STOCK PURCHASE AGREEMENT
by and between
Media and ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.,
a Nevada corporation (the "Company"),
and
Winsonic Holdings Ltd.,
a California corporation (the "Purchaser"),
dated as of
July 18, 2003
Table of Contents
Item Page
1. Sale and Purchase of Purchased Securities. 1
1.1.Agreement to Sell and Purchase Purchased Securities. 1
1.2.Purchase Price. 1
1.3.Closing. 1
1.4.Closing Conditions. 1
1.5.Escrow. 3
2. Representations and Warranties of the Company. 4
2.1.Organization and Authority. 4
2.2.Corporate Power; Binding Effect. 4
2.3.Foreign Qualification. 5
2.4.Subsidiaries. 5
2.5.Capitalization. 5
2.6.Lawful Issuance. 6
2.7.SEC Documents. 6
2.8.Absence of Certain Changes. 6
2.9.Properties, Leases, Etc. 8
2.10. Indebtedness. 9
2.11. Absence of Undisclosed Liabilities. 9
2.12. Tax Matters. 9
2.13. Litigation, Etc. 10
2.14. Safety, Zoning, and Environmental Matters. 10
2.15. Labor Relations. 11
2.16. Material Contracts. 11
2.17. Employee Benefit Plans. 13
2.18. Potential Conflicts of Interest. 14
2.19. Proprietary Information. 14
2.20. Insurance. 16
2.21. Governmental and Other Third-Party Consents. 16
2.22. Employment of Officers, Employees. 16
2.23. Brokers. 16
2.24. Compliance with Other Instruments, Laws, Etc. 16
2.25. Compliance with Securities Laws. 17
2.26. Foreign Corrupt Practices Act. 17
2.27. Disclosure. 17
3. Representations and Warranties of the Purchaser. 17
3.1.Investment Representations. 17
3.2.Organization and Authority. 18
3.3.Corporate Power; Binding Effect. 18
3.4.Listed Contracts. 18
3.5.Litigation, Etc. 19
3.6.Potential Conflicts of Interest. 19
3.7.Brokers. 19
3.8.Compliance with Other Instruments, Laws, Etc. 19
3.9.Foreign Corrupt Practices Act. 20
3.10. Disclosure. 20
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4. Covenants. 20
▇.▇.▇▇▇▇▇▇ Agreement. 20
4.2.Non-competition. 21
5. Restrictions on Transfer. 22
5.1.General Restriction. 22
5.2.Notice of Transfer. 22
5.3.Restrictive Legends. 22
5.4.Termination of Restrictions. 22
6. Expenses; Indemnification. 22
7. Definitions. 23
7.1.Certain Defined Terms. 23
7.2.Terms Defined Elsewhere. 26
8. Miscellaneous Provisions. 27
8.1.Amendments, Consents, Waivers, Etc. 27
8.2.Notices. 27
8.3.Counterparts. 28
8.4.Captions. 28
8.5.Binding Effect and Benefits. 28
8.6.Assignment. 28
▇.▇.▇▇▇▇▇▇▇▇▇▇▇▇. 29
8.8.Further Assurances. 29
8.9.Severability. 29
8.10. Equitable Relief. 29
8.11. Entire Agreement. 29
8.12. Governing Law. 29
SIGNATURES 30
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as
of July 18, 2003, is by and between (i) Media and
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Nevada corporation (the "Company"),
and (ii) Winsonic Holdings Ltd., a California corporation (the
"Purchaser").
Capitalized terms used and not otherwise defined upon first
usage herein are defined in Section 7.1 hereof.
1. Sale and Purchase of Purchased Securities.
1.1. Agreement to Sell and Purchase Purchased
Securities.
The Company hereby agrees to issue and sell to Purchaser,
and Purchaser agrees to purchase, subject to all of the terms and
conditions hereof and in reliance on the representations and
warranties set forth or referred to herein, thirty million
(30,000,000) shares of the Company's Common Stock, such number
being equal to a fully-diluted 60% of the total number of shares
issued and outstanding after giving effect to such issuance and
to the potential exercise of all outstanding options and warrants
to acquire shares of the Company's Common Stock, and the
potential conversion of all outstanding shares of the Company's
Preferred Stock (the "Purchased Securities").
1.2. Purchase Price.
The purchase price (the "Purchase Price") for the Purchased
Securities will be payable by transfer and assignment of the
certain contracts, to be mutually agreed upon by the Company and
Purchaser, as described upon Exhibit A annexed hereto (the
"Listed Contracts"). The deemed purchase price shall be $.10 per
share, which is approximately equal in amount to one hundred
fifty (150%) percent of the fair market value of Seller's common
stock of seven cents ($0.07) per share, on or about the date,
June __, 2003, negotiation of this Agreement commenced. The
aggregate purchase price of $3 million shall be equal to $.10 per
share multiplied by the 30 million shares of common stock issued
to the Purchaser at the Closing (as defined in Section 1.3).
1.3. Closing.
The closing of the purchase and sale of the Purchased
Securities (the "Closing") will take place on or before July 31,
2003 at the offices of Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇ P.C., 605 Third Avenue,
25th Floor, New York, New York, or at such other time, date, and
place as the Company and the Purchaser may agree following the
satisfaction of the last to occur of the conditions precedent to
Closing set forth in Section 1.4 below (the date on which the
Closing actually occurs, the "Closing Date").
1.4. Closing Conditions.
The obligation of the Purchaser to purchase the Purchased
Securities at Closing and of the Company to sell the Purchased
Securities at Closing, is subject to the fulfillment, or the
waiver by the applicable party, of each of the following
conditions on or before the Closing:
(a) The Company will deliver to Purchaser one or more stock
certificates representing the Purchased Securities to be sold to
and purchased by the Purchaser pursuant to this Agreement, free
and clear of all Liens, which shall be registered in such
Purchaser's name in the Company's records.
(b) Purchaser will pay for the Purchased Securities delivering
to the Company a ▇▇▇▇ of Assignment, in substantially the form
annexed hereto as Exhibit B, transferring and assigning the
Listed Contracts to the Company. Purchaser will deliver to the
Company copies of each of the Listed Contracts on or before the
Closing.
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(c) The Company will deliver to the Purchaser each of the
following documents:
(i) The Registration Rights Agreement, in substantially the form
annexed hereto as Exhibit C, duly executed by the Company and the
Purchaser and any of its assignees who is to have any
registration rights with respect to the Company's securities.
(ii) With respect to the Company, (A) a copy of its charter
documents, certified as of a date not more than five business
days before the Closing Date, by the Secretary of State of the
State of Nevada, (B) a certificate of the Secretary of State of
the State of Nevada, dated as of a date not more than five
business days before the Closing Date, with respect to the legal
existence, charter documents on file with the Secretary of State,
and good standing of the Company in the State of Nevada, and
(C) a certificate of the Secretary of State or equivalent
official of each other jurisdiction in which the Company's
activities or ownership or leasing of property require it to
qualify to do business as a foreign corporation, other than
jurisdictions in which the failure to so qualify or be in good
standing would not, either in any case or in the aggregate, have
a Material Adverse Effect, dated not more than five business days
before the Closing Date, with respect to such qualification and
the good standing of the Company in such jurisdiction.
(iii) With respect to each of the Company's Subsidiaries
which is a limited liability company, (A) a certificate of the
Secretary of State of such Subsidiary's state of formation, dated
as of a date not more than fifteen business days before the
Closing Date, with respect to the legal existence, charter
documents on file with the Secretary of State, and good standing
of such Subsidiary in such state, and (B) a certificate of the
Secretary of State or equivalent official of each other
jurisdiction in which such Subsidiary's activities or ownership
or leasing of property require it to qualify to do business as a
foreign limited liability company, other than jurisdictions in
which the failure to so qualify or be in good standing would not,
either in any case or in the aggregate, have a Material Adverse
Effect, dated not more than five business days before the Closing
Date, with respect to such qualification and the good standing of
the Company in such jurisdiction.
(iv) With respect to the Company, a certificate of its secretary,
dated the Closing Date, certifying (A) the absence of any
amendments to its charter documents (or proceedings therefor)
since the date of the certificate referred to in
Section 1.4(c)(ii)(A) above, (B) the attached copy of its by-laws
(the "By-laws") are complete and correct, (C) the attached
resolutions of its board of directors with respect to the
transactions hereby contemplated or otherwise to be effected at
the Closing, and (D) the incumbency of its officers and
directors.
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(v) With respect to each of the Company's Subsidiaries which is
a limited liability company, a certificate of its managing
member, dated the Closing Date, certifying (A) the absence of any
amendments to its certificate of organization or formation (or
proceedings therefor) since the date of the certificate referred
to in Section 1.4(c)(iii)(A) above, and (B) the attached copy of
its operating agreement is complete and correct.
(vi) Evidence satisfactory to the Purchaser that (i) each member
of the Company's senior management and any other key employee, as
determined by the Purchaser, has executed and delivered to the
Company a general release from employment agreement and/or a non-
solicitation agreement, in form and substance satisfactory to the
Purchasers; (ii) ▇▇▇▇ ▇▇▇▇▇▇, and each other executive officer
whom the Purchaser agrees to hire, has executed and delivered to
the Company a new employment or consulting agreement, in form and
substance satisfactory to the Purchasers; and (iii) each member
of the Company's senior management and ▇▇▇▇▇ ▇▇▇▇▇▇ has executed
and delivered to the Company a lockup agreement in substantially
the form amount hereto as Exhibit E.
(vii) Evidence that, upon consummation of the transactions
contemplated by this Agreement, the Company's Board of Directors
will be constituted in accordance with the Agreement.
(viii) Copies of each of the material Contracts
referred to in Section 2.16 of this Agreement
and/or referred to in the Company Disclosure
Schedule.
(d) The Purchaser shall provide evidence reasonably satisfactory
to the Company that immediately subsequent to the Closing the
Purchaser shall provide to the Company supporting financial
and/or other support personnel as may be required to allow ▇▇.
▇▇▇▇▇▇ the discretion to make operating decisions normally made
by the president of a public company, subject to the approval of
the Company's Board of Directors, when required.
(e) The Company and the Purchaser have executed and
delivered a Services Agreement. Under the Services
Agreement, the Company will purchase and license from
the Purchaser various products and services. The
compensation to be paid by the Company for these
products and services is 2 million shares of Common
Stock of the Company. Upon the Closing, 2 million
Shares shall be credited to the number of shares
constituting the Purchased Securities, however, such 2
million shares are non-cancelable and are not part of
the escrow agreement set forth below.
1.5. Escrow.
Concurrently with the execution and delivery of this
Agreement, the Company shall deliver or cause its transfer
agent to deliver to UBS Financial Services, Inc. as Escrow
Agent, the Purchased Securities together with duly executed
blank stock powers. The Purchased Securities shall be held
by the Escrow Agent under an Escrow Agreement, in
substantially the form annexed hereto as Exhibit D, entered
into between the Company, the Purchaser and the Escrow Agent
on this date. All of the Purchased Securities shall be
released to the Purchaser if the Company's independent
auditors have reviewed and/or audited the Company's
financial statements which reflect the recognition of an
amount of revenues equal to at least fifty percent (50%) of
the Purchase Price which have been derived from the Listed
Contracts.
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In the event that an amount equal to less that 50% of
the Purchase Price, however, greater than 25% of the
Purchase Price is recorded by the Company on its financial
statements as having been derived from the Listed Contracts,
then the Purchased Securities shall be released from escrow
on a pro rata basis in the same percentage as the fraction
of the Purchase Price earned (e.g., 25%) divided by 50%.
Any and each such pro rata release from escrow of a portion
of the Purchased Securities shall take place as soon as
practicable following the filing with the Securities and
Exchange Commission of the Company's periodic report for the
quarterly or annual period, as the case may be, for each
period during which the date on which the milestone for such
pro rata release was achieved. Notwithstanding the escrow
of the Purchased Securities, the Purchaser shall be entitled
to vote the Purchased Securities to the same extent as if
the Purchaser retained physical possession of the Purchased
Securities. The terms and conditions of the Escrow
Agreement are incorporated by reference herein, and should
there be any conflict between this Agreement and the Escrow
Agreement, the latter shall control.
2. Representations and Warranties of the Company.
In order to induce the Purchaser to enter into this
Agreement and to purchase the Purchased Securities, the Company
hereby represents and warrants to the Purchaser as follows,
subject in each case to such exceptions as are set forth in the
attached Company Disclosure Schedule in the section thereof
numbered and captioned to correspond to the specific
representation or warranty to which such exception relates.
2.1. Organization and Authority.
The Company and each of its Subsidiaries is a corporation or
limited liability company, as the case may be, duly organized,
validly existing, and in good standing under the laws of its
state of incorporation, formation or organization, as the case
may be. The Company and each of its Subsidiaries has all
requisite power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted. The minute books of the Company and
each of its Subsidiaries have been made available to the
Purchaser for inspection and accurately record therein all
corporate actions taken by the Board of Directors and
stockholders of the Company and each of its Subsidiaries which is
a corporation.
2.2. Corporate Power; Binding Effect.
The Company has all requisite power and full legal right to
execute and deliver this Agreement and the Ancillary Agreements,
and to perform all of its obligations hereunder and thereunder in
accordance with the respective terms hereof and thereof. This
Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby have been duly approved and
authorized by all requisite corporate action on the part of the
Company, and this Agreement has been duly executed and delivered
by the Company and constitutes, and each of the Ancillary
Agreements, when executed and delivered by the Company at the
Closing, will constitute, a legal, valid, and binding obligation
of the Company, enforceable against it in accordance with its
respective terms. The execution, delivery, and performance by the
Company of this Agreement and the Ancillary Agreements in
accordance with their respective terms, and the consummation by
the Company of the transactions contemplated hereby or thereby,
will not result (with or without the giving of notice or the
lapse of time or both) in any conflict, violation, breach, or
default, or the creation of any Lien, or the termination,
acceleration, vesting, or modification of any right or
obligation, under or in respect of (x) the charter documents or
by-laws of the Company or any of its Subsidiaries which is a
corporation, or the certificate of formation or organization and
operating agreement of any of its Subsidiaries which is a limited
liability company, (y) any judgment, decree, order, statute,
rule, or regulation binding on or applicable to the Company or
any of its Subsidiaries, or (z) any agreement or instrument to
which the Company or any of its Subsidiaries is a party or by
which it or any of its Subsidiaries' assets is or are bound.
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2.3. Foreign Qualification.
The Company and each of its Subsidiaries is duly qualified
to do business and in good standing as a foreign corporation or
foreign limited liability company, as the case may be, in each
jurisdiction in which the character of the properties owned or
leased by it or the nature of its activities makes such
qualification necessary, other than any jurisdictions in which
the failure so to qualify or be in good standing would not,
either in any case or in the aggregate, have a Material Adverse
Effect.
2.4. Subsidiaries.
Each of the Corporation's Subsidiaries is listed in Section
2.4 of the Company Disclosure Schedule. Except as otherwise noted
on the Company Disclosure Schedule, the Company owns fifty
percent (50%) of the outstanding capital stock, membership
interests or other equity interests of each Subsidiary free and
clear of all liens, claims and encumbrances, and all right, title
or interest of others.
2.5. Capitalization.
(a) Immediately after the Closing, giving effect to the sale and
purchase of the Purchased Securities provided for in this
Agreement, the authorized and the outstanding capital stock and
securities of the Company will be as set forth in Section 2.5(a)
of the Company Disclosure Schedule, and all such outstanding
shares of capital stock and securities will be owned (of record
and beneficially) by the persons and in the amounts there
indicated. All such outstanding shares of capital stock and
securities will be duly authorized, validly issued, fully paid,
and nonassessable, and free and clear of Liens.
(b) Other than with respect to the Purchased Securities, and
except as set forth in Section 2.5(b) of the Company Disclosure
Schedule, neither the Company, nor any of its Subsidiaries, is
bound by, or has any obligation to grant or enter into, any
(i) outstanding subscriptions, options, warrants, calls,
commitments, or agreements of any character calling for it to
issue, deliver, or sell, or cause to be issued, delivered, or
sold, any shares of its capital stock, any membership interests
or any other equity security, or any securities described in the
following clause, or (ii) securities convertible into,
exchangeable for, or representing the right to subscribe for,
purchase, or otherwise acquire any shares of its capital stock,
any membership interests or any other equity security.
(c) Other than with respect to the Purchased Securities, this
Agreement and the Ancillary Agreements, and except as set forth
in Section 2.5(c) of the Company Disclosure Schedule, neither the
Company, nor any of its Subsidiaries (i) has any outstanding
obligations, contractual or otherwise, to repurchase, redeem, or
otherwise acquire any shares of capital stock, membership
interests or other equity securities of the Company, (ii) is a
party to or bound by, or has knowledge of, any agreement or
instrument relating to the voting of any of its securities, or
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(iii) is a party to or bound by any agreement or instrument under
which any person has the right to require it to effect, or to
include any securities held by such person in, any registration
under the Securities Act.
2.6. Lawful Issuance.
All of the outstanding shares of capital stock, membership
interests, and other securities of the Company and each of its
Subsidiaries were offered, issued, and sold, and the Purchased
Securities have been offered and at the Closing will be issued
and sold, in compliance with (i) all applicable preemptive or
similar rights of all persons, and (ii) assuming the truthfulness
and accuracy of the representations made by the Purchaser in
Section 3 hereof, all applicable provisions of the Securities Act
and the rules and regulations thereunder, and all applicable
state securities laws and the rules and regulations thereunder.
No person has any valid right to rescind any purchase of any
shares of capital stock or other securities of the Company or any
of its Subsidiaries.
2.7. SEC Documents.
The Company has filed each report, schedule, registration
statement and definitive proxy statement required to be filed by
the Company, with the Commission (the "Company SEC Documents").
As of its filing date (and, with respect to any registration
statement, the date on which it was declared effective), each
Company SEC Document was in compliance, in all material respects,
with the requirements of its form and contained no untrue
statement of a material fact and did not omit any statement of a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the
Company included in the Company SEC Documents complied, at the
time of filing with the Commission (and, with respect to any
registration statement, at the time it was declared effective),
as to form, in all material respects, with applicable accounting
requirements and the published rules and regulations of the
Commission with respect thereto, have been prepared in accordance
with GAAP applied on a consistent basis during the periods
involved and fairly present, in all material respects (subject,
in the case of the unaudited statements, to normal, recurring
year-end audit adjustments), the consolidated financial position
of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and
changes in financial position for the periods then ended. Since
December 31, 2002, there have been no changes in the Company's
method of accounting for tax purposes or any other purpose. The
consolidated financial statements of the Company and its
consolidated Subsidiaries as of December 31, 2002, included in
the Company SEC Documents disclose all liabilities of the Company
and its consolidated Subsidiaries required to be disclosed
therein and contain adequate reserves for taxes and all other
material accrued liabilities.
2.8. Absence of Certain Changes.
Since December 31, 2002, there has not been:
(a) any (i) acquisition (by purchase, lease as lessee, license
as licensee, or otherwise) or disposition (by sale, lease as
lessor, license as licensor, or otherwise) by the Company, or any
of its Subsidiaries, of any material properties or assets, or
(ii) other transaction by, or any agreement or commitment on the
part of, the Company, or any of its Subsidiaries, other than in
the ordinary course of business, that have not caused and will
not cause, either in any case or in the aggregate, a Material
Adverse Effect;
(b) any material change in the condition (financial or
otherwise), properties, assets, liabilities, investments,
revenues, expenses, income, operations, business, or prospects of
the Company, or any of its Subsidiaries, or in any of their
respective relationships with any suppliers, customers, or other
third parties with whom any of them has financial, commercial, or
other business relationships, other than changes in the ordinary
course of business that have not caused and cannot reasonably be
expected to cause, either in any case or in the aggregate, a
Material Adverse Effect;
-7-
(c) any transaction or change in compensation by the Company, or
any of its Subsidiaries, with any of their respective
stockholders, members, directors, officers, or key employees,
other than the payment of compensation and reimbursement of
reasonable employee travel and other business expenses in
accordance with existing employment arrangements and usual past
practices;
(d) any damage, destruction, or loss, whether or not covered by
insurance, that, either in any case or in the aggregate, has
caused, or could reasonably be expected to cause, a Material
Adverse Effect;
(e) any declaration, setting aside, or payment of any dividend
or any other distribution (in cash, stock, and/or property or
otherwise) in respect of any shares of the capital stock,
membership interests, or other securities of the Company or any
of its Subsidiaries;
(f) any issuance of any shares of the capital stock, membership
interests or other securities of the Company or any of its
Subsidiaries, or any direct or indirect redemption, purchase, or
other acquisition by the Company or any of its Subsidiaries of
any shares of their respective capital stock, membership
interests or other securities;
(g) any change in the officers, directors, key employees, or
material independent contractors of the Company or any of its
Subsidiaries;
(h) any labor trouble or claim of unfair labor practices
involving the Company or any of its Subsidiaries, any increase in
the compensation or other benefits payable or to become payable
by the Company or any of its Subsidiaries to any of their
respective Affiliates, or to any of its officers, employees, or
independent contractors, or any bonus payments or arrangements
made to or with any of such officers, employees, or independent
contractors;
(i) any forgiveness or cancellation of any debt or claim by the
Company or any of its Subsidiaries or any waiver by the Company
or any of its Subsidiaries of any right of material value, other
than compromises of accounts receivable in the ordinary course of
business;
(j) any incurrence or any payment, discharge, or satisfaction by
the Company or any of its Subsidiaries of any material
Indebtedness or any material obligations or material liabilities,
whether absolute, accrued, contingent, or otherwise (including
without limitation liabilities, as guarantor or otherwise, with
respect to obligations of others), other than in the ordinary
course of business that have not caused and cannot reasonably be
expected to cause, either in any case or in the aggregate, a
Material Adverse Effect.
-8-
(k) any incurrence, discharge, or satisfaction of any Lien
(i) by the Company or any of its Subsidiaries, or (ii) on any of
the capital stock, membership interests, other securities,
properties, or assets owned or leased by the Company or any of
its Subsidiaries;
(l) any change in the financial or tax accounting principles,
practices, or methods of the Company or any of its Subsidiaries;
or
(m) any agreement, understanding, or commitment by or on behalf
of the Company or any of its Subsidiaries, whether in writing or
otherwise, to do or permit any of the things referred to in this
Section 2.8.
2.9. Properties, Leases, Etc.
(a) Title to Properties; Condition of Personal Properties. The
Company and each of its Subsidiaries has (i) good and marketable
title to all of the assets and properties owned by it, including
without limitation all assets and properties reflected in the
Company SEC Documents (in each case excluding any assets and
properties sold or otherwise disposed of to persons other than
non-Subsidiary Affiliates in the ordinary course of business
since December 31, 2002) free and clear of all Liens, (ii) valid
title to the lessee interest in all assets and properties leased
by them as lessee, free and clear of all Liens, and (iii) full
right to hold and use all of its assets and properties used in or
necessary to its businesses and operations, in each case all free
and clear of all Liens, and in each case subject to applicable
laws and the terms of any lease under which the Company and each
of its Subsidiaries leases such assets or properties as lessee.
All such assets and properties are in good condition and repair,
reasonable wear and tear excepted, and collectively are adequate
and sufficient to carry on the businesses of the Company and each
of its Subsidiaries as presently conducted and as proposed to be
conducted.
(b) No Owned Real Properties. Neither the Company, nor any of
its Subsidiaries, owns any real property or any interest (other
than a leasehold interest) in any real property.
(c) Leased Properties. Section 2.9(c) of the Company Disclosure
Schedule sets forth a complete and correct description of all
leases of real or personal property under which the Company or
any of its Subsidiaries is lessor or lessee. Complete and correct
copies of all such leases and all amendments, supplements, and
modifications thereto, other than any personal property lease
with an annual rent of less than $10,000 and total remaining
rental payments of less than $20,000, have been delivered to the
Purchaser. Each such lease is valid and subsisting and, to the
Company's knowledge, no event or condition exists that
constitutes, or after notice or lapse of time or both would
constitute, a default thereunder by the Company or any of its
Subsidiaries, as the case may be, or, to the Company's knowledge,
any other party thereto. The Company's and each of its
Subsidiaries' leasehold interests are subject to no Lien, and the
Company and each of its Subsidiaries is in quiet possession of
the properties covered by their respective leases. The Company
has established adequate reserves which are reflected in the
Company SEC Documents, for the anticipated costs of any property
renovation and repairs to the Company's, or its Subsidiaries',
leased premises required to be performed or paid for by it upon
termination of any of its leases of real property.
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2.10. Indebtedness.
Except as described in Section 2.10 of the Company
Disclosure Schedule or disclosed in the Company SEC Documents,
immediately after the Closing, neither the Company, nor any of
its Subsidiaries, will have any Indebtedness outstanding. Neither
the Company, nor any of its Subsidiaries, is in default with
respect to any outstanding Indebtedness or any instrument or
agreement relating thereto, and no such Indebtedness or any
instrument or agreement relating thereto purports to limit the
issuance of any securities by the Company or the operation of its
business or the business of its Subsidiaries. Complete and
correct copies of all instruments and agreements (including all
amendments, supplements, waivers, and consents) relating to any
Indebtedness of the Company and its Subsidiaries have been
furnished to the Purchaser.
2.11. Absence of Undisclosed Liabilities.
Except to the extent reflected or reserved in the Company
SEC Documents, or incurred in the ordinary course of business
since December 31, 2002 (other than in connection with any
transactions with non-Subsidiary Affiliates), neither the
Company, nor any of its Subsidiaries, has any material
liabilities or obligations of any nature, whether accrued,
absolute, contingent, or otherwise (including, without
limitation, liabilities as guarantor or otherwise with respect to
obligations of others) and whether due or to become due.
2.12. Tax Matters.
(a) Filing of Tax Returns and Payment of Taxes. Except as
described in Section 2.12 of the Company Disclosure Schedule, the
Company and each of its Subsidiaries has timely filed all Tax
Returns required to be filed by it, each such Tax Return has been
prepared in compliance with all applicable laws and regulations,
and all such Tax Returns are true and accurate in all respects.
All Taxes due and payable by the Company and each of its
Subsidiaries have been paid, and the Company will not be liable
for any additional Taxes in respect of any taxable period ending
on or before the Closing Date in an amount that exceeds the
corresponding reserve therefor, if any, reflected in the
accounting records of the Company as of the Closing Date. No
claim has ever been made by a taxing authority in a jurisdiction
where the Company or any of its Subsidiaries does not pay Tax or
file Tax Returns that the Company or any of its Subsidiaries is
or may be subject to Taxes assessed by such jurisdiction. There
are no Liens for Taxes (other than current Taxes not yet due and
payable) on the assets of the Company or any of its Subsidiaries.
(b) Audit History, Extensions, Etc. There is no action, suit,
taxing authority proceeding, or audit with respect to any Tax now
in progress, pending, or to the best of the Company's knowledge,
threatened, against or with respect to the Company or any of its
Subsidiaries. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been
asserted or assessed by any taxing authority against the Company
or any of its Subsidiaries. Neither the Company, nor any of its
Subsidiaries, has consented to extend the time in which any Tax
may be assessed or collected by any taxing authority. Neither the
Company, nor any of its Subsidiaries, has requested or been
granted an extension of the time for filing any Tax Return to a
date on or after the Closing Date.
-10-
(c) Membership in Affiliated Groups, Etc. Neither the Company,
nor any of its Subsidiaries, has ever been a member of any
Affiliated Group, or filed or been included in a combined,
consolidated, or unitary Tax Return other than a consolidated tax
return with respect to the Company and its Subsidiaries only.
Neither the Company, nor any of its Subsidiaries, is a party to
or bound by any tax sharing or allocation agreement or has any
current or potential contractual obligation to indemnify any
other person with respect to Taxes.
(d) Withholding Taxes. The Company and each of its Subsidiaries
has withheld and paid all Taxes required to have been withheld
and paid by it in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other Person.
2.13. Litigation, Etc.
No litigation, arbitration, action, suit, claim, demand,
proceeding or investigation (whether conducted by or before any
judicial or regulatory body, arbitrator, commission or other
person) is pending or, to the Company's knowledge, threatened,
against the Company or its Subsidiaries, nor is there any basis
therefor known to the Company.
2.14. Safety, Zoning, and Environmental Matters.
(a) Neither the Company, nor any of its Subsidiaries, is or has
been in violation of any applicable statute, law, or regulation
relating to occupational health or safety, other than those the
violation of which would not, either in any case or in the
aggregate, have a Material Adverse Effect, and no charge,
complaint, action, suit, proceeding, hearing, investigation,
claim, demand , or notice has been filed or commenced against or
received by the Company or any of its Subsidiaries alleging any
failure by the Company or any of its Subsidiaries to comply with
any such statute, law, or regulation, nor is there any basis
therefor known to the Company.
(b) To the best of the Company's knowledge, none of the real
properties presently owned, leased, or operated by the Company or
any of its Subsidiaries, nor any leasehold improvements thereto,
nor any business conducted by the Company or any of its
Subsidiaries thereon, is in violation of any applicable land use
or zoning requirements, including without limitation any building
line or use or occupancy restriction, any public utility or other
easement, any limitation, condition, or covenant of record, or
any zoning or building law, code, or ordinance.
(c) Neither the Company, nor any of its Subsidiaries, is
presently, or has been, in violation of any judgment, decree,
order, statute, law, permit, license, rule, or regulation
pertaining to environmental matters, including without limitation
those arising under any Environmental Laws, other than those the
violation of which would not, either in any case or in the
aggregate, have a Material Adverse Effect, nor has the Company or
any of its Subsidiaries received any written notice alleging any
such violation.
-11-
(d) Neither the Company, nor any of its Subsidiaries, has
received any notice or request for information from any third
party, including without limitation any federal, state, or local
governmental authority, (i) that the Company or any of its
Subsidiaries has been identified by the EPA or any state
environmental regulatory authority as a potentially responsible
party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B, or under any
equivalent state law; (ii) that any Hazardous Substances that the
Company or any of its Subsidiaries has generated, transported, or
disposed of have been found at any site at which a federal,
state, or local agency or other third party has conducted or has
ordered it to conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that
the Company or any of its Subsidiaries is or will or may be a
named party to any claim, action, cause of action, complaint, or
legal or administrative proceeding arising out of any third
party's incurrence of Damages in connection with the release
(within the meaning of CERCLA) of any Hazardous Substances or any
other environmental matters. No circumstances exist that could
reasonably be expected to give rise to any such notice or request
for information or to any Damages.
2.15. Labor Relations.
The Company and each of its Subsidiaries is in compliance
with all applicable federal and state laws respecting employment
and employment practices, terms and conditions of employment,
wages and hours, and nondiscrimination in employment, other than
those the violation of which would not, either in any case or in
the aggregate, have a Material Adverse Effect, and neither the
Company, nor any of its Subsidiaries, is engaged in any unfair
labor practice. There is no charge pending or, to the best of the
Company's knowledge, threatened, against or with respect to the
Company or any of its Subsidiaries before any court or agency and
alleging unlawful discrimination in employment practices, and
there is no charge of or proceeding with regard to any unfair
labor practice against the Company or any of its Subsidiaries
pending before the National Labor Relations Board. There is no
labor strike, dispute, slow-down, or work stoppage pending or, to
the Company's knowledge, threatened against or involving the
Company or any of its Subsidiaries. None of the employees of the
Company or any of its Subsidiaries is covered by any collective
bargaining agreement, and no such collective bargaining agreement
is currently being negotiated. No one has petitioned and, to the
Company's knowledge, no one is now petitioning, for union
representation of any employees of the Company. Neither the
Company, nor any of its Subsidiaries, has experienced any work
stoppage or other material labor difficulty.
2.16. Material Contracts.
Except for the contracts, agreements and other arrangements
set forth in Section 2.16 of the Company Disclosure Schedule and
contracts, agreements, or other arrangements that have been fully
performed and with respect to which neither the Company, nor any
of its Subsidiaries, has any further obligations or liabilities,
neither the Company, nor any of its Subsidiaries, is a party to
or otherwise bound by (i) any agreement, instrument, or
commitment that may affect the Company's ability to consummate
the transactions contemplated hereby or by the Ancillary
Agreements, or (ii) any other material agreement, instrument, or
commitment, including without limitation any:
(a) agreement for the purchase, sale, lease, or license by or
from it of services, products, or assets, requiring total
payments by or to it in excess of $100,000 in any instance, or
entered into other than in the ordinary course of business;
-12-
(b) agreement requiring it to purchase all or substantially all
of its requirements for a particular product or service from a
particular supplier or suppliers, or requiring it to supply all
of a particular customer's or customers' requirements for a
certain service or product;
(c) agreement or other commitment pursuant to which it has
agreed to indemnify or hold harmless any other person, other than
agreements with respect to the purchase, sale, lease or license
from it of services, products or assets in the ordinary course of
business;
(d) (i) employment agreement providing for annual payments equal
to or in excess of $100,000 per annum and/or with a term greater
than one (1) year, (ii) consulting agreement providing for annual
payments equal to or in excess of $100,000 per annum and/or with
a term greater than one (1) year, or (iii) agreement providing
for severance payments or other additional rights or benefits
(whether or not optional) in the event of the sale or other
change in control of it;
(e) agreement with any current or former Affiliate, stockholder,
member, officer, director, employee, or consultant or with any
person in which any such Affiliate has an interest;
(f) joint venture, partnership or teaming agreement;
(g) agreement with any domestic or foreign government or agency
or executive office thereof or any subcontract between it and any
third party relating to a contract between such third party and
any domestic or foreign government or agency or executive office
thereof;
(h) agreement imposing non-competition or exclusive dealing
obligations on it;
(i) agreement with respect to the confidentiality of the
Company's or any of its Subsidiaries' Proprietary Information (as
described in Section 2.19 hereof), and the assignment to the
Company or any of its Subsidiaries of any and all rights
employees of the Company or any of its Subsidiaries,
respectively, might have to acquire with respect to technology,
inventions, developments, etc., developed in connection with this
employment with the Company, or any of its Subsidiaries,
respectively; and
(j) agreement the performance of which is reasonably likely to
result in a loss to it.
The Company has delivered or caused to be delivered to the
Purchaser correct and complete copies (or written summaries of
the material terms of oral agreements or understandings) of each
agreement, instrument, and commitment listed in the Company
Disclosure Schedule, each as amended to date. Each such
agreement, instrument, and commitment is a valid, binding and
enforceable obligation of the Company, or the Company's
Subsidiary which is a party thereto, and, to the Company's
knowledge, of the other party or parties thereto, and is in full
force and effect. Neither the Company, nor any of its
Subsidiaries, is nor, to the Company's knowledge, is any other
party thereto, (nor is the Company considered by any other party
thereto to be) in breach of or noncompliance with any term of any
such agreement, instrument, or commitment (nor is there any basis
for any of the foregoing), except for any breaches or
noncompliances that singly or in the aggregate would not have a
Material Adverse Effect. Other than in the ordinary course of
business, no claim, change order, request for equitable
adjustment, or request for contract price or schedule adjustment,
between the Company or any of its Subsidiaries and any supplier,
customer or any other person, relating to any agreement,
instrument, or commitment listed in the Company Disclosure
Schedule is pending or, to the Company's knowledge, threatened,
nor is there any basis for any of the foregoing. No agreement,
instrument, or commitment listed in the Company Disclosure
Schedule, (i) includes or incorporates any provision, the effect
of which may be to enlarge or accelerate any of the obligations
of the Company or any of its Subsidiaries or to give additional
rights to any other party thereto, (ii) will terminate, lapse, or
(iii) in any other way be affected, by reason of the transactions
contemplated by this Agreement, the effect of which would have a
Material Adverse Effect on the Company or any of its
Subsidiaries, either individually or in the aggregate.
-13-
2.17. Employee Benefit Plans.
(a) Identification of Plans. Except for the arrangements set
forth in Section 2.17 of the Company Disclosure Schedule, neither
the Company, nor any of its Subsidiaries, maintains or
contributes to any pension, profit-sharing, deferred
compensation, bonus, stock option, share appreciation right,
severance, group or individual health, dental, medical, life
insurance, survivor benefit, or similar plan, policy or
arrangement, whether formal or informal, for the benefit of any
director, member, officer, consultant, or employee of any of
them, whether active or terminated; nor have any of them ever
maintained or contributed to any such plan, policy, or
arrangement that was subject to ERISA. Each of the arrangements
set forth in Section 2.17 of the Company Disclosure Schedule is
herein referred to as an "Employee Benefit Plan."
(b) Compliance with Terms and Law. Each Employee Benefit Plan
is and has been maintained and operated in compliance in all
material respects with the terms of such plan and with the
requirements prescribed (whether as a matter of substantive law
or as necessary to secure favorable tax treatment) by any and all
statutes, governmental, or court orders, or governmental rules or
regulations in effect from time to time, including but not
limited to ERISA and the Code, and applicable to such plan. Each
Employee Benefit Plan that is intended to qualify under Section
401(a) of the Code is so qualified.
(c) Absence of Certain Events and Arrangements.
(i) There is no pending or, to the Company's knowledge,
threatened, legal action, proceeding, or investigation, other
than routine claims for benefits, concerning any Employee Benefit
Plan, or any fiduciary or service provider thereof and there is
no basis for any such legal action or proceeding.
(ii) No Employee Benefit Plan, nor any party in interest in
respect thereof has engaged in a prohibited transaction that
could subject the Company or any of its Subsidiaries, directly or
indirectly, to liability under Section 409 or 502(i) of ERISA or
Section 4975 of the Code.
(iii) No communication, report, or disclosure has been made
that, at the time made, did not accurately reflect the terms and
operations of any Employee Benefit Plan.
-14-
(iv) No Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their
beneficiaries (except to the extent required by applicable state
insurance laws and Title I, Part 6 of ERISA).
(v) Neither the Company, nor any of its Subsidiaries, has
undertaken to maintain any Employee Benefit Plan for any specific
period of time and each such plan is terminable at the sole
discretion of the Company or its Subsidiary, as the case may be,
subject only to such constraints as may be imposed by applicable
law.
(vi) No Employee Benefit Plan is maintained pursuant to a
collective bargaining agreement or is or has been subject to the
minimum funding requirements of Section 302 of ERISA or Section
412 of the Code.
(d) Funding of Certain Plans. With respect to each Employee
Benefit Plan for which a separate fund of assets is or is
required to be maintained, full payment has been made of all
amounts that, under the terms of each such plan, it is required
to have paid as contributions to that plan as of the end of such
plan's most recently ended year, and through the Closing hereof.
2.18. Potential Conflicts of Interest.
Neither the Company, nor any of its Subsidiaries, nor any of
their respective officers, members, directors, shareholders, or
employees, (i) owns, directly or indirectly, any interest
(excepting passive holdings for investment purposes of not more
than 2% of the securities of any publicly held and traded
company) in, or is an officer, director, member, employee, or
consultant of, any person that is a competitor, lessor, lessee,
customer, or supplier of the Company or any of its Subsidiaries;
(ii) owns, directly or indirectly, any interest in any tangible
or intangible property used in or necessary to the business of
the Company or any of its Subsidiaries; (iii) to the Company's
knowledge, has any cause of action or other claim whatsoever
against the Company or any of its Subsidiaries, except for claims
in the ordinary course of business, such as for accrued vacation
pay, accrued benefits under employee benefit plans, and similar
matters and agreements; or (iv) owes any amount to the Company or
any of its Subsidiaries other than loans between the Company and
any of its Subsidiaries.
2.19. Proprietary Information.
(a) Section 2.19 of the Company Disclosure Schedule lists all
patents, patent applications, trademarks, trade names, service
marks, logos, copyrights, and licenses used in or necessary to
the Company's or any of its Subsidiaries' business (other than
for software programs that have not been customized for its use),
as now being conducted or as proposed to be conducted
(collectively, and together with any technology, know-how, trade
secrets, processes, formulas, and techniques used in or necessary
to the Company's or any of its Subsidiaries' business,
"Proprietary Information"). The Company and/or its Subsidiaries
own, or are licensed or otherwise have the full and unrestricted
exclusive right to use, without the payment of royalties or other
further consideration, all Proprietary Information, and no other
intellectual property rights, privileges, licenses, contracts, or
other agreements, instruments, or evidences of interests are
necessary to or used in the conduct of their respective
businesses.
-15-
(b) Each instance where the Company's or any of its
Subsidiaries' rights to Proprietary Information arise under a
license or similar agreements (other than for software programs
that have not been customized for its use) is indicated in
Section 2.19 of the Company Disclosure Schedule and such rights
are licensed exclusively to such entity except as indicated in
Section 2.19 of the Company Disclosure Schedule. No other person
has an interest in, other than the licensor with respect to
licensed Proprietary Information, or right or license to use,
other than the licensor after the expiration of the license with
respect to licensed Proprietary Information, any of the
Proprietary Information. To the best of the Company's knowledge,
none of the Proprietary Information is being infringed by others,
or is subject to any outstanding order, decree, judgment, or
stipulation. No litigation (or other proceedings in or before any
court or other governmental, adjudicatory, arbitral, or
administrative body) relating to the Proprietary Information is
pending (other than litigation against the licensor of any
Proprietary Information licensed to the Company with respect to
which the Company has no knowledge) or, to the Company's
knowledge, threatened, nor, to the best of the Company's
knowledge, is there any basis for any such litigation or
proceeding. The Company and each of its Subsidiaries maintains
adequate and sufficient security measures for the preservation of
the secrecy and proprietary nature of the Proprietary Information
consistent with the practice in its industry.
(c) To the best of the Company's knowledge: (i) neither the
Company, nor any of its Subsidiaries, nor any of their respective
employees has infringed or made unlawful use of, or is, to the
Company's knowledge, infringing or making unlawful use of, any
proprietary or confidential information of any Person, including
without limitation any former employer of any past or present
employee or consultant of the Company or any of its Subsidiaries;
and (ii) the activities of the Company's and each of its
Subsidiaries respective employees in connection with their
employment do not violate any agreements or arrangements that any
such employees or consultants have with any former employer or
any other Person. No litigation (or other proceedings in or
before any court or other governmental, adjudicatory, arbitral,
or administrative body) charging the Company or any of its
Subsidiaries with infringement or unlawful use of any patent,
trademark, copyright, or other proprietary right is pending or,
to the Company's knowledge, threatened; nor is there any basis
for any such litigation or proceeding.
(d) To the best of the Company's knowledge, no officer,
director, member, employee, or consultant of the Company or any
of its Subsidiaries is presently obligated under or bound by any
agreement or instrument, or any judgment, decree, or order of any
court of administrative agency, that (i) conflicts or may
conflict with his or her agreements and obligations to use his or
her best efforts to promote the interests of the Company or any
of its Subsidiaries, (ii) conflicts or may conflict with the
business or operations of the Company or any of its Subsidiaries
as presently conducted or as proposed to be conducted, or
(iii) restricts or may restrict the use or disclosure of any
information that may be useful to the Company or any of its
Subsidiaries.
-16-
2.20. Insurance.
Section 2.20 of the Company Disclosure Schedule lists the
policies of theft, fire, liability, worker's compensation, life,
property and casualty, directors' and officers', medical
malpractice, and other insurance owned or held by the Company and
each of its Subsidiaries and the basis on which such policies
provide coverage (i.e., an incurrence or claims-made basis). All
such policies are, and at all times since the respective dates
set forth in Section 2.20 of the Company Disclosure Schedule,
have been, in full force and effect, are sufficient for
compliance in all respects by the Company and each of its
Subsidiaries with all requirements of law and of all agreements
to which it is a party, and provide that they will remain in full
force and effect through the respective dates set forth in
Section 2.20 of the Company Disclosure Schedule, and will not
terminate or lapse or otherwise be affected in any way by reason
of the transactions contemplated hereby.
2.21. Governmental and Other Third-Party Consents.
No consent, approval, or authorization of, or registration,
designation, declaration, or filing with, any governmental
authority, federal or other, or any other person is required on
the part of the Company or any of its Subsidiaries in connection
with the Company's execution, delivery, or performance of this
Agreement or the Ancillary Agreements or the Company's
consummation of the transactions contemplated hereby or thereby,
or the continued conduct of the present business of the Company
and each of its Subsidiaries after the Closing Date.
2.22. Employment of Officers, Employees.
The Company SEC Documents set forth those persons who served
as chief executive officer during the Company's 2002 fiscal year
and each of the Company's other executive officers who earned (or
accrued) compensation in excess of $100,000 during the year ended
December 31, 2002.
2.23. Brokers.
No finder, broker, agent, or other intermediary has acted
for or on behalf of the Company or any of its Subsidiaries in
connection with the negotiation or consummation of the
transactions contemplated hereby, and no fee will be payable by
the Company or any of its Subsidiaries to any such person in
connection with such transactions.
2.24. Compliance with Other Instruments, Laws, Etc.
The Company and each of its Subsidiaries has complied with,
and is in compliance with, (i) all laws, statutes, governmental
regulations, judicial or administrative tribunal orders,
judgments, writs, injunctions, decrees, and similar commands
applicable to it and its business, and all unwaived terms and
provisions of all agreements, instruments, and commitments to
which it is a party or to which it or any of its assets or
properties is subject, except for any non-compliances that, both
individually and in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect, and
(ii) its charter documents and by-laws, or certificate of
formation or organization and operating agreement, as the case
may be, each as amended to date. Neither the Company, nor any of
its Subsidiaries, has committed, been charged with, or, to the
Company's knowledge, been under investigation with respect to,
nor does there exist, any violation by the Company or any of its
Subsidiaries of any provision of any federal, state, or local law
or administrative regulation, except for any violations that,
both singly or in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect. The
Company and each of its Subsidiaries has and maintains, and
Section 2.24 of the Company Disclosure Schedule sets forth a
complete and correct list of, all such licenses, permits, and
other authorizations from all such governmental authorities as
are legally required for the conduct of its business or in
connection with the ownership or use of its properties, except
for any such licenses, permits, and other authorizations, the
failure to obtain or maintain which in effect, both singly or in
the aggregate, has not had and could not reasonably be expected
to have a Material Adverse Effect, and all of which (except as
specifically described in Section 2.24 of the Company Disclosure
Schedule) are in full force and effect in all material respects,
and true and complete copies of all of which have been delivered
to the Purchaser.
-17-
2.25. Compliance with Securities Laws.
Assuming the accuracy of the representations of each
Purchaser contained in Section 3 hereof, the offer, issuance, and
delivery of the Purchased Securities as contemplated by this
Agreement are exempt from the registration requirements of the
Securities Act, and are exempt from registration or qualification
under applicable states' securities laws. Neither the Company,
nor any of its Subsidiaries nor anyone acting on its behalf will
hereafter offer to sell, solicit offers to buy, or sell any
securities of the Company or any of its Subsidiaries so as to
subject the offer, issuance, and sale of the Purchased Securities
to the registration requirements of the Securities Act.
2.26. Foreign Corrupt Practices Act.
Neither the Company, nor any of its Subsidiaries, has taken
any action which would cause it to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, or any rules or
regulations thereunder. To the Company's knowledge, there is not
now, and there has never been, any employment by the Company or
any of its Subsidiaries of, or beneficial ownership in the
Company or any of its Subsidiaries by, any governmental or
political official in any country in the world.
2.27. Disclosure.
No representation or warranty by the Company in this
Agreement, in the Company Disclosure Schedule, or in the
Ancillary Agreements, contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein not
false or misleading. There is no fact or circumstance relating
specifically to the business or condition of the Company or any
of its Subsidiaries, other than such facts and circumstances as
are generally understood to affect the Company's industry, that
could reasonably be expected to result in a Material Adverse
Effect that is not disclosed in the Company Disclosure Schedule.
3. Representations and Warranties of the Purchaser.
In order to induce the Company to enter into this Agreement
and to sell the Purchased Securities, the Purchaser hereby
represents and warrants to the Company as follows, subject in
each case to such exceptions as are set forth in the attached
Purchaser Disclosure Schedule in the section thereof numbered and
captioned to correspond to the specific representation or
warranty to which such exception relates.
3.1. Investment Representations.
Purchaser is an "accredited investor" as defined in Rule
501(a) promulgated under the Securities Act, was not organized
for the specific purpose of acquiring the securities offered
hereby, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and
risks of the transactions contemplated under this Agreement.
Purchaser's financial condition is such that it is able to bear
all economic risks of investment in the Purchased Securities,
including a complete loss of its investment therein. The Company
has provided Purchaser with adequate access to financial and
other information concerning the Company as requested and
Purchaser has had the opportunity to ask questions of and receive
answers from the Company concerning the transactions contemplated
by this Agreement and to obtain therefrom any additional
information necessary to make an informed decision regarding an
investment in the Company. Purchaser is acquiring the Purchased
Securities solely for investment purposes, with no present
intention of distributing or reselling any of the Purchased
Securities or any interest therein. Purchaser is aware that the
Purchased Securities will not be registered under the Securities
Act, and that neither the Purchased Securities nor any interest
therein may be sold, pledged, or otherwise transferred unless the
Purchased Securities are registered under the Securities Act or
qualify for an exemption under the Securities Act.
-18-
3.2. Organization and Authority.
The Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of its state of
incorporation. The Purchaser has all requisite power and
authority to own or lease and operate its properties and to carry
on its business as now conducted and as proposed to be conducted.
3.3. Corporate Power; Binding Effect.
The Purchaser has all requisite power and full legal right
to execute and deliver this Agreement and the Ancillary
Agreements, and to perform all of its obligations hereunder and
thereunder in accordance with the respective terms hereof and
thereof. This Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby have been duly
approved and authorized by all requisite corporate action on the
part of the Purchaser, and this Agreement has been duly executed
and delivered by the Purchaser and constitutes, and each of the
Ancillary Agreements, when executed and delivered by the
Purchaser at the Closing, will constitute, a legal, valid, and
binding obligation of the Purchaser, enforceable against it in
accordance with its respective terms. The execution, delivery,
and performance by the Purchaser of this Agreement and the
Ancillary Agreements in accordance with their respective terms,
and the consummation by the Purchaser of the transactions
contemplated hereby or thereby, will not result (with or without
the giving of notice or the lapse of time or both) in any
conflict, violation, breach, or default, or the creation of any
Lien, or the termination, acceleration, vesting, or modification
of any right or obligation, under or in respect of (x) the
charter documents or by-laws of the Purchaser, (y) any judgment,
decree, order, statute, rule, or regulation binding on or
applicable to the Purchaser, or (z) any agreement or instrument
to which the Purchaser is a party or by which any of its assets
is or are bound.
3.4. Listed Contracts.
The Purchaser has delivered or caused to be delivered to the
Company correct and complete copies (or written summaries of the
material terms of oral agreements or understandings) of each
agreement, instrument, and commitment which comprise the Listed
Contracts, listed on Exhibit A, each as amended to date. Each
Listed Contract is a valid, binding and enforceable obligation of
the Purchaser, and, to the Purchaser's knowledge, of the other
party or parties thereto, and is in full force and effect.
Neither the Purchaser is nor, to the Purchaser's knowledge, is
any other party thereto, (nor is the Purchaser considered by any
other party thereto to be) in breach of or noncompliance with any
term of any Listed Contract (nor is there any basis for any of
the foregoing), except for any breaches or noncompliances that
singly or in the aggregate would not have a Material Adverse
Effect. Other than in the ordinary course of business, no claim,
change order, request for equitable adjustment, or request for
contract price or schedule adjustment, between the Purchaser and
any supplier, customer or any other person, relating to any
Listed Contract is pending or, to the Purchaser's knowledge,
threatened, nor is there any basis for any of the foregoing. Each
Listed Contract is assignable by the Purchaser to the Company
without the consent of any other person.
-19-
3.5. Litigation, Etc.
No litigation, arbitration, action, suit, claim, demand,
proceeding or investigation (whether conducted by or before any
judicial or regulatory body, arbitrator, commission or other
person) is pending or, to the Purchaser's knowledge, threatened,
against the Purchaser, nor is there any basis therefor known to
the Purchaser.
3.6. Potential Conflicts of Interest.
Neither the Purchaser nor any of its officers, directors,
shareholders, or employees (i) owns, directly or indirectly, any
interest (excepting passive holdings for investment purposes of
not more than 2% of the securities of any publicly held and
traded company) in, or is an officer, director, member, employee,
or consultant of, any person that is a competitor, lessor,
lessee, customer, or supplier of the Company or any of its
Subsidiaries; (ii) owns, directly or indirectly, any interest in
any tangible or intangible property used in or necessary to the
business of the Company or any of its Subsidiaries; (iii) to the
Company's knowledge, has any cause of action or other claim
whatsoever against the Company or any of its Subsidiaries, except
for claims in the ordinary course of business, such as for
accrued vacation pay, accrued benefits under employee benefit
plans, and similar matters and agreements; or (iv) owes any
amount to the Company or any of its Subsidiaries.
3.7. Brokers.
No finder, broker, agent, or other intermediary has acted
for or on behalf of the Purchaser in connection with the
negotiation or consummation of the transactions contemplated
hereby, and no fee will be payable by the Company or any of its
Subsidiaries to any such person in connection with such
transactions.
3.8. Compliance with Other Instruments, Laws, Etc.
The Purchaser has complied with, and is in compliance with,
(i) all laws, statutes, governmental regulations, judicial or
administrative tribunal orders, judgments, writs, injunctions,
decrees, and similar commands applicable to it and its business,
and all unwaived terms and provisions of all agreements,
instruments, and commitments to which it is a party or to which
it or any of its assets or properties is subject, except for any
non-compliances that, both individually and in the aggregate,
have not had and could not reasonably be expected to have a
Material Adverse Effect, and (ii) its charter documents and by-
laws, each as amended to date. The Purchaser has not committed,
been charged with, or, to the Purchaser's knowledge, been under
investigation with respect to, nor does there exist, any
violation by the Purchaser of any provision of any federal,
state, or local law or administrative regulation, except for any
violations that, both singly or in the aggregate, have not had
and could not reasonably be expected to have a Material Adverse
Effect. The Purchaser has and maintains, and Section 3.8 of the
Purchaser Disclosure Schedule sets forth a complete and correct
list of, all such licenses, permits, and other authorizations
from all such governmental authorities as are legally required
for the conduct of its business or in connection with the
ownership or use of its properties, except for any such licenses,
permits, and other authorizations, the failure to obtain or
maintain which in effect, both singly or in the aggregate, has
not had and could not reasonably be expected to have a Material
Adverse Effect, and all of which (except as specifically
described in Section 3.8 of the Purchaser Disclosure Schedule)
are in full force and effect in all material respects, and true
and complete copies of all of which have been delivered to the
Company.
-20-
3.9. Foreign Corrupt Practices Act.
The Purchaser has taken no action which would cause it to be
in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any rules or regulations thereunder. To the
Purchaser's knowledge, there is not now, and there has never
been, any employment by the Purchaser of, or beneficial ownership
in the Purchaser by, any governmental or political official in
any country in the world.
3.10. Disclosure.
No representation or warranty by the Purchaser in this
Agreement, in the Purchaser Disclosure Schedule, or in the
Ancillary Agreements, contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein not
false or misleading. There is no fact or circumstance relating
specifically to the business or condition of the Purchaser, other
than such facts and circumstances as are generally understood to
affect the Purchaser's industry, that could reasonably be
expected to result in a Material Adverse Effect that is not
disclosed in the Purchaser Disclosure Schedule.
4. Covenants.
The Purchaser covenants that until the second anniversary of
the date of this Agreement, the Purchaser will comply with each
of the following covenants. Notwithstanding the foregoing, in
the event that the Purchased Securities are released from escrow
as set forth in Section 1.5 above, the terms and conditions of
this Section 4 shall be terminated and null and void.
4.1. Voting Agreement.
(a) Agreement with Respect to Voting.
(i) Purchaser shall vote any and all shares of the Company's
capital stock held by it from time to time, and shall use its
best efforts to cause the several members of the Company's Board
of Directors whom it has nominated to vote to maintain the
membership of the Board of Directors in accordance with the terms
and conditions of this Agreement, as set forth in Section 4.1(b),
and to cause the Company to act or abstain from acting, in
accordance with all of the provisions of this Agreement.
(ii) If the Purchaser fails or refuses to vote its shares of the
Company's capital stock as required by, or votes its shares of
the Company's capital stock in contravention of, this Agreement,
then ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and each of them, shall
have an irrevocable proxy and power of attorney, coupled with an
interest, to vote such shares of shares of the Company's capital
stock in accordance with this Agreement, and the Purchaser hereby
grants to each of ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ an irrevocable
proxy.
(b) Board of Directors. The Board of Directors shall be
comprised of five (5) directors, designated as follows:
(i) One of the directors shall be ▇▇▇▇ ▇▇▇▇▇▇ for so long as he
shall remain the President of the Company.
(ii) One of the directors shall be one of the following
individuals: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
(iii) Three of the directors shall be designated by the
Purchaser.
-21-
4.2. Non-competition.
(a) Other than as the Purchaser has already disclosed to the
Company concerning the Purchaser's current activities and
operations and as expanded in the future in businesses
competitive with the Company's, all of which are expressly
excluded from the terms of this Section 4.2, the Purchaser will
not, directly or indirectly, own any interest in, participate or
engage in, assist, render any services (including advisory
services) to, become associated with, work for, or otherwise
become in any way or manner connected with the ownership,
management, operation, or control of, any person that engages in,
or assists others in engaging in or conducting any business,
which deals, directly or indirectly, in products or services
competitive with the Company's, or any of its Subsidiaries',
product line or services, anywhere in the world; provided,
however, that the above shall not be deemed to prohibit the
Purchaser from owning or acquiring securities issued by any
corporation whose securities are listed with a national
securities exchange or are traded in the over-the-counter market,
provided that the Purchaser at no time owns, directly or
indirectly, beneficially or otherwise, two (2%) percent or more
of any class of any such corporation's outstanding capital stock.
(b) Except as specifically provided in this subsection (b),
notwithstanding anything contained in subsection (a) above, the
Purchaser will not knowingly provide or solicit to provide to any
person any goods or services which are competitive with those
provided by the Company or any of its Subsidiaries, or which
would be competitive with the goods or services that the Company
or any of its Subsidiaries has planned to provide to any customer
of the Company or any of its Subsidiaries.
(c) The Purchaser agrees that it shall not divulge to others,
nor shall he use to the detriment of the Company or any of its
Subsidiaries, or in any business or process of manufacture
competitive with or similar to any technology, business or
process of manufacture engaged in by the Company or any of its
Subsidiaries, any confidential or trade secret information
relating to technology, sales, salesmen, sales volume or
strategy, customers, formulas, processes, methods, machines,
manufactures, compositions, ideas, improvements or inventions
belonging to or relating to the business of the Company or its
Subsidiaries.
(d) The Purchaser will neither solicit, hire or seek to solicit
or hire any of the Company's or any of its Subsidiaries'
personnel in any capacity whatsoever nor shall the Purchaser
induce or attempt to induce any of the Company's or any of its
Subsidiaries' personnel to leave the employ of the Company to
work for the Purchaser or otherwise.
-22-
5. Restrictions on Transfer.
5.1. General Restriction.
The Purchased Securities and all securities issued in
exchange therefor (for purposes of this Section 5, the
"Restricted Securities"), will be transferable only upon the
satisfaction of the conditions set forth in this Section 5. Any
transfer or purported transfer in violation of this Section 5
will be void.
5.2. Notice of Transfer.
Subject to Section 8.6, prior to any transfer of any
Restricted Securities, the holder thereof will give written
notice to the Company describing in reasonable detail the manner
and terms of the proposed transfer and the identity of the
proposed transferee, accompanied by the written agreement of the
proposed transferee to be bound by all of the provisions hereof
and of the Ancillary Agreements applicable to holders of such
Restricted Securities hereunder or thereunder.
5.3. Restrictive Legends.
For so long as the Purchased Securities remain subject to
the restrictions on transfer set forth in this Section 5, the
certificates representing such Purchased Securities will bear
restrictive legends in substantially the following forms:
The securities represented by this
certificate have not been registered under the
Securities Act of 1933, as amended (the
"Securities Act"), and may be transferred only
pursuant to an effective registration statement
under the Securities Act or in accordance with an
applicable exemption from the registration
requirements of the Securities Act.
The securities represented by this
certificate are subject to certain restrictions on
transfer set forth in a Stock Purchase Agreement
dated as of July 18, 2003, by and between the
issuer of such securities and the registered
holder of this certificate (or such holder's
predecessor-in-interest). A copy of such agreement
is on file and may be inspected by the registered
holder of this certificate at the principal
executive office of the issuer.
5.4. Termination of Restrictions.
The restrictions imposed by this Section 5 upon the
transferability of Restricted Securities will terminate as to any
particular Restricted Securities when such Restricted Securities
have been sold pursuant to an effective registration statement
under the Securities Act, or pursuant to Rule 144 under the
Securities Act or any other exemption from the registration
requirements of the Securities Act pursuant to which the
transferee receives securities that are not "restricted
securities" within the meaning of that term as defined in Rule
144(a)(3). Whenever any of such restrictions terminates as to any
Restricted Securities, the holder thereof will be entitled to
receive from the Company, at the Company's expense, new
certificates representing such Purchased Securities, without the
applicable restrictive legends.
6. Expenses; Indemnification.
-23-
(a) The Company hereby agrees to pay on demand all reasonable
out-of-pocket expenses (including without limitation the
reasonable fees and charges for disbursements of one counsel to
the Purchaser) incurred by the Purchaser or any holder of any of
the Purchased Securities issued hereunder in connection with the
enforcement of any rights hereunder, or with respect to any of
the Purchased Securities, including without limitation, (a) the
cost and expenses of preparing and duplicating this Agreement and
the Purchased Securities; (b) the cost of delivering to each
Purchaser's principal office, insured to such Purchaser's
satisfaction, the Purchased Securities sold to such Purchaser
hereunder and any Purchased Securities delivered to such
Purchaser in exchange therefor or upon any exchange, or
substitution thereof; and (c) recording fees and filing fees and
documentary stamp and similar taxes at any time payable in
respect of this Agreement or the issuance of any of the Purchased
Securities.
(b) All covenants, agreements, representations, and warranties
made herein or in the Ancillary Agreements or any other document
referred to herein or delivered to the Purchaser pursuant hereto
will be deemed to have been relied on by the Purchaser,
notwithstanding any investigation made by or on behalf of the
Purchaser, and will survive the Closing. The Company will
indemnify, defend, and hold harmless each Purchaser, and each of
Purchaser's partners, stockholders, officers, directors,
employees, agents, and representatives, from and against any and
all Damages incurred by any of them in any capacity and resulting
from or relating to the material breach by the Company of any of
its representations, warranties, covenants, or agreements
contained in this Agreement or in the Ancillary Agreements or any
other document referred to herein or delivered to the Purchaser
pursuant hereto.
(c) The obligations of the Company under this Section 6 will
survive transfer of the Purchased Securities and the termination
of this Agreement.
7. Definitions.
7.1. Certain Defined Terms.
For all purposes of this Agreement the following terms will
have the meanings set forth or cross-referenced in this
Section 7:
"Affiliate" means any other person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, the Company (or other referenced person) and
includes without limitation, (a) any person who is an officer,
director, or direct or indirect beneficial holder of at least 5%
of the then outstanding capital stock of the Company (or other
referenced person), and any of the Family Members of any such
person, (b) any person of which the Company (or other referenced
person) and/or its Affiliates (as defined in clause (a) above),
directly or indirectly, either beneficially own(s) at least 5% of
the then outstanding equity securities or constitute(s) at least
a 5% equity participant, (c) in the case of a specified person
who is an individual, Family Members of such person, and (d) in
the case of the Purchaser, any entities for which a Purchaser or
any of its Affiliates serve as general partner and/or investment
adviser or in a similar capacity, and all mutual funds or other
pooled investment vehicles or entities under the control or
management of such Purchaser or the general partner or investment
adviser thereof, or any Affiliate of any of them, or any
Affiliates of any of the foregoing.
"Affiliated Group" has the meaning given to it in Section
1504 of the Code, and in addition includes any analogous
combined, consolidated, or unitary group, as defined under any
applicable state, local, or foreign income Tax law.
-24-
"Ancillary Agreements" means the Registration Rights
Agreement and any other agreement or document delivered or
executed in connection with this Agreement.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company as the same may be amended from time
to time.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, $0.001 par value per
share, of the Company.
"Damages" means all damages, losses, claims, demands,
actions, causes of action, suits, litigations, arbitrations,
liabilities, costs, and expenses, including without limitation
court costs and the fees and expenses of counsel and experts.
"Derivative Securities" means (i) all shares of stock and
other securities that are convertible into or exchangeable for
shares of Common Stock, and (ii) all options, warrants, and other
rights to acquire shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock.
"Environmental Laws" means, collectively, the Resource
Conservation and Recovery Act, CERCLA, the Superfund Amendments
and Reauthorization Act of 1986, the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, and any
and all state or local statutes, regulations, ordinances, orders,
and decrees relating to health, safety, or the environment, each,
as the case may be, as amended.
"EPA" means the United States Environmental Protection
Agency.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Family Members" means, as applied to any individual, any
parent, spouse, child, spouse of a child, brother or sister of
the individual, and each trust created for the benefit of one or
more of such persons and each custodian of a property of one or
more such persons and the estate of any such persons.
"GAAP" means generally accepted accounting principles that
are (i) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors,
(ii) applied on a basis consistent with prior periods, and
(iii) such that, insofar as the use of accounting principles is
pertinent, a certified public accountant could deliver an
unqualified opinion with respect to financial statements in which
such principles have been properly applied.
"Hazardous Substances" means, collectively, any hazardous
waste, as defined by 42 U.S.C. 6903(5), any hazardous
substances as defined by 42 U.S.C. 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. 9601(33), or any toxic
substance, methane gas, oil, or hazardous materials or other
chemicals or substances regulated by any Environmental Laws.
"Holder" means, as of the relevant time of reference, a
holder of Purchased Securities.
"Indebtedness" means (a) all indebtedness for borrowed
money, whether current or long-term, or secured or unsecured,
(b) all indebtedness for the deferred purchase price of property
or services represented by a note or security agreement, (c) all
indebtedness created or arising under any conditional sale or
other title retention agreement (even though the rights and
remedies of the seller or lender under such agreement in the
event of default may be limited to repossession or sale of such
property), (d) all indebtedness secured by a purchase money
mortgage or other lien to secure all or part of the purchase
price of property subject to such mortgage or lien, (e) all
obligations under leases that have been or must be, in accordance
with GAAP, recorded as capital leases in respect of which it is
liable as lessee, (f) any liability in respect of banker's
acceptances or letters of credit, and (g) all indebtedness of any
person that is directly or indirectly guaranteed by the Company
or that it has agreed (contingently or otherwise) to purchase or
otherwise acquire or in respect of which it has otherwise assured
a creditor against loss.
-25-
"Liens" means any and all liens, claims, mortgages, security
interests, charges, encumbrances, and restrictions on transfer of
any kind, except: (i) in the case of references to securities,
any of the same arising under applicable securities laws solely
by reason of the fact that such securities were issued pursuant
to exemptions from registration under such securities laws,
(ii) real estate taxes not yet due and payable, (iii) any lien in
favor of any landlord for unpaid rent, additional rent, or other
charges, which lien is created by statute or under any lease
under which the Company or any of its Subsidiaries is lessee, and
(iv) liens relating to accounts payable incurred in the ordinary
course of business.
"Majority Holders" means, as of the relevant time of
reference, the record holders of at least seventy-five percent
(75%) of the shares of Common Stock sold and purchased pursuant
to this Agreement.
"Material Adverse Effect" means, with reference to the
Company or any of its Subsidiaries, a material adverse effect on
the condition (financial or otherwise), operations, business,
assets, or prospects of the Company or any of its Subsidiaries,
or on the Company's ability to consummate the transactions hereby
contemplated.
"Person" or "person" (regardless of whether capitalized)
means any natural person, entity, or association, including
without limitation any corporation, partnership, limited
liability company, government (or agency or subdivision thereof),
trust, joint venture, or proprietorship.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated as of the date hereof, among the Company
and the Purchaser in the form of the attached Exhibit C.
"Securities Act" means the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and
regulations of the Securities and Exchange Commission thereunder,
all as the same are in effect at the relevant time of reference.
"Subsidiary" means, with respect to any person, any
corporation or limited liability company a majority (by number of
votes) of the outstanding shares of any class or classes or
membership interests, as the case may be, of which are at the
time owned by such person or by a Subsidiary of such person, if
the holders of the shares of such class or classes or membership
interests, as the case may be, (a) are ordinarily, in the absence
of contingencies, entitled to vote for the election of a majority
of the directors (or persons performing similar functions) of the
issuer thereof, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) are at
the time entitled, as such holders, to vote for the election of a
majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to
vote exists by reason of the happening of a contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign
income, gross receipts, franchise, estimated, alternative
minimum, add-on minimum, sales, use, transfer, registration,
value added, excise, severance, stamp, occupation, premium,
windfall profit, customs, duties, real property, personal
property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other
tax or levy, of any kind whatsoever, including any interest,
penalties, or additions to tax in respect of the foregoing.
-26-
"Tax Return" means any return, declaration, report, claim
for refund, information return, or other document (including any
related or supporting estimates, elections, schedules,
statements, or information) filed or required to be filed in
connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or
administrative requirements relating to any Tax.
7.2. Terms Defined Elsewhere.
The following terms are defined herein in the sections
identified below:
Term Section Term Section
------ --------- ----- -------
Agreement Preamble Proprietary Information 2.19
Closing 1.3 Purchased Securities 1.1
Closing Date 1.3 Purchaser Preamble
Company Preamble Restricted Securities 5.1
Employee Benefit 2.17(a)
Plan
8. Status of Schedules and Exhibits as of Signature Date.
(a) The parties each acknowledge and agree that as of the date
this Agreement is executed and delivered, none of the Schedules
or Exhibits to this Agreement have been prepared, delivered,
reviewed or approved by the parties or their respective counsel.
In addition to and without in any way limiting any other express
or implied condition precedent to the obligations of any party
under this Agreement, the obligations of the parties under this
Agreement are hereby made subject to and contingent upon the
following:
(i) The preparation, delivery and approval by the parties of all
of the Schedules described in this Agreement;
(ii) The preparation, delivery and approval by the parties of all
of the Exhibits to this Agreement; and
(iii) All other express and implied conditions precedent to
the obligations of the parties under this Agreement shall have
been satisfied or waived at or prior to the Closing.
(b) In addition, notwithstanding any other term, condition,
covenant or provision of this Agreement or of any other
agreement, the parties have not made, and shall not be deemed to
have made by their execution and delivery of this Agreement, any
representation or warranty with respect to any:
(iv) Schedule described in this Agreement;
(v) Exhibit to this Agreement;
-27-
(vi) Document or state of facts pertaining to any Schedule or
Exhibit to this Agreement; or
(vii) The intended contents to any document or state of facts
pertaining to any Schedule or Exhibit to this Agreement.
Any representations or warranties with respect to
those matters or items shall be made (unless waived or amended)
only as of the Closing Date, and only with respect to the
Schedules and Exhibits attached to this Agreement as of the
Closing Date.
9. Miscellaneous Provisions.
9.1. Amendments, Consents, Waivers, Etc.
(a) This Agreement or any provision hereof may be amended or
terminated by the agreement of the Company and the Purchaser, and
the observance of any provision of this Agreement that is for the
benefit of the Purchaser may be waived (either generally or in a
particular instance, and either retroactively or prospectively),
and any consent, approval, or other action to be given or taken
by the Purchaser pursuant to this Agreement may be given or taken
by the consent of the Purchaser.
(b) No course of dealing between the Company and the Purchaser
will operate as a waiver of any of the Company's or the
Purchaser's rights under this Agreement. No waiver of any breach
or default hereunder will be valid unless in a writing signed by
the waiving party. No failure or other delay by any person in
exercising any right, power, or privilege hereunder will be or
operate as a waiver thereof, nor will any single or partial
exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege.
9.2. Notices.
All notices, requests, payments, instructions or other
documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if
(i) delivered personally (effective upon delivery), (ii) mailed
by certified mail, return receipt requested, postage prepaid
(effective five business days after dispatch), (iii) sent by a
reputable, established courier service that guarantees overnight
delivery (effective the next business day) or (iv) dispatched by
facsimile (if the facsimile is in complete, readable form,
effective upon dispatch), addressed as follows (or to such other
address as the recipient party may have furnished to the sending
party for the purpose pursuant to this Section 8.2):
(a) If to the Company:
Media and ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies sent at the same time and by the same means
to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Snow ▇▇▇▇▇▇ ▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
-28-
(b) If to the Purchaser:
Winsonic Holdings, Ltd.
One Wilshire Building
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy sent at the same time and by the same means
to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Wasserman, Comden, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
9.3. Counterparts.
This Agreement may be executed by the parties in separate
counterparts, each of which when so executed and delivered will
be an original, but all of which together will constitute one and
the same instrument. In pleading or proving this Agreement, it
will not be necessary to produce or account for more than one
such counterpart.
9.4. Captions.
The captions of sections or subsections of this Agreement
are for reference only and will not affect the interpretation or
construction of this Agreement.
9.5. Binding Effect and Benefits.
This Agreement will bind and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement, the
provisions of this Agreement that are for the Purchaser's benefit
will inure to the benefit of all permitted transferees of
Purchased Securities, and the applicable provisions of this
Agreement that bind the Purchaser will bind all transferees of
Purchased Securities. Nothing in this Agreement is intended to or
will confer any rights or remedies on any person other than the
parties hereto and their respective successors and permitted
assigns.
9.6. Assignment.
This Agreement and the rights and obligations hereunder may
not be assigned by the Company without the written consent of the
Purchaser. Subject to the terms of Section 5 of this Agreement,
this Agreement and the rights and obligations hereunder and the
Purchased Securities may be transferred by each of the Purchaser
in its sole discretion at any time, without the consent of the
Company.
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9.7. Construction.
The language used in this Agreement is the language chosen
by the parties to express their mutual intent, and no rule of
strict construction will be applied against either party.
9.8. Further Assurances.
From time to time on and after the Closing Date, the Company
and the Purchaser will promptly execute and deliver all such
further instruments and assurances, and will promptly take all
such further actions, as the other party may reasonably request
in order more effectively to effect or confirm the transactions
contemplated by this Agreement and/or any of the Ancillary
Agreements and to carry out the purposes hereof and thereof.
9.9. Severability.
No invalidity or unenforceability of any section of this
Agreement or any portion thereof will affect the validity or
enforceability of any other section or the remainder of such
section.
9.10. Equitable Relief.
Each of the parties acknowledges that any breach by such
party of his, her, or its obligations under this Agreement would
cause substantial and irreparable damage to one or more of the
other parties and that money damages would be an inadequate
remedy therefor. Accordingly, each party agrees that the other
parties or any of them will be entitled to an injunction,
specific performance, and/or other equitable relief to prevent
the breach of such obligations.
9.11. Entire Agreement.
This Agreement, together with the exhibits and schedules
hereto and the Ancillary Agreements, contains the entire
understanding and agreement among the parties, or between or
among any of them, and supersedes any prior understandings or
agreements between or among any of them, with respect to the
subject matter hereof. Notwithstanding the foregoing or any other
provision of this Agreement or the Ancillary Agreements, nothing
herein or therein will be deemed to terminate or supersede any
other agreements not specifically terminated or superseded herein
or therein.
9.12. Governing Law.
This Agreement will be governed by and interpreted and
construed in accordance with the internal laws of the State of
Delaware, as applied to agreements under seal made, and entirely
to be performed, within Delaware.
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SIGNATURES
IN WITNESS WHEREOF, the Company and the Purchaser have
executed this Agreement as an agreement under seal on and as of
the date first above written.
MEDIA AND ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, WINSONIC HOLDINGS, LTD.
INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ -----------------------
------------------ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
Title: Exec. V.P.