EXHIBIT 1
ASSET PURCHASE AGREEMENT
by and between
OXFORD FINANCE ACQUISITION CORP.
and
OXFORD FINANCE CORPORATION
Dated as of January 28, 2004
TABLE OF CONTENTS
Page
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Article I DEFINITIONS AND DEFINED TERMS..........................................................1
Section 1.1 Definitions and Defined Terms..............................................1
Article II PURCHASE OF ASSETS.....................................................................2
Section 2.1 Purchase and Sale of Transferred Assets....................................2
Section 2.2 Excluded Assets............................................................3
Article III ASSUMPTION OF LIABILITIES..............................................................3
Section 3.1 Assumed Liabilities........................................................3
Section 3.2 Retained Liabilities.......................................................3
Article IV PURCHASE PRICE.........................................................................4
Section 4.1 Purchase Price.............................................................4
Section 4.2 Closing Date Adjustment Report.............................................5
Section 4.3 Payment of Post-Closing Adjustments........................................6
Section 4.4 Allocation of Consideration................................................7
Section 4.5 Prorations.................................................................7
Article V CLOSING................................................................................8
Section 5.1 Closing....................................................................8
Section 5.2 Deliveries at Closing......................................................8
Section 5.3 Conditions to Each Party's Obligation to Effect the Transactions
Contemplated by this Agreement............................................10
Section 5.4 Conditions to Purchaser's Obligation to Effect the Transactions
Contemplated by this Agreement............................................10
Section 5.5 Conditions to Seller's Obligation to Effect the Transactions
Contemplated by this Agreement............................................12
Section 5.6 Frustration of Closing Conditions.........................................13
Article VI REPRESENTATIONS AND WARRANTIES OF SELLER..............................................13
Section 6.1 Organization..............................................................13
Section 6.2 Authority.................................................................14
Section 6.3 Consents and Approvals; No Violations.....................................14
Section 6.4 Books and Records.........................................................14
Section 6.5 SEC Reports and Financial Statements......................................14
Section 6.6 Absence of Certain Changes or Events......................................16
Section 6.7 Employee Benefits.........................................................16
Section 6.8 Contracts.................................................................17
Section 6.9 Financing Contracts.......................................................18
Section 6.10 Receivables of Seller.....................................................19
Section 6.11 Portfolio Property........................................................20
Section 6.12 Insurance.................................................................20
Section 6.13 Litigation................................................................21
Section 6.14 Compliance with Applicable Law............................................21
Section 6.15 Taxes.....................................................................22
Section 6.16 Environmental.............................................................23
Section 6.17 State Takeover Statutes...................................................24
Section 6.18 Proprietary Rights........................................................24
Section 6.19 Opinion of Financial Advisor..............................................25
Section 6.20 Board Approval............................................................26
Section 6.21 Voting Requirements.......................................................26
Section 6.22 Brokers and Finders.......................................................26
Section 6.23 Information Supplied......................................................26
Section 6.24 No Third Party Options....................................................27
Section 6.25 Assets Necessary to Business..............................................27
Section 6.26 No Default................................................................27
Section 6.27 Transactions with Affiliates..............................................27
Section 6.28 Labor Relations...........................................................27
Section 6.29 Title to Assets...........................................................28
Section 6.30 Absence of Certain Business Practices.....................................28
Section 6.31 Real Property; Title......................................................28
Section 6.32 No Misleading Statements..................................................29
Article VII REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................29
Section 7.1 Organization..............................................................29
Section 7.2 Authority.................................................................29
Section 7.3 Consents and Approvals; No Violations.....................................29
Section 7.4 Brokers and Finders.......................................................30
Section 7.5 Information Supplied......................................................30
Section 7.6 Financing.................................................................30
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Section 7.7 Litigation................................................................30
Article VIII COVENANTS.............................................................................31
Section 8.1 Covenants of Seller.......................................................31
Section 8.2 No Solicitation...........................................................33
Section 8.3 Stockholder Meeting; Preparation of Proxy Statement.......................35
Section 8.4 Access to Information.....................................................36
Section 8.5 Disclosure Supplements....................................................36
Section 8.6 Commercially Reasonable Efforts...........................................37
Section 8.7 State Takeover Statutes...................................................37
Section 8.8 Certain Litigation........................................................38
Section 8.9 Notification of Certain Matters...........................................38
Section 8.10 Transfer Taxes............................................................38
Section 8.11 Filings Under HSR Act.....................................................38
Section 8.12 Confidentiality...........................................................38
Section 8.13 Delivery of Agreements....................................................38
Section 8.14 No Inconsistent Action....................................................39
Section 8.15 Payment of Accounts Payable...............................................39
Section 8.16 Powers of Attorney........................................................39
Section 8.17 Seller's Rights...........................................................39
Section 8.18 Further Assurances........................................................39
Section 8.19 Release of Liens..........................................................40
Section 8.20 Consents to Transfer Assets...............................................40
Section 8.21 Employment Matters........................................................40
Section 8.22 Bulk Sales Laws...........................................................41
Section 8.23 No Solicitation of Employees..............................................41
Section 8.24 Collection of Accounts Receivables........................................41
Section 8.25 Termination of Seller's Activities........................................41
Section 8.26 Cancellation of Stock Options.............................................42
Section 8.27 Payoff Amount.............................................................42
Article IX TERMINATION...........................................................................42
Section 9.1 Termination...............................................................42
Section 9.2 Effect of Termination.....................................................43
Section 9.3 Fees and Expenses.........................................................44
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Section 9.4 Termination Fees..........................................................44
Section 9.5 Extension; Waiver.........................................................44
Article X SURVIVAL; INDEMNIFICATION.............................................................45
Section 10.1 Survival of Indemnification Rights........................................45
Section 10.2 Seller Indemnification Obligations........................................45
Section 10.3 Purchaser Indemnification Obligations.....................................46
Section 10.4 Indemnification Procedure.................................................46
Section 10.5 Calculation of Indemnity Payments.........................................47
Section 10.6 Relation of Indemnity to Contingent Payment...............................47
Section 10.7 Indemnification Amounts...................................................47
Section 10.8 Limitation on Liability...................................................48
Article XI MISCELLANEOUS PROVISIONS..............................................................48
Section 11.1 Notices...................................................................48
Section 11.2 Interpretation............................................................49
Section 11.3 Counterparts..............................................................49
Section 11.4 Entire Agreement; No Third Party Beneficiaries............................49
Section 11.5 Governing Law.............................................................50
Section 11.6 Publicity.................................................................51
Section 11.7 Assignment................................................................51
Section 11.8 Enforcement...............................................................51
Section 11.9 Severability..............................................................51
Section 11.10 Modification..............................................................51
Section 11.11 Expenses..................................................................51
Exhibits
Exhibit A - Definitions and Defined Terms
Exhibit B - Form of Assignment and Assumption Agreement
Exhibit C - Closing Date Adjustment Report
Exhibit D - Form of ▇▇▇▇ of Sale
Exhibit E - Form of Trademark Assignment Agreement
Exhibit F - Form of Domain Name Assignment Agreement
Exhibit G - Form of Subscription Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of January 28, 2004 by and between Oxford Finance Acquisition
Corp., a Delaware corporation ("Purchaser"), and Oxford Finance Corporation, a
Maryland corporation ("Seller").
RECITALS
WHEREAS, Seller is engaged in the business of providing senior
secured equipment financing primarily to emerging-growth life science companies
(the "Business");
WHEREAS, Seller desires to sell to Purchaser, and Purchaser
desires to purchase, all of the tangible and intangible assets of Seller used in
connection with the Business, in connection with which Purchaser will assume
certain liabilities and obligations of Seller related to the Business, and
Seller will remain solely liable for all liabilities and obligations of the
Business other than those expressly assumed by Purchaser;
WHEREAS, in order to induce Purchaser to enter into this
Agreement, certain stockholders of Seller are simultaneously entering into
Voting and Support Agreements with respect to the approval of this Agreement and
the transactions contemplated hereby (collectively, the "Voting and Support
Agreements"); and
WHEREAS, in order to induce Purchaser to enter into this
Agreement, J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ are simultaneously
entering into separate employment agreements with Purchaser to become effective
on the Closing Date (collectively, the "Employment Agreements").
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and subject to the conditions set forth herein, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS AND DEFINED TERMS
Section 1.1 Definitions and Defined Terms. Unless the context
otherwise requires or as otherwise defined herein, capitalized terms used in
this Agreement shall have the meanings set forth in Exhibit A hereto.
ARTICLE II
PURCHASE OF ASSETS
Section 2.1 Purchase and Sale of Transferred Assets. On the
terms and subject to the conditions set forth herein, at the Closing, as
described in Article V hereto, Seller shall sell, transfer, convey, assign and
deliver to Purchaser, and Purchaser shall purchase and acquire from Seller, good
and valid title to, and all rights and interests of Seller in and to, all of the
rights, properties and assets used or held for use in, necessary for or relating
to the Business, other than the Excluded Assets (collectively, the "Transferred
Assets"), free and clear of all Liens, except Permitted Liens, including, good
and valid title to, and all rights and interests in and to, the following:
(a) All assets reflected on the balance sheet as of and for
the year ended December 31, 2003 relating to the Business (the "Balance Sheet")
and all assets used to generate revenue and income reflected on the income
statement relating to the Business for the year ended December 31, 2003 (the
"Income Statement"), which Balance Sheet and Income Statement are set forth in
Schedule 2.1(a), other than, in each case, assets disposed of after the date of
such Balance Sheet and Income Statement and on or prior to the Closing in the
ordinary course of business as permitted under Section 8.1 hereto.
(b) All assets used, or held for use in, necessary for or
otherwise relating to the Business acquired by Seller in the ordinary course of
business after December 31, 2003 and on or prior to the Closing.
(c) All leases to which Seller is a party, including real
property leases for the operating facilities, relating to the Business and any
improvements thereunder.
(d) All Financing Contracts relating to the Business.
(e) All other Contracts relating to the Business.
(f) All securities or warrants to acquire securities issued
to Seller in connection with any Financing Contract (the "Securities").
(g) All general intangibles and intangible property,
including all Seller's Rights.
(h) All accounts receivable, notes receivable and other
indebtedness related to the Business that are outstanding as of the Closing (the
"Accounts Receivable").
(i) All rights under Contracts, including Financing
Contracts, relating to the Business to the extent that such rights relate to
non-competition, confidentiality or non-solicitation obligations enforceable
against a third party.
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(j) All current, fixed or prepaid assets, prepaid items and
plant, property and equipment used or held for use in, necessary for or relating
to the Business.
(k) All Permits used or held for use in, necessary for or
relating to the Business including the Seller Permits, to the extent
transferable under applicable Law.
(l) All books and records relating to the Business or the
Transferred Assets, including those in respect of Taxes.
The Contracts included in the Transferred Assets, including
those listed above, are hereinafter collectively referred to as the "Assumed
Contracts."
Section 2.2 Excluded Assets. Notwithstanding anything contained
in this Agreement to the contrary, the rights, properties and assets set forth
on Schedule 2.2 (collectively, the "Excluded Assets") will not be included in
the Transferred Assets.
ARTICLE III
ASSUMPTION OF LIABILITIES
Section 3.1 Assumed Liabilities. At the Closing, pursuant to an
Assignment and Assumption Agreement in the form of Exhibit B attached hereto
(the "Assignment and Assumption Agreement"), Seller will assign all of its
rights, title and interest in, to and under, and Purchaser will assume and agree
to undertake, pay, satisfy, discharge and perform in respect of, all
liabilities, obligations and indebtedness of Seller set forth on Schedule 3.1
(collectively, the "Assumed Liabilities").
Section 3.2 Retained Liabilities. Notwithstanding anything
contained in this Agreement to the contrary, Purchaser does not assume or agree
or undertake to pay, satisfy or discharge or perform in respect of, and will not
be deemed by virtue of the execution and delivery of this Agreement or any
document delivered at the Closing pursuant to this Agreement, or as a result of
the consummation of the transactions contemplated by this Agreement, to have
assumed, or to have agreed to pay, satisfy or discharge or perform in respect
of, any liability, obligation or indebtedness (whether primary or secondary,
direct or indirect, known or unknown, absolute or contingent, matured or
unmatured or otherwise), including for or in respect of Taxes, of Seller or of
any other Person or in any way relating to the Business as conducted on or prior
to the Closing other than the Assumed Liabilities (such liabilities and
obligations retained by Seller, including all liabilities and obligations with
respect to the Excluded Assets, being referred to herein as the "Retained
Liabilities"). It is specifically agreed that Seller shall remain liable for all
the Retained Liabilities.
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ARTICLE IV
PURCHASE PRICE
Section 4.1 Purchase Price. In consideration of the conveyance
to Purchaser of all right, title and interest of Seller in and to the
Transferred Assets and the other rights granted to Purchaser hereunder, and
subject to the terms and conditions hereof, Purchaser shall:
(a) at Closing, assume the Assumed Liabilities pursuant to
the Assignment and Assumption Agreement;
(b) pay an aggregate of up to US$51,000,000 (the "Purchase
Price"), subject to adjustment as hereinafter provided, which shall be delivered
as follows:
(i) at Closing, Purchaser shall pay to Seller
US$49,000,000 in cash, in immediately available funds (the
"Closing Date Cash Payment"); and
(ii) within ninety (90) calendar days of the Closing
Date, Purchaser shall deliver to Seller an aggregate of
US$2,000,000 (the "Contingent Payment"), unless and to the
extent that such amount is reduced pursuant to Section 4.3 or
Section 10.6 hereof, in which case Purchaser shall deliver to
Seller the reduced amount, if any, in cash, in immediately
available funds; provided that in the event that Purchaser has
made a claim pursuant to Article X for any amount, the
Contingent Payment otherwise payable hereunder shall not be made
to the extent of the amount of such claim until such claim is
resolved and then only to the extent of the Contingent Payment
payable after accounting for the claim as so resolved; provided
further, that in the case the Contingent Payment has not been
delivered to Seller in accordance with this Section 4.1(b)(ii)
on or before June 29, 2004, Purchaser shall deposit an amount
equal to the Contingent Payment into an escrow account to be
held for the benefit of Seller to the extent all or any portion
of the Contingent Payment becomes payable to Seller hereunder;
and
(c) at Closing, pay to Seller the aggregate amount
outstanding under the Bank Credit Agreements as of the Closing Date evidenced by
executed payoff letters received from the banks which are parties to the Bank
Credit Agreements no later than two (2) Business Days prior to the Closing less
any Excess Cash (the "Payoff Amount") in immediately available funds. "Excess
Cash" means the amount by which cash on hand and cash equivalents of Seller
immediately prior to the Closing exceeds the sum of (1) the earnings of Seller
in excess of distributions at Closing, (2) any net realized gains on investments
prior to Closing and (3) any proceeds received by Seller on the disposition of
the Cogent Asset prior to Closing.
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Section 4.2 Closing Date Adjustment Report.
(a) Not later than sixty (60) calendar days after the
Closing Date, Seller shall prepare and deliver to Purchaser a written report
(substantially in the form of Exhibit C attached hereto) (the "Closing Date
Adjustment Report") identifying each Obligor under a Financing Contract (a "High
Risk Obligor") with respect to which Purchaser does not have Acceptable Evidence
confirming that the High Risk Obligor had sufficient available cash, as of the
Closing Date, to satisfy all of its projected expenses over the six (6) month
period immediately following the Closing Date. The Closing Date Adjustment
Report shall also identify, with respect to each High Risk Obligor, (i) the
amount by which the outstanding loan balance as of the last date such High Risk
Obligor is projected to make a payment against its outstanding loan balance (the
"Out of Cash Date") is undersecured based on an Under-The-Hammer Analysis on the
Out of Cash Date (the "Undersecured Loan Amount") as of the Closing Date and
(ii) the value at which any Securities issued by any High Risk Obligor are
carried on the Company's balance sheet as of the Closing Date (the "Securities
Writeoff Amount"). For purposes of this Section 4.2(a), "Acceptable Evidence"
means any of the following documentation to the extent such documentation
evidences that the High Risk Obligor has, or reasonably expects to receive,
sufficient cash to satisfy all of its projected expenses for at least six (6)
months: (1) an executed letter of intent, or binding transaction documentation
such as a subscription agreement or loan agreement, for equity or debt
financing, (2) financial statements delivered by the High Risk Obligor, (3)
contracts for the sale of products or services by the High Risk Obligor, (4) a
collaborative agreement for just reimbursed research and development, (5)
documentation verifying grant funding from a Governmental Entity or private
organization, (6) any license agreements that would provide cash inflows, (7) a
letter of intent for an acquisition or a merger/purchase agreement, (8) comfort
letter from the existing stockholders who are also the company's lead venture
capitalists, attesting to their commitment to fund the company or to provide
bridge financing or (9) such other documentation that is reasonably acceptable
to Purchaser. So long as the Cogent Asset remains a Transferred Asset hereunder,
Purchaser and Seller agree to apply Section 4.2 to Cogent and the Cogent Asset.
For purposes of Section 4.2 and 4.3 hereof, Cogent will be deemed a High Risk
Obligor. Furthermore, for purposes of determining the extent to which the book
value of the Cogent Asset is undersecured, Seller and Purchaser shall mutually
agree upon the value of the Cogent Asset, based upon documentary evidence
acceptable to Purchaser.
(b) Unless within ten (10) calendar days after receipt of
the Closing Date Adjustment Report, Purchaser delivers to Seller a reasonably
detailed written statement describing any objections to such report and any
figures or calculations therein, including a description of the bases of such
objection (the "Objection Statement"), the report shall be final and binding.
(c) If Purchaser delivers the Objection Statement, Purchaser
and Seller shall use reasonable efforts to resolve any disputes, but if a final
resolution is not reached within fifteen (15) calendar days after Purchaser has
submitted the Objection Statement, the unresolved dispute shall be submitted to
the Reviewing Accountants for
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determination, which shall be final and binding. Seller shall be solely
responsible for all costs incurred by the Reviewing Accountants in connection
with such determination.
(d) The final and binding Closing Date Adjustment Report
referred to in clauses (b) and (c) of this section shall be referred to as the
"Final Closing Adjustment Report."
Section 4.3 Payment of Post-Closing Adjustments.
(a) The Contingent Payment shall be reduced by an amount
equal to (i) the sum of (A) the total aggregate Securities Writeoff Amounts for
all High Risk Obligors set forth in the Final Closing Adjustment Report, plus
(B) the amount equal to fifty percent (50%) of the total aggregate Undersecured
Loan Amounts set forth in the Final Closing Adjustment Report and (ii) an amount
equal to $302,685, if the Cogent Asset is not a Transferred Asset (collectively,
the "Adjustment Amount"). The Adjustment Amount shall be reduced by an amount,
if any, equal to the sum of the amount by which the net cash proceeds actually
received by Purchaser from the sale or disposition by Purchaser of any
Securities owned by Purchaser exceeds the book value of such Securities as of
the Closing Date; provided that Purchaser receives such cash proceeds arising
from such sale on or prior to the earlier to occur of (1) sixty (60) calendar
days after the Closing Date or (2) payment of the Contingent Payment payable
pursuant to Section 4.1(b)(ii), if any.
(b) If the Adjustment Amount exceeds the Contingent Payment,
then Purchaser shall have no obligation to pay any portion of the Contingent
Payment to Seller pursuant to Section 4.1(b)(ii). If the Contingent Payment
exceeds the Adjustment Amount, subject to Section 4.3(c) and Section 10.6
hereof, such excess shall be paid in accordance with Section 4.1(b)(ii) hereof.
Notwithstanding the foregoing, the Contingent Payment may not be reduced below
zero (0) or increased above US$2,000,000.
(c) The Contingent Payment also shall be reduced by an
amount equal to the sum of the Closing Date book values attributable to any
Securities which have not been transferred by Seller to Purchaser within ninety
(90) calendar days after the Closing Date. To the extent the Contingent Payment
is actually reduced in accordance with the preceding sentence, Seller shall be
entitled to retain those Securities, and only those Securities, that are the
subject of such reduction. To the extent the Contingent Payment is actually
reduced in accordance with paragraph (a) above, Purchaser shall be obligated to
promptly transfer back to Seller those Securities, that are the subject of such
reduction.
(d) Seller acknowledges and agrees that the right to receive
the Contingent Payment, if any, (i) is an integral part of the consideration
provided for in this Agreement, (ii) shall not be evidenced by a certificate or
other instrument, (iii) shall not be assignable or otherwise transferable (other
than by will or descent after the death of a natural holder thereof), (iv) shall
not accrue or pay interest on any portion thereof and (v) does not represent any
right other than the right to receive the Contingent Payment. Any attempted
transfer of the right to a Contingent Payment by any holder thereof (other than
as permitted by the immediately preceding sentence) shall be null and void.
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Section 4.4 Allocation of Consideration. All amounts
constituting consideration within the meaning of, and for the purposes of,
Section 1060 of the Code and the regulations thereunder shall be allocated among
the Transferred Assets and any other rights acquired by Purchaser hereunder, as
applicable, in the manner required by Section 1060 of the Code and the
regulations thereunder and all applicable Laws. Within sixty (60) calendar days
after the Closing Date, Purchaser shall provide Seller with a proposed schedule
(the "Allocation Schedule") allocating all such amounts as provided herein. The
Allocation Schedule shall become final and binding on the parties hereto fifteen
(15) calendar days after Purchaser provides such schedule to Seller, unless
Seller objects in writing to Purchaser, specifying the basis for its objection
and preparing an alternative allocation. If Seller does object in writing,
Purchaser and Seller shall in good faith attempt to resolve the dispute within
fifteen (15) calendar days of written notice to Purchaser of Seller's objection.
Any such resolution shall be final and binding on the parties hereto. Any
unresolved disputes shall be promptly submitted to the Reviewing Accountants for
determination, which shall be final and binding on the parties hereto. Purchaser
and Seller will each pay one-half of the fees and expenses of the Reviewing
Accountants. Seller and Purchaser shall cooperate with each other and the
Reviewing Accountants in connection with the matters contemplated by this
Section 4.4, including by furnishing such information and access to books,
records (including accountants work papers), personnel and properties as may be
reasonably requested. Each of the parties hereto agrees to (a) prepare and
timely file all Tax Returns, including Form 8594 (and all supplements thereto)
in a manner consistent with the Allocation Schedule as finalized and (b) act in
accordance with the Allocation Schedule for all tax purposes. The parties hereto
will revise the Allocation Schedule to the extent necessary to reflect any
Contingent Payment payable pursuant to Section 4.1(b)(ii), any payment made
under Article X hereto or other post-Closing payment made pursuant to or in
connection with this Agreement. In the case of any such payment, Purchaser shall
propose a revised Allocation Schedule, and the parties hereto shall follow the
procedures outlined above with respect to review, dispute and resolution in
respect of such revision. In no event shall the allocation of consideration, on
the Allocation Schedule, be such that amounts are allocated to Seller's
investments in loans or Securities in excess of the fair market values of such
investments.
Section 4.5 Prorations.
(a) With respect to any payments made pursuant to the
Financing Contracts or other obligations thereunder, Seller and Purchaser shall
use commercially reasonable efforts to arrange for the counterparty to such
Financing Contracts to pay Seller directly prior to the Closing Date and
Purchaser directly on and after the Closing Date.
(b) After the Closing, ad valorem, use, real and personal
property and similar Taxes, installments or special assessments arising from, or
relating to, the Transferred Assets or the conduct of the Business, which become
due and payable on or after the Closing Date and relate to periods both before
and after the Closing Date, shall be prorated and adjusted between Seller and
Purchaser as of the Closing Date on a per diem basis and Seller shall be
responsible for and pay to Purchaser the portion of such
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amounts allocable to the period or portion thereof ending on the Closing Date
for which payment is due after the Closing Date at least ten (10) Business Days
prior to the date such Taxes become due and payable; provided that property
taxes with a lien date on or prior to the Closing Date shall be the sole
liability of Seller, and Seller shall pay to Purchaser all such amounts at least
ten (10) Business Days prior to the date such Taxes become due and payable.
ARTICLE V
CLOSING
Section 5.1 Closing. Upon the terms and subject to the
conditions of this Agreement, the closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, two (2)
Business Days following the satisfaction or waiver of the conditions set forth
in this Article V (other than conditions which, by their nature, are to be
satisfied at the Closing, but subject to such conditions), or at such other time
and place and on such other date as Purchaser and Seller shall agree in writing
(the "Closing Date").
Section 5.2 Deliveries at Closing. At the Closing:
(a) Seller shall deliver, or cause to be delivered, to
Purchaser, the following:
(i) a duly executed general ▇▇▇▇ of sale and
assignment, in the form of Exhibit D attached hereto (the "▇▇▇▇
of Sale");
(ii) the Assignment and Assumption Agreements and any
other agreements or instruments necessary for assignment and
assumption of the Assumed Liabilities, duly executed by Seller;
(iii) releases, in form and substance reasonably
satisfactory to Purchaser, evidencing discharge, removal and
termination of all Liens (other than Permitted Liens) to which
any of the Transferred Assets are subject, which releases shall
be effective at or prior to the Closing, and duly executed UCC-3
Termination Statements terminating each outstanding UCC-1
Financing Statement relating to such Liens or the Transferred
Assets;
(iv) duly executed UCC-3 Amendments assigning each
outstanding UCC-1 Financing Statement in favor of Seller
relating to the Credit Enhancements to Purchaser;
(v) all certificates or other instruments evidencing
Securities of at least eighty percent (80%) of the book value of
all Securities together with such other documentation necessary
to effectuate the re-issuance of
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the Securities in the name of Purchaser upon presentation to the
issuer thereof, the remainder of which Seller shall be obligated
to deliver to Purchaser within ninety (90) calendar days after
the Closing Date;
(vi) the officer's certificate referenced in Section
5.4(c) hereto;
(vii) a certification from Seller in accordance with
United States Treasury Regulation Section 1.1445-2(b)(2)(i) and
in the form provided in United States Treasury Regulation
Section 1.1445-2(b)(2)(iv)(B) (the "FIRPTA Certificate");
(viii) duly executed consents to the assignment of all
Contracts, including all Financing Contracts and Credit
Enhancements, requiring prior written consent to assignment;
(ix) a Trademark Assignment Agreement with respect to
the Trademark in substantially the form attached hereto as
Exhibit E (the "Trademark Assignment Agreement"), duly executed
by Seller and duly notarized;
(x) a Domain Name Assignment Agreement in
substantially the form attached hereto as Exhibit F (the "Domain
Name Assignment Agreement"), duly executed by Seller; and
(xi) such other duly executed documents and
certificates as may be required to be delivered by Seller
pursuant to the terms of this Agreement or as may be reasonably
requested by Purchaser prior to the Closing and necessary to
consummate the transactions contemplated hereby.
(b) Purchaser shall deliver, or cause to be delivered, to
Seller the following:
(i) the Closing Date Cash Payment and the Payoff
Amount by wire transfer of immediately available funds to an
account of Seller designated by Seller no later than two (2)
Business Days prior to the Closing;
(ii) the Assignment and Assumption Agreements and any
other agreements or instruments necessary for assignment and
assumption of the Assumed Liabilities, duly executed by
Purchaser;
(iii) the officer's certificate referenced in Section
5.5(c) hereto;
(iv) the Trademark Assignment Agreement, duly
executed by Purchaser;
9
(v) the Domain Name Assignment Agreement, duly
executed by Purchaser; and
(vi) such other duly executed documents and
certificates as may be required to be delivered by Purchaser
pursuant to the terms of this Agreement or as may be reasonably
requested by Seller prior to the Closing and necessary to
consummate the transactions contemplated hereby.
Section 5.3 Conditions to Each Party's Obligation to Effect the
Transactions Contemplated by this Agreement. The respective obligation of each
party to effect the transactions contemplated by this Agreement shall be subject
to the satisfaction of the following conditions:
(a) Stockholder Approval. The Stockholder Approval shall
have been obtained.
(b) No Injunctions or Restraints. No Law or Order issued by
any court of competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition preventing consummation of the transactions
contemplated by this Agreement shall be in effect; provided, however, that each
of the parties shall have used reasonable efforts to prevent the entry of any
such Order and to appeal as promptly as possible any Order that may be entered.
(c) Governmental Consents and Approvals. All necessary
Consents and approvals of any Governmental Entity required for consummation of
the transactions contemplated hereby, which are set forth in Schedule 5.3(c),
shall have been obtained, and any waiting period applicable to consummation of
the transactions contemplated by this Agreement under the HSR Act shall have
expired or been terminated.
Section 5.4 Conditions to Purchaser's Obligation to Effect the
Transactions Contemplated by this Agreement. The obligation of Purchaser to
effect the transactions contemplated by this Agreement shall be subject to the
satisfaction of the following conditions, any one or more of which may be
waived, in writing, by Purchaser:
(a) Representations and Warranties. Each of the
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects (unless such representation or
warranty is already subject, by its terms, to a qualification relating to
materiality or a Material Adverse Effect, in which case the words "in all
material respects" immediately preceding this parenthetical shall not be given
effect) as of the date of this Agreement and when made and at and as of the
Closing Date, as if made as of such time (except for those representations and
warranties which address matters only as of a particular date which shall have
been true and correct as of such date).
(b) Performance. Seller shall have complied, in all material
respects, with all agreements, obligations, covenants and conditions (unless
such agreements, obligations, covenants and conditions are already subject, by
their terms, to a
10
qualification relating to materiality or a Material Adverse Effect, in which
case the words "in all material respects" preceding this parenthetical shall not
be given effect) required hereby to be complied with by it on or prior to the
Closing Date.
(c) Officer's Certificate. Purchaser shall have received a
certificate, dated as of the Closing Date, executed on behalf of Seller, by an
authorized executive officer, certifying in such detail as Purchaser may
reasonably request that the conditions specified in Section 5.4(a) and Section
5.4(b) hereto have been fulfilled.
(d) Consents. Purchaser shall have received evidence, in
form and substance satisfactory to it, that Seller shall have obtained all
Consents, approvals, authorizations, qualifications and Orders of third parties
necessary for the transfer of the Transferred Assets and assumption of the
Assumed Liabilities and set forth on Schedule 5.4(d).
(e) Litigation. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity or by any other Person
(other than Purchaser and/or its Affiliates) (i) challenging the acquisition by
Purchaser of any Transferred Assets, seeking to restrain or prohibit
consummation of the transactions contemplated by this Agreement, or seeking to
place limitations on the ownership of Transferred Assets by Purchaser or seeking
to obtain from Seller or Purchaser any damages that are material in relation to
Seller, (ii) as a result of any transaction contemplated by this Agreement,
seeking to prohibit or materially limit the ownership or operation by Seller or
Purchaser of any portion of any business or of any assets of Seller or
Purchaser, or to compel Seller or Purchaser to divest or hold separate any
portion of any business or of any assets of Seller or Purchaser as a result of
the transactions contemplated by this Agreement or (iii) seeking to prohibit
Purchaser from effectively controlling in any material respect the Business or
the Transferred Assets.
(f) Restraints. No Law or Order issued by any court of
competent jurisdiction or other Governmental Entity or other legal restraint or
prohibition that would reasonably be expected to result, directly or indirectly,
in any of the effects referred to in clauses (i) through (iii) of paragraph (e)
of this Section 5.4 shall be in effect.
(g) No Prohibition. No preliminary or permanent injunction
or other Order issued by any Governmental Entity, nor any Law promulgated or
enacted by any Governmental Entity, that restrains, enjoins or otherwise
prohibits the transactions contemplated hereby, or imposes civil or criminal
penalties on Purchaser if such transactions are consummated, shall be in effect.
(h) Material Adverse Effect. There shall not have occurred
any event or events that would be reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect.
(i) Employment Agreements. Each of the Employment Agreements
shall be in full force and effect.
11
(j) Fairness Opinion. Seller shall have received a Fairness
Opinion and such opinion shall not have been withdrawn or, in any way, modified
by the Seller Financial Advisor.
(k) Deliverables. Seller shall have delivered to Purchaser,
on or prior to the Closing Date, all of the deliverables set forth in Section
5.2(a) hereof, in each case, duly executed, and, in the case of the Trademark
Assignment Agreement, notarized, and in full force and effect.
(l) California Lenders License. Purchaser shall have secured
a lenders license duly issued by the Department of Corporations of the State of
California.
(m) Subscription Agreement. The Subscription Agreement (in
the form of Exhibit G attached hereto) between Purchaser and J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇, pursuant to which J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ will subscribe for three percent
(3%) of all of the common stock, par value US$0.01, of Purchaser issued and
outstanding on the Closing Date (the "Subscription Agreement"), shall have been
executed, delivered and fully consummated.
(n) Stockholders Agreement. The Stockholders Agreement by
and among Purchaser, J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ and Sumitomo Corporation of America
(the "Stockholders Agreement") shall have been executed and delivered and shall
be in full force and effect.
Section 5.5 Conditions to Seller's Obligation to Effect the
Transactions Contemplated by this Agreement. The obligation of Seller to effect
the transactions contemplated by this Agreement shall be subject to the
satisfaction of the following conditions, any one or more of which may be
waived, in writing, by Seller:
(a) Representations and Warranties. Each of the
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects (unless such representation or
warranty is already subject, by its terms, to a qualification relating to
materiality, in which case the words "in all material respects" immediately
preceding this parenthetical shall not be given effect) as of the date of this
Agreement and when made and at and as of the Closing Date, as if made as of such
time (except for those representations and warranties which address matters only
as of a particular date which shall have been true and correct as of such date).
(b) Performance. Purchaser shall have complied, in all
material respects, with all agreements, obligations, covenants and conditions
(unless such agreements, obligations, covenants and conditions are already
subject, by their terms, to a qualification relating to materiality, in which
case the words "in all material respects" preceding this parenthetical shall not
be given effect) required hereby to be complied with by it on or prior to the
Closing Date.
(c) Officer's Certificate. Seller shall have received a
certificate, dated as of the Closing Date, executed on behalf of Purchaser by an
authorized executive
12
officer of Purchaser, certifying in such detail as Seller may reasonably request
that the conditions specified in Section 5.5(a) and Section 5.5(b) hereto have
been fulfilled.
(d) Closing Date Cash Payment. Purchaser shall have
delivered to Seller, on or prior to the Closing Date, the Closing Date Cash
Payment and the Payoff Amount.
(e) Deliverables. Purchaser shall have delivered to Seller,
on or prior to the Closing Date, all of the deliverables set forth in Section
5.2(b) hereof, in each case, duly executed, and, in the case of the Trademark
Assignment Agreement, notarized, and in full force and effect.
(f) No Prohibition. No preliminary or permanent injunction
or other Order issued by any Governmental Entity, nor any Law promulgated or
enacted by any Governmental Entity, that restrains, enjoins or otherwise
prohibits the transactions contemplated hereby, or imposes civil or criminal
penalties on Seller if such transactions are consummated, shall be in effect.
Section 5.6 Frustration of Closing Conditions. Neither Seller
nor Purchaser may rely on the failure of any condition set forth in Sections
5.3, 5.4 or 5.5, as the case may be, to be satisfied if such failure was caused
by such party's failure to act in good faith or to use reasonable efforts to
consummate the transactions contemplated hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the disclosure schedule delivered by
Seller to Purchaser prior to the execution of this Agreement (the "Disclosure
Schedule"), which Disclosure Schedule identifies the Section to which such
exception relates, Seller represents and warrants to Purchaser as follows:
Section 6.1 Organization. Seller (i) is a corporation duly
incorporated and validly existing and in good standing under the Laws of the
State of Maryland, (ii) has all corporate power and authority and all
governmental licenses, authorizations, consents and approvals required to own,
lease and operate its properties and assets and to carry on its business
(including the Business) as now conducted and (iii) is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the properties (including the Transferred Assets) owned,
leased or operated by it or the nature of its activities (including the
Business) makes such qualification necessary, except where the failure to be so
qualified would not, individually or in the aggregate, be reasonably likely to
have a material adverse effect on the ability of Purchaser to perform its
obligations hereunder or which would prevent, delay, impede or hinder
consummation of the transactions contemplated hereby.
13
Section 6.2 Authority. Seller has all requisite corporate power
and authority to execute and deliver this Agreement and each of the Collateral
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and each of the
Collateral Agreements and consummation by Seller of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Seller and no other corporate proceedings on the
part of Seller are necessary to authorize this Agreement and each of the
Collateral Agreements or to consummate such transactions, other than, with
respect to the transactions contemplated by this Agreement, the adoption and
approval of this Agreement and Articles of Transfer by the holders of two-thirds
(2/3) of the outstanding voting stock of Seller (the "Stockholder Approval").
This Agreement has been duly executed and delivered by Seller and constitutes a
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
Section 6.3 Consents and Approvals; No Violations.
(a) The execution, delivery and performance by Seller of
this Agreement and each of the Collateral Agreements and consummation by Seller
of the transactions contemplated hereby and thereby do not and will not require
any filing or registration with, notification to or authorization, permit,
consent or approval of, or other action by or in respect of, any Governmental
Entities or any other Person other than (i) compliance with any applicable
requirements of the HSR Act, (ii) compliance with any applicable requirements of
the Securities Act, the Exchange Act or the Investment Company Act and (iii)
compliance with any applicable state securities or "blue sky" Laws.
(b) The execution, delivery and performance by Seller of
this Agreement and each of the Collateral Agreements and consummation by Seller
of the transactions contemplated hereby and thereby do not and will not (i)
conflict with or result in any breach of any provision of the articles of
incorporation or bylaws of Seller, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
under, or give rise to any right of termination, amendment, cancellation,
acceleration or loss of benefits under, or result in the creation of any Lien
(other than Permitted Liens) upon any of the Transferred Assets under any of the
terms, conditions or provisions of any Contract to which Seller is a party or
may be subject to or which is included in the Transferred Assets or the Assumed
Liabilities or (iii) violate any Order or Law applicable to Seller, the
Transferred Assets, the Assumed Liabilities or the Business.
Section 6.4 Books and Records. Seller's books, accounts and
records are, and have been, maintained in Seller's usual, regular and ordinary
manner and all material transactions to which Seller is or has been a party that
are required to be reflected therein are properly reflected therein.
Section 6.5 SEC Reports and Financial Statements.
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(a) Seller has filed with the SEC all forms, reports,
schedules, statements and other documents required to be filed by it since
October 1, 2002 (together with all information incorporated therein by
reference, the "SEC Documents"). The SEC Documents as of their respective dates
or, if amended, as of the date of the last such amendment (i) did not contain
any untrue statement of a material fact or omit to state a 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, and (ii) complied in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the Investment Company
Act, as the case may be.
(b) The financial statements of Seller included in the SEC
Documents as of their respective dates or, if amended, as of the date of the
last such amendment (i) complied in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, (ii) were prepared in accordance with GAAP applied on a
consistent basis during the periods indicated (except as may be indicated in the
notes thereto) and (iii) fairly presented (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments not material in amount) the
consolidated financial position of Seller as at the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended. There were no extraordinary or material non-recurring items of income or
expense during the periods covered by such financial statements (except as set
forth therein) and the consolidated balance sheets of Seller included or
incorporated therein did not reflect any write-up or revaluation increasing the
book value of any assets, except (X) as specifically disclosed in the notes
thereto or the accompanying narrative description relevant thereto, or (Y)
pursuant to any ▇▇▇▇-to-market methodology that complies with Section 2(a)(41)
of the Investment Company Act and GAAP consistently applied by Seller and which
has been disclosed by Seller in any SEC Documents. Except as and to the extent
reflected or reserved against in the financial statements included in Seller's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 or as
disclosed therein, Seller did not have, as of such date, any liability or
obligation of any kind, known or unknown, whether accrued, absolute, contingent,
unliquidated or other, whether due or to become due and whether or not required
to be disclosed (including any liability for breach of contract, breach of
warranty, torts, infringements, claims or lawsuits), which was material to the
business, assets, properties, results of operations or financial condition of
Seller. Since September 30, 2003, there has been no material change in Seller's
accounting methods or principles that would be required to be disclosed in
Seller's financial statements in accordance with GAAP, except as described in
the notes to such Seller financial statements.
(c) Seller has heretofore made available to Purchaser
complete and correct copies of any amendments or modifications to (i)
agreements, documents or other instruments which previously have been filed by
Seller with the SEC pursuant to the Exchange Act and (ii) the SEC Documents
themselves. Seller has responded to all comment letters of the staff of the SEC
relating to the SEC Documents, and the SEC has not asserted that any of such
responses are inadequate, insufficient or otherwise non-responsive. Seller has
heretofore made available to Purchaser true, correct and complete copies of all
correspondence with the SEC occurring since October 25, 2002.
15
Section 6.6 Absence of Certain Changes or Events. Except as
specifically disclosed in Seller SEC Documents publicly available prior to the
date of this Agreement (the "Filed SEC Documents"), (a) Seller has conducted the
Business only in the ordinary course, (b) there has not been any event or events
that has had or would be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect and (c) Seller has not taken, or agreed to
take, any action contemplated by Section 8.1.
Section 6.7 Employee Benefits.
(a) Section 6.7(a) of the Disclosure Schedule sets forth a
list of all "employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA), any
bonus, deferred compensation, stock bonus, stock purchase, restricted stock,
stock option, employment, termination, change in control, retention, consulting,
severance or other employee or fringe benefit plan, program, policy, arrangement
and contract (all the foregoing being herein called "Benefit Plans") sponsored,
maintained or required to be contributed to, by Seller for the benefit of any
current or former directors, officers, employees or independent contractors of
the Business. Seller has made available to Purchaser complete and accurate
copies of (i) each Benefit Plan (or, in the case of any unwritten Benefit Plan,
a brief description thereof), (ii) the most recent annual report on Form 5500
filed with the Internal Revenue Service with respect to any Benefit Plan (if any
such report was required) and (iii) each trust agreement and group annuity
contract relating to any Benefit Plan.
(b) Each Benefit Plan has been administered in compliance
with its terms and the applicable provisions of ERISA, the Code and all other
applicable Laws, except for such non-compliance as would not reasonably be
expected to have a Material Adverse Effect. Neither Seller nor any entity that
is treated with Seller as a single employer under Section 414 of the Code
("ERISA Affiliate") maintains or contributes to any Benefit Plan that is subject
to the provisions of Title IV of ERISA. Neither Seller nor any ERISA Affiliate
has any unsatisfied material liability under the Code, ERISA or any other
applicable Laws in respect of any Benefit Plan. Each employee pension benefit
plan that is intended to be qualified under Section 401(a) of the Code is
subject to a determination letter from the Internal Revenue Service stating it
is so qualified and to Seller's Knowledge there are no facts that would be
reasonably likely to cause revocation of such letter. There are no material
pending or, to Seller's Knowledge, threatened claims, suits or arbitrations
involving any Benefit Plan except any routine claim for benefits under a Benefit
Plan.
(c) No director, officer, employee or consultant of Seller
will be entitled to any additional economic benefit (including the acceleration
of the time of payment or vesting of any economic benefit) as a result of the
consummation of the transactions contemplated by this Agreement other than
pursuant to the terms of the Employment Agreements.
(d) Seller is not a party to any Contract, agreement, plan
or arrangement that, individually or in the aggregate, or when taken together
with any
16
payment that may be made under this Agreement or any agreements contemplated by
this Agreement, could give rise to the payment of any "excess parachute payment"
within the meaning of Section 280G of the Code.
Section 6.8 Contracts.
(a) Neither Seller nor, to Seller's Knowledge, any other
party, is in violation or breach of or in default (nor does there exist any
condition which upon the passage of time or the giving of notice would result in
a violation or breach of, or constitute a default under, or give rise to any
right of termination, amendment, cancellation, acceleration, modification or
loss of benefits, or result in the creation of any Lien upon any of the
Transferred Assets) under any Contract to which it is a party or by which any of
the Transferred Assets are bound. No other party to any such Contract has
alleged that Seller is in violation or breach of or in default under any such
Contract or has notified Seller of an intention to terminate, amend, cancel,
accelerate or modify any terms of or not to renew any such Contract.
(b) Section 6.8(b) of the Disclosure Schedule sets forth a
complete and accurate list of all Contracts (excluding Financing Contracts)
relating to the Business other than Contracts which involve the payment of less
than $50,000 per year and are terminable without penalty by Seller on no more
than thirty (30) days' notice, which are not otherwise material to the Business.
(c) (i) Each Contract included in the Transferred Assets or
the Assumed Liabilities is legal, valid, binding and enforceable against Seller
and to Seller's Knowledge, against each other party thereto, is in full force
and effect and will continue to be so legal, valid, binding and enforceable and
in full force and effect following the assignment of such Contract at the
Closing or pursuant to other arrangements in accordance with Section 8.20
hereto, as the case may be, and (ii) Seller and to Seller's Knowledge, no other
party, is in breach or default, and no event has occurred which would constitute
(with or without notice or lapse of time or both) a breach or default (or give
rise to any right of termination, modification, cancellation or acceleration) or
loss of any benefits under any such Contract, except in each case as would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
(d) Seller has delivered to Purchaser complete and accurate
copies of each Contract. Since December 31, 2002, there has been no material
modification, waiver, breach or termination of any Contract or any material
provision thereto. To Seller's Knowledge, no modification, waiver, breach or
termination of any Contract is contemplated and no Contract is terminable or
cancelable as a result of the consummation of the transactions contemplated by
this Agreement.
(e) Except as set forth on Section 6.8(e) of the Disclosure
Schedule, there are no non-competition or non-solicitation agreements or any
similar agreements or arrangements that would restrict or hinder the operation
or conduct of the Business or use of any of the Transferred Assets or any
"earn-out" agreements or arrangements to which
17
Seller is a party or to which Seller, the Business or the Transferred Assets is
or may be subject (other than this Agreement or pursuant to this Agreement).
(f) No provision of any Contract, arrangement, understanding
or Law or other item which binds or may bind the Business or is included in the
Transferred Assets or the Assumed Liabilities, prevents, materially hinders or
would prevent or materially hinder the Business from assigning or amending the
Assumed Contracts or arrangements or as Purchaser may specify.
Section 6.9 Financing Contracts.
(a) Section 6.9(a) of the Disclosure Schedule sets forth for
each Financing Contract entered into by Seller on or before the date of this
Agreement the following information as of the date of this Agreement: (i) the
name and address of the Obligor; (ii) the principal amount of the loan, the
remaining term of the Financing Contract and all amounts outstanding thereunder;
(iii) the amortization schedule in respect of each amount outstanding under the
Financing Contracts, (iv) whether the debt under the Financing Contract is
subordinate; (v) the number of shares or other units for which Securities have
been issued to Seller in connection with the Financing Contract and the
unadjusted exercise or conversion price thereunder; (vi) the material terms and
amounts of any additional equity interest held by Seller in the Obligor (if
any), and (vii) the value reflected on Seller's books of any debt or equity
interest in the Obligor.
(b) Each Financing Contract and Credit Enhancement (i) is
legal, valid, binding and enforceable by Seller against the lessee, obligor or
borrower thereunder in accordance with its written terms, except as may be
limited by the Bankruptcy and Equity Exception, and (ii) constitutes and arose
out of a bona fide business transaction entered into in the ordinary course of
business of Seller.
(c) (i) Each Financing Contract and Credit Enhancement is,
or as of the Closing Date will be, in full force and effect, free and clear of
all Liens (whether or not perfected), except for Permitted Liens, and to
Seller's Knowledge not subject to any defense, offset, claim, right of
rescission or counterclaim by the Obligor under such Financing Contract in the
case of a Financing Contract or by the Obligor thereunder in the case of a
Credit Enhancement, or any Person claiming under any such right, (ii) each
Financing Contract and Credit Enhancement is without (A) any default thereunder
by Seller, (B) to Seller's Knowledge, any monetary default by the Obligor
thereunder or (C) to Seller's Knowledge, any material non-monetary default by
any Obligor or other party thereto, (iii) Seller is the owner and holder of all
right, title and interest in each Financing Contract and each Credit
Enhancement, (iv) to Seller's Knowledge, no Obligor under any Financing Contract
(A) has acquired any Portfolio Property, any interest in any Portfolio Property
or the use of any Portfolio Property pursuant to such Financing Contract for
personal, family or household use or for agricultural purposes or (B) is
required under any applicable Law to withhold any Taxes from payments on any
such Financing Contracts, (v) Seller has in its possession a fully executed
original, or valid, binding and enforceable copy, of any lease or note (and an
executed original or true and correct copy of all other documents) comprising
such Financing Contract and each such Credit
18
Enhancement and all other documents required by the credit or investment
approval of each Financing Contract, (vi) Seller has in its possession
documentation sufficient to establish the original cost or value (as used by
Seller) of all Portfolio Property for purposes of determining personal property
tax liability, (vii) all payments pursuant to each Financing Contract are made
directly to Seller and (viii) Seller neither is or has been, nor is committed to
become, a party to any agreement, contract or commitment with respect to the
Residual as to any Portfolio Property.
(d) Except as set forth in Section 6.9(d) of the Disclosure
Schedule, no Financing Contract is subject to any subordination agreement or
Disposition Agreement.
(e) Section 6.9(e) of the Disclosure Schedule sets forth (i)
a list of each Credit Enhancement as of the date of this Agreement, (ii) with
respect to each such Credit Enhancement which is a security deposit, the amount
thereof and the depositor and (iii) with respect to each such Credit Enhancement
which is a letter of credit, the issuer thereof, the maximum amount drawable
thereunder, the expiration date thereof and the physical location thereof.
Seller neither has accepted, nor possesses or is required, pursuant to the terms
of any investment or credit approval, to have obtained any Credit Enhancement
that is a certificate of deposit or stock certificate.
(f) To Seller's Knowledge, each Obligor under a Financing
Contract is solvent and has the ability to pay its debts and obligations under
such Financing Contract.
(g) With respect to each Financing Contract in which Seller
has been issued Securities, to the actual knowledge of Seller each such Security
was issued in compliance with the requirements of the Securities Act and Seller
has not taken any actions which would violate the restrictions imposed upon
Seller in connection with such Securities under the applicable securities laws,
pursuant to contract or otherwise.
(h) Section 6.9(a) of the Disclosure Schedule sets forth
each of the Securities issued by Obligors under Financing Contracts which are
held by Seller as of the date of this Agreement. To the actual knowledge of
Seller, each such security or warrant has been duly authorized and validly
issued and are fully paid and nonassessable and free of preemptive and similar
rights. To the actual knowledge of Seller, the securities to be issued upon
exercise of the warrants have been reserved for issuance to Seller by the
Obligors. To the actual knowledge of Seller, upon exercise of any such warrant
and payment of the exercise price, the shares of the Obligor's capital stock
issuable upon such exercise shall be duly authorized, validly issued and fully
paid and nonassessable and free of preemptive and similar rights.
Section 6.10 Receivables of Seller.
(a) Each of the Accounts Receivable (i) is legal, valid,
binding and enforceable by Seller against the Obligor thereunder in accordance
with its terms, except as may be limited by the Bankruptcy and Equity Exception,
(ii) has arisen out of a bona
19
fide transaction and (iii) to Seller's Knowledge, is not subject to any defense,
offset, claim, right of rescission or counterclaim of the Obligor thereunder.
(b) Each of the Accounts Receivable either has been or, to
Seller's Knowledge, will be collected in full, without any set off, within
fifteen (15) days after the day on which it first becomes due and payable.
Section 6.10(b) of the Disclosure Schedule contains a complete and accurate list
of all Accounts Receivable as of the date of this Agreement and sets forth the
aging of such accounts receivables.
Section 6.11 Portfolio Property.
(a) Seller has (i) with respect to each item of Primary
Portfolio Property, either (A) good and valid title to such Primary Portfolio
Property free and clear of all Liens, other than Permitted Liens, or (B) a valid
first priority security interest on such Primary Portfolio Property that is
governed by or subject to a Financing Contract which has been duly perfected
(including all appropriate Uniform Commercial Code filings), when and as
required by Seller's written operating procedures pertaining to such matters, a
copy of which is set forth on Section 6.11(a) of the Disclosure Schedule and
(ii) with respect to each item of Portfolio Property that does not constitute
Primary Portfolio Property, either (A) good and valid title to such Portfolio
Property free and clear of all Liens, other than Permitted Liens or (B) a valid
security interest on each Portfolio Property that is governed by or subject to a
Financing Contract, which has been duly perfected (including all appropriate
Uniform Commercial Code filings) when and as required by Seller's written
operating procedures pertaining to such matters, a copy of which is set forth on
Section 6.11(a) of the Disclosure Schedule and which has the priority as
required by the investment or credit approval applicable to such Financing
Contract. Each item of Portfolio Property and the amount of the Residual with
respect thereto as described accurately in the files of Seller that relate to
such item of Portfolio Property. None of the Portfolio Property is a vessel, an
aircraft or a vehicle. None of the Portfolio Property has been sold, rented,
leased, mortgaged, licensed, or otherwise transferred or encumbered.
(b) To Seller's Knowledge, as of the date any Portfolio
Property became subject to a Financing Contract, such Portfolio Property was in
compliance in all material respects with all Laws, statutes, ordinances, rules
and regulations applicable to such Portfolio Property, and each of the Financing
Contracts requires the Obligor thereunder to maintain or otherwise cause the
Portfolio Property subject thereto to be, at all times, in compliance with all
Laws, statutes, ordinances, rules and regulations applicable to such Portfolio
Property and (ii) each Financing Contract requires the Obligor thereunder (and
not Seller or any other Person) to provide insurance against loss or damage with
respect to the Portfolio Property subject to or governed by such Financing
Contract.
Section 6.12 Insurance. Seller has delivered to Purchaser prior
to the date of this Agreement copies of all insurance policies which are owned
by Seller or which names Seller as an insured (or loss payee), including those
relating to Seller's properties, assets, businesses, employees or operations.
All such insurance policies
20
owned by Seller are, and all such insurance of which Seller is named insured or
loss payee are to Seller's Knowledge, in full force and effect, in such amounts
and covering such losses and risks as are consistent with industry practice and
sufficient to cover the full value of the Transferred Assets and the Business.
All premiums due under insurance policies owned by Seller have been paid, and
all premiums due under insurance policies of which Seller is named insured or
loss payee have to Seller's Knowledge been paid. Seller has not received notice
of cancellation of any such insurance policies.
Section 6.13 Litigation. There is no suit, claim, action,
demand, notice, request for information, proceeding, arbitration or
investigation pending before any Governmental Entity or, to Seller's Knowledge,
threatened against Seller, the Transferred Assets, the Assumed Liabilities or
the Business. Seller is not subject to any outstanding Order or Orders. There is
no action, suit, proceeding or investigation pending or, to Seller's Knowledge,
threatened against Seller, the Transferred Assets, the Assumed Liabilities or
the Business, which seeks to restrain, enjoin or delay consummation of the
transactions contemplated hereby or which seeks damages in connection therewith,
and no injunction of any type has been entered or issued. Except as set forth on
Section 6.13 of the Disclosure Schedule, there are no outstanding judgments,
writs, injunctions, Orders, decrees or settlements that apply, in whole or in
part, to the Transferred Assets, the Assumed Liabilities or the Business that
restrict the ownership or use of the Transferred Assets, the Assumed Liabilities
or the Business in any way.
Section 6.14 Compliance with Applicable Law.
(a) Seller holds all permits, licenses, variances,
exemptions, orders and approvals necessary for the lawful conduct of the
Business by Seller (the "Seller Permits"). Section 6.14(a) of the Disclosure
Schedule sets forth Seller Permits. The Transferred Assets include all of the
Seller Permits that are assignable to Purchaser under applicable Law. Seller is
in compliance with the terms of Seller Permits. Seller is, and at all times has
been, in compliance with all Laws, and all regulations promulgated or issued by
a Governmental Entity, including Environmental Laws, and Laws pertaining to
usury, installment or conditional sales and sales financing and neither the
billing and collection nor enforcement of any Contract will result in a
violation of Law or any regulation promulgated or issued by a Governmental
Entity. To Seller's Knowledge, no investigation or review by any Governmental
Entity with respect Seller, the Transferred Assets, the Assumed Liabilities or
the Business is pending and, to Seller's Knowledge, no such investigation or
review is threatened.
(b) Seller (i) has qualified for and validly elected to be
treated as a "Business Development Company" under the Investment Company Act and
such election has not been revoked or rescinded and is in full force and effect
and (ii) is in compliance with the Investment Company Act.
(c) Neither Seller nor any "affiliated person" of Seller (as
defined in the Investment Company Act), as applicable, is ineligible pursuant to
Section 9(a) or (b) of the Investment Company Act to serve as an investment
advisor (or in any other capacity contemplated by the Investment Company Act) to
an investment company
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registered under the Investment Company Act or to a company which has elected to
be a "Business Development Company" pursuant to Section 54 of the Investment
Company Act and has not withdrawn its election.
Section 6.15 Taxes.
(a) All Tax Returns required to be filed and relating in any
manner to any of the Transferred Assets or the Business have been timely filed
(after giving effect to extensions duly and timely filed). All such Tax Returns
(i) were prepared in the manner required by applicable Law and (ii) are true,
correct and complete in all material respects.
(b) Seller has paid, or caused to be paid, all Taxes due
with respect to any of the Transferred Assets or the Business whether or not
shown (or required to be shown) on a Tax Return; and such Taxes paid include
those for which Seller may be liable in its own right, or as the transferee of
the assets of, or as successor to, any other entity.
(c) There has been no notice of a deficiency or assessment
or other claim relating in any manner to any of the Transferred Assets or the
Business from any Taxing Authority which has not been fully paid or finally
settled. To Seller's Knowledge, there are no current audits or examinations of,
and no notice of audit or examination of, any Tax Return that relates to any of
the Transferred Assets or the Business. Seller has not given nor has there been
given on Seller's behalf a waiver or extension of any statute of limitations
relating to the payment of Taxes relating to any of the Transferred Assets or
the Business.
(d) Seller has complied with all applicable Laws, rules and
regulations relating to the withholding of Taxes and the payment thereof to the
appropriate Taxing Authority, including, without limitation, Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee or independent contractor.
(e) No written claim has ever been made by any Taxing
Authority and delivered to Seller, and to Seller's Knowledge, no other claim has
ever been made by any Taxing Authority, with respect to any of the Transferred
Assets or the Business in a jurisdiction where Seller does not file Tax Returns
that Seller may be subject to taxation in that jurisdiction.
(f) There are no encumbrances or security interests on any
of the Transferred Assets that arose in connection with any failure (or alleged
failure) to pay any Taxes and, except for liens for real and personal property
Taxes that are not yet due and payable, there are no liens for any Tax upon any
Transferred Asset. Purchaser will not be liable for, and none of the Transferred
Assets will be subject to a Lien with respect to, any Taxes arising out of,
relating to or in respect of the Business or any of the Transferred Assets for
any tax period or portion thereof ending on or before the Closing Date.
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(g) No depreciation or amortization with respect to the
Transferred Assets will be disallowed as a deduction under Section 197(f)(9) of
the Code.
(h) Other than in respect of the Securities included in the
Transferred Assets, the Transferred Assets do not include any shares of capital
stock of, or any other equity interest in, any Person.
(i) For purposes of this Agreement:
(i) "Tax" and "Taxes" mean any and all federal,
state, local and foreign taxes, duties, fees, assessments and
other governmental charges, impositions, levies and liabilities
in the nature of a tax, including, without limitation, taxes
based upon, measured by, or with respect to gross or net income,
earnings, profits or receipts, or any sales, use, ad valorem,
transfer, franchise, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property,
windfall profits, environmental, alternative, add-on minimum,
custom, capital stock, social security (or similar),
unemployment, disability, gains, recapture, estimated, or other
taxes, duties, fees, assessments or charges of any kind
whatsoever, together with any interest, penalties, and additions
thereto.
(ii) "Tax Return" means any return, declaration,
report, claim, election, notice or information return or
statement or other document (including, without limitation, any
related or supporting information, schedules, or exhibits) filed
or required to be filed with any federal, state, local or
foreign Governmental Authority or other authority in connection
with any Tax or estimated Tax.
Section 6.16 Environmental.
(a) No Hazardous Substances are present at or have been
Released or threatened to be Released from, onto or under any of the properties
currently or formerly owned, leased, operated or otherwise used by Seller or its
predecessor, or from any other location, resulting from or arising in connection
with the operation of Seller or its predecessors. None of Seller, the
Transferred Assets or the Business are subject to any indemnity or other
agreement with any Person or entity relating to Hazardous Substances.
(b) As used herein, the term "Environmental Law" means any
Law or Permit relating to (i) protection, investigation or restoration of the
environment (including natural resources), (ii) the health or safety of human or
other living organisms or (iii) the handling, use, presence, disposal, Release
or threatened Release of any Hazardous Substance or pollution.
(c) As used herein, the term "Hazardous Substance" means any
element, compound, substance or other material (including any pollutant,
contaminant, hazardous waste, hazardous substance, chemical substance, or
product) that is listed, classified or regulated pursuant to any Environmental
Law, including any petroleum product, by-product or additive, asbestos, presumed
asbestos-containing material,
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asbestos-containing material, medical waste, chlorofluorocarbon,
hydrochlorofluorocarbon, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive material or radon.
(d) As used herein, the term "Release" means any release,
pumping, pouring, emptying, injecting, escaping, leaching, migrating, dumping,
seepage, spill, leak, flow, discharge, disposal or emission.
Section 6.17 State Takeover Statutes.
(a) Seller has taken all actions (if any) required to be
taken by it in order to exempt this Agreement, the Voting and Support Agreements
and the transactions contemplated hereby and thereby from the provisions of
Subtitles 6, 7 and 8 of the MGCL, and those subtitles do not apply to the
transactions contemplated hereby or thereby. No other "control share
acquisition," "fair price" or other anti-takeover regulations enacted under
state or Laws in the United States would apply to this Agreement, the Voting and
Support Agreements or any of the transactions contemplated hereby and thereby.
(b) If any anti-takeover statute shall become applicable to
the transactions contemplated hereby, Seller and the members of its Board of
Directors shall (subject to compliance with the MGCL and to the provisions of
Section 8.2), grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
(c) No anti-takeover provision in Seller's articles of
incorporation or bylaws is applicable to Seller, this Agreement or the
transactions contemplated hereby.
Section 6.18 Proprietary Rights.
(a) Except as set forth in Section 6.18(a) of the Disclosure
Schedule, (i) Seller is the sole owner of, free and clear of any claim or Lien
(other than Permitted Liens), or has a valid license to, without the payment of
any royalty, except with respect to off-the-shelf software licensed on
commercially reasonable terms, and after the Closing Purchaser will be the sole
owner of, free and clear of any claim or Lien (other than Permitted Liens), or
will have a valid license on the same terms as Seller (without the payment of
any sublicense or other payment relating to the transactions contemplated by
this Agreement) to, all U.S. and non-U.S. trademarks, service marks, logos,
designs, trade names, internet domain names and corporate names, and the
goodwill of the business connected therewith and symbolized thereby, patents,
registered designs, copyrights, computer software and databases (including all
source and object codes), web sites and web pages and related items (and all
intellectual property and proprietary rights incorporated therein) and all trade
secrets, research and development and know-how ("Trade Secrets") and all other
proprietary and intellectual property rights and information, including, without
limitation, all grants, registrations and applications
24
relating thereto (all of the foregoing to be collectively referred to as the
"Proprietary Rights") necessary or advisable for the conduct of the Business as
now conducted (such Proprietary Rights owned by or licensed to Seller,
collectively, "Seller's Rights"), (ii) except as set forth on Section 6.18(a) of
the Disclosure Schedule, Seller's Rights therein are valid and enforceable,
subject to the Bankruptcy and Equity Exceptions, and, following the Closing,
Purchaser's rights in Seller's Rights will be valid and enforceable, subject to
the Bankruptcy and Equity Exceptions, (iii) no act has been done or omitted to
be done by Seller which has, or could have the effect of impairing or dedicating
to the public, or entitling any Person to cancel, forfeit, modify or consider
abandoned, any Seller's Rights, or give any Person any rights with respect
thereto, (iv) all necessary registration, maintenance and renewal fees in
respect of Seller's Rights have been paid and all necessary documents and
certificates have been filed with the relevant Governmental Authority for the
purpose of maintaining such Seller's Rights, (v) Seller has not received any
demand, claim, notice or inquiry from any Person in respect of Seller's Rights
which challenges, threatens to challenge or inquires as to whether there is any
basis to challenge, the validity of, or the rights of Seller in, any Seller's
Rights, and to Seller's Knowledge there is no basis for any such challenge, (vi)
neither Seller nor the Business as presently conducted by Seller is in violation
or infringement of, nor has Seller nor the Business as currently or in the past
conducted by Seller violated or infringed, any Proprietary Rights of any other
Person, (vii) Seller has not received any written demand, claim, notice or
inquiry from any Person alleging or inquiring whether there is any basis to
allege that Seller or the Business violates or infringes, or has violated or
infringed, any Proprietary Rights of any other Person, and no proceedings or
actions are pending or have been instituted, or, to Seller's Knowledge,
threatened or asserted against Seller whereby it is alleged that Seller or the
Business violates or infringes, or has violated or infringed, any Proprietary
Rights of any other Person, and to Seller's Knowledge there is no valid basis
for any such proceeding or action; (viii) to Seller's Knowledge, no Person is
violating or infringing any Seller's Rights, (ix) Seller has obtained from all
individuals who participated (as employees, consultants, employees of
consultants or otherwise) in any respect in the invention or authorship of any
Seller's Rights owned by Seller ("Owned Rights") effective waivers of any and
all ownership rights of such individuals in such Owned Rights, and/or
assignments to Seller of all rights with respect thereto, (x) Seller's Rights
will not be adversely affected by the completion of the transactions
contemplated by this Agreement and (xi) Seller has not divulged, furnished to or
made accessible to any Person, any Trade Secrets without prior thereto having
obtained an enforceable agreement of confidentiality from such Person, and
Seller has otherwise taken commercially reasonable measures to maintain the
confidentiality of the Trade Secrets.
(b) Section 6.18(b) of the Disclosure Schedule contains a
complete and accurate list of Seller's Rights, other than non-material
unregistered copyrights and Trade Secrets, and all licenses and other agreements
relating thereto.
Section 6.19 Opinion of Financial Advisor. As of the date of
this Agreement, Seller has received the opinion of Milestone Advisors, LLC (the
"Seller Financial Advisor"), dated the date of this Agreement, to the effect
that, as of the date of this Agreement, the Purchase Price to be received in the
transactions contemplated by this
25
Agreement is fair to Seller from a financial point of view (the "Fairness
Opinion"). A complete and correct signed copy of such opinion has been, or
promptly upon execution of this Agreement will be, delivered to Purchaser and
such opinion shall be included as an exhibit to the Proxy Statement.
Section 6.20 Board Approval. The Board of Directors of Seller,
at a meeting duly called and held, has by unanimous vote of the directors (a)
determined that this Agreement, each of the Collateral Agreements, the Voting
and Support Agreements and the transactions contemplated hereby and thereby are
advisable, fair to and in the best interests of the stockholders of Seller, (b)
approved this Agreement and each of the Voting and Support Agreements and (c)
recommended that the this Agreement and the Articles of Transfer and the
transactions contemplated hereby be adopted by the holders of all of the issued
and outstanding stock of Seller (the "Seller Shares").
Section 6.21 Voting Requirements.
(a) The affirmative vote of holders of two-thirds (2/3) of
the Seller Shares at the meeting of Seller's stockholders to be held in
connection with the transactions contemplated by this Agreement (the
"Stockholder Meeting") or any adjournment or postponement thereof to adopt this
Agreement is the only vote of the holders of any class or series of capital
stock of Seller's necessary to adopt this Agreement and approve the transactions
contemplated hereby.
(b) Seller has been advised by each of its directors and
executive officers that each such person intends to vote their respective Seller
Shares in favor of the approval and adoption of this Agreement and the
transactions contemplated by this Agreement.
Section 6.22 Brokers and Finders. No broker, investment banker,
financial advisor or other Person, other than Seller's Financial Advisors, the
fees and expenses of which will be paid by Seller (as reflected in an agreement
between such firm and Seller, a copy of which has been delivered to Purchaser),
is entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated hereby.
Section 6.23 Information Supplied. None of the information
supplied by Seller or any of its Affiliates, directors, officers, employees,
agents or representatives for inclusion or incorporation by reference in, and
which is included or incorporated by reference in the Proxy Statement or any
other documents filed or to be filed with the SEC in connection with the
transactions contemplated hereby, will, at the respective times such documents
are filed, at the time of mailing or other distribution of the Proxy Statement
to Seller's stockholders or at the time of the Stockholder Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If, at any time prior to Closing,
any event or circumstance relating to Seller or its officers or directors,
should be discovered by Seller which, pursuant to the Exchange Act, should be
set forth in an amendment or supplement to the
26
Proxy Statement, Seller shall notify Purchaser in writing. All documents that
Seller is responsible for filing with the SEC in connection with the
transactions contemplated by this Transaction will comply with the applicable
requirements of the Exchange Act.
Section 6.24 No Third Party Options. There are no existing
agreements, options, commitments or other rights granting any Person the right
to acquire Seller's right, title or interest in or to any of the Transferred
Assets or any interest therein.
Section 6.25 Assets Necessary to Business. The Transferred
Assets constitute all of the rights, properties and assets used or held for use
in or necessary for the conduct or operation of the Business as presently
conducted. Seller is the sole owner of the Transferred Assets. Immediately
following the Closing, none of Seller or any of its Affiliates will continue to
own or lease any rights, properties or assets (other than Excluded Assets
expressly excluded hereby) which are used or held for use in or necessary for
the conduct of the Business as presently conducted.
Section 6.26 No Default. Seller has not committed, or received
notice of, any default or violation (and, as to Seller and, to Seller's
Knowledge, any third party, no event involving Seller or, to Seller's Knowledge,
any third party has occurred which with notice or lapse of time or both would
constitute a default or violation or loss of any material benefit) of any term,
condition or provision of (a) any Contract to which Seller is a party or may be
subject that is included in the Transferred Assets or the Assumed Liabilities or
otherwise relates to or affects the Business or (b) except as set forth on
Section 6.26 of the Disclosure Schedule, any order, writ, injunction, decree,
statute, treaty, rule or regulation applicable to the Business or any of the
Transferred Assets or the Assumed Liabilities.
Section 6.27 Transactions with Affiliates. Except as otherwise
previously disclosed in the SEC Documents or set forth in Section 6.27 of the
Disclosure Schedule, there are no outstanding liabilities or obligations for
amounts owing or other commitments to or from, or Contracts between, and within
the past year there have been no transactions between, any Affiliates of Seller
or any of Seller's respective directors (whether a current or former director),
officers or employees on the one hand, and Seller, the Business, the Transferred
Assets or the Assumed Liabilities, on the other hand.
Section 6.28 Labor Relations.
(a) Seller is not a party to any collective bargaining
agreement with respect to any current or former employee of the Business and
there is no collective bargaining agreement which relates to the Business.
(b) There is no unfair labor practice, charge or complaint
or other proceeding pending or, to Seller's Knowledge, threatened, against any
of the Transferred Assets or Seller or otherwise relating to the Business before
the National Labor Relations Board or any other Governmental Authority.
(c) There is no labor strike, slowdown or stoppage pending
or, to Seller's Knowledge, threatened, against Seller that would reasonably be
expected to have
27
a Material Adverse Effect, nor has there been any such activity within the past
two (2) years.
(d) There are no pending collective bargaining negotiations
relating to any employees of the Business.
(e) (i) There are no agreements with, or pending petitions
for recognition of, a labor union or association as the exclusive bargaining
agent for any or all of the employees of the Business, (ii) no such petitions
have been pending within the past five (5) years and (iii) to Seller's
Knowledge, there has not been any general solicitation of representation cards
by any union seeking to represent the employees of Seller or of the Business as
their exclusive bargaining agent at any time within the past five (5) years.
(f) Seller is in material compliance with all applicable
Laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment, health and safety, classification of employment or
service status, withholding and wages and hours, in each case, with respect to
current and former employees and service providers of the Business.
Section 6.29 Title to Assets. Seller is the lawful owner of, or
has the right to use, and has good and valid title to, the Transferred Assets
free and clear of any Liens other than Permitted Liens.
Section 6.30 Absence of Certain Business Practices. Neither
Seller nor any Affiliate, director, officer, employee or agent of Seller, nor
any other Person acting on behalf of Seller, have to Seller's Knowledge given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other Person which (a) could reasonably be expected to
subject the Transferred Assets or Purchaser to any damage or penalty or to
increase the Assumed Liabilities in any civil, criminal or governmental
litigation or proceeding, (b) if not given in the past, would have been
reasonably likely to, individually or in the aggregate, have had a Material
Adverse Effect or (c) if not continued in the future, would be reasonably likely
to, individually or in the aggregate, have a Material Adverse Effect or which
might subject Seller or Purchaser to suit or penalty in any private or
governmental litigation or proceeding.
Section 6.31 Real Property; Title. Section 6.31 of the
Disclosure Schedule sets forth the location and a description of the leased real
property included in the Transferred Assets or the Assumed Liabilities and the
general nature of the facilities located on the properties. (a) Seller has good,
legal and valid title to all of its assets (including its investment assets) and
other rights that would not constitute real property, free and clear of all
Liens, except for Permitted Liens, (b) Seller has valid leasehold interests in
or valid contractual rights to use, all of the properties and assets, tangible
and intangible, used or held for use in, necessary for or relating to the
conduct or operation of, the Business as presently conducted and (c) in the case
of property referenced in clauses (a) and (b), such property is in good
operating condition (subject to ordinary wear and tear).
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Section 6.32 No Misleading Statements. The representations and
warranties made by Seller in this Agreement, including the exhibits and
schedules hereto, do not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements included herein or
therein not misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 7.1 Organization. Purchaser (i) is a corporation duly
incorporated and validly existing and in good standing under the Laws of the
jurisdiction of its incorporation, (ii) has all corporate power and authority
and all governmental licenses, authorizations, consents and approvals required
to own, lease and operate its properties and assets and to carry on its business
as now conducted and (iii) is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned, leased or operated by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, be reasonably likely to have a
material adverse effect on the ability of Purchaser to perform its obligations
hereunder or which would prevent, delay, impede or hinder consummation of the
transactions contemplated hereby.
Section 7.2 Authority. Purchaser has all requisite corporate
power and authority to execute and deliver this Agreement and each of the
Collateral Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and each of the Collateral Agreements to which it is a party and
consummation by Purchaser of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
Purchaser and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement and each of the Collateral Agreements to
which it is a party or to consummate such transactions. This Agreement has been
duly executed and delivered by Purchaser and constitutes a valid and binding
obligation of Purchaser enforceable against it in accordance with its terms,
subject to the Bankruptcy and Equity Exception.
Section 7.3 Consents and Approvals; No Violations.
(a) The execution, delivery and performance by Purchaser of
this Agreement and each of the Collateral Documents to which it is a party and
consummation by Purchaser of the transactions contemplated hereby and thereby do
not and will not require any filing or registration with, notification to or
authorization, permit, consent or approval of, or other action by or in respect
of, any Governmental Entities other than (i) compliance with any applicable
requirements of the HSR Act and (ii) compliance with any applicable requirements
of the Exchange Act, except for such the failure of which to make or obtain
would not reasonably be expected to prevent, delay,
29
impede or hinder Purchaser's ability to consummate the transactions contemplated
hereby.
(b) The execution, delivery and performance by Purchaser of
this Agreement and each of the Collateral Agreements to which it is a party and
consummation by Purchaser of the transactions contemplated hereby and thereby do
not and will not (i) conflict with or result in any breach of any provision of
the certificate of incorporation or bylaws of Purchaser; (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default under, or give rise to any right of termination,
amendment, cancellation, acceleration or loss of benefits under, or result in
the creation of any Lien upon any of the properties or assets of Purchaser
under, any of the terms, conditions or provisions of any contract to which
Purchaser is a party or by which any of its properties or assets may be bound;
or (iii) violate any Order or Law applicable to Purchaser or any of its
properties or assets.
Section 7.4 Brokers and Finders. No broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby.
Section 7.5 Information Supplied. None of the information
supplied by Purchaser or any of its Affiliates, directors, officers, employees,
agents or representatives specifically for inclusion in, and which is included
in the Proxy Statement or any other documents filed or to be filed with the SEC
in connection with the transactions contemplated hereby, will, at the respective
times such documents are filed, at the time of mailing of the Proxy Statement to
Seller's stockholders or at the time of the Stockholder Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If, at any time prior to the Closing
Date, any event or circumstance relating to Purchaser or its respective officers
or directors, should be discovered by Purchaser which, pursuant to the Exchange
Act, should be set forth in an amendment or supplement to the Proxy Statement,
Purchaser shall notify Seller in writing.
Section 7.6 Financing. Purchaser has, or will have, sufficient
funds available to consummate the transactions contemplated hereby.
Section 7.7 Litigation. There is no action, suit, proceeding or
investigation pending or, to Purchaser's knowledge, threatened, that questions
the validity of this Agreement or any Collateral Agreement or any actions taken
or to be taken in connection with this Agreement or any Collateral Agreement
which is reasonably likely to prevent, delay, impede or hinder Purchaser's
ability to consummate the transactions contemplated hereby.
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ARTICLE VIII
COVENANTS
Section 8.1 Covenants of Seller. Until the Effective Time,
Seller shall (i) conduct the Business in the ordinary course of business, (ii)
use reasonable best efforts to preserve intact its business organizations and
relationships with third parties and to keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with Seller and (iii) use
reasonable best efforts to protect Seller's Rights to the end that Seller's
goodwill and the Business shall not be impaired in any material respects as of
the Closing Date. Without limiting the generality of the foregoing, except as
expressly permitted in this Agreement, until the Closing Date:
(a) Seller shall not sell, lease, license or otherwise
dispose of or encumber, or agree to sell, lease or otherwise dispose of or
encumber, any of its assets that would be included in the Transferred Assets
other than in the ordinary course of business;
(b) Seller shall not (i) make any loans, advances or capital
contributions to, or investments in, any other Person, not within the ordinary
course of its Business or which exceed US$3,000,000 individually or US$5,000,000
in the aggregate to any individual Person; provided that any loans, advances or
capital contributions to, or investments in any other Person permitted under
this clause (i) must be made in accordance with Seller's underwriting practices,
procedures and standards in effect on the date hereof or (ii) except in the
ordinary course of business, incur any additional indebtedness for borrowed
money or guarantee any such indebtedness of another Person, issue or sell any
debt securities or warrants or other rights to acquire any debt securities of
Seller, guarantee any debt securities of another Person, enter into any "keep
well" or other agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the economic effect of any
of the foregoing;
(c) Seller shall not make, revoke or change any Tax
election, settle or compromise any Tax liability of Seller or change any method
or practice with respect to Taxes, except as required by Law, if any such action
could have a material effect on Purchaser or otherwise bind Purchaser on a
post-Closing basis;
(d) except as disclosed in the Filed SEC Documents or as
required by a Governmental Entity, Seller shall not change its methods of
accounting in effect at December 31, 2002, except as required by changes in
GAAP;
(e) Seller shall not make or agree to make any capital
expenditure or expenditures, or enter into any agreement or agreements providing
for payments for capital expenditures, with respect to the Business or the
Transferred Assets;
31
(f) Seller shall not take any action that, or omit to take
any action where such omission would reasonably be expected to prevent, delay,
impede or hinder consummation of the transactions contemplated hereby;
(g) Except as to matters related to Taxes (which are the
subject of paragraph (c) above), Seller shall not pay, discharge, settle or
satisfy any claims, liabilities or obligations related to the Transferred Assets
or the Business (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge, settlement or satisfaction, in the
ordinary course of business or in accordance with their terms, of claims,
liabilities or obligations disclosed in the most recent financial statements (or
the notes thereto) of Seller included in the Filed SEC Documents or incurred
since the date of such financial statements in the ordinary course of business;
(h) except as otherwise set forth in this Agreement, Seller
shall not terminate, cancel or request any change in, or agree to any change in
any Contract, including any Financing Contract, of Seller or enter into any
Contract, including any Financing Contract, (whether written or oral) material
to the condition of the (financial or otherwise) business, properties, assets
prospects or results of operations of Seller;
(i) Seller shall not (i) sell, assign, license, sublicense,
encumber, impair, abandon or fail to maintain any Seller's Rights, (ii) grant,
extend, amend, waive or modify Seller's Rights, or (iii) amend, assign,
terminate, fail to exercise a right of renewal or extension under any Contract
relating to Seller's Rights;
(j) Seller shall not (i) increase the compensation or
benefits of any director, officer, employee or consultant of or associated with
the Business, (ii) adopt any new employee benefit plan or any amendment to an
existing Benefit Plan other than as required by applicable Law, (iii) enter into
any employment or consulting agreement with any director, officer, employee or
consultant of or associated with the Business, (iv) accelerate the payment of
compensation or benefits to any director, officer, employee or consultant of or
associated with the Business, (v) enter into any compensation, severance,
retention or change of control arrangement with any employee or other service
provider of Seller or (vi) grant any stock option or other equity awards to any
director, officer, employee or consultant of or associated with the Business;
(k) Seller shall not cease to continue to collect any
Accounts Receivable and to pay any accounts payable in a manner consistent with
past practice;
(l) Seller shall not waive any material rights;
(m) Seller shall not amend any material term of the Bank
Credit Agreements, or create or incur any indebtedness under the Bank Credit
Agreements except for borrowings in the ordinary course of business; provided
that such borrowings shall not exceed an aggregate outstanding balance of
US$36,000,000 and shall be on terms consistent with the Company's prior
borrowings and the proceeds of which shall be used for purposes consistent with
prior borrowings; provided, further, that any proceeds of which that remain on
the Closing Date shall be applied by Seller immediately prior to
32
Closing to reduce the outstanding balance of the Bank Credit Agreements existing
on the Closing Date; and
(n) Seller shall not authorize any of, or announce an
intention to, commit or agree to take any of, the foregoing actions or any
action which would result in a breach of any representation, warranty or
covenant of Seller contained in this Agreement as of the date when made or as of
any future date.
Section 8.2 No Solicitation.
(a) Seller shall, and shall cause its officers, directors,
stockholders, employees, financial advisors, attorneys, accountants and other
advisors, representatives and agents (collectively, "Representatives") to,
immediately cease and cause to be terminated immediately any discussions or
negotiations with any parties that may be ongoing with respect to, or that could
reasonably be expected to lead to, a Takeover Proposal. Seller shall not, nor
shall it authorize or permit any of its Representatives, to (i) directly or
indirectly solicit, initiate, encourage or take any other action designed to, or
which would reasonably be expected to, facilitate (including by way of
furnishing information) any Takeover Proposal, (ii) enter into any agreement,
arrangement or understanding with respect to any Takeover Proposal or enter into
any agreement, arrangement or understanding requiring it to abandon, terminate
or fail to consummate the transactions contemplated hereby, (iii) initiate or
participate in any way in any negotiations or discussions regarding, or furnish
or disclose to any Person (other than to Purchaser and its Affiliates) any
information with respect to, or take any other action to facilitate or in
furtherance of any inquiries or the making of any proposal that constitutes, or
could reasonably be expected to lead to, any Takeover Proposal or (iv) grant any
waiver or release under any standstill or any similar agreement with respect to
any class of Seller's equity securities; provided, however, at any time prior to
obtaining the Stockholder Approval, in response to a bona fide written Takeover
Proposal that the Board of Directors of Seller determines in good faith (after
receiving advice from outside counsel and a financial advisor of nationally
recognized reputation) constitutes or would reasonably be expected to lead to a
Superior Proposal, and which Takeover Proposal was not solicited after the date
hereof and was made after the date hereof and did not otherwise result from a
breach of this Section 8.2, Seller may, if its Board of Directors determines in
good faith (after receiving advice from outside counsel) that it is required to
do so in order to comply with its fiduciary duties to the stockholders of Seller
under applicable Law, and subject to compliance with Section 8.2(c), (i) furnish
information with respect to Seller to the Person making such Takeover Proposal
(and its representatives) pursuant to a customary confidentiality agreement not
less restrictive of such Person than the Confidentiality Agreement, provided
that all such information has previously been provided to Purchaser or is
provided to Purchaser prior to or at the time it is provided to such Person, and
(ii) participate in discussions or negotiations with the Person making such
Takeover Proposal (and its representatives) regarding such Takeover Proposal.
33
(b) Seller shall provide Purchaser with seventy-two (72)
hours' prior written notice of any meeting of its Board of Directors at which
its Board of Directors is reasonably expected to consider any Takeover Proposal.
(c) Neither the Board of Directors of Seller nor any
committee thereof shall (i) (A) withdraw (or modify in a manner adverse to
Purchaser), or propose to withdraw (or modify in a manner adverse to Purchaser),
the approval, recommendation or declaration of advisability by such Board of
Directors, or any such committee thereof, of this Agreement, the transactions
contemplated hereby or (B) recommend, adopt or approve, or propose to recommend,
adopt or approve, any Takeover Proposal (any action described in this clause (i)
being referred to as a "Adverse Recommendation Change") or (ii) approve or
recommend, or propose to approve or recommend, or allow Seller to execute or
enter into, any letter of intent, memorandum of understanding, agreement in
principle, merger agreement, acquisition or purchase agreement, option
agreement, joint venture agreement, partnership agreement or other similar
agreement constituting or related to, or that is intended to or could reasonably
be expected to lead to, any Takeover Proposal (other than a confidentiality
agreement referred to in Section 8.2(a)) (an "Acquisition Agreement").
Notwithstanding the foregoing, at any time prior to obtaining the Stockholder
Approval, the Board of Directors of Seller may make an Adverse Recommendation
Change in response to a Superior Proposal if such Board of Directors determines
in good faith (after receiving advice from outside counsel) that it is required
to do so in order to comply with its fiduciary duties to the stockholders of
Seller under applicable Law; provided, however, that (i) no Adverse
Recommendation Change shall be made until after the fifth (5th) Business Day
following Purchaser's receipt of written notice (a "Notice of Adverse
Recommendation") from Seller advising Purchaser that the Board of Directors of
Seller intends to take such action and specifying the reasons therefor,
including the terms and conditions of any Superior Proposal that is the basis of
the proposed action by the Board of Directors of Seller (it being understood and
agreed that any amendment to the financial terms or any other material term of
such Superior Proposal shall require a new Notice of Adverse Recommendation and
a new five (5) Business Day period); (ii) during such five (5) Business Day
period Seller shall negotiate with Purchaser in good faith to make such
adjustments to the terms and conditions of this Agreement as would enable the
Board of Directors of Seller to proceed with its recommendation of this
Agreement and not make an Adverse Recommendation Change; and (iii) the Board of
Directors of Seller shall not make an Adverse Recommendation Change if, prior to
the expiration of such five (5) Business Day period, Purchaser makes a proposal
to adjust the terms and conditions of this Agreement that Seller's Board of
Directors determines in good faith (after consultation with its financial
advisors) to be at least as favorable as the Superior Proposal.
(d) Seller agrees that in addition to the obligations of
Seller set forth in paragraphs (a), (b) and (c) of this Section 8.2, promptly on
the date of receipt thereof, Seller shall advise Purchaser orally and in writing
of any request for information or any Takeover Proposal, or any inquiry,
discussions or negotiations with respect to any Takeover Proposal and the terms
and conditions of such request, Takeover Proposal, inquiry, discussions or
negotiations and Seller shall promptly provide to Purchaser copies of any
written materials received by Seller in connection with any of the foregoing,
and
34
the identity of the Person or group making any such request, Takeover Proposal
or inquiry or with whom any discussions or negotiations are taking place. Seller
agrees that it shall keep Purchaser fully informed of the status and details
(including amendments or proposed amendments) of any such request, Takeover
Proposal or inquiry and keep Purchaser fully informed as to the details of any
information requested of or provided by Seller and as to the details of all
discussions or negotiations with respect to any such request, Takeover Proposal
or inquiry.
(e) Nothing contained in this Section 8.2 shall prohibit
Seller from (i) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2 promulgated under the Exchange Act or (ii) making any
disclosure to the stockholders of Seller if, in the good faith judgment of the
Board of Directors of Seller (after receiving advice from outside counsel) such
disclosure would be required under applicable Law; provided, however, that in no
event shall Seller or its Board of Directors or any committee thereof take, or
agree or resolve to take, any action prohibited by Section 8.2(c).
(f) Seller agrees that immediately following the execution
of this Agreement it shall request that each Person which has heretofore
executed a confidentiality agreement in connection with such Person's
consideration of acquiring Seller to return or destroy all confidential
information heretofore furnished to such Person by or on its behalf.
Section 8.3 Stockholder Meeting; Preparation of Proxy Statement.
(a) Seller shall, as promptly as practicable following the
execution of this Agreement, establish a record date for, duly call, give notice
of, convene and hold the Stockholder Meeting whereby Seller shall submit this
Agreement and the transactions contemplated by this Agreement. Subject to
Sections 8.2(c) and 8.2(e), Seller shall, through its Board of Directors,
recommend to its stockholders adoption of this Agreement and shall include such
recommendation in the Proxy Statement. Without limiting the generality of the
foregoing, Seller's obligations pursuant to the first sentence of this Section
8.3(a) shall not be affected by (i) the commencement, public proposal, public
disclosure or communication to Seller of any Takeover Proposal or (ii) the
withdrawal or modification by the Board of Directors of Seller or any committee
thereof of such Board of Directors' or such committee's approval or
recommendation of this Agreement or the other transactions contemplated hereby;
provided, however, that no breach of this Section 8.3(a) shall be deemed to have
occurred if Seller adjourns or postpones the Stockholders Meeting for a
reasonable period of time, each such period of time not to exceed ten (10)
Business Days; provided that (x) at the time of such adjournment or postponement
the Board of Directors shall be prohibited by the terms of this Agreement from
making an Adverse Recommendation Change, and the Stockholders Meeting is then
scheduled to occur within four (4) Business Days of the time of such adjournment
or postponement or (y) at the time the Board of Directors announces an Adverse
Recommendation Change, the Stockholders Meeting is then scheduled to occur no
later than ten (10) Business Days from the date of such Adverse Recommendation
Change; provided that Seller may not adjourn or postpone the Stockholders
Meeting
35
pursuant to this clause (ii) more than two (2) times or for more than fifteen
(15) Business Days in the aggregate.
(b) Seller shall, as soon as practicable following the
execution of this Agreement, but in no event more than seventeen (17) calendar
days following the execution of this Agreement, prepare and file a preliminary
Proxy Statement with the SEC and shall use all reasonable efforts to respond to
any comments of the SEC or its staff and to cause the Proxy Statement to be
mailed to Seller's stockholders as promptly as practicable. Seller shall notify
Purchaser promptly of the receipt of any comments or other communication from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Proxy Statement or for additional information and will
supply Purchaser with copies of all correspondence between Seller or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the transactions contemplated by this
Agreement. Seller shall provide Purchaser an opportunity to comment on any
correspondence with the SEC or its staff or any proposed material to be included
in the Proxy Statement prior to transmission to the SEC or its staff and shall
not transmit any such material to which Purchaser reasonably objects. If at any
time prior to the Stockholder Meeting there shall occur any event that should be
set forth in an amendment or supplement to the Proxy Statement, Seller shall
promptly prepare and mail to its stockholders such an amendment or supplement.
Seller shall not mail any Proxy Statement, or any amendment or supplement
thereto, to which Purchaser reasonably objects.
Section 8.4 Access to Information. Prior to Closing, Seller
shall afford to Purchaser and its officers, employees, accountants, counsel,
agents and other Representatives reasonable access at reasonable times and upon
reasonable prior notice to all of the assets, properties, personnel, books and
records of Seller relating to the Business, Transferred Assets and the Assumed
Liabilities (including Tax Returns filed and those in preparation, work papers
and other items relating to Taxes), and shall furnish promptly all information
relating to the Business, Transferred Assets and the Assumed Liabilities as
Purchaser may reasonably request. All such information shall be kept
confidential in accordance with the terms of the Confidentiality Agreement.
Section 8.5 Disclosure Supplements. From time to time prior to
Closing, Seller shall supplement or amend the Disclosure Schedule with respect
to any matter hereafter arising or any information obtained after the date
hereof which, if existing, occurring or known at or prior to the date of this
Agreement, would have been required to be set forth or described in the
Disclosure Schedule or which is necessary to complete or correct any information
in such schedule or in any representation and warranty of Seller which has been
rendered inaccurate thereby. Seller shall promptly inform Purchaser of any claim
by a third party that a Contract has been breached, is in default, may not be
renewed or that a consent would be required as a result of the transactions
contemplated hereby. For purposes of determining the satisfaction of the
conditions to consummation of the transactions contemplated hereby, no such
supplement, amendment or information shall be considered without Purchaser's
written consent.
36
Section 8.6 Commercially Reasonable Efforts.
(a) Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall use commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated by this Agreement and the
Collateral Agreements as promptly as practicable, including (i) the prompt
preparation and filing of all forms, registrations and notices required to be
filed to consummate the transactions contemplated by this Agreement and the
Collateral Agreements and the taking of such commercially reasonable actions as
are necessary to obtain any requisite approvals, consents, orders, exemptions or
waivers by any Governmental Authority or any other Person and (ii) using its
reasonable best efforts to cause the satisfaction of all conditions to Closing.
Each party shall promptly consult with the other with respect to, provide any
necessary information with respect to and provide the other (or its counsel)
copies of, all filings made by such party with any Governmental Authority or any
other Person or any other information supplied by such party to a Governmental
Authority or any other Person in connection with this Agreement and the
transactions contemplated by this Agreement, as the same may be disclosed
without (i) violating any legal constraints or any legal obligation, (ii)
waiving any attorney/client work product or like privilege or (iii) disclosing
information about the activities of Seller that is not related to Purchaser or
the operation of the Business or the Transferred Assets or Assumed Liabilities.
(b) Each party hereto shall promptly inform the other of any
communication from any Governmental Authority regarding any of the transactions
contemplated by this Agreement and the Collateral Agreements. If any party or
Affiliate thereof receives a request for additional information or documentary
material from any such Governmental Authority with respect to the transactions
contemplated by this Agreement, then such party will endeavor in good faith to
make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. Nothing herein shall require any party to waive any substantial
rights or agree to any substantial limitation on its operations or to divest
itself of any assets.
Section 8.7 State Takeover Statutes. Seller and its Board of
Directors shall (i) take all reasonable action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
this Agreement or the transactions contemplated hereby and (ii) if any state
takeover statute or similar statute becomes applicable to this Agreement or the
transactions contemplated hereby, take all reasonable action necessary to ensure
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise to minimize the
effect of such statute or regulation on this Agreement or the transactions
contemplated hereby. Nothing in this Agreement shall be deemed to require
Purchaser to agree to, or proffer to, divest or hold separate any assets or any
portion of any business of Purchaser or Seller.
37
Section 8.8 Certain Litigation. Seller agrees that it shall not
settle any litigation commenced after the date hereof against Seller or any of
its directors or officers by any stockholder of Seller without the prior written
consent of Purchaser. In addition, Seller shall not cooperate with any third
party that may hereafter seek to restrain or prohibit or otherwise oppose the
transactions contemplated by this Agreement and shall cooperate with Purchaser
to resist any such effort to restrain or prohibit or otherwise oppose the
transactions contemplated by this Agreement.
Section 8.9 Notification of Certain Matters. After the date
hereof and prior to Closing, Seller shall give prompt notice to Purchaser of (a)
any notice of, or other communication relating to, a default or event which,
with notice or lapse of time or both, would become a default, received by it
subsequent to the date of this Agreement and prior to Closing, under any
Contract material to the condition (financial or otherwise), business,
properties, assets, prospects or results of operations of Seller to which it is
a party or is subject, (b) any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated hereby, (c) any Material Adverse
Effect or the occurrence of any event or events which would be reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect or (d) the
occurrence or existence of any event which would, or could with the passage of
time or otherwise, make any representation or warranty contained herein untrue;
provided, however, that the delivery of notice pursuant to this Section 8.9
shall not limit or otherwise affect the remedies available hereunder to
Purchaser.
Section 8.10 Transfer Taxes. Notwithstanding any other provision
of this Agreement, all transfer, registration, stamp, documentary, sales, use
and similar Taxes incurred in connection with this Agreement or the transfer of
the Business or the Transferred Assets shall be borne equally by Purchaser and
Seller. Seller shall be solely responsible for making the determination with
respect to the applicability of any such Taxes, and preparing and timely filing
all Tax Returns with respect thereto.
Section 8.11 Filings Under HSR Act. Purchaser and Seller shall
make the necessary filings under the HSR Act with respect to the transactions
contemplated hereby as promptly as possible but in no event more than ten (10)
calendar days following execution of this Agreement, and shall thereafter use
commercially reasonable efforts to cause the related waiting period to expire or
to be otherwise terminated at the earliest practicable time.
Section 8.12 Confidentiality. For purposes of this Agreement,
the parties hereto adopt, acknowledge and affirm the terms and conditions of the
Confidentiality Agreement and the terms and conditions of such agreement shall
be incorporated into this Agreement, as if fully set forth herein and as if
originally executed by the parties hereto.
Section 8.13 Delivery of Agreements. Seller shall use reasonable
efforts to cause J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ to duly execute and deliver the
Subscription Agreement
38
and the Stockholders Agreement to Purchaser not later than five (5) Business
Days prior to the Closing Date.
Section 8.14 No Inconsistent Action. Neither Purchaser nor
Seller will take any action which is inconsistent with its respective
obligations under this Agreement and both Purchaser and Seller will timely
perform their respective obligations under this Agreement and as otherwise
contemplated by the transactions contemplated hereby.
Section 8.15 Payment of Accounts Payable. Seller shall, and
shall cause its Affiliates to, pay all accounts payable and any other amounts
owed by them, including accrued liabilities, to any third parties in accordance
with their terms.
Section 8.16 Powers of Attorney. At or prior to the Closing, all
powers of attorney relating to the Business or the Transferred Assets shall be
revoked by their terms or Seller shall revoke them or cause them to be revoked.
Section 8.17 Seller's Rights.
(a) From and after the Closing, Purchaser shall possess, to
the exclusion of Seller, all Seller's Rights, and Seller agrees that it will
not, nor will it authorize any third party to, register (as a trademark, service
▇▇▇▇, corporate name, assumed name, trade name, domain name or otherwise), apply
to register or use any of Seller's Rights or any formatives, derivatives or
colorable imitations thereof, or any marks confusingly similar thereto, or
challenge the validity of, or Purchaser's right in, Seller's Rights, or engage
in any act contesting or in any way impairing or tending to impair Purchaser's
rights in any of Seller's Rights.
(b) On or prior to the Closing, Seller shall change its
company name and assumed names in accordance with the previous sentence, and
from time to time after Closing, without additional consideration, Seller shall
(or, if appropriate, cause its Affiliates to) execute and deliver such further
consents or instruments and take such other action as may be reasonably
necessary for Purchaser to register any of Seller's Rights with any Governmental
Entity as a trademark, service ▇▇▇▇, company name, assumed name, trade name or
otherwise.
(c) The rights and obligations of the parties set forth in
this Section 8.17 shall survive the Closing without limitation.
Section 8.18 Further Assurances. From time to time after the
Closing, without additional consideration, each party hereto will (or, if
appropriate, will cause its Affiliates to) execute and deliver such further
instruments and take such other action as may be necessary or reasonably
requested by the other party to make effective the transactions contemplated by
this Agreement and the Collateral Agreements and to provide the other party with
the intended benefits of this Agreement and the Collateral Agreements. Without
limiting the foregoing, upon reasonable request of Purchaser, Seller shall, and
Seller shall cause its Affiliates to, as applicable, execute, acknowledge and
deliver all such further assurances, deeds, assignments, consequences, powers of
attorney and other instruments and paper as may be required to sell, transfer,
assign,
39
convey and deliver to Purchaser all right, title and interest in, to and under
the Transferred Assets. If any party to this Agreement shall, following the
Closing, have in its possession any asset or right (including with respect to
any Seller's Rights) which under this Agreement should have been delivered to
the others, such party shall promptly deliver such asset or right to the others.
Section 8.19 Release of Liens. At or prior to the Closing,
Seller shall cause the release of all Liens (other than Permitted Liens) on the
Transferred Assets, so that such Transferred Assets and rights are free and
clear of any Liens (other than Permitted Liens).
Section 8.20 Consents to Transfer Assets. Seller agrees that if
any required Consent to the transfer of any Transferred Asset to Purchaser as
provided for herein and set forth on Schedule 8.20 is not obtained prior to
Closing, Seller shall provide Purchaser with all of the benefits of such
Transferred Asset as though the required Consents had been obtained (and, to the
extent, but, notwithstanding anything herein to the contrary, only to the
extent, such benefits are provided, Purchaser shall assume the corresponding
obligation) and shall continue to use reasonable best efforts to obtain such
Consent.
Section 8.21 Employment Matters. Seller shall make available to
Purchaser all employees of the Business for the purposes of interviewing and
hiring. Purchaser agrees and undertakes to extend to every employee of Seller an
offer of employment with the same base salary that each such employee has with
Seller immediately prior to the date hereof (other than with respect to J. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, whose terms of employment shall be
governed by the Employment Agreements), with employee benefits substantially
similar, in the aggregate, to similarly situated employees of SCOA and its
subsidiaries (with the exception of SCOA's defined benefit pension plan), with
recognition of all prior employment by Seller as employment by Purchaser for the
purposes of benefit vesting, and with group health care coverage made available
to all such employees without any limitation (but only to the extent such
limitations did not apply to the employees under the applicable group health
plan of Seller) or exclusion for preexisting conditions. Seller shall furnish to
Purchaser such employee information and records and such descriptions of
personnel policies, procedures and benefits plans applicable to employees of the
Business as Purchaser may reasonably request and such information, records and
descriptions shall be subject to the provisions of Section 8.12 hereto. Seller
shall cooperate with the efforts of Purchaser to cause such employees to accept
any offers of employment by Purchaser and shall not make any competing offer of
continued employment to any individual whom Purchaser desires to employ in the
Business. Seller does not intend to maintain a group health plan after Closing,
and Purchaser shall be liable for and reimburse Seller for any liability or
obligations which Seller might incur or for which Seller might become obligated
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
with respect to employees of the Business (and their eligible dependents)
arising in connection with their termination of employment with Seller.
40
Section 8.22 Bulk Sales Laws. The parties hereto hereby waive
compliance with the provisions of any applicable bulk sales laws, including
Article 6 of the Uniform Commercial Code as it may be in effect in any
applicable jurisdiction ("Bulk Sales Laws"). This provision shall not be deemed
to in any way limit the indemnity provided for in Article X hereof.
Section 8.23 No Solicitation of Employees. For a period of three
(3) years after the Closing Date, Seller shall not, and shall cause its
Affiliates (other than Friedman, Billings, ▇▇▇▇▇▇ Group, Inc.) not to, directly
or indirectly, without the prior written consent of Purchaser, solicit, employ
or contract with any employee of Seller who has accepted employment with
Purchaser pursuant to Section 8.21 hereto (each, a "Transferred Employee");
provided that nothing shall prohibit Seller and its Affiliates from performing,
or having performed on their behalf, a general solicitation for employees not
specifically focused at the Transferred Employees through the use of media,
advertisement, electronic job boards or other general, public solicitations.
Section 8.24 Collection of Accounts Receivables.
(a) As of the Closing Date, Seller hereby authorizes
Purchaser to open any and all mail addressed to Seller relating to the Business
and delivered to the offices of the Business or otherwise to Purchaser if
received on or after the Closing Date, and hereby appoints Purchaser its
attorney-in-fact to endorse, cash and deposit any monies, checks or negotiable
instruments received by Purchaser after the Closing Date with respect to the
Accounts Receivable and any accounts receivables made payable or endorsed to
Seller or its order, for Purchaser's own account.
(b) As of the Closing Date, Seller agrees that it promptly
shall forward to Purchaser any monies, checks or negotiable instruments received
by Seller after the Closing Date relating to the Accounts Receivable and any
accounts receivables for Purchaser's own account.
Section 8.25 Termination of Seller's Activities.
(a) Purchaser acknowledges that it is the intention of
Seller to terminate its status as a reporting company under the Exchange Act at
the end of the calendar quarter in which settlement of the Contingent Payment
occurs, and to conclude all actions necessary to discontinue its business and
affairs (including without limitation all distributions to its stockholders and
all associated accounting and tax reporting and returns) within one hundred
eighty (180) calendar days of the Closing. Purchaser agrees that it shall pay
reasonable and documented expenses actually incurred by Seller which are
directly related to the termination of Seller's business and affairs up to
US$150,000. Purchaser agrees to settle such expenses within five (5) Business
Days of Seller's written invoice therefor including any other documentation
reasonably requested by Purchaser.
(b) Purchaser agrees that it shall preserve and keep all
material books and records of Seller included within the Transferred Assets for
a period of at least three
41
(3) years from the Closing Date and, subject to Section 8.12, provide Seller
with reasonable access, upon reasonable prior notice, to such material books and
records.
(c) Purchaser agrees that it shall make J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ available to Seller to assist Seller in the
termination of its business and affairs.
Section 8.26 Cancellation of Stock Options. Seller shall cancel
the stock options of J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ which are unvested as of the Closing
Date for the purchase of additional shares of Seller without compensation
consistent with the terms of Seller's stock option plan.
Section 8.27 Payoff Amount. Seller shall promptly use the Payoff
Amount to pay, satisfy, discharge and perform in respect of all liabilities,
obligations and indebtedness of Seller under the Bank Credit Agreements as of
the Closing Date.
ARTICLE IX
TERMINATION
Section 9.1 Termination. This Agreement may be terminated at any
time prior to the Closing, whether before or after receipt of the Stockholder
Approval:
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller:
(i) if the Stockholder Approval is not obtained at
the Stockholder Meeting;
(ii) if the transactions contemplated by this
Agreement shall not have been consummated by May 31, 2004 (the
"Termination Date"); provided, however, that the right to
terminate this Agreement under this Section 9.1(b)(ii) shall not
be available to any party whose breach of any provision of this
Agreement has been the cause of, or resulted in, the failure of
the transactions contemplated by this Agreement to occur on or
before the Termination Date; or
(iii) there shall be any Law or Order that has the
effects set forth in Section 5.3(b);
(c) by Seller, (i) (A) if Purchaser shall have breached any
of the covenants or agreements contained in this Agreement to be complied with
by Purchaser such that the closing condition set forth in Section 5.5(b) would
not be satisfied or (B) if there exists a breach of any representation or
warranty of Purchaser contained in this Agreement such that the closing
condition set forth in Section 5.5(a) would not be satisfied, and, in the case
of both (A) and (B), such breach is incapable of being cured by
42
the Termination Date or is not cured by Purchaser within thirty (30) Business
Days after Purchaser receives written notice of such breach from Seller;
(d) by Purchaser:
(i) (A) if Seller shall have breached any of the
covenants or agreements contained in this Agreement to be
complied with by Seller such that the closing condition set
forth in Section 5.4(b) would not be satisfied or (B) if there
exists a breach of any representation or warranty of Seller
contained in this Agreement such that the closing condition set
forth in Section 5.4(a) would not be satisfied, and, in the case
of both (A) and (B), such breach is incapable of being cured by
the Termination Date or is not cured by Seller within thirty
(30) Business Days after Seller receives written notice of such
breach from Purchaser;
(ii) in the event that prior to obtaining the
Stockholder Approval (A) an Adverse Recommendation Change shall
have occurred, (B) Seller shall have failed to include in the
Proxy Statement the recommendation of the Board of Directors of
Seller that its stockholders vote in favor of the transactions
contemplated hereby, (C) the Board of Directors of Seller shall
have failed to publicly reaffirm its recommendation of this
Agreement or the transactions contemplated hereby within five
(5) Business Days after Purchaser requests in writing that such
recommendation or determination be reaffirmed, (D) a tender or
exchange offer relating to any Seller Shares shall have been
commenced and Seller shall not have sent to its stockholders,
within ten (10) Business Days after the commencement of such
tender or exchange offer, a statement disclosing that Seller
recommends rejection of such tender or exchange offer or (E) a
Takeover Proposal is publicly announced, and Seller shall have
failed to issue, within five (5) Business Days after such
Takeover Proposal is announced, a press release that reaffirms
the recommendation of the Board of Directors of Seller that its
stockholders vote in favor of the transactions contemplated
hereby; or
(iii) if Seller breaches any of its obligations under
Section 8.2.
Section 9.2 Effect of Termination. Except as otherwise set forth
in this Agreement, in the event of a termination of this Agreement by either
Seller or Purchaser as provided in Section 9.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Purchaser or Seller or their respective officers or directors; provided,
however, that no such termination shall relieve any party hereto of any
liability or damages resulting from any material breach of this Agreement; and
provided further, that the provisions of this Section 9.2, Section 8.12
(Confidentiality) Section 9.3 (Fees and Expenses), Section 9.4 (Termination Fee)
and Section 11.6 (Publicity) of this Agreement shall remain in full force and
effect and survive any termination of this Agreement.
43
Section 9.3 Fees and Expenses. Except as otherwise expressly set
forth in this Agreement, all fees and expenses incurred in connection herewith
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the transactions contemplated by this Agreement
are consummated. The filing fee payable in connection with the parties'
compliance with the HSR Act shall be borne equally by Purchaser and Seller.
Section 9.4 Termination Fees.
(a) If this Agreement shall be terminated pursuant to (i)
Section 9.1(b)(i), 9.1(b)(ii), 9.1(d)(i) or 9.1(d)(ii) and (A) at any time after
the date hereof a Takeover Proposal shall have been publicly announced or
otherwise communicated to Seller's Board of Directors and (B) within eighteen
(18) months of the termination of this Agreement, Seller enters into a
definitive agreement with any third party with respect to a transaction similar
to a Takeover Proposal or any such transaction is consummated or such a
transaction is consummated then Seller shall upon the earlier to occur of the
execution of such definitive agreement and such consummation pay Purchaser a
non-refundable fee in an amount equal to five percent (5%) of the Purchase Price
(the "Termination Fee"), payable by wire transfer of immediately available funds
to an account designated in writing to Seller by Purchaser or (ii) Section
9.1(c)(ii) and 9.1(d)(iii) Seller shall pay Purchaser a non-refundable fee in
the amount equal to the fees and expenses of Purchaser and its Affiliates
incurred in connection with the transactions contemplated by this Agreement up
to US$500,000.
(b) Seller acknowledges that the agreements contained in
this Section 9.4 are an integral part of the transactions contemplated hereby,
and that, without these agreements, Purchaser would not enter into this
Agreement; accordingly, if Seller fails to promptly pay the Termination Fee,
and, in order to obtain such payment Purchaser commences a suit which results in
a judgment against Seller for the Termination Fee, Seller shall pay to Purchaser
its costs and expenses (including attorney's fees) in connection with such suit,
together with interest on the amount of the fee at the rate announced by Bank of
America as its prime rate on the date on which the Termination Fee became
payable, plus two percent (2%), per annum.
(c) If this Agreement shall be terminated pursuant to
Section 9.1(c)(i), Purchaser shall pay Seller a non-refundable fee in the amount
equal to the fees and expenses of Seller and its Affiliates incurred in
connection with the transactions contemplated by this Agreement up to
US$500,000.
Section 9.5 Extension; Waiver. At any time prior to the Closing,
the parties hereto may, to the extent permitted by applicable Law, subject to
Section 11.10, (a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. The failure of any party to this Agreement to
44
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.1 Survival of Indemnification Rights. Subject to the
limitations and other provisions of this Agreement, the representations and
warranties of Seller contained in Article VI hereto and the representations and
warranties of Purchaser in Article VII hereto shall survive the Closing and
remain in full force and effect until the earlier to occur of (i) payment in
full of the Contingent Payment payable pursuant to Section 4.1(b)(ii) by
Purchaser to Seller or (ii) one hundred eighty (180) calendar days following the
Closing Date; provided that if a claims notice has been provided within such one
hundred eighty (180) calendar day period, they shall remain in full force and
effect until final resolution thereof. The covenants and agreements of Seller
contained in this Agreement shall survive and remain in full force and effect
for the applicable period specified therein, or if no such period is specified,
indefinitely. The provisions of this Article X shall survive for so long as any
other Section of this Agreement shall survive. None of the Closing, Purchaser's
waiver of any condition to the Closing or Purchaser's knowledge of any breach
prior to the Closing, shall constitute a waiver of any of the rights Purchaser
may have hereunder.
Section 10.2 Seller Indemnification Obligations. Seller shall
indemnify, defend and hold harmless Purchaser and any parent, subsidiary,
associate, Affiliate, director, officer, stockholder or agent of Purchaser, and
their respective representatives, successors and permitted assigns (all of the
foregoing are collectively referred to as the "Purchaser Indemnified Parties")
from and against and pay on behalf of or reimburse such party in respect of, as
and when incurred, all out-of-pocket losses, liabilities, demands, claims,
actions or causes of action, costs, damages, judgments, debts, settlements,
assessments, deficiencies, Taxes, penalties, fines or expenses, whether or not
arising out of any claims by or on behalf of a third party, including interest,
penalties, reasonable attorneys' fees and expenses and all reasonable amounts
paid in investigation, defense or settlement of any of the foregoing
(collectively, "Losses") which any such party may suffer, sustain or become
subject to, to the extent resulting from or relating to:
(a) any inaccuracy in, or breach of, any representation or
warranty made by Seller under this Agreement or any Collateral Agreement;
(b) any material breach or non-fulfillment of any covenant
or agreement on the part of Seller under this Agreement or any other Collateral
Agreement;
(c) the ownership or operation of the Transferred Assets or
the conduct or operation of the Business or the activities of Seller in
connection with the Transferred Assets or the Business on or prior to the
Closing Date;
45
(d) any applicable Bulk Sales Laws as a result of the
actions contemplated by Section 8.22 hereto;
(e) any fees, expenses or other payments incurred or owed by
Seller to any agent, broker, investment banker or other firm or Person retained
or employed in connection with the transactions contemplated by this Agreement;
or
(f) the Retained Liabilities.
Section 10.3 Purchaser Indemnification Obligations. Purchaser
shall indemnify, defend and hold harmless Seller and any parent, subsidiary,
associate, Affiliate, director, officer, stockholder or agent of Seller, and
their respective representatives, successors and permitted assigns (all of the
foregoing are collectively referred to as the "Seller Indemnified Parties") from
and against and pay on behalf of or reimburse such party in respect of, as and
when incurred, all Losses which any such party may suffer, sustain or become
subject to, to the extent resulting from or relating to:
(a) any inaccuracy in, or breach of, any representation or
warranty made by Purchaser under this Agreement or any Collateral Agreement;
(b) any material breach or non-fulfillment of any covenant
or agreement on the part of Purchaser under this Agreement or any other
Collateral Agreement;
(c) the ownership or operation of the Transferred Assets or
the conduct or operation of the Business or the activities of Purchaser in
connection with the Transferred Assets or the Business from and after the
Closing; or
(d) the Assumed Liabilities.
Section 10.4 Indemnification Procedure.
(a) If any Purchaser Indemnified Party or Seller Indemnified
Party (the "Indemnified Party") intends to seek indemnification pursuant to this
Article X, such Indemnified Party shall promptly notify the other party (the
"Indemnifying Party"). The Indemnified Party will provide the Indemnifying Party
with prompt notice of any third party claim in respect of which indemnification
is sought. The failure to provide either such notice will not affect any rights
hereunder except to the extent the Indemnifying Parties are materially
prejudiced thereby.
(b) If such claim involves a claim by a third party against
the Indemnified Party, the Indemnifying Party may, within thirty (30) calendar
days after receipt of such notice and upon notice to the Indemnified Party,
assume, through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and the Indemnified Party shall reasonably
cooperate in connection therewith; provided that the Indemnified Party may
participate in such settlement or defense through counsel chosen by it;
provided, further, that if the Indemnified Party reasonably determines that
representation by the Indemnifying Party's counsel of the Indemnifying Party and
the
46
Indemnified Party may present such counsel with a conflict of interests, then
the Indemnifying Party shall pay the reasonable fees and expenses of the
Indemnified Party's counsel. Notwithstanding anything in this Section 10.4 to
the contrary, no Indemnifying Party may, without the prior written consent of
the Indemnified Party, settle or compromise any action or consent to the entry
of any judgment, such consent not to be unreasonably withheld. So long as the
Indemnifying Party is contesting any such claim in good faith, the Indemnified
Party shall not pay or settle any such claim without the Indemnifying Party's
consent, such consent not to be unreasonably withheld. If the Indemnifying Party
is not contesting such claim in good faith, then the Indemnified Party may
conduct and control, through counsel of their own choosing and at the expense of
the Indemnifying Party, the settlement or defense thereof, and the Indemnifying
Party shall cooperate with them in connection therewith. The failure of the
Indemnified Party to participate in, conduct or control such defense shall not
relieve the Indemnifying Party of any obligation it may have hereunder.
Section 10.5 Calculation of Indemnity Payments. The amount of
any Loss for which indemnification is provided under this Article X shall be (a)
increased to take account of any net Tax cost actually incurred by the
Indemnified Party arising from the receipt or accrual of indemnity payments
hereunder (grossed up for such increase) and (b) reduced to take account of any
net Tax benefit actually realized by the Indemnified Party arising from the
incurrence of the Loss that gave rise to such indemnity claim.
Section 10.6 Relation of Indemnity to Contingent Payment. The
amount of the Contingent Payment shall be reduced by any amount that is owed
hereunder by Seller to any Purchaser Indemnified Party. The rights of any
Purchaser Indemnified Party under the preceding sentence are in addition to any
other rights and remedies that such Purchaser Indemnified Party may have under
this Agreement. Seller acknowledges and agrees that its obligations to Purchaser
under this Agreement, including this Article X, are not limited to the amount of
the Contingent Payment.
Section 10.7 Indemnification Amounts. Notwithstanding any
provision to the contrary contained in this Agreement, the Indemnifying Party
shall not be obligated to indemnify the Indemnified Parties for any Losses
pursuant to this Article X to the extent they are the result of any breach of
any representation or warranty or failure to perform any covenant made by or on
behalf of the Indemnifying Party unless and until the dollar amount of all
Losses in the aggregate exceed US$10,000, in which case the Indemnifying Party
will be obligated to indemnify the Indemnified Parties for the total amount of
Losses including any amounts which would otherwise not be required to be paid by
reason of this Section 10.7; provided that in no event shall the aggregate
indemnification obligations of the Indemnifying Party pursuant to Section
10.2(a) or (b) (with respect to Seller) or Section 10.3(a) or (b) (with respect
to Purchaser) hereto exceed US$2,000,000. Notwithstanding the foregoing, none of
(i), the Indemnified Parties' right to seek indemnification hereunder for any
Losses arising out of criminal activity or fraud of the Indemnifying Party, (ii)
Purchaser's right to seek indemnification under Section 10.2(c), (d), (e) or (f)
or (iii) Seller's right to seek indemnification under Section 10.3(c) or (d),
shall be subject to, or limited by, the limits contained in this Section 10.7.
47
Section 10.8 Limitation on Liability. NOTWITHSTANDING ANYTHING
CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, THE
INDEMNIFICATION OBLIGATIONS THE INDEMNIFYING PARTY, AND THE RECOVERY BY THE
INDEMNIFIED PARTY OF ANY LOSSES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY
BREACH OR NONFULFILLMENT BY A PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES,
COVENANTS, AGREEMENTS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT, SHALL BE
LIMITED TO ACTUAL DAMAGES AND SHALL NOT INCLUDE OR APPLY TO, NOR SHALL THE
INDEMNIFIED PARTY BE ENTITLED TO RECOVER, ANY INDIRECT, CONSEQUENTIAL, SPECIAL,
EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON
ACCOUNT OF LOST PROFITS OR OPPORTUNITIES OR BUSINESS INTERRUPTION) SUFFERED OR
INCURRED BY THE INDEMNIFIED PARTY.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt by the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Purchaser, to
Sumitomo Corporation of America
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Vice President Business Investment
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Seller, to
48
McGuireWoods LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Clive ▇.▇. ▇'▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McGuireWoods LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 11.2 Interpretation.
(a) When a reference is made in this Agreement to an Article
or a Section, such reference shall be to an Article or a Section of this
Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(c) This Agreement is the result of the joint efforts of
Purchaser and Seller, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there shall be no
construction against any party based on any presumption of that party's
involvement in the drafting thereof.
(d) The words "include," "includes" or "including" shall be
deemed to be followed by the words "without limitation."
(e) The term "ordinary course of business" (or similar
terms) shall be deemed to be followed by the words "consistent with past
practices."
Section 11.3 Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when such counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 11.4 Entire Agreement; No Third Party Beneficiaries.
This Agreement (including the documents and the instruments referred to herein)
(i) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) other than with respect to the matters set forth
in Article X (Indemnification), is not
49
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
Section 11.5 Governing Law.
(a) This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York, without giving effect to the
principles of conflicts of Law thereof.
(b) Each of the parties to this Agreement irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any New York state court or federal court of the United States
of America, in either case sitting in the Borough of Manhattan, New York, New
York, and any appellate court to any thereof, in any action or proceeding
arising out of or relating to this Agreement, the Voting and Support Agreements
or the transactions contemplated hereby or thereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties
irrevocably and unconditionally (i) agrees not to commence any such action or
proceeding except in such courts, (ii) agrees that any claim in respect of any
such action or proceeding may be heard and determined in such New York state
court or, to the extent permitted by Law, in such federal court, (iii) waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any such action or
proceeding in any such New York state or federal court, and (iv) waives, to the
fullest extent permitted by Law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such New York state or federal
court. Each of the parties to this Agreement agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 11.1 hereof. Nothing in this Agreement
shall affect the right of any party to this Agreement to serve process in any
other manner permitted by Law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
THAT MAY ARISE UNDER THIS AGREEMENT AND THE RELATED AGREEMENTS IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, IT IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE VOTING AND SUPPORT AGREEMENTS OR ANY OF THE RELATED AGREEMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (iv) IT HAS
50
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.5(c).
Section 11.6 Publicity. Except as required by Law, neither party
hereto shall issue any press release or otherwise make any public statement with
respect to the transactions contemplated hereby without the prior written
consent of the other party hereto as to the form and substance of such press
release or statement.
Section 11.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by either party
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 11.8 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, in addition to any
other remedy to which they are entitled at law or in equity.
Section 11.9 Severability. This Agreement shall be deemed
severable; the invalidity or unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability of the balance of this
Agreement or of any other term hereof, which shall remain in full force and
effect. If any of the provisions hereof are determined to be invalid or
unenforceable, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible.
Section 11.10 Modification. No supplement, modification or
amendment of this Agreement will be binding unless made in a written instrument
that is signed by each of the parties hereto and that specifically refers to
this Agreement.
Section 11.11 Expenses. Except as otherwise expressly provided
herein, each party hereto will pay any expenses incurred by it incident to this
Agreement and in preparing to consummate and consummating the transactions
provided for herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
OXFORD FINANCE ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
President
OXFORD FINANCE CORPORATION
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
---------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
Chief Executive Officer
EXHIBIT A
DEFINITIONS AND DEFINED TERMS
(a) As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate" shall mean with respect to any Person, any other
Person who, directly or indirectly, controls, is controlled by or is under
common control with that Person. For purposes of this definition, a Person has
control of another Person if it has the direct or indirect ability or power to
direct or cause the direction of management policies of such other Person or
otherwise direct the affairs of such other Person, whether through ownership of
at least fifty percent (50%) of the voting securities of such other Person, by
Contract or otherwise.
"Bank Credit Agreements" shall mean (i) the Master Loan and
Security Agreement dated October 17, 2003 by and among Seller, National City
Bank as Administrative Agent and Bank of America as the other Lender named
therein in the maximum principal amount of $35,000,000 and (ii) the Master Loan
and Security Agreement dated November 27, 2002 by and between Farmers &
Mechanics Bank and Seller in the maximum principal amount of $7,500,000.
"Bankruptcy and Equity Exception" shall mean, in respect of any
agreement, contract or commitment, any limitation thereon imposed by any
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar law affecting creditors' rights and remedies generally and, with respect
to the enforceability of any agreement, contract or commitment, by general
principles of equity, including principles of commercial reasonableness, public
policy, good faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
"Business Day" shall mean any day, other than a Saturday, Sunday
or one on which banks are authorized by Law to close in New York, New York.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Cogent" shall mean Cogent Neuroscience, Inc.
"Cogent Asset" shall mean all rights of Seller in the Portfolio
Property of Cogent.
"Collateral Agreements" shall mean the ▇▇▇▇ of Sale, the
Assignment and Assumption Agreements, the Employment Agreements, the Trademark
Assignment Agreement, the Domain Name Assignment Agreement and the other
assignment or transfer documents delivered at the Closing.
"Confidentiality Agreement" shall mean the confidentiality
agreement, dated as of July 23, 2003, between Purchaser and Seller.
"Consent" shall mean any consent, approval or authorization of,
notice to, or designation, registration, declaration or filing with, any Person.
"Contract" shall mean any note, bond, mortgage, indenture,
lease, license, permit, concession, franchise, contract, agreement or other
instrument or obligation.
"Credit Enhancement" shall mean any (a) security deposit,
unapplied advance rental payment or dealer investment, (b) investment
certificate, certificate of deposit, authorization to hold funds, hypothecation
of account or like instrument, (c) letter of credit, guarantee, lease guarantee
bond or postponement agreement, (d) recourse agreement, (e) security agreement,
(f) Property, (g) certificate representing shares or the right to purchase
capital of or interests in, any Person or (h) bond or debenture, in each case
pledged, assigned, mortgaged, made, delivered or transferred as security for the
performance of any obligation under or with respect to any Financing Contract.
"Disposition Agreement" shall mean any agreement, contract or
other arrangement (other than this Agreement) pursuant to which any interest in
any Financing Contract or any payment due under any Financing Contract and
related Credit Enhancement or with respect to any Portfolio Property is sold,
used as collateral, transferred to or otherwise disposed of to any Person or
Persons by Seller.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Financing Contract" shall mean any contract (including any
schedule or amendment thereto or assignment, assumption, renewal or novation
thereof) in existence on or prior to the Closing Date and any ancillary
agreements relating thereto, in the form of (a) a lease of or rental agreement
with respect to Property or (b) a sale contract (including an installment sale
contract or conditional sale agreement) arising out of the sale of Property or
(c) a secured or unsecured financing of Property or (d) a secured or unsecured
loan, and in each case, which with respect thereto: (i) Seller is the lessor,
seller, lender, secured party or obligee (whether initially or as an assignee)
or (ii) is between an obligor, on the one hand, and a lessor, seller, obilgee,
secured party or assignee of any of the foregoing, on the other hand, and (1)
which would be a Financing Contract if Seller were the lessor, seller, obligee,
secured party or assignee of any of the foregoing thereunder and (2) with
respect to which Seller is an assignee of the revenues or claims with respect
thereto.
"GAAP" shall mean U.S. generally accepted accounting principles
as in effect from time to time.
"Governmental Entity" shall mean any governmental body, court,
agency, official or regulatory or other authority, whether federal, state, local
or foreign.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations promulgated thereunder.
"Law" shall mean any statute, law, ordinance, rule or regulation
of any Governmental Entity, including any Environmental Law.
"Liens" shall mean pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature.
"Material Adverse Effect" shall mean a fact, event, effect or
circumstance which has had, or is reasonably likely to have, together with all
similar or related facts, events, effects and circumstances, a material adverse
effect on the condition (financial or otherwise), business, properties, assets,
prospects or results of operations of the Transferred Assets, Assumed
Liabilities or the Business taken as a whole or on the ability of Seller to
perform its obligations hereunder or which would prevent, delay, impede or
hinder consummation of the transactions contemplated hereby.
"MGCL" shall mean the Maryland General Corporation Law, as
amended.
"Obligor" shall mean any Person that is an obligor, lessee or
borrower under any Financing Contract.
"Order" shall mean any judgment, order, writ, preliminary or
permanent injunction or decree of any Governmental Entity.
"Permits" shall mean all permits, licenses, approvals,
franchises, notices and authorizations issued by any Governmental Authority that
are used or held for use in, necessary or otherwise relate to the ownership,
operation or other use of any of the Business or the Transferred Assets.
"Permitted Lien" shall mean:
(i) all agreements, leases, instruments, documents,
liens and encumbrances which are described in Schedule 1 to this
Exhibit A;
(ii) any Lien for Taxes not yet due and payable (or
which are being contested in good faith and which are fully
reserved for on the books, records and financial statements of
Seller);
(iii) any Liens arising under Financing Contracts
entered into by Seller in accordance with the terms of this
Agreement or in compliance with the approvals or directives of
Purchaser made pursuant to this Agreement;
(iv) any Lien created by Purchaser;
(v) with respect to the Securities, restrictions on
transfer by the terms of such Securities, by the terms of
applicable shareholders
agreements, pursuant to any legends on the certificates
evidencing the Securities, and pursuant to any applicable lockup
agreements, and under applicable securities laws;
(vi) any mechanic's or materialmen's lien, which an
Obligor under a Financing Contract is required to remove;
(vii) any Lien on any Portfolio Property which is
specifically permitted in accordance with the terms of the
related Financing Contract (if any).
"Person" shall mean an individual, corporation, limited
liability company, partnership, association, trust or any other entity or
organization, including any Governmental Entities.
"Portfolio Property" shall mean Property with respect to which
Seller is the lessor, seller or secured party, as the case may be, pursuant to
the terms of a Financing Contract (whether initially or as an assignee).
"Primary Portfolio Property" shall mean, with respect to a
Financing Contract, the Portfolio Property that constitutes the primary or
principal subject of, or collateral securing, such Financing Contract.
"Property" shall mean all property and assets of whatsoever
nature including personal property, whether tangible or intangible, and claims,
rights and choses in action.
"Proxy Statement" shall mean the proxy statement relating to the
Stockholder Meeting, together with any amendments or supplements thereto.
"Residual" shall mean the estimated value of Portfolio Property
upon expiration of the Financing Contract to which it is subject, as determined
by Seller and established on its books and records at the inception of such
Financing Contract, as reflected on the books and records of Seller.
"Reviewing Accountants" shall mean a public accounting firm or
recognized life science industry expert as mutually agreed to by Seller and
Purchaser.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Seller's Knowledge" shall mean, with respect to a particular
fact or other matter if (a) any of J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇, Chief Executive
Officer of Seller, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Chief Financial Officer of Seller,
▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President of Portfolio and Credit of Seller, ▇▇▇▇▇ ▇▇▇▇▇,
Senior Contracts Manager of Seller or ▇▇▇▇ ▇▇▇▇▇, Controller of Seller (each, a
"Manager") is aware of such fact or other matter or (b) a Manager could be
reasonably expected to discover or otherwise become aware of such fact or other
matter in the ordinary course of normal day to day operations of such
Manager and consistent with industry practices and consistent with the
requirements of the job of such Manager.
"Superior Proposal" shall mean a bona fide written Takeover
Proposal made by a third party to purchase at least eighty percent (80%) of the
outstanding equity securities of Seller pursuant to a tender offer or exchange
offer or to effect any merger, consolidation, business combination or sale of
all or substantially all of the assets, recapitalization or similar transaction
involving Seller (i) on terms which Seller's Board of Directors determines in
good faith (after consultation with its legal and financial advisors) to be
superior for the stockholders of Seller (in their capacity as stockholders) from
a financial point of view as compared to the transactions contemplated hereby
and any alternative proposed by Purchaser in accordance with Section 8.2(c)
hereof and (ii) which is reasonably likely to be consummated (taking into
account, among other things, all legal, financial, regulatory and other aspects
of the proposal and identity of the offeror).
"Takeover Proposal" shall mean any inquiry, proposal or offer
from any Person or group relating to (i) any direct or indirect acquisition or
purchase of fifteen percent (15%) or more of the assets of Seller or fifteen
percent (15%) or more of any class of equity securities of Seller, (ii) any
tender offer or exchange offer that, if consummated, would result in any Person
beneficially owning at least fifteen percent (15%) of any class of equity
securities of Seller or (iii) any merger, consolidation, business combination,
sale of all or any substantial portion of the assets, recapitalization,
liquidation or a dissolution of, or similar transaction involving Seller other
than the transactions contemplated by this Agreement.
"Taxing Authority" shall mean any national, provincial, state or
local government, or any subdivision, agency, commission or authority thereof
exercising tax regulatory, enforcement, collection or other authority.
"Trademark" shall mean the ▇▇▇▇ "TODAY'S CAPITAL FOR TOMORROW'S
CURES", U.S. Reg. No 2,764,398, registration date September 16, 2003, with
respect to financing services (Int. Class 36).
"Under-The-Hammer Analysis" shall mean the method for
determining the value of the Company's Credit Enhancements based on the
"Under-the-Hammer Value" percentages reflected on the Company's collateral risk
analysis charts and tables for such Obligor that are generated in accordance
with the Company's underwriting guidelines to reflect the existing equipment
breakdown of such Portfolio Property.
"U.S." shall mean the United States of America.
"US$" shall mean the currency of the United States of America.
(b) Each of the following terms is defined in the Section
set forth opposite such term:
Term Section
---- -------
Acceptable Evidence................................................. 4.2(a)
Accounts Receivable................................................. 2.1(h)
Acquisition Agreement............................................... 8.2(c)
Adjustment Amount................................................... 4.3(a)
Adverse Recommendation Change....................................... 8.2(c)
Agreement........................................................... Preamble
Allocation Schedule................................................. 4.4
Assignment and Assumption Agreement................................. 3.1
Assumed Contracts................................................... 2.1
Assumed Liabilities................................................. 3.1
Balance Sheet....................................................... 2.1(a)
Benefit Plans....................................................... 6.7(a)
▇▇▇▇ of Sale........................................................ 5.2(a)(i)
Bulk Sales Laws..................................................... 8.22
Business............................................................ Recitals
Closing............................................................. 5.1
Closing Date........................................................ 5.1
Closing Date Adjustment Report...................................... 4.2(a)
Closing Date Cash Payment........................................... 4.1(b)(i)
Contingent Payment.................................................. 4.1(b)(ii)
Disclosure Schedule................................................. Preamble Article VI
Domain Name Assignment Agreement.................................... 5.2(a)(x)
Employment Agreements............................................... Recitals
Environmental Law................................................... 6.16(b)
ERISA............................................................... 6.7(a)
ERISA Affiliate..................................................... 6.7(b)
Excess Cash......................................................... 4.1(c)
Excluded Assets..................................................... 2.2
Fairness Opinion.................................................... 6.19
Filed SEC Documents................................................. 6.6
Final Closing Adjustment Report..................................... 4.2(d)
FIRPTA Certificate.................................................. 5.2(a)(vii)
Hazardous Substance................................................. 6.16(c)
High Risk Obligor................................................... 4.2(a)
Income Statement.................................................... 2.1(a)
Indemnified Party................................................... 10.4(a)
Indemnifying Party.................................................. 10.4(a)
Losses.............................................................. 10.2
Manager............................................................. Definition of Seller's
Knowledge
Notice of Adverse Recommendation.................................... 8.2(c)
Objection Statement................................................. 4.2(b)
Out of Cash Date.................................................... 4.2(a)
Owned Rights........................................................ 6.18(a)
Term Section
---- -------
Payoff Amount....................................................... 4.1(c)
Proprietary Rights.................................................. 6.18(a)
Purchase Price...................................................... 4.1(b)
Purchaser........................................................... Preamble
Purchaser Indemnified Parties....................................... 10.2
Release............................................................. 6.16(d)
Retained Liabilities................................................ 3.2
Representatives..................................................... 8.2(a)
SEC Documents....................................................... 6.5(a)
Securities.......................................................... 2.1(f)
Securities Writeoff Amount.......................................... 4.2(a)
Seller.............................................................. Preamble
Seller Indemnified Parties.......................................... 10.3
Seller Financial Advisor............................................ 6.19
Seller Permits...................................................... 6.14(a)
Seller Shares....................................................... 6.20
Seller's Rights..................................................... 6.18(a)
Stockholder Approval................................................ 6.2
Stockholder Meeting................................................. 6.21(a)
Stockholders Agreement.............................................. 5.4(n)
Subscription Agreement.............................................. 5.4(m)
Tax(es) 6.15(i)(i)
Tax Return.......................................................... 6.15(i)(ii)
Termination Date.................................................... 9.1(b)(ii)
Termination Fee..................................................... 9.4(a)
Trademark Assignment Agreement...................................... 5.2(a)(ix)
Trade Secrets....................................................... 6.18(a)
Transferred Assets.................................................. 2.1
Transferred Employee................................................ 8.23
Undersecured Loan Amount............................................ 4.2(a)
Voting and Support Agreements....................................... Recitals