Company (i) to whom the
Company made payments in the three month period ending March 31, 1999 in excess
of $2,500 or (ii) that generated in excess of $10,000 of the Company's revenues
has been provided to Purchaser by Sellers.
3.15. EMPLOYEE BENEFITS. 15. EMPLOYEE BENEFITS.
16
Except as disclosed on Schedule 3.15 of the Disclosure
Schedule, the Company has no collective bargaining, labor, stock option, profit
sharing, pension, retirement, stock bonus, thrift-savings, incentive, benefit or
other similar Contract, plan, policy or arrangement in connection with the
conduct of its operations, and the Company is not in default under any such
Contract, plan, policy or arrangement.
3.16. LITIGATION 3.16. LITIGATION.
(a) There are no Legal Proceedings pending or threatened
that question the validity of this Agreement or any of the other Transaction
Documents or any action taken or to be taken in connection with the consummation
of the transactions contemplated hereby or thereby. Schedule 3.16 of the
Disclosure Schedule sets forth a true, correct and complete list of all Legal
Proceedings pending or threatened against or affecting the Company or any of the
Sellers, or any properties or assets of the Company or any of the Sellers, at
law or in equity.
(b) There is no outstanding or threatened Order of any
Governmental Body against, affecting or naming the Company or affecting any of
the business, properties or assets of the Company.
3.17. COMPLIANCE WITH LAWS; PERMITS. 17. COMPLIANCE WITH LAWS; PERMITS.
(a) The Company is and at all times has been in compliance
in all material respects with all Laws and Orders promulgated by any
Governmental Body applicable to the Company or to the conduct of the business or
operations of the Company or the use of the properties (including any leased
properties) and assets of the Company. The Company has not received, and to the
best knowledge of each of the Sellers there has been no issuance of, any notice
of a violation or alleged violation by the Company of any such Law or Order.
There is no investigation or review by any Governmental Body with respect to the
Company pending, or to the best knowledge of each of the Sellers, threatened,
nor has any Governmental Body notified the Company or any of the Sellers of its
intention to conduct the same.
(b) To the best knowledge of each of the Sellers, no
legislative or regulatory proposal of any Governmental Body has been adopted or
is pending which could result in a Material Adverse Change.
17
(c) The Company is not subject to any Legal Proceeding,
investigation, Order or settlement alleging or addressing a violation of, or
liability under, any Law.
(d) Schedule 3.17 of the Disclosure Schedule lists all
Permits of the Company of all Governmental Bodies, indicating, in each case, the
expiration date thereof, which Permits constitute all Permits required by the
nature of the operations of the Company to permit its operations in the manner
in which they are currently conducted. Such Permits have been validly issued to
the Company by the appropriate Governmental Bodies in compliance with all
applicable Laws, and the Company has complied in all material respects with all
conditions of such Permits applicable to it. No default or violation, or event
that with the lapse of time or giving of notice or both would become a default
or violation, has occurred in the due observance of any such Permit. All such
Permits are in full force and effect without further consent or approval of any
Person.
3.18. ENVIRONMENTAL MATTERS. 18. ENVIRONMENTAL MATTERS.
The operations of the Company have been conducted and are in
compliance with all Environmental Laws. Neither the Company nor any of the
Sellers has received any notice from any source, or has otherwise obtained
knowledge, to the effect that there is lacking any Environmental Permit required
in connection with the Company's operations and Real Property Leases. The
Company and all of its past and current Facilities and operations are not
subject to any outstanding Order or Contract, including Environmental Liens,
with any Governmental Body or Person, or subject to any federal, state or local
investigation respecting (A) Environmental Laws, (B) any Remedial Action or (C)
any Environmental Claim. The Company is not subject to any Legal Proceeding
alleging the violation of any Environmental Law or Environmental Permit. The
Company has not received (nor, to the best knowledge of each of the Sellers, has
there been issued) any communication, whether from a Governmental Body,
citizens' group, employee or any other Person, that alleges that the Company is
not in compliance with any Environmental Law or Environmental Permit. The
Company has not caused or permitted any Hazardous Materials to remain or be
disposed of, either on or under real property legally or beneficially owned or
operated by the Company or on any real property not permitted to accept, store
or dispose of such Hazardous Materials. The Company has no liabilities
18
with respect to Hazardous Materials, and no facts or circumstances exist which,
in the aggregate, could give rise to liabilities with respect to Hazardous
Materials. None of the operations of the Company involves the generation,
transportation, treatment, storage or disposal of Hazardous Materials and there
is not now on or in any property leased by Company (1) any underground storage
tanks or surface tanks, dikes or impoundments; (2) any asbestos containing
materials or (3) any polychlorinated biphenyls.
3.19. Insurance.19. Insurance.
Schedule 3.19 of the Disclosure Schedule sets forth a list of
all policies of insurance of any kind or nature covering the Company or any of
its employees, properties, assets, or operations, including, without limitation,
policies of life, disability, fire, theft, workers compensation, employee
fidelity, product liability and other casualty and liability insurance. All such
policies are in full force and effect. Such insurance is adequate to cover risks
of such types and in such amounts as is customary for Persons engaged in similar
lines of business. All policies of such insurance (identified on Schedule 3.19
of the Disclosure Schedule) are binding and effective upon the issuers thereof
(each of whom is reputable and creditworthy) in accordance with their respective
terms.
3.20. INVENTORY; RECEIVABLES; PAYABLES. 20. INVENTORY;
RECEIVABLES; PAYABLES.
(a) The inventory of the Company (including that reflected
on the Financial Statements) is in good and merchantable condition, and suitable
and usable or saleable in the ordinary course of business, consistent with past
practice, and has been reflected on the Financial Statements and carried on the
books of account of the Company in accordance with generally accepted accounting
principles, consistently applied. Without limiting the generality of the
foregoing, such inventory does not include any obsolete, below standard quality
or defective materials or any excess stock items, except as have been reserved
against as reflected on the Financial Statements. The Company's assets include a
sufficient but not an excessive quantity of each type of inventory in order to
meet the normal requirements of the Company's business.
(b) All accounts receivable of the Company have arisen
from bona fide transactions in the ordinary course of business consistent with
past practice and are legally binding. All accounts receivable of the Company
reflected on the Latest Financials, or arising after the date thereof, are good
19
and collectible at the aggregate recorded amounts thereof, net of any applicable
reserve for returns or doubtful accounts reflected thereon, which reserves are
adequate and were calculated in a manner consistent with past practice and in
accordance with generally accepted accounting principles consistently applied.
Since December 31, 1998, to the best knowledge of each of the Sellers, there has
been no event that could materially increase the ratio of uncollectible accounts
receivable ("Uncollectible Receivables") to the accounts receivable or cause the
Company's reserve, if any, for Uncollectible Receivables to be inadequate. None
of such accounts receivable is, or will at the Closing Date be, subject to any
defense, counterclaim or setoff.
(c) All accounts payable of the Company reflected in the
Latest Financials or arising after the date thereof are the result of bona fide
transactions in the ordinary course of business consistent with past practice
and have been paid or are not yet due and payable.
3.21. MAJOR SUPPLIERS AND CUSTOMERS. 21. MAJOR SUPPLIERS
AND CUSTOMERS.
(a) Since December 31, 1998, there has not been any
Material Adverse Change in the business relationship of the Company with its any
of its suppliers, and none of the Sellers has any knowledge that there will be
any such change.
(b) Since December 31, 1998, there has not been any
Material Adverse Change in the business relationship of the Company with its
customers, and none of the Sellers has any knowledge that there will be any such
change. Except as disclosed on Schedule 3.21 of the Disclosure Schedule, the
Company has no customer which purchased products that accounted for more than 5%
of the Company's sales during the fiscal year ended December 31, 1998 or during
the three month period ended March 31, 1999.
3.22. RELATED PARTY TRANSACTIONS. 22. RELATED PARTY
TRANSACTIONS.
Except as set forth on Schedule 3.22 of the Disclosure
Schedule, no officer, director or Affiliate (or any relative of any of them) of
the Company nor any of the Sellers (or any relative of any Seller) has entered
into any transaction with or is a party to any Contract with the Company. No
officer, director or Affiliate (or any relative of any of them) nor any of the
Sellers (or any relative of any Seller) of the Company owns any direct or
indirect interest of any kind in, or controls or is a director, officer,
employee or partner of, or consultant to, or lender to or borrower from or has
the right to participate in the profits of, any Person which is a competitor,
supplier, customer, landlord, tenant, creditor or debtor of the Company.
20
3.23. ENTIRE BUSINESS. 23. ENTIRE BUSINESS.
The assets, properties and rights which will be owned or
leased by the Company as of the Closing will constitute all of the tangible and
intangible property used by and necessary to the Company in connection with the
conduct of its business, except as described in the Schedules to this Agreement.
3.24. No Misrepresentation. 24. No Misrepresentation.
No representation or warranty of any of the Sellers contained
in this Agreement (including the Disclosure Schedules hereto) or in any other
Transaction Document furnished to the Purchaser pursuant to the terms hereof
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances under which they were made, not
misleading. None of the Sellers knows of any facts which have caused or in the
future are reasonably likely to cause a Material Adverse Change which has not
been disclosed herein or in a Disclosure Schedule hereto. The representations
and warranties contained in this Section 3.24 or elsewhere in this Agreement or
in any other Transaction Document shall not be affected or deemed waived by
reason of the fact that the Purchaser and/or its Representatives know or should
have known that any such representation or warranty is or might be inaccurate in
any respect.
3.25. PRODUCT LIABILITY AND RECALLS. 25. PRODUCT LIABILITY
AND RECALLS.
(a) Except as disclosed on Schedule 3.25 of the Disclosure
Schedule, none of the Sellers is aware of any claim, or the basis of any claim,
against the Company for injury to person or property of employees or any third
parties suffered as a result of the manufacture, sale or distribution of any
product or the performance of any service by the Company, including claims
arising out of the allegedly defective or unsafe nature of the products sold or
distributed by the Company.
21
(b) Except as disclosed on Schedule 3.25 of the Disclosure
Schedule, there is no pending or, to the best knowledge of each of the Sellers,
threatened recall or investigation of any product sold or distributed by the
Company.
(c) There are no liabilities or threatened claims for (a)
product returns, (b) warranty obligations or (c) product services other than
those arising in the ordinary course of business consistent with past practice.
3.26. 3.26. BROKERS, FINDERS.
No Person has acted directly or indirectly as a broker or
finder for the Company or any of the Sellers in connection with the negotiations
relating to the transactions contemplated by this Agreement or by the other
Transaction Documents, and no Person is entitled to any fee or commission or
like payment in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Company or any of the Sellers.
40 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Sellers
that:
4.1. Organization and Good Standing.1. Organization and Good
Standing.
The Purchaser is duly organized, validly existing and in good
standing under the laws of the State of Delaware.
4.2. AUTHORIZATION OF AGREEMENT.2. AUTHORIZATION OF
AGREEMENT.
The Purchaser has all requisite corporate power and authority
to execute and deliver this Agreement and each of the other Transaction
Documents to be executed by the Purchaser in connection with the consummation of
the transactions contemplated hereby and thereby, and to perform fully its
obligations hereunder and thereunder. The execution, delivery and performance by
the Purchaser of this Agreement and each of the other Transaction Documents to
be executed by the Purchaser has been duly authorized by all necessary action on
behalf of the
22
Purchaser. This Agreement has been, and each of the other Transaction Documents
will be (when executed and delivered by the Purchaser), duly and validly
executed and delivered by the Purchaser and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each of the other Transaction Documents will constitute (when
executed and delivered by the Purchaser), legal, valid and binding obligations
of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
4.3. NO CONFLICTS; CONSENTS OF THIRD PARTIES. 3. NO
CONFLICTS; CONSENTS OF THIRD PARTIES.
The execution and delivery by the Purchaser of this Agreement
and the other Transaction Documents to be executed by the Purchaser, the
consummation of the transactions contemplated hereby or thereby, and the
compliance by the Purchaser with any of the provisions hereof or thereof does
not and will not (a) conflict with, or result in the breach of, the certificate
of incorporation or by-laws of the Purchaser, (b) conflict with, violate, result
in the breach of, or constitute a default under any Contract or Order to which
the Purchaser is a party or by which the Purchaser or its properties or assets
are bound or (c) constitute a violation by the Purchaser of any Law applicable
to the Purchaser. No consent, waiver, approval, Order, Permit or authorization
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of the Purchaser in connection with
the execution and delivery of this Agreement or the other Transaction Documents
to be executed by the Purchaser or the compliance by the Purchaser with any of
the provisions hereof or thereof which has not been made or obtained.
4.4. LITIGATION. 4. LITIGATION.
Except as disclosed in Purchaser Disclosure Documents, there
are no Legal Proceedings against the Purchaser pending or, to the best knowledge
of the Purchaser, threatened that question the validity of this Agreement or any
of the other Transaction Documents or any action taken or to be taken by the
Purchaser in connection with the consummation of the transactions contemplated
hereby or thereby.
23
4.5 FINANCIAL STATEMENTS FINANCIAL STATEMENTS.
The financial statements of Purchaser which have been included
in the Purchaser Disclosure Documents referred to in Section 4.6 and provided to
the Seller were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may have been indicated in the notes thereto) and fairly present, in all
material respects, the consolidated financial position of Purchaser as at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods then ended.
4.6. SEC DOCUMENTS. 6. SEC DOCUMENTS.
Purchaser has furnished to the Seller a complete copy of
(i)Purchaser's Annual Report to Stockholders on Form 10-K for the fiscal year
ended March 31, 1998 (the "Annual Report"), and (ii)Purchaser's Quarterly Report
to Stockholders on Form 10-Q for the quarter, ended December 31, 1998, filed
with the Securities and Exchange Commission (collectively, the "Purchaser
Disclosure Documents"). The Purchaser Disclosure Documents, at the respective
time each such document was issued, (a) complied as to form in all material
respects with the rules and regulations of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended; and (b) did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.7. TITLE TO PURCHASER SHARES. 7. TITLE TO PURCHASER
SHARES.
The Purchaser Shares have been duly authorized for issuance
and when issued and delivered in accordance with and pursuant to the terms of
this Agreement will be validly issued, fully paid and non-assessable.
50 ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE SELLERS ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS.
5.1. TITLE AND INVESTMENT REPRESENTATIONS 5.1. TITLE AND
INVESTMENT REPRESENTATIONS.
24
Each Seller represents and warrants to, and covenants and
agrees with, the Purchaser that, such Seller (a) has good and marketable title
to the Shares of such Seller, free and clear of all Liens of any kind or nature
whatsoever and that at the Closing, the Purchaser will obtain good and
marketable title to such Shares, free and clear as aforesaid, (b) is an
"accredited investor" within the meaning of Rule 501 under the Securities Act of
1933, as amended, (c) by reason of such Seller's business and financial
experience, and the business and financial experience of those persons retained
by such Seller to advise him with respect to his investment in the Purchaser
Shares, such Seller, together with such advisors, has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and the risks of an investment in the Purchaser
Shares and is able to bear the economic risk of holding the Purchaser Shares for
an indefinite period and (d) is acquiring the Purchaser Shares for his own
account and for investment and with no intention of distributing or reselling
the Purchaser Shares or any part thereof in any transaction that would be in
violation of the securities laws of the United States or any state. Each of the
Sellers shall receive, proportionally, "piggy-back" rights similar to
Registration rights that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,his successors, or any assigns,
including but not limited to relatives, beneficiaries, heirs or others whom he
has transferred any interest receives in the event that the Purchaser files a
Registration Statement, excluding any Registration Statement, which proceeds
will be used, directly or indirectly, to provide funding for the Company, filed
within the six (6) month period from the Closing Date.
5.2. INFORMATION REPRESENTATIONS. 2. INFORMATION
REPRESENTATIONS.
Each Seller represents and warrants that (i) such Seller, and
his Representatives as deemed necessary by such Seller (including such Seller's
professional, tax and other advisors), have carefully reviewed the materials
(the "Materials") furnished by the Purchaser to such Seller in connection with
the transactions contemplated by this Agreement, including without limitation,
the Purchaser Disclosure Documents and (ii) such Seller, and such Seller's
Representatives, have been granted the opportunity to ask questions of, and
receive answers from, Representatives of Purchaser concerning Purchaser and the
Purchaser Shares and to obtain any additional information that such Seller
deemed necessary to verify the accuracy of the information contained in the
Materials.
25
5.3. .3. ADVICE OF CHANGES.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, each Seller will promptly advise the Purchaser in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of the Sellers contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate, (b) of any Material Adverse Change, and (c) of any breach
by any Seller of any covenant or agreement contained in any Transaction
Document.
5.4. MAINTENANCE OF BUSINESS.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Sellers shall cause the Company to:
(a) cause to be done all things in the regular course of
business necessary to maintain, preserve and renew its (i) corporate existence
and all material licenses, authorizations and permits necessary to the conduct
of its businesses and (ii) relationships with customers, suppliers, employees
and others in substantially the same manner as it has prior to the date hereof;
(b) comply in all material respects with all applicable
Laws; and
(c) maintain proper books of record and account which
present fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such proper
reserves as in each case are required in accordance with generally accepted
accounting principles, consistently applied. 5.4. MAINTENANCE OF BUSINESS. FROM
THE DATE HEREOF UNTIL THE EARLIER OF THE CLOSING OR THE TERMINATION OF THIS
AGREEMENT, THE SELLERS SHALL CAUSE THE COMPANY TO(A) CAUSE TO BE DONE ALL THINGS
IN THE REGULAR COURSE OF BUSINESS NECESSARY TO MAINTAIN, PRESERVE AND RENEW ITS
(I) CORPORATE EXISTENCE AND ALL MATERIAL LICENSES, AUTHORIZATIONS AND PERMITS
NECESSARY TO THE CONDUCT OF ITS BUSINESSES AND (II) RELATIONSHIPS WITH
CUSTOMERS, SUPPLIERS, EMPLOYEES AND OTHERS IN SUBSTANTIALLY THE SAME MANNER AS
IT HAS PRIOR TO THE DATE HEREOF;(B) COMPLY IN ALL MATERIAL RESPECTS WITH ALL
APPLICABLE LAWS; AND(C) MAINTAIN PROPER BOOKS OF RECORD AND ACCOUNT WHICH
PRESENT FAIRLY IN ALL MATERIAL RESPECTS ITS FINANCIAL CONDITION AND RESULTS OF
OPERATIONS AND MAKE PROVISIONS ON ITS FINANCIAL STATEMENTS FOR ALL SUCH PROPER
RESERVES AS IN EACH CASE ARE REQUIRED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, CONSISTENTLY APPLIED.
26
5.5 CONDUCT OF BUSINESS. 5 CONDUCT OF BUSINESS.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Sellers will cause the Company to continue to
conduct the business of the Company and maintain the Company's business
relationships in the ordinary and usual course of business and will not permit
the Company, without the prior written consent of the Purchaser, which shall not
be unreasonably withheld and which shall be presumed to be granted unless denied
within five (5) business days of written notice to Purchaser from the Company,
to;
(a) (i) declare, set aside or authorize the payment of,
any dividend or other distribution in respect of any shares of capital stock of
the Company or repurchase, redeem or acquire any of the outstanding shares of
any class of capital stock or (ii) pay or otherwise distribute any other amounts
or assets to any Seller, whether as compensation or otherwise;
(b) split or combine the outstanding shares of its capital
stock of any class or enter into any recapitalization or agreement affecting the
number or rights of outstanding shares of any class of its capital stock;
(c) (i) award or pay any bonuses to employees of the
Company, (ii) enter into or modify or amend any employment, deferred
compensation, severance or similar agreement, (iii) increase or agree to
increase the compensation payable or to become payable by it to any of the
Company's directors, officers, employees, agents or Representatives or (iv)
increase or agree to increase the coverage or benefits available under any
severance pay, termination pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with such directors, officers, employees,
agents or Representatives;
(d) change accounting principles, methods or policies;
(e) enter into any Contract requiring payments in excess
of $1,000, or conduct its business other than in the ordinary course of business
consistent with past practice;
27
(f) (i) incur or repay any Indebtedness, (ii) make any
loans, advances or capital contributions to any other Person or (iii) assume,
guarantee, endorse or otherwise become liable for the obligations of any other
Person.
(g) fail to maintain and keep its properties in good
repair, working order and condition, normal wear and tear excepted;
(h) fail to comply with all other obligations which it
incurred pursuant to any Contract or promptly pay or discharge any current
liabilities, as such obligations become due, unless and to the extent that the
same are being contested in good faith and by appropriate proceedings and
adequate reserves (as determined in accordance with generally accepted
accounting principles, consistently applied) have been established on its books
with respect thereto;
(i) mortgage, pledge or subject to any Lien any of its
assets, or acquire any assets or sell, assign, transfer, convey, lease or
otherwise dispose of any assets of the Company (other than the sale of inventory
in the ordinary course of business consistent with past practice);
(j) discharge or satisfy any Lien, or pay any obligation
or liability (fixed or contingent), except in the ordinary course of business
consistent with past practice and which, in the aggregate, would not be material
to the Company;
(k) cancel or compromise any debt or claim or amend,
cancel, terminate, relinquish, waive or release (i) any Contract to which any
Seller or any of his Affiliates is a party or (ii) any other Contract or right
except (in the case of this clause (ii)) in the ordinary course of business
consistent with past practice and which, in the aggregate, would not be material
to the Company;
(l) transfer or grant any rights under any concessions,
leases, licenses, agreements or Intellectual Property used by the Company in its
business;
(m) make or commit to make any capital expenditures or
capital additions or betterments;
28
(n) institute or settle any Legal Proceeding;
(o) amend its certificate of incorporation or by-laws;
(p) issue, sell or transfer any shares of its capital
stock of any class or any other of its securities, or issue or create any
options, warrants, calls, rights, commitments, subscriptions, convertible
securities or other agreements of any character requiring the Company to issue,
sell or transfer any shares of capital stock, or accelerate the vesting of any
outstanding security;
(q) merge, consolidate or reorganize with, or acquire, any
entity;
(r) agree to any audit assessment by any Tax authority or
fail to pay and discharge when payable all Taxes, assessments and governmental
charges imposed upon its properties or upon the income or profits therefrom (in
each case before the same becomes delinquent and before penalties accrue
thereon) and all claims for labor, materials or supplies which if unpaid would
by law become a Lien upon any of its property;
(s) change any insurance coverage, issue any certificates
of insurance or fail to continue in force with nationally recognized insurance
companies adequate insurance covering risks of such types and in such amounts as
are customary for Persons engaged in similar lines of business;
(t) enter into any transaction with, or become party to
any Contract with, any officer, director, or Affiliate (or any relative of any
of them) of the Company; or
(u) agree to do, or enter into negotiations with respect
to, any of the things described in the preceding clauses in this Section 5.5.
5.6. REGULATORY APPROVALS. 6. REGULATORY APPROVALS.
Each Seller will, and will cause the Company to, promptly
execute and file, or join in the execution and filing, of any application or
other document that may be necessary in order to obtain the authorization,
approval or consent of any Governmental Body which may be reasonably required,
or which the Purchaser may reasonably request in connection with the
consummation of the transactions contemplated by this Agreement. The Sellers
will use their, and will cause the Company to use its, best efforts to promptly
obtain all such authorizations, approvals and consents.
29
5.7. NECESSARY CONSENTS. 7. NECESSARY CONSENTS.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Sellers will use their, and will cause the
Company to use its, best efforts to obtain such written consents and take such
other actions as may be necessary or appropriate to facilitate the consummation
of the transactions contemplated hereby and by the other Transaction Documents
and to allow the Purchaser to carry on the Company's business after the Closing
Date.
5.8. ACCESS TO INFORMATION. 8. ACCESS TO INFORMATION.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Sellers will, and shall cause the Company to,
(i) allow the Purchaser and its Representatives reasonable access to the files,
books, records, personnel and offices of the Company, including, without
limitation, any and all information relating to the Company's Taxes,
commitments, Contracts, and real, personal and intangible property and financial
condition, (ii) furnish promptly to the Purchaser all information concerning the
Company's business, properties and personnel as the Purchaser may reasonably
request, and (iii) make available to the Purchaser the appropriate individuals
(including attorneys, accountants and other professionals) for discussion of the
Company's business, properties and personnel as the Purchaser may reasonably
request. The Sellers will cause the Company's accountants to cooperate with the
Purchaser and its Representatives in making available to the Purchaser all
financial information reasonably requested, including, without limitation, the
right to examine all working papers pertaining to all Tax returns and financial
statements prepared, reviewed or audited by such accountants.
5.9. SATISFACTION OF CONDITIONS PRECEDENT. 9. SATISFACTION OF
CONDITIONS PRECEDENT.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Sellers will use their, and will cause the
Company to use its, best efforts to satisfy or cause to be satisfied all the
conditions precedent that are set forth in Section 7.
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5.10. NO OTHER NEGOTIATIONS. 10. NO OTHER NEGOTIATIONS.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Sellers shall not, and shall cause the
Company to not, directly or indirectly, (a) solicit, initiate discussions or
engage in negotiations with any Person (whether such negotiations are initiated
by the Seller or otherwise) or take any other action intended or designed to
facilitate the efforts of any Person, other than the Purchaser, relating to the
acquisition of the Company (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise) or any material portion of its capital stock or
assets (any such efforts by any such Person, including any proposal to make such
an acquisition, are referred to as an "Acquisition Proposal"), (b) provide
non-public information with respect to the Company to any Person, other than the
Purchaser or (c) enter into any agreement, understanding, commitment or other
arrangement with any Person, other than the Purchaser, relating to an
Acquisition Proposal. If the Company or any Seller receives any unsolicited
offer or proposal to enter negotiations or discussions relating to an
Acquisition Proposal, the Sellers shall promptly notify the Purchaser, which
notice shall include information as to the identity of the Person making any
such offer or proposal and the specific terms of such offer or proposal, as the
case may be.
60 COVENANTS OF THE PURCHASER COVENANTS OF THE
PURCHASER.
6.1. ADVICE OF CHANGES. 1. ADVICE OF CHANGES.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Purchaser will promptly advise the Seller in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of the Purchaser contained in this
Agreement, if made on or as of the date of such event or the Closing Date,
untrue or inaccurate in any material respect, and (b) of any breach by the
Purchaser of any covenant or agreement contained in this Agreement.
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6.2. REGULATORY APPROVALS. 2. REGULATORY APPROVALS.
The Purchaser will promptly execute and file, or join in the
execution and filing, of any application or other document that may be necessary
in order to obtain the authorization, approval or consent of any Governmental
Body, or which the Seller may reasonably request in connection with the
consummation of the transactions contemplated by this Agreement. The Purchaser
will use its best efforts to promptly obtain all such authorizations, approvals
and consents.
6.3. NECESSARY CONSENTS. 3. NECESSARY CONSENTS.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Purchaser will use its best efforts to obtain
such written consents and take such other actions as may be necessary or
appropriate to facilitate the consummation of the transactions contemplated
hereby and by the other Transaction Documents.
6.4. SATISFACTION OF CONDITIONS PRECEDENT.
4. SATISFACTION OF CONDITIONS PRECEDENT.
From the date hereof until the earlier of the Closing or the
termination of this Agreement, the Purchaser will use its best efforts to
satisfy or cause to be satisfied all the conditions precedent that are set forth
in Section 7.
6.5 DIRECTORS AND OFFICERS OF THE PURCHASER AND THE
COMPANY.
Immediately following the Closing, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇ shall be elected/appointed by Purchaser as Directors of the Company.
Additional Directors of the Company may be elected/appointed at the direction
and sole discretion of the Purchaser. In addition, for a period to coincide with
▇▇▇▇ ▇▇▇▇▇▇'▇ Employment Agreement with the Company, the Purchaser shall
nominate ▇▇▇▇ ▇▇▇▇▇▇ as a Director of Purchaser prior to June 1, 1999.
6.6. PERSONAL GUARANTEES BY THE SELLER.
In the event that the Sellers do not exercise their rights to
take back the Company's Shares under the Pledge Agreement, all personal
guarantees of the Sellers relating to the Companys' corporate matters shall be
paid or collateralized by the Purchaser and all individual guarantors shall be
removed within five days of September 15, 1999.
32
6.7. MAINTENANCE OF BUSINESS.
Until payment of the Deferred Purchase Price has been made,
the Purchaser shall cause the Company to operate in the ordinary course,
consistent with past practice, except that (i) the Company shall cooperate in
any manner necessary to complete the financing contemplated in Section 6.8(b);
and (ii) the Purchaser and the Company will cooperate in connection with joint
products and services contemplated by the Purchaser's business plan. Without
limiting the foregoing, the Purchaser shall not, prior to the payment of the
Deferred Purchase Price, invade the assets of the Company.
6.8 FINANCING MATTERS.
(a) The Purchaser shall provide, through the date of payment
in full of the Deferred Purchase Price, a line of credit of up to $250,000,
which shall bear interest at the lesser of (i) a rate of 1 1/2% per annum over
the Purchaser's cost of funds; or (ii) a rate of 8 3/4% per annum.
(b) On or prior to September 15, 1999, the Purchaser shall
provide or secure funding in a minimum amount of $4,000,000 (prior to costs and
expenses of obtaining such funding). This funding may be obtained, at the
Purchaser's discretion, in the form of a private or public sale of securities of
the Purchaser or the Company, or through any alternative means.
(c) In the event that Purchaser fails to pay the Deferred
Purchase Price in accordance with Section 2.1(b) or secure funding in accordance
with Section 6.8(b) by September 15, 1999; i) any amount outstanding and/or
remaining under the $250,000 line of credit, including accrued interest thereon,
shall be considered liquidated damages; ii) the Company and Purchaser shall
split profits, if any, attributable to joint projects by the Company and
Purchaser during the 2nd and 3rd quarters of 1999, but no later than December
31, 1999; and iii) the Company shall reserve sufficient capacity to complete any
Purchaser projects in progress at that time. For all work performed under this
Section, the Company shall be compensated at its normal and customary retail
rates.
33
(d) In the event that Purchaser pays the Deferred Purchase Price in
accordance with Section 2.1(b) and secures funding in accordance with Section
6.8(b) by September 15, 1999, the Company shall repay to the Purchaser, from the
financing, all monies provided to Company by Purchaser and all cost and expenses
incurred by the Purchaser arising from this Agreement and the transactions
contemplated by this Agreement, including accrued interest.
6.9 PUT OF PURCHASER SHARES.
Each of the Sellers shall have the one-time right to require
the Purchaser to repurchase all or any part of the Purchaser Shares issued to
them under this Agreement, at a price of $7.00 per share, if, on the one year
anniversary of the Closing Date, (i) the Purchaser Shares are not listed for
trading on a national securities exchange or included on an automated quotation
system maintained by the National Association of Securities Dealers; (ii) during
the ninety days preceding such date the average weekly reported trading volume
of the Purchaser Shares is less than 100,000 shares; and (iii) the average of
the closing price or the high bid price of the Purchaser Shares during the
twenty trading days preceding such date is less than $10.00 per share. Any
Seller desiring to exercise the option shall notify the Company not later than
ninety days after the anniversary date of the Closing Date, which notification
shall be irrevocable.
7. CONDITIONS 7. CONDITIONS.
7.1. CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS
..1. CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS.
The respective obligations of each party hereunder are subject
to the fulfillment or satisfaction of each of the following conditions prior to
or at Closing(any one or more of which may be waived in writing by all of the
parties to this Agreement):
(A COMPLIANCE WITH LAW.(AA COMPLIANCE WITH LAW. There shall
be no Law enacted, entered, enforced or deemed applicable to the transactions
contemplated hereby or by the other Transaction Documents which would prohibit
or render illegal the transactions contemplated hereby or thereby.
34
(b No Legal Proceedings or Orders.(ba No Legal Proceedings or
Orders. There shall not have been instituted, pending or threatened any Legal
Proceeding by or before any Governmental Body, nor shall there be in effect any
Order issued by any Governmental Body, or threat of any Order, that prevents or
seeks to prevent, or questions the validity of this Agreement or the other
Transaction Documents or any action taken or to be taken in connection with the
consummation of the transactions contemplated hereby or thereby.
(c Other Agreements. Each of the Sellers and the Purchaser
shall have executed and delivered such Seller's Employment Agreement.
7.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS.2.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS.
The obligations of each of the Sellers hereunder are subject
to the fulfillment or satisfaction of each of the following conditions prior to
or at Closing (any one or more of which may be waived in writing by the Seller):
(a Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser set forth in Section 4 shall be
true and accurate in all material respects with the same force and effect as if
they had been made at the Closing, and the Seller shall receive a certificate to
such effect signed by an officer of the Purchaser.
(b COVENANTS. The Purchaser shall have performed and complied
in all material respects with all of its covenants required to be performed by
it under this Agreement and the Seller shall receive a certificate to such
effect signed by an officer of the Purchaser.
35
7.3. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER.3.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER.
The obligations of the Purchaser hereunder are subject to the
fulfillment or satisfaction of each of the following conditions prior to or at
Closing (any one or more of which may be waived in writing by the Purchaser):
(A ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each of the Sellers set forth in Section 3
shall be true and accurate in all material respects with the same force and
effect as if they had been made at the Closing, and the Purchaser shall receive
a certificate to such effect signed by each of the Sellers.
(b COVENANTS. Each of the Sellers shall have performed and
complied in all material respects with all of the covenants required to be
performed by such Seller under this Agreement and the Purchaser shall receive a
certificate to such effect signed by each of the Sellers.
(c ABSENCE OF MATERIAL ADVERSE CHANGE. There shall not have
been any Material Adverse Change, and the Purchaser shall receive a certificate
to such effect signed by each of the Sellers.
(d OPINION OF SELLER'S COUNSEL. The Purchaser shall have
received from Ferriter, Scobbo, ▇▇▇▇▇▇ & Rodophele, Attorneys at Law, counsel to
the Sellers and the Company. Such opinion shall be in form and substance
reasonably satisfactory to the Purchaser's legal counsel.
(e DOCUMENTS. The Purchaser shall have received all written
consents, assignments, waivers, authorizations or other certificates reasonably
deemed necessary by the Purchaser's legal counsel to provide for the
continuation in full force and effect of any and all material Contracts of the
Company and for each of the Sellers to consummate the transactions contemplated
hereby and by the other Transaction Documents.
(f GOVERNMENT CONSENTS. There shall have been obtained such
material Permits and there shall have been taken such other action, as may be
required to consummate the transactions contemplated hereby and by the other
Transaction Documents by any Government Body having jurisdiction over the
parties and the actions herein proposed to be taken, including but not limited
to requirements under applicable federal and state securities laws.
36
(g OTHER AGREEMENTS. Each Seller shall have executed and
delivered (i) a Non-competition Agreement and a General Release Such documents
shall be in form and substance reasonably satisfactory to the Purchaser's legal
counsel
(h SATISFACTORY COMPLETION OF DUE DILIGENCE. The Purchaser
shall have (i) received all due diligence materials requested by the Purchaser
from the Company and the Sellers and shall be satisfied in its sole discretion
with the results of its review and analysis of such materials, and (ii)
conducted interviews with such members of the Company's management or such other
personnel as the Purchaser shall have requested and shall be satisfied in its
sole discretion with the results of such interviews. (i) Notwithstanding
anything herein to the contrary, final approval of this Agreement by the Board
of Directors of the Purchaser.
8. TERMINATION OF AGREEMENT. TERMINATION OF AGREEMENT.
8.1. TERMINATION 8.1. TERMINATION.
This Agreement shall become effective upon execution. This
Agreement may be terminated prior to the Closing as follows:
(a by mutual written consent duly executed by each of the
Sellers and the Purchaser; or
(b by either the Purchaser or the Sellers, if any of the
conditions set forth herein shall not have been satisfied or waived on the
Closing Date; provided, however, that the right to terminate this Agreement
under this Section 8.1(b) shall not be available to any party whose breach of
this Agreement or failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of any condition for Closing; or
(c by either the Purchaser or the Sellers, if a Governmental
Body shall have issued a nonappealable final Order or taken any other action
having the effect of permanently
37
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby or in the other Transaction Documents; provided
however, that the right to terminate this Agreement under this Section 8.1(c)
shall not be available to any party which has not complied with its respective
obligations under Sections 5.7 or 6.2 and such noncompliance materially
contributed to the issuance of any such Order or the taking of such action;
provided further that the party seeking to terminate this Agreement pursuant to
this Section 8.1(c) shall have used all reasonable efforts to remove such Order
or action; or
(d by either the Purchaser or the Sellers, if any
representation or warranty of the Purchaser or any of the Sellers, respectively,
set forth in this Agreement shall be untrue in any material respect such that
the conditions set forth in Sections 7.3(a) or 7.2(a)), as the case may be,
would not be satisfied provided, however, that if such representation or
warranty is curable prior to the Closing Date by the Purchaser or the Sellers,
as the case may be, through the exercise of reasonable best efforts and for so
long as the Purchaser or the Sellers, as the case may be, continues to exercise
such reasonable best efforts, neither the Purchaser nor the Sellers,
respectively, may terminate this Agreement under this Section 8.1(d); or
(e by either the Purchaser or the Sellers, upon a breach of
any covenant or agreement on the part of the Purchaser or the Seller,
respectively, set forth in this Agreement such that the conditions set forth in
Sections 7.3(b) or 7.2(b), as the case may be, would not be satisfied; provided,
however, that if such covenant or agreement is curable prior to the Closing Date
by the Purchaser or the Sellers, as the case may be, through the exercise of
reasonable best efforts and for so long as the Purchaser or the Sellers, as the
case may be, continue to exercise such reasonable best efforts, neither the
Purchaser nor the Sellers, respectively, may terminate this Agreement under this
Section 8.1(e).
8.2. NOTICE OF TERMINATION. 2. NOTICE OF TERMINATION.
Any termination of this Agreement under Section 8.1 above will
be effective by the delivery of written notice (in accordance with the
provisions of Section 11.10 hereof) of the terminating party to the other
parties hereto.
38
8.3. EFFECT OF TERMINATION. 3. EFFECT OF TERMINATION.
In the case of any termination of this Agreement as provided
in this Section 8, this Agreement shall be of no further force and effect
(except for Sections 11.3, 11.6, 11.8 and 11.13); provided, however, that a
termination of this Agreement shall not relieve any party from liability for any
breach of this Agreement or defeat or impair the right of any party to pursue
such relief as may otherwise be available to it as a result of any breach of
this Agreement or any of the representations, warranties, covenants or
agreements contained herein.
9. LEGEND ON CERTIFICATES. LEGEND ON CERTIFICATES.
Each stock certificate issued to represent the Purchaser
Shares shall bear the following (or a substantially equivalent) conspicuous
legend on the face or reverse side thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO (I) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAW, OR (II)
ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT, OR APPLICABLE
STATE SECURITIES LAW, RELATING TO THE DISPOSITION OF
SECURITIES, INCLUDING RULE 144 UNDER THE ACT; PROVIDED THAT,
AN OPINION OF COUNSEL IS FURNISHED, REASONABLY SATISFACTORY IN
FORM AND SUBSTANCE TO THE TRANSLATION GROUP LTD., THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND/OR
APPLICABLE STATE SECURITIES LAW IS AVAILABLE.
Any stock certificate issued at any time in exchange or substitution for any
certificate bearing such legend shall also bear such legend, unless the
restrictions contained in Section 5.1 of this Agreement are no longer effective
and in the opinion of counsel for Purchaser the Purchaser Shares represented
thereby need no longer be subject to the restrictions contained in this
Agreement. Purchaser shall not transfer on its books any certificate for the
Purchaser Shares in violation of the provisions of this Agreement. Purchaser
shall give appropriate stop transfer instructions to its stock transfer agent
with respect to the Purchaser Shares.
39
10. FURTHER AGREEMENTS OF THE PARTIES. FURTHER AGREEMENTS
OF THE PARTIES.
10.1. INDEMNITY. 1. INDEMNITY.
(a Each Seller, jointly and severally, and, until the
Closing, the Company, agrees to indemnify, defend and hold harmless the
Purchaser (and each officer, director, shareholder, affiliate, agent and
permitted assign thereof) from and against any and all losses, liabilities,
damages, deficiencies, costs or expenses (including interest, penalties, and
attorneys' fees, disbursements and related charges) (collectively, "Losses")
based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representations, warranties, covenants or agreements of the
Company or any of the Sellers contained in this Agreement or the other
Transaction Documents.
(b The Purchaser agrees to indemnify, defend and hold
harmless the Company and each of the Sellers from and against any and all Losses
based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representations, warranties, covenants or agreements of the
Purchaser contained in this Agreement or the other Transaction Documents.
40
11. Miscellaneous. Miscellaneous.
11.1. Survival of Representations and
Warranties 11.1. Survival of Representations and Warranties.
The representations and warranties of the Sellers contained in
this Agreement shall survive the Closing Date for the benefit of the Purchaser
as follows: (i) as to the representations and warranties contained in Sections
3.5 and 5.1, forever; (ii) as to the representations and warranties contained in
Section 3.18, five years following the Closing Date; (iii) as to the
representation and warranties contained in Section 3.9, until 60 days following
the expiration of all periods allowed for objecting and appealing the
determination of any proceedings relating to any assessment or reassessment by
any tax authority with respect to the matters to which such representations and
warranties pertain; and (iv) as to all other representations and warranties,
until two years following the Closing Date. The representations and warranties
of the Purchaser shall survive the Closing Date for the benefit of the Sellers
until two years following the Closing Date.
11.2. CERTAIN DEFINITIONS.2. CERTAIN DEFINITIONS.
"AFFILIATE" shall have the meaning specified by Rule 12b-2
under the Securities Exchange Act of 1934.
"CLOSING" shall have the meaning set forth in Section 1
hereof.
"CLOSING DATE" shall have the meaning set forth in Section 1
hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means shares of the Company's Common Stock,
par value [$_____] per share.
"CONFIDENTIAL INFORMATION" shall mean confidential records
and information, including, but not limited to, development, marketing,
purchasing, organizational, strategic, financial, managerial, administrative,
manufacturing, production, distribution and sales information, distribution
methods, data, specifications and processes presently owned or at any time
hereafter developed by a Person or its agents or consultants or used presently
or at any time hereafter in the course of the business of such Person, that are
not otherwise part of the public domain.
41
"CONTRACT" means any contract, agreement, indenture, note,
bond, loan, instrument, lease, conditional sale contract, mortgage, license,
franchise, insurance policy. commitment or other arrangement or agreement,
whether written or oral.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule annexed
hereto as Schedule I.
"ENVIRONMENTAL CLAIM" means any accusation, allegation,
notice of violation, action, claim, Lien, demand, abatement or other Order or
direction (conditional or otherwise) by any Governmental Body or any Person for
personal injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution, contamination
or other adverse effects on the environment, or for fines, penalties or
restrictions resulting from or based upon (i) the existence, or the continuation
of the existence, of a Release (including, without limitation, sudden or
non-sudden accidental or non-accidental Releases) of, or exposure to, any
Hazardous Material or other substance, clinical, material, pollutant,
contaminant, odor, audible noise, or other Release in, into or onto the
environment (including, without limitation, the air soil, soil, surface water or
Groundwater) at, in, by, from or related to the Facilities or any activities
conducted thereon, (ii) the environmental aspects of the transportation,
storage, treatment or disposal of Hazardous Materials in connection with the
operation of the Facilities; or (iii) the violation, or alleged violation, of
any Environmental Laws, Orders or Permits of or from any Governmental Body
relating to environmental matters connected with the Facilities.
"ENVIRONMENTAL LAW" means any Law concerning the
environment, or activities that might threaten or result in damage to the
environment or human health, or any Law that is concerned in whole or in part
with the environment and with protecting or improving the quality of the
environment and human and employee health and safety and includes, but is not
limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") (42 U.S.C. ss. 9601 et seq.) the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901 et seq), the Clean Water Act (33 U.S.C. ss.
1251 et seq), the Clean Air Act
42
(33 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss.
2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
ss. 136 et seq.) and the Occupational Safety and Health Act (29 U.S.C. ss. 651
et seq.) ("OSHA"), as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and any and all analogous state or
local statutes, and the regulations promulgated pursuant thereto, and any and
all treaties, conventions and environmental public and employee health and
safety statutes and regulations or analogous requirements of non-United States
jurisdictions in which the Company conducts any business.
"ENVIRONMENTAL MATTERS" means any matter arising out of or
relating to human and employee health and safety or the environment which could
give rise to liability or require the expenditure of money to address, and shall
include, without limitation, investigating and remediating costs, any fines and
penalties arising in connection therewith, and any claim in respect thereof for
damages or injunctive relief for alleged personal injury, property damage or
damage to natural resources under common law or other Environmental Law.
"ENVIRONMENTAL PERMIT" means any Permit, approval,
authorization, license variance, registration, or permission required under any
applicable Environmental Laws and all supporting documents associated therewith.
"FACILITIES" means real property, leased or operated by the
Company.
"GOVERNMENTAL BODY" means any governmental or regulatory
body (including the Food and Drug Administration (the "FDA"), the Federal Trade
Commission (the "FTC"), the Consumer Product Safety Commission (the "CPSC") the
United States Department of Agriculture (the "USDA") and the Federal Trade
Commission, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"HAZARDOUS MATERIALS" means any substance, material or waste
which is regulated by any local, state or federal Governmental Body in the
Jurisdiction in which the Company conducts business, or the United States,
including, without limitation, any material or substance which is defined as a
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste" or restricted hazardous waste," "subject waste," "contaminant,"
"toxic waste" or "toxic substance" under any provision of Environmental Law,
including but not limited to, petroleum products, asbestos and polychlorinated
biphenyls.
43
"INDEBTEDNESS" means at a particular time, without
duplication, (i) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, including any bank overdraft
or other similar extension of credit, (ii) any indebtedness evidenced by any
note, bond, debenture or other debt security, (iii) any indebtedness for the
deferred purchase price of property or services with respect to which a Person
is liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business which are not more than 30 days past due), (iv) any commitment by which
a Person assures a creditor against loss (including, without limitation,
contingent reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person's assets and (viii) any unsatisfied
obligation for "withdrawal liability" to a multiemployer plan" as such terms are
defined under ERISA.
"LAW" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement or guideline (including FDA Over the Counter ("OTC") Monographs and
cosmetic ingredient safety and color additive rules and regulations, cosmetic
labeling requirements under the Fair Packaging and Labeling Act (the "FPLA"),
federal and state food, drug and false advertising Laws, and rules and
regulations of the FTC, the CPSC and the USDA).
"LEGAL PROCEEDING" means any judicial, administrative or
arbitral actions, suits, proceedings (public or private), claims or governmental
proceedings.
"LIEN" means any lien, pledge, hypothecation, levy,
mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement, or
other real estate declaration, covenant, condition, restriction or servitude,
transfer restriction under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.
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"MATERIAL ADVERSE CHANGE" means any material adverse change
in the business, properties, results of operations, prospects or condition
(financial or otherwise) of the Company.
"ORDER" means any order, consent, consent order, injunction,
judgment, decree, consent decree, ruling, writ, assessment or arbitration award.
"PERMITS" means any approvals, authorizations,
registrations, consents, licenses, permits or certificates by any Governmental
Body.
"PERSON" means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, trust, unincorporated
organization, Governmental Body or other entity.
"REPRESENTATIVES" of a Person means its officers, employees,
agents, legal advisors and accountants.
"SHARES" means the Common Stock to be purchased hereunder.
11.3. EXPENSES. 3. EXPENSES.
Each party shall bear its own expenses in connection with the
negotiation and execution of this Agreement and the transactions contemplated
hereby and by the other Transaction Documents. None of Seller's costs or
expenses shall be charged to the Company without the prior written consent of
Purchaser.
11.4. SPECIFIC PERFORMANCE. 4. SPECIFIC PERFORMANCE.
Each Seller acknowledges and agrees that the breach or
threatened breach of this Agreement would cause irreparable damage to the
Purchaser and that the Purchaser will not have an adequate remedy at law.
Accordingly, each Seller expressly acknowledges that the Purchaser shall be
entitled to specific performance, injunctive relief or any other equitable
remedy against each of the Sellers, without the posting of a bond, in
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the event of any breach or threatened breach of any provision of this Agreement
by any of the Sellers. The rights and remedies of the parties hereto are
cumulative and shall not be exclusive, and each such party shall be entitled to
pursue all legal and equitable rights and remedies and to secure performance of
the obligations and duties of the other under this Agreement, and the
enforcement of one or more of such rights and remedies by a party shall in no
way preclude such party from pursuing, at the same time or subsequently, any and
all other rights and remedies available to it.
11.5. FURTHER ASSURANCES. 5. FURTHER ASSURANCES.
Each Seller and the Purchaser each agree to execute and
deliver such other reasonable documents or agreements as may be necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby or by the other Transaction Documents.
11.6. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; AND
CONSENT TO SERVICE OF PROCESS.6. SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; AND CONSENT TO SERVICE OF PROCESS.
(a The parties hereto hereby irrevocably submit to the
exclusive jurisdiction of any federal or state court located within the State of
New Jersey over any dispute arising out of or relating to this Agreement or any
of the transactions contemplated hereby or by the other Transaction Documents
and each party hereby irrevocably agrees that all claims in respect of such
dispute or any suit, action or proceeding related thereto may be heard and
determined in such courts. The parties hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute. Each
of the parties hereto agrees that a judgment in any such dispute may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law.
(b THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT AND ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF
THIS AGREEMENT.
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(c Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding, by the
mailing of a copy thereof in accordance with the provisions of Section 11.10.
11.7. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS.7. ENTIRE
AGREEMENT; AMENDMENTS AND WAIVERS.
This Agreement (including the schedules and exhibits hereto)
represents the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the parties hereto. No
action taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
11.8. GOVERNING LAW11. 8. GOVERNING LAW.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New Jersey without giving
effect to the principles of conflict of laws thereunder.
11.9. Table of Contents and Headings11.9.Table of Contents and
Headings.
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The table of contents and section headings of this Agreement
are for reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
11.10. NOTICES. 10. NOTICES.
All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, upon
delivery to a nationally recognized overnight courier service, or when mailed by
certified mail, return receipt requested, to the parties at the following
addresses (or to such other address as a party may have specified by notice
given to the other party pursuant to this provision):
If to Seller, to:
[Provide Sellers' address]
With a copy to:
__________________________
__________________________
__________________________
__________________________
Telephone:
Fax:
If to Purchaser to:
The Translation Group, Ltd.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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With copies to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
And
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
All notices are effective upon receipt or upon refusal if properly delivered.
11.11. SEVERABILITY. 11. SEVERABILITY.
If any term, provision, covenant or condition of this
Agreement or part thereof, or the application thereof to any Person, place or
circumstance shall be held to be invalid, unenforceable or void by a court of
competent jurisdiction, the remainder of this Agreement and such term,
provision, covenant or condition shall remain in full force and effect, and any
such invalid, unenforceable or void term, provision, covenant or condition shall
be deemed, without further action on the part of the parties hereto, modified,
amended and limited, and the court shall have the power to modify, amend, and
limit such term, provision, covenant or condition, to the extent necessary to
render the same and the remainder of this Agreement valid, enforceable and
lawful.
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11.12. BINDING EFFECT, ASSIGNMENT. 12. BINDING EFFECT,
ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors and permitted assigns. Nothing in
this Agreement shall create or be deemed to create any third party beneficiary
rights or any other rights of any kind in any Person or entity not a party to
this Agreement except as provided below. No assignment of this Agreement or of
any rights or obligations hereunder may be made by any Seller (by operation of
law or otherwise) without the prior written consent of the Purchaser and any
attempted assignment without such required consent shall be void. The Purchaser
may assign this Agreement and any or all rights and obligations hereunder, in
whole or in part, to any Affiliate of the Purchaser, any purchaser of all or
substantially all of the Purchaser's business or assets, any successor to the
Purchaser or any assignee thereof (each, a "Successor"), whether direct or
indirect, by purchase, merger, consolidation, operation of law or otherwise. The
Purchaser will require any such Successor to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Purchaser would be required to perform it if no such purchase, succession or
assignment had taken place. Upon any such permitted assignment, the references
in this Agreement to the Purchaser shall also apply to any Successor unless the
context otherwise requires.
11.13. Confidential Information. 13. Confidential Information.
All Confidential Information with respect to any party hereto
is considered secret and will be disclosed in confidence. Each party hereto
acknowledges that, it may have access to and become acquainted with Confidential
Information of another party. Each party hereto agrees that it will not prior to
the Closing Date (or in the event of the termination of this Agreement in
accordance with its terms) and at all times thereafter, directly or indirectly
for any reason whatsoever, disclose or use any such Confidential Information.
All records, files, drawings, documents, equipment and other tangible items,
wherever located, relating in any way to or containing Confidential Information,
which any party has prepared or shall in the future prepare, shall be and remain
the sole and exclusive property of such party and shall be included in the
Confidential Information. Upon termination of this Agreement in accordance with
its terms, the parties shall promptly deliver any and all of the Confidential
Information and copies thereof of any other party, not previously delivered to
such party, that may be in its possession or under its control. The foregoing
restrictions shall not apply to the use, divulgence, disclosure or grant of
access to Confidential Information to the extent, but only to the extent, (i)
expressly permitted or required pursuant to any other written agreement
50
between the parties, (ii) such Confidential Information has been publicly
disclosed (not due to a breach by any party of its obligations hereunder, or by
breach of any other Person, of a fiduciary or confidential obligation to a
party) or (iii) a party is required to disclose Confidential Information by or
to any court of competent jurisdiction or any other Governmental Body; provided,
however, that the party required to disclose such Confidential Information
shall, prior to any such disclosure, immediately notify the party which owns the
Confidential Information of such requirement and provided further, that such
party shall have the right, at its expense, to object to such disclosures and to
seek confidential treatment of any Confidential Information to be so disclosed
on such terms as it shall determine.
11.14. PUBLIC ANNOUNCEMENT. 14. PUBLIC ANNOUNCEMENT.
The parties shall cooperate with respect to any public
announcement relating to the transactions contemplated hereby or by the other
Transaction Documents; and neither party will issue any public statement
announcing such transaction without the prior consent of the others, except as
such party in good faith (based upon advice of counsel) believes is required by
law and following notice to the other party.
11.15. COUNTERPARTS. 15. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written above.
THE TRANSLATION GROUP, LTD.
By:_________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇, C.O.O.
PLANET ACCESS NETWORKS INC.
By:_________________________________
▇▇▇▇ ▇▇▇▇▇▇ AS PRESIDENT OF PLANET
ACCESS NETWORKS INC., AND
INDIVIDUALLY AS A SELLER
By:_________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ AS VICE PRESIDENT
OF PLANET ACCESS NETWORKS INC.,
AND INDIVIDUALLY AS A SELLER
By:_________________________________
▇▇▇▇ ▇▇▇▇▇▇ AS TECHINAL DIRECTOR
OF PLANET ACCESS NETWORKS INC., AND
INDIVIDUALLY AS A SELLER
By:_________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ AS INFORMATION ARCHITECT
OF PLANET ACCESS NETWORKS INC., AND
INDIVIDUALLY AS A SELLER
52