Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
PRIMIX SOLUTIONS INC.
ADV ACQUISITION CORP.,
ADVIS, INC.
AND
THE SOLE STOCKHOLDER OF
ADVIS, INC.
Dated as of December 31, 1998
AGREEMENT AND PLAN OF MERGER
INDEX
PAGE
SECTION 1. THE MERGER.................................................1
1.1 The Merger.................................................1
1.2 Closing....................................................1
1.3 Effective Time.............................................2
1.4 Effect of the Merger.......................................2
1.5 Conversion of Securities...................................2
1.6 Cash and Stock Consideration...............................3
1.7 Further Assurances.........................................6
1.8 Principal Stockholder Approval and Waiver..................6
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PRINCIPAL STOCKHOLDER....................................6
2.1 Making of Representations and Warranties...................6
2.2 Organization and Qualifications of the Company.............7
2.3 Capital Stock of the Company; Beneficial Ownership.........7
2.4 Subsidiaries...............................................8
2.5 Authority of the Company...................................8
2.6 Properties.................................................9
2.7 Financial Statements......................................10
2.8 Taxes.....................................................11
2.9 Collectibility of Accounts Receivable.....................12
2.10 Absence of Certain Changes................................12
2.11 Ordinary Course...........................................14
2.12 Banking Relations.........................................14
2.13 Intellectual Property.....................................14
2.14 Contracts.................................................17
2.15 Litigation................................................18
2.16 Compliance with Laws......................................18
2.17 Insurance.................................................18
2.18 Warranty or Other Claims..................................19
2.19 Powers of Attorney........................................19
2.20 Finder's Fee..............................................19
2.21 Permits; Burdensome Agreements............................19
2.22 Corporate Records; Copies of Documents....................19
2.23 Transactions with Interested Persons......................19
2.24 Employee Benefit Programs.................................19
2.25 Environmental Matters.....................................20
2.26 List of Directors and Officers............................20
2.27 Disclosure................................................20
2.28 Non-Foreign Status........................................21
2.30 Employees; Labor Matters..................................21
2.31 Customers.................................................21
PAGE
SECTION 3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE
PRINCIPAL STOCKHOLDER...................................22
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER...................23
4.1 Making of Representations and Warranties..................23
4.2 Organization of Buyer.....................................23
4.3 Capital Stock of Buyer....................................23
4.4 Authority of Buyer........................................23
4.5 Finder's Fee..............................................24
4.6 SEC Reports...............................................24
4.7 Disclosure................................................24
SECTION 5. CONDITIONS................................................24
5.1 Conditions to the Obligations of Buyer....................24
5.2 Conditions to Obligations of the Company and the
Principal Stockholder...................................26
SECTION 6. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING..............27
6.1 Survival of Warranties....................................27
6.2 Payment of and Release from Certain Obligations...........27
6.3 Buyer Options.............................................27
6.4 Tax Returns; Tax Elections................................28
6.5 Restriction on Transfer...................................28
6.6 Non-Competition; Non-Solicitation.........................29
6.7 Transfer of Certain Software to the
Principal Stockholder...................................31
6.8 Collection of Accounts Receivable.........................31
6.9 Return of Deposits........................................32
6.10 Loan for Tax Liability of the Principal Stockholder.......32
SECTION 7. INDEMNIFICATION...........................................32
7.1 Indemnification by the Principal Stockholder..............32
7.2 Limitations on Indemnification by the
Principal Stockholder...................................33
7.3 Indemnification by Buyer..................................33
7.4 Limitation on Indemnification by Buyer....................34
7.5 Notice; Defense of Claims.................................34
SECTION 8. MISCELLANEOUS.............................................35
8.1 Fees and Expenses.........................................35
8.2 Governing Law.............................................35
8.3 Notices...................................................35
8.4 Entire Agreement..........................................36
8.5 Assignability; Binding Effect.............................36
8.6 Captions and Gender.......................................36
(ii)
PAGE
8.7 Execution in Counterparts.................................36
8.8 Amendments................................................36
8.10 Publicity and Disclosures.................................37
8.11 Arbitration...............................................37
8.12 Consent to Jurisdiction...................................38
8.13 Specific Performance......................................38
(iii)
LIST OF EXHIBITS AND SCHEDULES
Exhibit A: Escrow Agreement
Exhibit B: Opinion of Counsel for the Company and the
Principal Stockholder
Exhibit C: General Release
Exhibit D: Opinion of Counsel for Buyer
Schedule 2.3 Outstanding Options
2.5(a) Consents and Encumbrances, etc.
2.5(c) Related Party Agreements
2.6 Properties
2.7 Financial Statements
2.8(f) Revocation of S corporation election
2.10 Absence of Certain Changes
2.12 Banking Arrangements
2.13 Intellectual Property
2.14 Contracts
2.15 Litigation
2.16 Compliance with Laws
2.17 Insurance
2.21 Permits, Burdensome Agreements
2.23 Transactions with Interested Persons
2.24 Employee Benefit Plans
2.25 Environmental Matters
2.26 Officers and Directors; Consultants
2.27 Disclosure
2.29 Backlog
2.30 Labor Matters
2.31 Customers
6.2 Capital Leases
6.3 Buyer Options
6.8 Accounts Receivable
(iv)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 31, 1998 (the
"Agreement"), by and among PRIMIX SOLUTIONS INC., a Delaware corporation
("Buyer"), ADV ACQUISITION CORP., a Delaware corporation ("Acquisition
Corp"), ADVIS, INC., a Delaware corporation (the "Company"), and the sole
stockholder of the Company (the "Principal Stockholder").
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), Buyer, Acquisition Corp and the Company desire to
enter into a business combination transaction pursuant to which Acquisition
Corp will merge with and into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company has adopted a
resolution approving this Agreement pursuant to Section 251(b) of Delaware
Law;
WHEREAS, the Board of Directors of Acquisition Corp has adopted a
resolution approving this Agreement pursuant to Section 251(b) of Delaware
Law;
WHEREAS, each of Buyer, the sole stockholder of Acquisition Corp and
the Principal Stockholder (the holder of 100% of the outstanding capital
stock of the Company) has adopted this Agreement in accordance with Section
251(c) of Delaware Law.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Buyer, Acquisition Corp, the Company, and the Principal Stockholder
hereby agree as follows:
SECTION 1. THE MERGER.
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the relevant provisions of
Delaware Law, at the Effective Time (as defined in Section 1.3), Acquisition
Corp shall be merged with and into the Company. As a result of the Merger,
the separate corporate existence of Acquisition Corp shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
1.2 CLOSING. The closing of the Merger (the "Closing") shall be held
on the date hereof at the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, Exchange
Place, Boston, Massachusetts (or such other place and date as the parties may
agree) or, if all of the conditions to the obligations of the parties hereto
have not been satisfied or waived by such date, on such mutually agreeable
later date as soon as practicable after the satisfaction or waiver of all
conditions to the obligations of the parties hereto.
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1.3 EFFECTIVE TIME. As of the Closing, the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger") with the Secretary of State for the State of
Delaware in such form as required by, and executed in accordance with the
relevant provisions of, Delaware Law (the date and time of such filing being
the "Effective Time").
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in Section 259 of Delaware Law. Without limiting
the generality of the foregoing, and subject to Section 259 of Delaware Law,
at the Effective Time, except as otherwise provided herein, all of the
property, rights, privileges, powers and franchises of the Company and
Acquisition Corp shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Acquisition Corp shall become the
debts, liabilities and duties of the Surviving Corporation. At the Effective
Time, the Certificate of Incorporation of Acquisition Corp as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation and the By-laws of Acquisition
Corp as in effect immediately prior to the Effective Time shall become the
By-laws of the Surviving Corporation (except that, in each case, the name of
the Surviving Corporation shall be "Advis, Inc."). At the Effective Time, the
initial directors of the Surviving Corporation shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇. The initial officers of the Surviving
Corporation shall be as specified in a resolution of the Board of Directors
adopted after the Effective Time.
1.5 CONVERSION OF SECURITIES. At the Effective Time and without any
action on the part of Buyer, Acquisition Corp, the Company, the Principal
Stockholder or any other holders of any of the securities of any of those
corporations:
(a) each share of the Company's common stock, par value
$.002 per share (the "Common Stock") issued and outstanding immediately prior
to the Effective Time (the "Company Shares") shall be converted into the
right to receive the following consideration without interest thereon and
only upon the surrender of the certificate formerly representing such share
of Common Stock: (i) the Per Share Cash Payment (as defined in Section 1.6(a)
below) and (ii) the Per Share Stock Payment (as defined in Section 1.6(c)
below);
(b) each share of Common Stock held in the treasury of the
Company immediately prior to the Effective Time shall automatically be
canceled and extinguished without any conversion thereof and no payment shall
be made with respect thereto;
(c) each share of common stock of Acquisition Corp issued
and outstanding immediately prior to the Effective Time shall be converted
into and exchangeable for one validly issued, fully paid and nonassessable
share of the common stock of the Surviving Corporation; and
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(d) the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers of shares of
Common Stock thereafter on the records of the Company.
1.6 CASH AND STOCK CONSIDERATION.
(a) CASH PURCHASE PRICE AT CLOSING. The aggregate cash
consideration payable by Buyer to the Principal Stockholder (the "Cash
Purchase Price") shall equal ONE MILLION FIVE HUNDRED THIRTY-TWO THOUSAND
DOLLARS ($1,532,000) minus the Company Deficit (as hereinafter defined). The
"Company Deficit" shall mean the amount by which the Company's total
liabilities through and including the Closing (including, without limitation,
the expenses incurred by the Company and the Principal Stockholder in
connection with the transaction contemplated hereby, the Option Payment (as
defined in Section 2.3(a) hereof) and the indebtedness under that certain
promissory note dated as of December 18, 1998 issued by the Company for the
benefit of Buyer) exceed the Company's total current assets as reflected on
the balance sheet of the Company as of the close of business on the Closing
Date. Such Closing Date balance sheet which was prepared on a pro forma basis
(the "Closing Date Balance Sheet") and delivered by the Company on the day
preceding the Closing Date was agreed to by Buyer and the Company. The
parties agree that the Cash Purchase Price is subject to a post-closing
adjustment based on the review and determination as provided under Section
1.6(b)(ii) hereof. As used herein the Cash Purchase Price determined based on
the Closing Date Balance Sheet shall be referred to as the "Closing Date Cash
Purchase Price." At the Closing, Buyer shall issue to the Principal
Stockholder a promissory note with a principal amount equal to the Closing
Date Cash Purchase Price, $100,000 (the "Cash Escrow Amount") of which shall
be payable on January 4, 1999, without interest, to the Principal Stockholder
but shall be delivered to Peabody & ▇▇▇▇▇▇ LLP (the "Escrow Agent") to be
held in escrow in accordance with the terms of an Escrow Agreement in the
form of EXHIBIT A attached hereto (the "Escrow Agreement") and the remainder
shall be payable, without interest, to the Principal Stockholder on January
4, 1999. As used herein the "Per Share Cash Payment" shall be determined by
dividing the Cash Purchase Price by the total number of Company Shares
outstanding immediately prior to the Effective Time (the "Company Share
Number").
(b) POST-CLOSING ADJUSTMENT OF THE CASH PURCHASE PRICE.
(i) The Company represents that the Closing Date
Balance Sheet was prepared in accordance with generally accepted
accounting principles ("GAAP") applied consistently during the period
covered thereby (except for the absence of footnotes). The Company has
also prepared and delivered a statement setting forth a determination
of the Company Deficit at the Closing Date based on the Closing Date
Balance Sheet.
(ii) As promptly as practicable after the Closing
(but in no event later than forty-five (45) calendar days thereafter),
Buyer shall cause to be prepared and
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delivered to the Principal Stockholder an audited balance sheet of the
Company as of the close of business on the Closing Date (the "Audited
Balance Sheet") prepared in accordance with GAAP applied consistently
during the period covered thereby and in a manner (to the extent
consistent with GAAP) consistent with the methodology used in preparing
the Closing Date Balance Sheet. Within thirty (30) calendar days after
receipt of the Audited Balance Sheet, the Principal Stockholder may
deliver to Buyer a detailed written statement ("Protest Notice")
describing its objections and the basis therefor to the Audited Balance
Sheet and the determination of the Company Deficit and Cash Purchase
Price based on the Audited Balance Sheet. If Buyer does not receive
such Protest Notice within such 30-day period, the Audited Balance
Sheet and Buyer's determination of the Company Deficit at the Closing
Date based on the Audited Balance Sheet shall become final and binding
upon all parties. Upon request by the Principal Stockholder at any time
during such 30-day period, Buyer shall make available to the Principal
Stockholder copies of the work papers used in preparing the Audited
Balance Sheet together with such other documents as the Principal
Stockholder may reasonably request in connection with the review
thereof. If the Principal Stockholder duly delivers a Protest Notice,
Buyer and the Principal Stockholder shall use reasonable efforts to
resolve any such disputes. If a final resolution is not obtained within
ten (10) calendar days after the date on which the Protest Notice is
received by Buyer, any remaining disputes shall be finally resolved
within thirty (30) calendar days after the expiration of said 10-day
period by an accounting firm ("Arbitrator") mutually agreeable to Buyer
and the Principal Stockholder. If Buyer and the Principal Stockholder
are unable to mutually agree on such accounting firm within five (5)
calendar days after the expiration of said 10-day period, a "big-five"
accounting firm shall be selected by lot after elimination of one firm
by Buyer and one firm by the Principal Stockholder; PROVIDED that a
firm shall be automatically excluded if it has performed substantial
services to Buyer, the Principal Stockholder or the Company within the
past twelve (12) months. The determination of the Arbitrator so
selected shall be set forth in writing and shall be conclusive and
binding upon the parties and the fees and expenses of the Arbitrator
shall be paid by the party (I.E., Buyer, on the one hand, or the
Principal Stockholder, on the other hand) whose last proposed
determination of the Company Deficit was furthest from that of the
Arbitrator. This provision for arbitration shall be specifically
enforceable by the parties, and the determination of the Arbitrator in
accordance with the provisions hereof shall be final and binding upon
Buyer and the Principal Stockholder, with no right of appeal therefrom.
(iii) The Principal Stockholder and Buyer agree that
the Cash Purchase Price shall be adjusted based on the determination of
the Company Deficit based on the Audited Balance Sheet as finally
determined under Section 1.6(b)(ii). In addition, the Cash Purchase
Price so determined shall be further adjusted in accordance with
Section 6.8 and 6.9 of this Agreement (the "Adjusted Cash Purchase
Price"). The Principal Stockholder and Buyer agree to settle any
adjustments to the Cash Purchase Price based on the differences between
the Adjusted Cash Purchase Price and Closing
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Date Cash Purchase Price within ten (10) business days after the period
ending on the 180th calendar day after the Closing Date (the
"Post-Closing Adjustment Period") as follows: (A) if the Adjusted Cash
Purchase Price is equal to or greater than the Closing Date Cash
Purchase Price, Buyer and the Principal Stockholders shall instruct the
Escrow Agent to release the entire Cash Escrow Amount to the Principal
Stockholder and Buyer shall pay to the Principal Stockholder the amount
by which the Adjusted Cash Purchase Price exceeds the Closing Date Cash
Purchase Price, if any, and (B) if the Closing Date Cash Purchase Price
exceeds the Adjusted Cash Purchase Price, Buyer and the Principal
Stockholder shall instruct the Escrow Agent to release the Cash Escrow
Amount to the extent of such excess to the Buyer and release the
remainder of the Cash Escrow Amount to the principal Stockholder, if
any, to the Principal Stockholder; PROVIDED, HOWEVER, if the amount by
which the Closing Date Cash Purchase Price exceeds the Adjusted Cash
Purchase Price is greater than or equal to the Cash Escrow Amount,
Buyer and the Principal Stockholder shall instruct the Escrow Agent to
release to Buyer the entire Cash Escrow Amount and a number of
Restricted Shares with a Fair Market Value (as defined in Section
1.6(d) hereof) equal to the amount by which the difference between the
Adjusted Cash Purchase Price and the Closing Date Cash Purchase Price
exceeds the Cash Escrow Amount, if any.
(c) STOCK CONSIDERATION. The aggregate number of shares of
Buyer common stock, par value $.001 per share (the "Buyer Stock"), issuable by
Buyer to the Principal Stockholder at the Closing shall be 171,000 (the
"Restricted Shares"); PROVIDED, HOWEVER, that the Restricted Shares shall be
subject to restriction on transfer pursuant to Section 6.5 hereof and will be
held in escrow in accordance with the terms of the Escrow Agreement. The Per
Share Stock Payment shall be the quotient obtained by dividing (x) the aggregate
number of Restricted Shares which shall constitute the aggregate stock
consideration by (y) the Company Share Number. Buyer shall hold back the
delivery of the Restricted Shares until ten (10) business days after the end of
the Post-Closing Adjustment Period to secure the payment by the Principal
Stockholder of claims for indemnification made in accordance with Section 7
hereof and any adjustments to the Cash Purchase Price under Section 1.6(b)(iii)
hereof. Buyer shall deliver the Restricted Shares which have not be retained by
Buyer in satisfaction of claims for indemnification under Section 7 hereof or
adjustments to the Cash Purchase Price under Section 1.6(b)(iii) hereof within
twenty (20) business days after the end of the Post-Closing Adjustment Period
or, if later, at such time as any claims for indemnification made by Buyer under
Section 7 shall have been finally settled.
(d) VALUATION OF RESTRICTED SHARES. For purposes of utilizing
the Restricted Shares held by Buyer during the Post-Closing Adjustment Period to
satisfy claims for indemnification under Section 7 payable by the Principal
Stockholder or adjustments to the Cash Purchase Price under Section 1.6(b)(iii),
the Restricted Shares shall be valued at Fair Market Value (as defined below).
As used herein "Fair Market Value" shall mean, as of the date of the payment of
any indemnification claim (or satisfaction of an adjustment to the Cash Purchase
Price) by delivery of Restricted Shares to a Buyer Indemnified Party, the
average for each of the five (5) business days preceding such day of the Buyer
Stock of (i) the last sale
5
price reported on the principal national securities exchange on which the Buyer
Stock is traded, if the Buyer Stock is then traded on a national securities
exchange; or (ii) the last sale price reported on the National Market System of
The Nasdaq Stock Market, Inc. ("NASDAQ"), if the Buyer Stock is then traded on
NASDAQ; or (iii) closing bid price (or average of the bid prices) last quoted by
an established quotation service for over-the-counter securities, if the Buyer
Stock is not reported on NASDAQ. In the event that any Restricted Shares are
retained by Buyer in satisfaction of claims payable by the Principal Stockholder
under Section 7 or any adjustments to the Cash Purchase Price under Section
1.6(b)(iii) as provided hereunder and, if and only if the Fair Market Value of a
Restricted Share is less than $3.51, Buyer shall grant to the Principal
Stockholder at the time of such payment a fully-vested option to purchase an
equivalent number of shares of Buyer Stock at an exercise price equal to the
then fair market value of the Buyer Stock.
1.7 FURTHER ASSURANCES. The Principal Stockholder from time to time
after the Closing at the request of Buyer and without further consideration
shall execute and deliver further instruments of transfer and assignment and
take such other action as Buyer may reasonably require to more effectively
transfer and assign to, and vest in, Buyer the Company Shares and all rights
thereto, and to fully implement the provisions of this Agreement.
1.8 PRINCIPAL STOCKHOLDER APPROVAL AND WAIVER. The Principal
Stockholder agrees that the execution and delivery of this Agreement shall
constitute his vote for adoption of this Agreement in accordance with, and his
written waiver of any notice required by or appraisal rights with respect to the
transactions contemplated hereby arising under, Delaware Law.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PRINCIPAL STOCKHOLDER.
2.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, the Company and the Principal Stockholder jointly and
severally hereby make to Buyer the representations and warranties contained in
this Section 2. The Principal Stockholder shall have no right of indemnity or
contribution from the Company with respect to the breach of any representation
or warranty under this Section 2. As used herein, the Company shall be deemed to
have "knowledge" of a particular fact or other matter if the Principal
Stockholder or other executive officer of the Company is actually aware, after
due inquiry, of such fact or other matter.
2.2 ORGANIZATION AND QUALIFICATIONS OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware with full corporate power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of the Company's Certificate of
Incorporation as amended to date, certified by the Delaware Secretary of State,
6
and of the Company's By-laws, as amended to date, certified by the Company's
Secretary, and heretofore delivered to Buyer's counsel, are complete and
correct, and no amendments thereto are pending. The Company is not in violation
of any term of its Certificate of Incorporation or By-laws. The Company is duly
qualified to do business as a foreign corporation in The Commonwealth of
Massachusetts and it is not required to be licensed or qualified to conduct its
business or own its property in any other jurisdiction except where the failure
to be so qualified would not have a material adverse effect on the assets,
liabilities, condition (financial or other), business or results of operations
of the Company (after giving effect to the Merger).
2.3 CAPITAL STOCK OF THE COMPANY; BENEFICIAL OWNERSHIP.
(a) The authorized capital stock of the Company consists of
(i) 10,000,000 shares of Common Stock, par value $.002 per share, of which
5,004,835 shares are duly and validly issued, outstanding, fully paid and
non-assessable, and (ii) 500,000 shares of Preferred Stock, without par value,
no shares of which are unissued. Attached to SCHEDULE 2.3 hereto are genuine
copies of option termination agreements executed by the persons listed on
SCHEDULE 2.3. SCHEDULE 2.3 also lists the total number of shares of Common Stock
of the Company and the number of vested shares underlying each of the
outstanding options of the Company. Upon payment to the persons listed on
SCHEDULE 2.3 of the amounts listed beside their respective names thereon, the
aggregate payment of which shall not exceed $213,000, such stock options will
fully terminate and be of no further force or effect and no longer represent the
right to acquire capital stock in the Company (the "Option Payment"). There are
no other outstanding options, warrants, rights, commitments, preemptive rights
or agreements of any kind for the issuance or sale of, or outstanding securities
convertible into, any additional shares of capital stock of any class of the
Company. None of the Company's capital stock has been issued in violation of any
federal or state law. There are no voting trusts, voting agreements, proxies or
other agreements, instruments or undertakings with respect to the voting of the
Company Shares.
(b) The Principal Stockholder owns beneficially and of record
all of the Company Shares free and clear of any liens, restrictions or
encumbrances. Such Company Shares are, and as of the Effective Time will be,
duly authorized, validly issued, fully paid, non-assessable and free and clear
of any and all liens, encumbrances, charges or claims.
2.4 SUBSIDIARIES. The Company has no subsidiaries or investments in, or
loans to, any other corporation, business or organization or entity.
2.5 AUTHORITY OF THE COMPANY.
(a) The Company has full right, authority and power to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by the Company pursuant to this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance by the
Company of this Agreement and each such other agreement, document and instrument
executed and delivered by the Company pursuant to
7
or contemplated by this Agreement have been duly authorized by all necessary
action of the Company and its stockholders and no other action on the part of
the Company or its stockholders is required in connection therewith.
This Agreement and each agreement, document and instrument executed and
delivered by the Company pursuant to this Agreement constitute, or when executed
and delivered will constitute, valid and binding obligations of the Company
enforceable in accordance with their terms. The execution, delivery and
performance by the Company of this Agreement and each such agreement, document
and instrument:
(i) do not and will not violate any provision of
the Certificate of Incorporation or By-laws of the Company;
(ii) do not and will not violate any laws of the
United States or any state or other jurisdiction applicable to the
Company, implicate any anti-takeover laws or require the Company to
obtain any approval, consent or waiver of, or make any filing with, any
person or entity (governmental or otherwise) that has not been obtained
or made; and
(iii) do not and will not result in a breach of,
constitute a default under, require any consent under, accelerate any
obligation under, or give rise to a right of termination of any
indenture or loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to
which the Company is a party or by which the property of the Company is
bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the Company's assets or Company Common Stock,
except as specifically identified on SCHEDULE 2.5(a).
(b) The Principal Stockholder has the capacity to enter into
this Agreement and each agreement, document and instrument to be executed and
delivered by or on behalf of him pursuant to or contemplated by this Agreement.
This Agreement and each agreement, document and instrument executed and
delivered by the Principal Stockholder pursuant to or contemplated by this
Agreement constitute, or when executed and delivered will constitute, valid and
binding obligations of the Principal Stockholder enforceable in accordance with
their respective terms, except as the same may be limited by bankruptcy,
insolvency or reorganization laws, or other laws relating to or affecting the
availability of the remedy of specific performance or equitable principles of
general application. The execution, delivery and performance by the Principal
Stockholder of this Agreement and each such agreement, document and instrument:
(i) do not and will not violate any laws of the
United States or any state or other jurisdiction applicable to the
Principal Stockholder or require the Principal Stockholder to obtain
any approval, consent or waiver of, or make any filing
8
with, any person or entity (governmental or otherwise) that has not
been obtained or made; and
(ii) do not and will not result in a breach of,
constitute a default under, require any consent under, accelerate any
obligation under or give rise to a right of termination of any
indenture or loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to
which the Principal Stockholder is a party or by which the property of
the Principal Stockholder is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest
or other charge or encumbrance on any of the Principal Stockholder's
assets, including, without limitation, the Company Shares held by the
Principal Stockholder.
(c) AGREEMENTS. Except as disclosed in SCHEDULE 2.5(c) hereto,
there are no agreements or arrangements to which the Principal Stockholder is a
party relating to the business of the Company or to the Principal Stockholder's
rights and obligations as a stockholder of the Company, or the rights and
obligations of his designees as directors or officers of the Company. The
Principal Stockholder does not own, directly or indirectly, on an individual or
joint basis, any material interest in, or serve as an officer or director of,
any customer, competitor or supplier of the Company, or any organization which
has a contract or arrangement with the Company. The Principal Stockholder has
not at any time transferred any of the stock of the Company held by or for him
to any employee or consultant of the Company, which transfer constituted or
could be viewed as compensation for services rendered to the Company by said
employee or consultant. Except as provided in SCHEDULE 2.5(c), the execution,
delivery and performance of this Agreement will not violate or result in default
or acceleration of any obligation under any contract, agreement, indenture or
other instrument involving the Company to which the Principal Stockholder is a
party.
2.6 PROPERTIES. The Company does not own, and has never owned, any real
property. The Company has good, valid and (if applicable) marketable title to or
valid leasehold interests in all assets material to its business and to those
assets reflected on the Closing Date Balance Sheet or acquired by the Company
after the date thereof (except for assets disposed of, cash used and accounts
receivable collected or written down since that date), free and clear of all
liens, claims or encumbrances of any nature, other than liens and encumbrances
that do not materially detract from the value of the assets subject thereto or
materially impair the operations of the Company, and liens under the IBM Credit
Agreement and the capital leases referred to in Section 6.2 hereof. Except as
set forth on SCHEDULE 2.6, all equipment included in such assets which is
necessary to the business of the Company is in good condition and repair
(ordinary wear and tear excepted) and all leases of real or personal property to
which any such entity is a party are fully effective and afford such entity
peaceful and undisturbed possession of the subject matter to the lease. The
property and assets of the Company are sufficient for the conduct of its
respective businesses as presently conducted. The Company is not in violation of
any zoning, building or safety ordinance, regulation or requirement or other law
or regulation applicable to the operation of its owed or leased
9
properties, which violation would have a material adverse effect on the assets,
liabilities, condition (financial or other), business or results of operations
of the Company (after giving effect to the Merger), nor has any such entity
received any notice of any such violation. There are no defaults by the Company
or, to its knowledge, by any other party, which might curtail in any material
respect the present use of its properties.
2.7 FINANCIAL STATEMENTS.
(a) The Company has delivered to Buyer the following financial
statements, copies of which are attached hereto as SCHEDULE 2.7:
(i) A balance sheet of the Company for its fiscal
year ended on December 31, 1996 and statements of income, retained
earnings and cash flows for the year then ended, certified by Deloitte
& Touche LLP, independent public accountants and an unaudited balance
sheet of the Company for its fiscal year ended on December 31, 1997 and
statements of income, retained earnings and cash flows for the year
then ended, prepared in accordance with GAAP applied consistently
during the period covered thereby and certified by the Company's
president (the "1997 Financial Statements"); and
(ii) The Closing Date Balance Sheet prepared in
accordance with GAAP applied consistently during the period covered
thereby and certified by the Company's chief financial officer.
Said financial statements have been prepared in accordance with GAAP
(except, in the case of the Closing Date Balance Sheet and the 1997 Financial
Statements, for the absence of footnotes) applied consistently during the
periods covered thereby, are complete and correct in all material respects and
present fairly in all material respects the financial condition of the Company
at the dates of said statements and the results of its operations for the
periods covered thereby, subject, in the case of the Closing Date Balance Sheet
and related financial statements, to normal year-end adjustments.
(b) As of the date hereof, the Company does not and will not
have any material liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including
without limitation, liabilities as guarantor or otherwise with respect to
obligations of others, or liabilities for taxes due or then accrued or to become
due or contingent or potential liabilities relating to activities of the Company
or the conduct of its business prior to the date hereof or the Closing, as the
case may be, regardless of whether claims in respect thereof had been asserted
as of such date), except liabilities (i) stated or adequately reserved against
on the Closing Date Balance Sheet or the notes thereto, (ii) reflected in the
Schedules furnished to Buyer hereunder on the date hereof, or (iii) incurred
after the date of the Closing Date Balance Sheet in the ordinary course of
business of the Company consistent with the terms of this Agreement.
10
2.8 TAXES.
(a) The Company has paid or caused to be paid all federal,
state, local, foreign, and other taxes, including without limitation, income
taxes, estimated taxes, alternative minimum taxes, excise taxes, sales taxes,
use taxes, value-added taxes, gross receipts taxes, franchise taxes, capital
stock taxes, employment and payroll-related taxes, withholding taxes, stamp
taxes, transfer taxes, windfall profit taxes, environmental taxes and property
taxes, whether or not measured in whole or in part by net income, and all
deficiencies, or other additions to tax, interest, fines and penalties owed by
it (collectively, "Taxes"), required to be paid by it through the date hereof
whether disputed or not.
(b) The Company has in accordance with applicable law timely
filed all federal, state, local and foreign tax returns required to be filed by
it through the date hereof, and all such returns correctly and accurately set
forth the amount of any Taxes relating to the applicable period. For each
taxable period of the Company ended on or after December 31, 1996, the Company
has delivered to Buyer correct and complete copies of all federal, state, local
and foreign income tax returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company.
(c) Neither the Internal Revenue Service nor any other
governmental authority is now asserting or, to the knowledge of the Company,
threatening to assert against the Company any deficiency or claim for additional
Taxes. No claim has ever been made by an authority in a jurisdiction where the
Company does not file reports and returns that the Company is or may be subject
to taxation by that jurisdiction. There are no security interests on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Taxes. The Company has never entered into a closing
agreement pursuant to Section 7121 of the Internal Revenue Code of 1986, as
amended (the "Code").
(d) There has not been any audit of any tax return filed by
the Company, no such audit is in progress, and the Company has not been notified
by any tax authority that any such audit is contemplated or pending. No
extension of time with respect to any date on which a tax return was or is to be
filed by the Company is in force, and no waiver or agreement by the Company is
in force for the extension of time for the assessment or payment of any Taxes.
(e) The Company has never been (and has never had any
liability for unpaid Taxes because it once was) a member of an "affiliated
group" (as defined in Section 1504(a) of the Code). The Company has never filed,
and has never been required to file, a consolidated, combined or unitary tax
return with any other entity. The Company does not own and has never owned a
direct or indirect interest in any trust, partnership, corporation or other
entity. The Company is not a party to any tax allocation or sharing agreement.
The Company has never made an election under Section 341(f) of the Code.
(f) As set forth on SCHEDULE 2.8(f), the Company has, at all
times since its incorporation until January 1, 1998, qualified as an entity
properly taxable as an S corporation
11
(as defined in Section 1361 of the Code) under the Code and comparable
provisions of applicable state law. The Company is, and at all times since its
incorporation and until January 1, 1998 has been, a "small business corporation"
with a valid election pursuant to Section 1362(a) of the Code, and applicable
state law.
(g) For purposes of this Agreement, all references to Sections
of the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.
2.9 COLLECTIBILITY OF ACCOUNTS RECEIVABLE. All of the accounts
receivable of the Company reflected on the Closing Date Balance Sheet or
existing at the date hereof (less the reserve for bad debts set forth on the
Closing Date Balance Sheet) are or will be at the Closing valid and enforceable
claims and subject to no set off or counterclaim, and to the knowledge of the
Company, will be fully collectible in the ordinary course of business; PROVIDED
that the foregoing shall not be construed to constitute a guaranty of full
collectibility. The Company has no accounts or loans receivable from any person,
firm or corporation which is affiliated with the Company or from any director,
officer or employee of the Company.
2.10 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 2.10
attached hereto, since the date of the Closing Date Balance Sheet there has not
been:
(a) any change in the financial condition, properties, assets,
liabilities, business or operations of the Company, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has been materially adverse with respect to the Company;
(b) any contingent liability incurred by the Company as
guarantor or otherwise with respect to the obligations of others or any
cancellation of any material debt or claim owing to, or waiver of any material
right of, the Company;
(c) any mortgage, encumbrance or lien placed on any of the
properties of the Company which remains in existence on the date hereof or will
remain on the Closing Date;
(d) any obligation or liability of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown (including without limitation liabilities for Taxes due or to become due
or contingent or potential liabilities relating to products or services provided
by the Company or the conduct of the business of the Company since the date of
the Closing Date Balance Sheet regardless of whether claims in respect thereof
have been asserted), incurred by the Company other than obligations and
liabilities incurred in the ordinary course of business consistent with the
terms of this Agreement (it being understood that product or service liability
claims shall not be deemed to be incurred in the ordinary course of business);
12
(e) any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Company other than in the ordinary course of
business;
(f) any material damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties, assets
or business of the Company;
(g) any declaration, setting aside or payment of any dividend
by the Company, or the making of any other distribution in respect of the
capital stock of the Company, or any direct or indirect redemption, purchase or
other acquisition by the Company of its own capital stock;
(h) any labor trouble or claim of unfair labor practices
involving the Company; any change in the compensation payable or to become
payable by the Company to any of its officers, employees, agents or independent
contractors other than normal merit increases in accordance with its usual
practices; or any bonus payment or arrangement made to or with any of such
officers, employees, agents or independent contractors;
(i) any change with respect to the officers or management
of the Company;
(j) any payment or discharge of a material lien or liability
of the Company which was not shown on the Closing Date Balance Sheet or incurred
in the ordinary course of business thereafter;
(k) any obligation or liability incurred by the Company to any
of its officers, directors, stockholders or employees, or any loans or advances
made by the Company to any of its officers, directors, stockholders or
employees, except normal compensation and expense allowances payable to officers
or employees;
(l) any change in accounting methods or practices, credit
practices or collection policies used by the Company;
(m) any other transaction entered into by the Company other
than transactions in the ordinary course of business; or
(n) any agreement or understanding whether in writing or
otherwise, for the Company to take any of the actions specified in paragraphs
(a) through (m) above.
2.11 ORDINARY COURSE. Since the date of the Closing Date Balance Sheet,
the Company has conducted its business only in the ordinary course and
consistently with its prior practices.
13
2.12 BANKING RELATIONS. All of the arrangements which the Company has
with any banking institution are described in SCHEDULE 2.12 attached hereto,
indicating with respect to each of such arrangements the type of arrangement
maintained (such as checking account, borrowing arrangements, safe deposit box,
etc.) and the person or persons authorized in respect thereof.
2.13 INTELLECTUAL PROPERTY.
(a) Except as described in SCHEDULE 2.13, the Company has
exclusive ownership of, or license to use, all patent, copyright, trade secret,
trademark, or other proprietary rights (collectively, "Intellectual Property")
used or to be used in the business of the Company as presently conducted or
contemplated. Except as set forth in SCHEDULE 2.13, all of the rights of the
Company in such Intellectual Property are freely transferable. There are no
claims or demands of any other person pertaining to any of such Intellectual
Property and no proceedings have been instituted, or are pending or threatened,
which challenge the rights of the Company in respect thereof. The Company has
the right to use, free and clear of claims or rights of other persons, all
customer lists, designs, manufacturing or other processes, computer software,
systems, data compilations, research results and other information required for
or incident to its products or its business as presently conducted or
contemplated.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Company or used or to be used by the Company in its business as
presently conducted or contemplated, and all other items of Intellectual
Property which are material to the business or operations of the Company, are
listed in SCHEDULE 2.13. All of such patents, patent applications, trademark
registrations, trademark applications and registered copyrights have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office, the United States Register of Copyrights, or the corresponding offices
of other jurisdictions as identified on said Schedule, and have been properly
maintained and renewed in accordance with all applicable provisions of law and
administrative regulations of the United States and each such jurisdiction.
(c) All licenses or other agreements under which the Company
is granted rights in Intellectual Property, other than licenses of
"off-the-shelf" software utilized in the internal operations of the Company
which are generally commercially available to the public at retail, are listed
in SCHEDULE 2.13. All said licenses or other agreements are in full force and
effect, there is no material default by the Company or, to its knowledge, by any
other party thereto, and, except as set forth on SCHEDULE 2.13, all of the
rights of the Company thereunder are freely assignable. To the Company's
knowledge, the licensors under said licenses and other agreements have and have
had all requisite power and authority to grant the rights purported to be
conferred thereby. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Buyer.
14
(d) All licenses or other agreements under which the Company
has granted rights to others in Intellectual Property owned or licensed by the
Company are listed in SCHEDULE 2.13. All of said licenses or other agreements
are in full force and effect, there is no material default by the Company or, to
the Company's knowledge by any other party thereto, and, except as set forth on
SCHEDULE 2.13, all of the rights of Company thereunder are freely assignable.
True and complete copies of all such licenses or other agreements, and any
amendments thereto, have been provided to Buyer.
(e) Except as described on SCHEDULE 2.13, the Company has
taken all steps required in accordance with sound business practices to
establish and preserve its ownership and license of all Intellectual Property
rights with respect to its products, services and technology (including source
code). The Company has required all professional and technical employees, and
other employees having access to valuable non-public information of the Company,
to execute agreements under which such employees are required to convey to the
Company ownership of all inventions and developments conceived or created by
them in the course of their employment and to maintain the confidentiality of
all such information of the Company. The Company has not made any such
information available to any person other than employees of Company except
pursuant to written agreements requiring the recipients to maintain the
confidentiality of such information and appropriately restricting the use
thereof. The Company has required all independent contractors who performed work
on or relating to the Company's products or Intellectual Property to execute
agreements under which such employees are required to convey to the Company
ownership of all inventions and developments conceived or created by them in the
course of their work for the Company. The Company has no knowledge of any
infringement by others of any Intellectual Property rights of the Company.
(f) To the Company's knowledge, the present and contemplated
business, activities and products of the Company do not infringe any
Intellectual Property of any other person. No proceeding charging the Company
with infringement of any adversely held Intellectual Property has been filed or
is threatened to be filed. To the Company's knowledge, there exists no unexpired
patent or patent application which includes claims that would be infringed by or
otherwise adversely affect the products, activities or business of the Company.
To the Company's knowledge, the Company is not making unauthorized use of any
confidential information or trade secrets of any person, including without
limitation, any former employer of any past or present employee of Company.
Except as set forth in SCHEDULE 2.13, neither the Company nor, to its knowledge,
any of its employees have any agreements or arrangements with any persons other
than the Company related to confidential information or trade secrets of such
persons or restricting any such employee's ability to engage in business
activities of any nature. The activities of the Company's employees on behalf of
the Company do not violate any such agreements or arrangements known to the
Company.
(g) SCHEDULE 2.13 sets forth a true and complete list of all
computer software products currently being marketed by the Company which are
proprietary to the Company (the "Proprietary Products"). The Company's rights in
the Proprietary Products (including source
15
code) constitute Intellectual Property subject to all of the representations and
warranties set forth in the foregoing provisions of this Section 2.13. Except as
set forth in SCHEDULE 2.13, the software and designs of the Proprietary Products
have been developed and implemented in a professional manner and are documented
in accordance with normal professional standards so as to enable a qualified
software engineer, as applicable, to maintain and modify the Proprietary
Products conveniently and effectively on the basis of such documentation. The
Company has conducted a regular program of maintaining and updating the
Proprietary Products in response to defects on problem reports, and has in
effect reliable procedures for version control with respect to the Proprietary
Products. Except as set forth on SCHEDULE 2.13, there are no material software
or design defects in any of the Proprietary Products and the Proprietary
Products conform in all material respects to the respective specifications and
documentation.
(h) Except as set forth on SCHEDULE 2.13, all computer
software products that are owned by the Company, exclusively licensed to the
Company, licensed, sold or otherwise distributed to others by the Company or are
otherwise required for the conduct of its business ("Software") are Year 2000
Compliant. As used herein, "Year 2000 Compliant" shall mean the ability of the
Software to provide the following date related functions:
(i) consistently handle date information before,
during and after January 1, 2000, including but not limited to
accepting date input, providing date output and performing calculations
on dates or portions of dates;
(ii) function accurately in accordance with the
documentation relating to the applicable Software and without
interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century;
(iii) respond to two-digit date input in a way that
resolves any ambiguity as to the century in a disclosed, defined and
predetermined manner; and
(iv) store and provide output of date information in
ways that are unambiguous as to century.
2.14 CONTRACTS. Except for contracts, commitments, plans, agreements
and licenses described in SCHEDULE 2.14 (true and complete copies of which have
been delivered to Buyer), the Company is not a party to or subject to:
(a) any plan or contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments, profit
sharing, collective bargaining or the like, or any contract or agreement with
any labor union;
(b) any employment contract or contract for services which
requires the payment of more than $100,000 annually or which is not terminable
within 30 days by the Company without liability for any penalty or severance
payment;
16
(c) any contract or agreement for the purchase of any
commodity, material or equipment, except purchase orders in the ordinary course
for less than $50,000 each, such orders not exceeding $200,000 in the aggregate;
(d) any other contracts or agreements creating any obligations
of the Company of $50,000 or more with respect to any such contract or agreement
not specifically disclosed elsewhere under this Agreement;
(e) any contract or agreement providing for the purchase of
all or substantially all of its requirements of a particular product from a
supplier;
(f) any contract or agreement which by its terms does not
terminate or is not terminable without penalty by the Company or its successors
within one year after the date hereof;
(g) any contract or agreement for the sale or license of its
products not made in the ordinary course of business;
(h) any contract with any sales agent or distributor of
products of the Company;
(i) any contract containing covenants limiting the freedom of
the Company to compete in any line of business or with any person or entity;
(j) any contract or agreement for the purchase of any fixed
asset for a price in excess of $100,000 whether or not such purchase is in the
ordinary course of business;
(k) any license agreement (as licensor or licensee), other
than licenses of "off-the-shelf" software utilized in the internal operations of
the Company which are generally commercially available to the public at retail;
(l) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money; or
(m) any contract or agreement with any officer, employee,
director or stockholder of the Company or with any persons or organizations
controlled by or affiliated with it.
The Company is not in default under any such contracts, commitments,
plans, agreements or licenses described in said Schedule and the Company has no
knowledge of conditions or facts which with notice or passage of time, or both,
would constitute a default.
2.15 LITIGATION. SCHEDULE 2.15 hereto lists all currently pending
litigation and governmental or administrative proceedings or investigations to
which the Company is a party.
17
Except for matters described in SCHEDULE 2.15, there is no litigation or
governmental or administrative proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company or its affiliates which
may have any adverse effect on the properties, assets, prospects, financial
condition or business of the Company or which would prevent or hinder the
consummation of the transactions contemplated by this Agreement. With respect to
each matter set forth therein, SCHEDULE 2.15 sets forth a description of the
matter, the forum (if any) in which it is being conducted, the parties thereto
and the type and amount of relief sought.
2.16 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 2.16 hereto,
the Company is in compliance in all material respects with all applicable
statutes, ordinances, orders, judgements, decrees, rules and regulations
promulgated by any federal, state, municipal entity, agency, court or other
governmental authority which apply to the Company or to the conduct of its
business, and the Company has not received notice of a violation or alleged
violation of any such statute, ordinance, order, rule or regulation.
2.17 INSURANCE. The physical properties and assets of the Company are
insured to the extent disclosed in SCHEDULE 2.17 attached hereto and all such
insurance policies and arrangements are disclosed in said Schedule. Said
insurance policies and arrangements are in full force and effect, all premiums
with respect thereto are currently paid, the Company is in compliance with the
terms thereof, and, except as set forth on SCHEDULE 2.17, no consent or notice
is required to be obtained or given in connection with the transactions
contemplated by this Agreement to keep such policies in full force and effect.
2.18 WARRANTY OR OTHER CLAIMS. There are no existing or, to the
knowledge of the Company, threatened product liability, warranty or other
similar claims, or any facts upon which a material claim of such nature could be
based, against the Company for products or services which are defective or fail
to meet any product or service warranties. No material claim has been asserted
against the Company for renegotiation or price redetermination of any business
transaction, and, to the knowledge of the Company, there are no facts upon which
any such claim could be based.
2.19 POWERS OF ATTORNEY. Neither the Company nor the Principal
Stockholder has any outstanding power of attorney.
2.20 FINDER'S FEE. Neither the Company nor the Principal Stockholder
has incurred or become liable for any broker's commission or finder's fee
relating to or in connection with the transactions contemplated by this
Agreement.
2.21 PERMITS; BURDENSOME AGREEMENTS. SCHEDULE 2.21 lists all
permits, registrations, licenses, franchises, certifications and other
approvals (collectively, the "Approvals") required from federal, state or
local authorities in order for the Company to conduct its business. The
Company has obtained all such Approvals, which are valid and in full force
and effect, and is operating in substantial compliance therewith. Such
Approvals
18
include, but are not limited to, those required under federal, state or local
statutes, ordinances, orders, requirements, rules, regulations, or laws
pertaining to environmental protection, public health and safety, worker health
and safety, buildings, highways or zoning.
2.22 CORPORATE RECORDS; COPIES OF DOCUMENTS. The corporate record books
of the Company accurately record all corporate action taken by its stockholders
and board of directors and committees. The copies of the corporate records of
the Company, as made available to Buyer for review, are true and complete copies
of the originals of such documents. The Company has made available for
inspection and copying by Buyer and its counsel true and correct copies of all
documents referred to in this Section or in the Schedules delivered to Buyer
pursuant to this Agreement.
2.23 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth in
SCHEDULE 2.23 hereto, neither the Company, nor, to the knowledge of the Company,
any stockholder, officer, supervisory employee or director of the Company nor,
to the knowledge of Company, any of their respective spouses or family members,
owns directly or indirectly on an individual or joint basis any material
interest in, or serves as an officer or director or in another similar capacity
of, any competitor or supplier of Company, or any organization which has a
material contract or arrangement with the Company.
2.24 EMPLOYEE BENEFIT PROGRAMS. Except as set forth on SCHEDULE 2.24,
the Company does not maintain and has never maintained an employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The Company has no liabilities or obligations
under ERISA. Except as set forth in SCHEDULE 2.24, the Company has no other
stock option plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income arrangements,
vacation plans, or other employee benefit plans, agreements, or arrangements.
True and correct copies of all plans and arrangements set forth on SCHEDULE 2.24
have been provided to Buyer. For purposes of this Section 2.24, an entity
"maintains" an employee benefit plan if such entity sponsors, contributes to, or
provides (or has promised to provide) benefits under such employee benefit plan,
or has any obligation (by agreement or under applicable law) to contribute to or
provide benefits under such employee benefit plan, or if such employee benefit
plan provides benefits to or otherwise covers employees of such entity, or their
spouses, dependents or beneficiaries.
2.25 ENVIRONMENTAL MATTERS. No Hazardous Materials (as hereinafter
defined) have been generated, transported, used, disposed, stored or treated by
the Company and, to the knowledge of the Company, no Hazardous Materials have
been released, discharged, disposed, placed or otherwise caused to enter the
soil or water within any real property owned, leased or operated by the Company.
Except as set forth in SCHEDULE 2.25 attached hereto, to the Company's
knowledge, no site owned, operated or leased by the Company contains any
asbestos or asbestos-containing material, any polychlorinated biphenyls (PCBs)
or equipment containing PCBs, or any urea formaldehyde foam insulation. For
purposes of this Section 2.25, (i) "Hazardous Material" shall mean and include
any hazardous waste, hazardous
19
material, hazardous substance, petroleum product, oil, toxic substance,
pollutant, contaminant, or other substance which may pose a threat to the
environment or to human health or safety, as defined or regulated under any
Environmental Law; (ii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance, or by-law at the
foreign, federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted; and (iii) "Company" shall mean and
include the Company and all other entities for whose conduct the Company is or
may be held responsible under any Environmental Law.
2.26 LIST OF DIRECTORS AND OFFICERS. SCHEDULE 2.26 hereto contains a
true and complete list of all current directors and officers of the Company. In
addition, SCHEDULE 2.26 hereto contains a list of all managers, employees and
consultants of the Company who, individually, have received or are scheduled to
receive compensation from the Company for the fiscal year ending 1997, in excess
of $75,000. In each such case SCHEDULE 2.26 includes the current job title and
aggregate annual compensation of each such individual. Except as set forth in
SCHEDULE 2.26, the Company has no consultants and no contracts or arrangements
with any consultants.
2.27 DISCLOSURE. To the Company's knowledge, the representations,
warranties and statements contained in this Agreement and in the certificates,
exhibits and schedules delivered by the Company pursuant to this Agreement to
Buyer do not contain any untrue statement of a material fact, and, when taken
together, do not omit to state a material fact required to be stated therein or
necessary in order to make such representations, warranties or statements not
misleading in light of the circumstances under which they were made. Except as
set forth on SCHEDULE 2.27, there are no facts known to the Company which, to
its knowledge, has or will have a material adverse effect on the assets,
liabilities, condition (financial or other), business or results of operations
of the Company (after giving effect to the Merger) which have not been
specifically disclosed herein or in a Schedule furnished herewith, other than
general economic conditions affecting the industries in which the Company
operates.
2.28 NON-FOREIGN STATUS. The Company is not a "foreign person" within
the meaning of Section 1445 of the Code and Treasury Regulations Section
1.1445-2.
2.29 BACKLOG. As of the date hereof, the Company has a backlog of
orders for the sale or license of products or services, for which revenues have
not been recognized by the Company, as set forth in SCHEDULE 2.29, which orders
may be subject to cancellation.
2.30 EMPLOYEES; LABOR MATTERS. The Company employs a total of
approximately 25 full-time employees and 5 hourly employees, and has current
contracts with 8 independent contractors and generally enjoy good
employer-employee relationships. The Company is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it through the date hereof or
amounts required to be reimbursed to such employees. Upon termination of the
employment of any of said employees, neither the Company nor Buyer will by
reason of the transactions
20
contemplated under this Agreement or any action taken by the Company prior to
the Closing be liable to any of said employees for so-called "severance pay" or
any other payments, except as set forth in SCHEDULE 2.30. The Company has no
policy, practice, plan or program of paying severance pay or any form of
severance compensation in connection with the termination of employment, except
as set forth in said Schedule. The Company is in material compliance with all
applicable laws and regulations respecting labor, employment, fair employment
practices, work place safety and health, terms and conditions of employment, and
wages and hours. There are no charges of employment discrimination or unfair
labor practices, nor are there any strikes, slowdowns, stoppages of work, or any
other concerted interference with normal operations which are existing, pending
or, to the Company's knowledge, threatened against or involving the Company. The
Company has not received any information indicating that any of its employment
policies or practices is currently being audited or investigated by any federal,
state or local government agency. The Company is, and at all times since
November 6, 1986 has been, in compliance with the requirements of the
Immigration Reform Control Act of 1986.
2.31 CUSTOMERS. SCHEDULE 2.31 sets forth each customer (whether
pursuant to a commission, royalty or other arrangement) which accounts for more
than 10% of the sales of the Company for the twelve (12) months ended December
31, 1997 or the eleven (11) months ended as of the date of the Closing Date
Balance Sheet (collectively, the "Customers"). The relationships of the Company
with its Customers are good commercial working relationships. No Customer has
canceled, materially modified, or otherwise terminated its relationship with the
Company, or has during the last twelve months decreased materially its usage or
purchase of the services or products of the Company, nor to the knowledge of
Company, does any Customer have any plan or intention to do any of the
foregoing.
SECTION 3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE
PRINCIPAL STOCKHOLDER
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, the Principal Stockholder
hereby makes to Buyer each of the representations and warranties set forth in
this Section 3. The Principal Stockholder shall have no right of indemnity or
contribution from the Company with respect to the breach of any representation
or warranty under this Section 3.
The Principal Stockholder hereby represents and warrants to Buyer that
with respect to his receipt of the Restricted Shares hereunder:
The Principal Stockholder is acquiring the Restricted Shares for his
own account, for investment, and not with a view to any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"). The Principal Stockholder is a resident of The Commonwealth of
Massachusetts and the offer and sale of the Restricted Shares to him will take
place in The Commonwealth of Massachusetts. The Principal
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Stockholder is knowledgeable and experienced in the making of investments of the
type involved in the acquisition of the Restricted Shares pursuant to this
Agreement and is able to bear the economic risk of loss of his investment in
Buyer. The Principal Stockholder has been granted the opportunity to investigate
the affairs of Buyer and to ask questions of and receive from its officers and
employees (including questions regarding the terms and conditions of the
offering of the Restricted Shares), and has availed itself of such opportunity
either directly or through his authorized representative.
The Principal Stockholder understands that because the Restricted
Shares have not been registered under the Securities Act or securities or "blue
sky" laws of any jurisdiction, none of the Restricted Shares held by him may be
sold unless such Restricted Shares are subsequently registered under the
Securities Act or exemptions from such registration are available. The Principal
Stockholder acknowledges and understands that he has no independent right to
require Buyer to register the Restricted Shares. The Principal Stockholder
understands that the certificate representing the Restricted Shares will bear a
legend in substantially the form provided below (in addition to any legend
required under applicable state securities laws):
"THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE
HOLDER NAMED HEREON FOR HIS OWN ACCOUNT FOR INVESTMENT; AND
SUCH SECURITIES MAY NOT BE PLEDGED, SOLD OR IN ANY OTHER WAY
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS IN EFFECT AT THAT TIME, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT."
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
4.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to the Company and the Principal Stockholder to enter into this Agreement and
consummate the transactions contemplated hereby, Buyer hereby makes the
representations and warranties to the Company and the Principal Stockholder
contained in this Section 4.
4.2 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware with full
corporate power to own or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it.
4.3 CAPITAL STOCK OF BUYER. The authorized capital stock of Buyer
consists of (i) 55,000,000 shares of common stock, $.001 per share, of which
14,404,411 shares were
22
duly and validly issued and outstanding, fully paid and non-assessable as of
September 30, 1998; and (ii) 5,000,000 shares of preferred stock, $1.00 per
share, of which no shares are issued and outstanding. Except for options to
purchase up to 1,281,362 shares of Buyer Stock which were granted under the
Buyer's 1996 Stock Plan and 1995 Stock Plan which remain outstanding and
unexercised as of September 30, 1998, there are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into, any shares
of Buyer Stock. The Restricted Shares have been duly authorized and issued, are
fully paid and non-assessable, were issued in accordance with applicable
securities laws and, except as contemplated under Section 1.6(c), are free and
clear of any and all liens, encumbrances, charges or claims.
4.4 AUTHORITY OF BUYER. Buyer has full right, authority and power to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by Buyer pursuant to this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance by
Buyer of this Agreement, and each such other agreement, document and instrument
have been duly authorized by all necessary corporate action of Buyer and no
other action on the part of Buyer is required in connection therewith. This
Agreement and each other agreement, document and instrument executed and
delivered by Buyer pursuant to this Agreement constitute, or when executed and
delivered will constitute, valid and binding obligations of Buyer enforceable in
accordance with their terms.
4.5 FINDER'S FEE. Buyer has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
4.6 SEC REPORTS. Buyer's Form 10-K for the period ended December 31,
1997 and all other forms, reports and documents filed with the Securities and
Exchange Commission since the filing of such Form 10-K (collectively, the "SEC
Reports") have been prepared in accordance with the applicable requirements of
the Securities Act and the Securities Exchange Act of 1934, as amended. The
balance sheets (including the related notes) included in the SEC Reports are
complete and correct in all material respects and fairly present the financial
position of Buyer as of the respective dates thereof, and the other related
statements (including the related notes) included therein and complete and
correct in all material respects fairly present the results of operations and
cash flows of Buyer for the respective fiscal periods set forth therein in
accordance with generally accepted accounting principles applied on a consistent
basis, except in the case of interim financial statements for normal recurring
and certain non-recurring audit adjustments necessary for a fair presentation of
the financial position and operating results of Buyer for the interim periods
which will not be materially adverse and for the omission of footnotes to said
interim financial statements that would be required by generally accepted
accounting principles.
4.7 DISCLOSURE. To Buyer's knowledge, the representations, warranties
and statements contained in this Agreement and in the certificates delivered by
Buyer and Acquisition Corp pursuant to this Agreement to Buyer do not contain
any untrue statement of a
23
material fact, and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
SECTION 5. CONDITIONS.
5.1 CONDITIONS TO THE OBLIGATIONS OF BUYER. The obligation of Buyer to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of the Company and the Principal Stockholder
contained in Sections 2 and 3 shall be true and correct in all material respects
(except for such representations and warranties that are qualified by their
terms as to materiality, which representations and warranties as so qualified
shall be true in all respects) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing; and the Company and the
Principal Stockholder shall, on or before the Closing, have performed all of
their obligations hereunder which by the terms hereof are to be performed on or
before the Closing.
(b) NO MATERIAL CHANGE. There shall have been no material
adverse change in the financial condition, prospects, properties, assets,
liabilities, business or operations of the Company since the date of the Closing
Date Balance Sheet, except in the ordinary course of business. It is understood
that the Company has incurred losses in recent months and up to the Closing
Date, the effect of which have been reflected on the Closing Date Balance Sheet.
(c) CERTIFICATE FROM OFFICERS. The Principal Stockholder shall
have delivered to Buyer a certificate of the Company's President and Chief
Financial Officer dated as of the Closing to the effect that the statements set
forth in paragraph (a) and (b) above in this Section 5.1 are true and correct.
(d) APPROVAL OF BUYER'S COUNSEL. All actions, proceedings,
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated
by this Agreement shall have been approved by ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP as
counsel for Buyer, and such counsel shall have received on behalf of Buyer
such other certificates, opinions, and documents in form satisfactory to such
counsel as Buyer may reasonably require from the Company and the Principal
Stockholder to evidence compliance with the terms and conditions hereof as of
the Closing and the correctness as of the Closing of the representations and
warranties of the Principal Stockholder and the Company and the fulfillment
of their respective covenants.
(e) OPINION OF COUNSEL. On the Closing Date, Buyer shall
have received from Peabody & ▇▇▇▇▇▇ LLP, counsel for the Company and the
Principal Stockholder, an opinion as of said date in the form attached hereto
as EXHIBIT B.
24
(f) NO LITIGATION. There shall have been no determination
by Buyer, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by
reason of the institution or threat by any person or any federal, state or
other governmental authority of litigation, proceedings or other action
against Buyer, the Company or the Principal Stockholder or any material
adverse change in the laws or regulations applicable to the Company.
(g) CONSENTS. The Company or the Principal Stockholder
shall have made all filings with and notifications of governmental
authorities, regulatory agencies and other entities required to be made by
the Company or the Principal Stockholder in connection with the execution and
delivery of this Agreement, the performance of the transactions contemplated
hereby and the continued operation of the business of the Company by Buyer
subsequent to the Closing; and the Company, the Principal Stockholder and
Buyer shall have received all authorizations, waivers, consents and permits,
in form and substance reasonably satisfactory to Buyer, from all third
parties, including, without limitation, applicable governmental authorities,
regulatory agencies, lessors, lenders and contract parties, required to
permit the continuation of the business of the Company and the consummation
of the transactions contemplated by this Agreement, and to avoid a breach,
default, termination, acceleration or modification of any material indenture,
loan or credit agreement or any other material agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award as a result
of, or in connection with, the execution and performance of this Agreement.
(h) BUSINESS RELATIONS. Buyer shall be reasonably satisfied
based on personal interviews with the Customers or otherwise that such
Customers intend to continue their current level of business with the Company
after the Closing.
(i) RESIGNATIONS. The Company shall have delivered to Buyer
the resignations of all of the directors of the Company and of such officers
of the Company as may be requested by Buyer prior to the Closing, such
resignations to be effective at the Closing.
(j) RELEASES. The Company shall have delivered to Buyer (i)
general releases signed by the Principal Stockholder of all claims which he
may have (in any capacity) against the Company in the form attached here to
as EXHIBIT C.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDER. The obligation of the Company and the Principal Stockholder to
consummate this Agreement and the transactions contemplated hereby is subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of Buyer contained in Section 4 shall be true
and correct in all material respects as though made on and as of the Closing;
Buyer shall, on or before the Closing, have performed all of its obligations
hereunder which by the terms hereof are to be performed on or
25
before the Closing; and Buyer shall have delivered to the Company and the
Principal Stockholder a certificate of the President or any Vice President of
Buyer dated on the Closing to such effect.
(b) APPROVAL OF THE COMPANY'S COUNSEL. All actions,
proceedings, instruments and documents required to carry out this Agreement
and the transactions contemplated hereby and all related legal matters
contemplated by this agreement shall have been approved by Peabody & ▇▇▇▇▇▇
LLP as counsel for the Company and the Principal Stockholder, and such
counsel shall have received on behalf of the Company and the Principal
Stockholder such other certificates, opinions and documents in form
satisfactory to such counsel as the Company may reasonably require from Buyer
to evidence compliance with the terms and conditions hereof as of the Closing
and the correctness as of the Closing of the representations and warranties
of Buyer and the fulfillment of its covenants.
(c) OPINION OF COUNSEL. On the Closing Date, the Company
and the Principal Stockholder shall have received from ▇▇▇▇▇▇▇, Procter &
▇▇▇▇ LLP counsel for Buyer, an opinion as of said date in the form attached
hereto as EXHIBIT C.
(d) NO LITIGATION. There shall have been no determination
by the Company, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become inadvisable or
impracticable by reason of the institution or threat by any person or any
federal, state or other governmental authority of material litigation,
proceedings or other action against Buyer, the Company or the Principal
Stockholder.
SECTION 6. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
6.1 SURVIVAL OF WARRANTIES. Each of the representations, warranties,
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be
deemed to have been relied upon by the other party and shall survive the
Closing regardless of any investigation and shall not merge in the
performance of any obligation by either party hereto; PROVIDED, HOWEVER, that
such representations and warranties shall expire on the same dates as and to
the extent that the rights to indemnification with respect thereto under
Section 7 shall expire.
6.2 PAYMENT OF AND RELEASE FROM CERTAIN OBLIGATIONS.
(a) As of the Effective Time, Buyer shall pay in full the
indebtedness of the Company under that certain Agreement for Wholesale
Financing dated as of March 1, 1995 by and between IBM Credit Corporation and
the Company, as amended (the "IBM Credit Agreement"), which amount (which
shall be reflected in the Closing Date Balance Sheet) shall not exceed
$900,000, whereupon no further amounts shall be borrowed under the IBM Credit
Agreement.
26
(b) At or as soon as practicable after the Closing, Buyer
shall use its commercially reasonable efforts to obtain the release of the
personal guarantee of the Principal Stockholder for obligations of the
Company under (i) the IBM Credit Agreement, (ii) the Lease dated September
1995 by and between WHVPW Real Estate Limited Partnership and the Company,
and (iii) the capital lease agreements set forth on SCHEDULE 6.2 attached
hereto, which obligations under item (iii) shall not exceed $130,000
(collectively the "Guaranty Items"); PROVIDED, HOWEVER, that Buyer shall
indemnify the Principal Stockholder for any claim asserted against the
Principal Stockholder after the Effective Time relating to a liability
reflected on the Closing Date Balance Sheet to the extent the Principal
Stockholder is not released of a Guaranty Item.
6.3 BUYER OPTIONS. At or as soon as practicable after the Closing,
Buyer shall grant options to purchase an aggregate of 496,000 shares of Buyer
Stock ("Buyer Options") to the employees of the Surviving Corporation
identified on SCHEDULE 6.3 attached hereto. The Buyer Options shall be
granted to the employees identified on SCHEDULE 6.3 to purchase the number of
shares of Buyer Stock set forth opposite the name of each such employee
pursuant to the terms of the Buyer's stock option plans, which terms shall
include, among other things, an exercise price equal to the fair market value
of the Buyer Stock as of the date of grant and annual vesting over a four (4)
year term.
6.4 TAX RETURNS; TAX ELECTIONS.
(a) The Principal Stockholder shall cooperate with Buyer to
permit the Company and/or Buyer in accordance with applicable law to promptly
prepare and file on or before the due date or any extension thereof all
federal, state and local tax returns required to be filed by the Company.
Buyer shall not make an election under Section 338(h)(10) of the Code without
the prior written consent of the Principal Stockholder.
(b) The Cash Purchase Price shall not be adjusted by reason
of any tax election made or return filed by Buyer in connection with or
following the Merger. Further, the Buyer shall not make a tax election in
connection with the Merger or file any tax return that will have a material
adverse effect on the Principal Stockholder's tax liability unless Buyer
either (a) obtains the Principal Stockholder's prior written consent or (b)
pays the Principal Stockholder an additional amount of purchase price so as
to make the Principal Stockholder whole, on an after-tax basis, for such
material adverse effect. Neither of the foregoing sentences shall apply if
and to the extent that such tax election or filing relates to a matter with
respect to which the Company or the Principal Stockholder did not have a
reasonable basis therefor (provided that if the Buyer makes such a
determination, it shall, before making any such election or filing, give the
Principal Stockholder an opportunity to provide to Buyer an opinion of
counsel reasonably satisfactory to Buyer that such reasonable basis exists).
27
6.5 RESTRICTION ON TRANSFER.
(a) GENERAL. From and after the Closing Date and until the
second (2nd) anniversary thereof (the "Restricted Period"), none of the
Restricted Shares to be issued at Closing to the Principal Stockholder shall
be sold, assigned, transferred, pledged, hypothecated, given away or in any
other manner disposed of or encumbered, whether voluntarily or by operation
of law, unless such transfer is in compliance with all applicable securities
laws (including, without limitation, the Securities Act), and such
disposition is in accordance with the terms and conditions of this Section
6.5. In connection with any transfer of Restricted Shares, Buyer may require
the transferor to provide at his or her own expense an opinion of counsel to
the transferor, satisfactory to Buyer, that such transfer is in compliance
with all foreign, federal and state securities laws (including, without
limitation, the Securities Act). Any attempted disposition of Restricted
Shares not in accordance with the terms and conditions of this Section 6.5
shall be null and void, and Buyer shall not reflect on its records any change
in record ownership of any Restricted Shares as a result of any such
disposition, shall otherwise refuse to recognize any such disposition and
shall not in any way give effect to any such disposition of any Restricted
Shares. Subject to the foregoing general provisions, Restricted Shares may be
transferred pursuant to the following specific terms and conditions:
(i) TRANSFERS TO PERMITTED TRANSFEREES. The Principal
Stockholder may sell, assign, transfer or give away any or all of the
Restricted Shares to Permitted Transferees (as hereinafter defined);
PROVIDED, HOWEVER, that such Permitted Transferee(s) shall, as a
condition to any such transfer, agree to be subject to the terms and
conditions of this Section 6.5 and shall have delivered a written
acknowledgment to that effect to Buyer. As used herein a "Permitted
Transferee" shall mean any of the following to whom the Principal
Stockholder may transfer Restricted Shares hereunder: the Principal
Stockholder's spouse, parents, children (natural or adopted),
stepchildren or grandchildren or a trust or a limited partnership for
their principal benefit of which the Principal Stockholder is the
settlor or general partner; PROVIDED, HOWEVER, that any such trust or a
limited partnership does not require or permit distribution of any
Restricted Shares during the Restricted Period; and
(ii) TRANSFERS UPON DEATH. Upon the death of the
Principal Stockholder or any Permitted Transferee the Restricted Shares
may be transferred by operation of law to the estate, legal
representatives, executors and administrators of the Principal
Stockholder or any such Permitted Transferee, subject to the terms of
this Section 6.5.
(b) LEGEND. Any certificate(s) representing the Restricted
Shares shall carry substantially the following legends:
"The transferability of this certificate and the
shares of stock represented hereby are subject to the
restrictions, terms and conditions (including restrictions
against transfers) contained in
28
Section 6.5 of a certain Agreement and Plan of Merger dated
December 31, 1998 between Primix Solutions Inc. and the holder
of this certificate (a copy of which is available at the
offices of Primix Solutions Inc. for examination)."
6.6 NON-COMPETITION; NON-SOLICITATION. In view of the fact that any
activity of the Principal Stockholder in violation of the terms hereof would
adversely affect Buyer and would deprive Buyer of the benefits of its bargain
under this Agreement and to preserve the goodwill associated with the
business of Buyer, the Principal Stockholder hereby agrees that, during the
Principal Stockholder's employment with Buyer or any Affiliate (as
hereinafter defined), he will not, without the express written consent of
Buyer, directly or indirectly, anywhere in the United States, engage in any
activity which is, or participate or invest in, or provide or facilitate the
provision of financing to, or assist (whether as owner, part-owner,
shareholder, member, partner, director, officer, trustee, employee, agent or
consultant, or in any other capacity), any business, organization or person
other than Buyer (or any Affiliate), and including any such business,
organization or person involving, or which is, a family member of the
Principal Stockholder, whose business, activities, products or services are
competitive with any of the business, activities, products or services
conducted or offered by Buyer and any Affiliate which business, activities,
products and services shall include in any event and without limitation the
business of computer software and systems consulting and any other business
activity engaged in, conducted by or in active planning by Buyer or any
Affiliate on the date the Principal Stockholder's employment with Buyer and
any Affiliate terminates. During the period commencing on the date hereof and
ending on the date which is the first (1st) anniversary of the date on which
the Principal Stockholder's employment with Buyer and any Affiliate
terminates for any reason, the Principal Stockholder shall not, without the
express consent of Buyer, directly or indirectly hire or engage or attempt to
hire or engage for or on behalf of himself or any such competitor any officer
or employee of Buyer or any Affiliate, or any former employee of Buyer and
any Affiliate who was employed during the six (6) month period immediately
preceding the date hereof or at any time during the term of the Principal
Stockholder's affiliation with Buyer or any Affiliate, encouraging for or on
behalf of himself or any such competitor, any such officer or employee to
terminate his or her relationship or employment with Buyer or any Affiliate,
soliciting for or on behalf of himself or any such competitor any client or
strategic partner of Buyer or any Affiliate, including, without limitation,
Apple Computer, Inc., Netscape and Active, during the term of his employment
with Buyer and diverting to any person or entity any client or business
opportunity of Buyer or any of any Affiliate.
Notwithstanding anything herein to the contrary, the Principal
Stockholder may make passive investments in any enterprise the shares of
which are publicly traded if such investment constitutes less than one
percent (1%) of the equity of such enterprise.
Neither the Principal Stockholder nor any business entity controlled
by him is a party to any contract, commitment, arrangement or agreement which
could, following the date hereof, restrain or restrict Buyer or any Affiliate
from carrying on its business, and as of the date of
29
this Agreement the Principal Stockholder has no business interests whatsoever
in or relating to the businesses in which Buyer and any Affiliate is
currently engaged, other than his interest in Buyer and interests in public
companies of less than one percent (1%).
The parties acknowledge that the time, scope, geographic area and
other provisions of this Section 6.6 have been specifically negotiated by
sophisticated commercial parties and agree that (a) all such provisions are
reasonable under the circumstances of the transactions contemplated hereby,
(b) are given as an integral and essential part of the transactions
contemplated hereby and (c) but for the covenants of the Principal
Stockholder contained in this Agreement, Buyer would not have entered into or
consummated the transactions contemplated under the this Agreement. The
Principal Stockholder has independently consulted with his counsel and has
been advised in all respects concerning the reasonableness and proprietary of
the covenants contained in this Section 6.6, with specific regard to the
business to be conducted by Buyer and its Affiliates, and represents that the
covenants contained in this Section 6.6 is intended to be, and shall be,
fully enforceable and effective in accordance with its terms.
As used herein an "Affiliate" of Buyer shall mean any person or
entity which directly or indirectly controls, is controlled by, or is under
common control with Buyer.
6.7 TRANSFER OF CERTAIN SOFTWARE TO THE PRINCIPAL STOCKHOLDER. At
the Closing, as part of the merger consideration, Buyer shall transfer its
entire right and interest in the software referred to as (i) "ERP2WEB" for
SAP R3 and for PeopleSoft applications and (ii) "Java Presentation Framework"
(collectively, the "Software Products") to the Principal Stockholder. In
connection with any agreement for the sale and/or license of the Software
Products to a third party ("Software Buyer"), the Principal Stockholder shall
use his reasonable best efforts to reserve the right of Buyer and its
Affiliates to use, copy, sell or license certain code modules and
methodologies contained in the Software Products; PROVIDED that neither Buyer
nor any of its Affiliates shall compete with such third party through the
sale or licensing of either Software Product in the form sold or licensed to
such third party; and PROVIDED, FURTHER, that the Principal Stockholder shall
not assert any claims or causes of action against Buyer or its Affiliates
alleging unauthorized use of the Software Products, except to the extent that
the Principal Stockholder is seeking indemnification from Buyer or any
Affiliate with respect to claims of a Software Buyer arising from the
unauthorized use of the Software Product by Buyer or any of its Affiliates
(other than the Principal Stockholder) and Buyer hereby agrees, on behalf of
itself and its Affiliates, so to indemnify the Principal Stockholder.
6.8 COLLECTION OF ACCOUNTS RECEIVABLE. In addition to the
adjustments to the Cash Purchase Price as contemplated under Section 1.6(b),
(i) if the aggregate amount of the accounts receivable identified on the
Closing Date Balance Sheet which are deemed to be uncollectible as of the
last day of the Post-Closing Adjustment Period (the "Uncollectible Accounts")
exceeds the reserve for doubtful accounts stated in the Closing Date Balance
Sheet (the "A/R Reserve"), then the Cash Purchase Price shall be reduced by
such excess, (ii) if the aggregate amount of the A/R Reserve exceeds the
Uncollectible Accounts, then the Cash
30
Purchase Price shall be increased by such excess, and (iii) if the aggregate
amount of the Uncollectible Accounts is equal to the A/R Reserve, no
adjustment to the Cash Purchase Price shall be made. If and to the extent the
Cash Purchase Price is required to be reduced as provided in the preceding
sentence, the parties hereto agree that Buyer shall either, at its sole
discretion, waive its right to any such purchase price reduction or assign
its rights to the applicable Uncollectible Accounts causing such purchase
price reduction to the Principal Stockholder for the collection by the
Principal Stockholder. All amounts received on accounts receivable shall be
applied by Buyer in good faith to the earliest dated account of each account
debtor. The settlement of the adjustment of the Cash Purchase Price as
contemplated in this Section 6.8 shall be in accordance with Section
1.6(b)(iii).
6.9 RETURN OF DEPOSITS. In the event the Surviving Corporation
receives any return of security deposits under the real property lease
agreements identified on SCHEDULE 2.14, the Cash Purchase Price determined
based on the Audited Balance Sheet shall be increased by the aggregate amount
of such deposits. The settlement of the adjustment the Cash Purchase Price
shall be in accordance with Section 1.6(b)(iii).
6.10 LOAN FOR TAX LIABILITY OF THE PRINCIPAL STOCKHOLDER. In the
event that the Merger shall not be treated for federal income tax purposes as
a "reorganization" within the meaning of Section 368(a) of the Code
("Tax-Free Reorganization") and the Principal Stockholder shall have
additional federal income tax liabilities solely as a result of such
determination based on the receipt of the Restricted Shares (the "Incremental
Tax Liability"), Buyer shall, within ten (10) calendar days after review by
Buyer to its reasonable satisfaction of the applicable federal income tax
return form(s) of the Principal Stockholder for the 1998 tax year as prepared
by a reputable tax advisor (the "Tax Forms"), loan an amount equal to the
Discounted Tax Liability to the Principal Stockholder upon tender of a
promissory note with a principal amount equal to the Discounted Tax Liability
at a compounded interest rate per annum of 6%, payable in two (2) years;
PROVIDED, HOWEVER, that in no event shall the aggregate amount of such loan
exceed $100,000. As used herein the "Discounted Tax Liability" shall mean the
Incremental Tax Liability, discounted to a present value based on an annual
interest rate of 6% over a five year period. The computation of the
Incremental Tax Liability and Discounted Tax Liability shall be set forth in
a statement accompanying the applicable Tax Forms and shall be subject to
review by Buyer to its reasonable satisfaction.
SECTION 7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDER. The Principal
Stockholder agrees subsequent to the Closing to indemnify and hold the
Surviving Corporation, Buyer and their respective subsidiaries and affiliates
and persons serving as officers, directors, partners or employees thereof
(individually a "Buyer Indemnified Party" and collectively the "Buyer
Indemnified Parties") harmless from and against any damages (including,
without limitation, diminution in value), liabilities, losses, taxes, fines,
penalties, costs, and expenses (including, without limitation, reasonable
fees of counsel) of any kind or nature whatsoever (whether or
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not arising out of third-party claims and including all amounts paid in the
investigation, defense or settlement of the foregoing) which may be sustained
or suffered by any of them arising out of or based upon any of the following
matters:
(a) fraud, intentional misrepresentation or a deliberate or
wilful breach by the Company or the Principal Stockholder of any of their
representations, warranties or covenants under this Agreement or in any
certificate, schedule or exhibit delivered pursuant hereto or any breach of
the representations contained in Section 2.3;
(b) any other breach of any representation, warranty or
covenant of the Company or the Principal Stockholder under this Agreement or
in any certificate, schedule or exhibit delivered pursuant hereto, or by
reason of any claim, action or proceeding asserted or instituted growing out
of any matter or thing constituting a breach of such representations,
warranties or covenants;
(c) any liability of the Company for Taxes arising from an
event or transaction prior to the Closing or as a result of the Closing which
have not been paid or provided for or reserved against by the Company,
including without limitation, any increase in Taxes due to the unavailability
of any loss or deduction claimed by the Company.
7.2 LIMITATIONS ON INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDER.
Notwithstanding the foregoing, the right of Buyer Indemnified Parties to
indemnification under Section 7.1 shall be subject to the following
provisions:
(a) No indemnification shall be payable to a Buyer
Indemnified Party with respect to claims asserted pursuant to Sections 7.1(b)
and 7.1(c) after June 30, 1999 (the "Indemnification Cut-Off Date");
(b) No indemnification shall be payable pursuant to
Sections 7.1(b) and 7.1(c) above to any Buyer Indemnified Party, except to
the extent the total of all claims for indemnification pursuant to Sections
7.1(b) and 7.1(c) shall exceed $25,000 in the aggregate, whereupon the full
amount of such excess shall be recoverable in accordance with the terms
hereof;
(c) No indemnification shall be payable pursuant to
Sections 7.1(b) and 7.1(c) by the Principal Stockholder to or on behalf of
the Buyer Indemnified Parties which cannot be satisfied by surrender of the
Restricted Shares (valued as provided in Section 1.6(d));
(d) The Buyer Indemnified Parties shall be required to seek
indemnification or reimbursement with respect to claims asserted pursuant to
Sections 7.1(b) and 7.1(c) solely from and to the extent of the Restricted
Shares then held in escrow pursuant to the Escrow Agreement; PROVIDED,
HOWEVER, the Buyer Indemnified Parties shall have full recourse against the
Principal Stockholder with respect to claims asserted pursuant to Section
7.1(a).
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7.3 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold the
Principal Stockholder harmless from and against any damages, liabilities,
losses and expenses (including, without limitation, reasonable fees of
counsel) of any kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in investigation, defense
or settlement of the foregoing) which may be sustained or suffered by him
arising out of or based upon any breach of any representation, warranty or
covenant made by Buyer in this Agreement or in any certificate delivered by
Buyer hereunder, or by reason of any claim, action or proceeding asserted or
instituted growing out of any matter or thing constituting such a breach.
7.4 LIMITATION ON INDEMNIFICATION BY BUYER. Notwithstanding the
foregoing, the right of Principal Stockholder to indemnification under
Section 7.3 shall be subject to the following provisions:
(a) No indemnification shall be payable to the Principal
Stockholder with respect to claims asserted pursuant to Section 7.3 after the
Indemnification Cut-Off Date;
(b) No indemnification shall be payable pursuant to
Subsection 7.3 above to the Principal Stockholder, except to the extent the
total of all claims for indemnification pursuant to Section 7.3 shall exceed
$25,000 in the aggregate, whereupon the full amount of such excess shall be
recoverable in accordance with the terms hereof; and
(c) No indemnification shall be payable pursuant to Section
7.3 by the Buyer to or on behalf of the Principal Stockholder which shall
exceed the value of the Restricted Shares (valued as provided in Section
1.6(d)); PROVIDED, HOWEVER, that the Principal Stockholder shall have full
recourse against Buyer with respect to claims arising under or based on
Buyer's failure to perform its obligations under Section 6.2(b).
7.5 NOTICE; DEFENSE OF CLAIMS. An indemnified party may make claims
for indemnification hereunder by giving written notice thereof to the
indemnifying party within the period in which indemnification claims can be
made hereunder. If indemnification is sought for a claim or liability
asserted by a third party, the indemnified party shall also give written
notice thereof to the indemnifying party promptly after it receives notice of
the claim or liability being asserted, but the failure to do so shall not
relieve the indemnifying party from any liability except to the extent that
it is prejudiced by the failure or delay in giving such notice. Such notice
shall summarize the bases for the claim for indemnification and any claim or
liability being asserted by a third party. Within thirty (30) days after
receiving such notice the indemnifying party shall give written notice to the
indemnified party stating whether it disputes the claim for indemnification
and whether it will defend against any third party claim or liability at its
own cost and expense. If the indemnifying party fails to give notice that it
disputes an indemnification claim within thirty (30) days after receipt of
notice thereof, it shall be deemed to have accepted and agreed to the claim,
which shall become immediately due and payable. The indemnifying party shall
be entitled to direct the defense against a third party claim or liability
with counsel selected by it (subject to the consent of the indemnified party,
33
which consent shall not be unreasonably withheld) as long as the indemnifying
party is conducting a good faith and diligent defense. The indemnified party
shall at all times have the right to fully participate in the defense of a
third party claim or liability at its own expense directly or through
counsel; PROVIDED, HOWEVER, that if the named parties to the action or
proceeding include both the indemnifying party and the indemnified party and
the indemnified party is advised that representation of both parties by the
same counsel would be inappropriate under applicable standards of
professional conduct, the indemnified party may engage separate counsel at
the expense of the indemnifying party. If no such notice of intent to dispute
and defend a third party claim or liability is given by the indemnifying
party, or if such good faith and diligent defense is not being or ceases to
be conducted by the indemnifying party, the indemnified party shall have the
right, at the expense of the indemnifying party, to undertake the defense of
such claim or liability (with counsel selected by the indemnified party), and
to compromise or settle it, exercising reasonable business judgment. If the
third party claim or liability is one that by its nature cannot be defended
solely by the indemnifying party, then the indemnified party shall make
available such information and assistance as the indemnifying party may
reasonably request and shall cooperate with the indemnifying party in such
defense, at the expense of the indemnifying party.
SECTION 8. MISCELLANEOUS.
8.1 FEES AND EXPENSES. Each of the parties will bear its own
expenses in connection with the negotiation and the consummation of the
transactions contemplated by this Agreement. The expenses of the Company and
the Principal Stockholder relating to the Merger, including legal expenses of
the Company and the Principal Stockholder, shall be liabilities of the
Company which are reflected on the Closing Date Balance Sheet.
8.2 GOVERNING LAW. This Agreement shall be construed under and
governed by the internal laws of The Commonwealth of Massachusetts without
regard to its conflict of laws provisions.
8.3 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to
have been given if delivered or sent by facsimile transmission, upon receipt,
or if sent by registered or certified mail, upon the sooner of the date on
which receipt is acknowledged or the expiration of three days after deposit
in United States post office facilities properly addressed with postage
prepaid. All notices to a party will be sent to the addresses set forth below
or to such other address or person as such party may designate by notice to
each other party hereunder:
To Buyer, Acquisition Corp or
the Surviving Corporation: c/o Primix Solutions Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
34
With a copy to: ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
To the Principal Stockholder: ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: Peabody & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Any notice given hereunder may be given on behalf of any party by its counsel
or other authorized representatives.
8.4 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of
the parties with respect to its subject matter, and supersedes all previous
written or oral negotiations, commitments and writings. No promises,
representations, understandings, warranties and agreements have been made by
any of the parties hereto except as referred to herein or in such Schedules
and Exhibits or in such other writings; and all inducements to the making of
this Agreement relied upon by either party hereto have been expressed herein
or in such Schedules or Exhibits or in such other writings.
8.5 ASSIGNABILITY; BINDING EFFECT. This Agreement shall only be
assignable by Buyer to a corporation or partnership controlling, controlled
by or under common control with Buyer upon written notice to the Company and
the Principal Stockholder. This Agreement may not be assigned by the
Principal Stockholder or the Company without the prior written consent of
Buyer. This Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the parties hereto and their respective successors
and permitted assigns.
8.6 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of
any term or provision hereof. The use in this Agreement of the masculine
pronoun in reference to a party hereto shall be deemed to include the
feminine or neuter, as the context may require.
8.7 EXECUTION IN COUNTERPARTS. For the convenience of the parties
and to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same document.
8.8 AMENDMENTS. This Agreement may not be amended or modified except
by a writing duly and validly executed by Buyer, the Company and the
Principal Stockholder.
35
Compliance with any condition or covenant set forth herein be waived only by
a writing duly executed by the party(s) for whose benefit the condition or
covenant is stabilized.
8.9 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such
provision or the other provisions of this Agreement.
8.10 PUBLICITY AND DISCLOSURES. Except as required by law or
regulation, no press releases or public disclosure, either written or oral,
of the transactions contemplated by this Agreement, shall be made by a party
to this Agreement without the prior knowledge and written consent of Buyer
and the Company.
8.11 ARBITRATION. All disputes, claims, or controversies arising out
of or relating to this Agreement or the negotiation, validity or performance
hereof that are not resolved by mutual agreement shall be resolved solely and
exclusively by binding arbitration to be conducted before JAMS/Endispute,
Inc. or its successor. The arbitration shall be held in Boston, Massachusetts
before a single arbitrator and shall be conducted in accordance with the
rules and regulations promulgated by JAMS/Endispute, Inc. unless specifically
modified herein.
The parties covenant and agree that the arbitration shall commence
within sixty (60) days of the date on which a written demand for arbitration
is filed by any party hereto. In connection with the arbitration proceeding,
the arbitrator shall have the power to order the production of documents by
each party and any third-party witnesses; however, the arbitrator shall not
have the power to order the taking of depositions, the answering of
interrogatories or the response to requests for admission. In connection with
any arbitration, each party shall provide to the other, no later than seven
(7) business days before the date of the arbitration, the identity of all
persons that may testify at the arbitration and a copy of all documents that
may be introduced at the arbitration or considered or used by a party's
witness or expert. The arbitrator's decision and award shall be made and
delivered within six (6) months of the selection of the arbitrator. The
arbitrator's decision shall set forth a reasoned basis for any award of
damages or finding of liability. The arbitrator shall not have power to award
damages in excess of actual compensatory damages and shall not multiply
actual damages or award punitive damages or any other damages that are
specifically excluded under this Agreement, and each party hereby irrevocably
waives any claim to such damages.
The parties covenant and agree that they will participate in the
arbitration in good faith and that they will share equally its costs, except
as otherwise provided herein. The arbitrator may in his or her discretion
assess costs and expenses (including the reasonable legal fees and expenses
of the prevailing party) against any party to a proceeding. Any party
unsuccessfully refusing to comply with an order of the arbitrators shall be
liable for costs and expenses, including attorneys' fees, incurred by the
other party in enforcing the award. This Section
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8.11 applies equally to requests for temporary, preliminary or permanent
injunctive relief, except that in the case of temporary or preliminary
injunctive relief any party may proceed in court without prior arbitration
for the limited purpose of avoiding immediate and irreparable harm. The
provisions of this Section 8.11 shall be enforceable in any court of
competent jurisdiction.
8.12 CONSENT TO JURISDICTION. Each of the parties hereto irrevocably
and unconditionally consents to the exclusive jurisdiction of JAMS/Endispute,
Inc. to resolve all disputes, claims or controversies arising out of or
relating to this Agreement or the negotiation, validity or performance
hereof, and further consents to the jurisdiction of the courts of The
Commonwealth of Massachusetts for the purposes of enforcing the arbitration
provisions of Section 8.11 of this Agreement. Each party further irrevocably
waives any objection to proceeding before JAMS/Endispute based upon lack of
personal jurisdiction or to the laying of venue and further irrevocably and
unconditionally waives and agrees not to make a claim in any court that
arbitration before JAMS/Endispute, Inc. has been brought in an inconvenient
forum. Each of the parties hereto hereby consents to service of process by
registered mail at the address to which notices are to be given. Each of the
parties hereto agrees that its or his submission to jurisdiction and its or
his consent to service of process by mail is made for the express benefit of
the other parties hereto.
8.13 SPECIFIC PERFORMANCE. Notwithstanding Section 8.11, it is
specifically understood and agreed that any breach of the provisions of this
Agreement by any person subject hereto will result in irreparable injury to
the other parties hereto, that the remedy at law alone will be an inadequate
remedy for such breach, and that, in addition to any other remedies which
they may have, such other parties may enforce their respective rights by
actions for specific performance (to the extent permitted by law).
37
IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be executed as of the date set forth above by their duly authorized
representatives.
BUYER:
PRIMIX SOLUTIONS INC.
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
ACQUISITION CORP
ADV ACQUISITION CORP.
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
COMPANY:
ADVIS, INC.
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
PRINCIPAL STOCKHOLDER:
/s/▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
