STOCK PURCHASE AGREEMENT among ARIEL WAY, INC. and MARKET CENTRAL, INC September 24, 2004
EXHIBIT
2.10
among
ARIEL
WAY, INC.
and
MARKET
CENTRAL, INC
September
24, 2004
-1-
TABLE
OF
CONTENTS
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§1.
Definitions.
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4
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§2.
Purchase and Sale of Purchased Shares.
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6
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(a)
Basic Transaction.
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6
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(b)
Purchase Consideration.
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6
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(c)
Closing.
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6
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(d)
Deliveries at Closing.
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6
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§3.
Seller's Representations and Warranties.
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6
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(a)
Organization, Qualification, and Corporate Power.
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7
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(b)
Authorization of Transaction.
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7
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(c)
Noncontravention.
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7
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(d)
Capitalization.
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7
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(e)
Subsidiaries and Equity Investments.
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8
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(f)
No Material Adverse Change; Subsequent Events.
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8
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(g)
Legal Compliance.
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8
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(h)
Litigation.
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8
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(i)
Certain Business Relationships with Affiliates.
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8
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(j)
Brokers' Fees.
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8
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(k)
Purchased Shares.
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8
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(l)
Disclaimer of Other Representations and Warranties.
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8
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§4
Buyer's Representations and Warranties.
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8
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(a)
Organization, Qualification, and Corporate Power.
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9
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(b)
Authorization of Transaction.
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9
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(c)
Noncontravention.
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9
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(d)
Brokers' Fees.
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9
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(e)
Investment.
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9
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§5.
Pre-Closing Covenants.
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9
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(a)
General.
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9
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(b)
Operation of Business.
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9
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(c)
Full Access.
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10
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(d)
Notice of Developments.
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10
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(e)
Exclusivity.
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10
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§6.
Post-Closing Acknowledgements and Covenants.
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10
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(a)
Mutual Acknowledgements Regarding Post-Closing Dividend of Purchased
Shares.
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10
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(b)
Further Assurances.
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11
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§7.
Conditions to Obligation to Close.
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11
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(a)
Conditions to Buyer's Obligation.
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11
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(b)
Conditions to Seller's Obligation.
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11
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§8.
Remedies for Breaches of This Agreement.
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12
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(a)
Survival of Representations and Warranties.
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12
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(b)
Indemnification Provisions for Buyer's Benefit.
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12
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(c)
Indemnification Provisions for Seller's Benefit.
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13
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(d)
Matters Involving Third Parties.
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13
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(e)
Determination of Losses.
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14
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(f)
Exclusive Remedy.
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14
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§9.
Termination.
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14
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(a)
Termination of Agreement.
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14
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(b)
Effect of Termination.
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15
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§10.
Miscellaneous.
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15
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(a)
Incorporation of Exhibits, Annexes, and Schedules.
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15
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-2-
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(b)
Press Releases and Public Announcements.
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15
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(c)
No Third-Party Beneficiaries.
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15
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(d)
Construction.
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15
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(e)
Entire Agreement.
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15
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(f)
Succession and Assignment.
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15
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(g)
Counterparts.
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15
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(h)
Headings.
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15
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(i)
Notices.
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16
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(j)
Governing Law; Jurisdiction.
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16
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(k)
Amendments and Waivers.
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16
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(l)
Severability.
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16
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(m)
Expenses.
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16
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Exhibit
A—
Purchase Consideration
Attachment
A
- CONVEY
ON DEMAND and SNAP SOFTWARE - Software License and Service
Agreement
Attachment
B
-
Assistance with Business Development and Strategic Support Services
Exhibit
B - Disclosure Schedule
Annex
I —
Exceptions to Seller's Representations and Warranties
Annex
II —
Exceptions to Buyer's Representations and Warranties
-3-
This
Stock Purchase Agreement (this "Agreement")
is
entered into as of September 24, 2004, by and among Market Central, Inc., a
Delaware corporation ("Buyer"),
and
Ariel Way, Inc., a Delaware corporation ("Seller").
Buyer
and Seller may be referred to individually herein as a "Party"
and,
collectively, as the "Parties."
WHEREAS,
Buyer
and Seller mutually desire to consummate a transaction whereby Buyer will
purchase from Seller, and Seller will sell to Buyer, two million (2,000,000)
shares (the "Purchased
Shares")
of the
common stock, par value $0.001 per share, of Seller (the "Seller
Common Stock"),
in
exchange for Buyer's payment of the Purchase Consideration as described (and
defined) below;
NOW,
THEREFORE,
in
consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties, and covenants herein
contained, the Parties agree as follows.
§1. Definitions.
As used
in this Agreement, the following terms shall have the following
meanings:
"Accredited
Investor"
has the
meaning set forth in Regulation D promulgated under the Securities Act.
"Affiliate"
has the
meaning set forth in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act.
"Buyer"
has the
meaning set forth in the preamble hereto.
"Closing"
has the
meaning set forth in §2(c) below.
"Closing
Date"
has the
meaning set forth in §2(c) below.
"Confidential
Information"
means
any information concerning the Purchased Shares and/or the businesses and
affairs of Seller and its Affiliates that is not already generally available
to
the public.
"Development/Support
Services Consideration"
has the
meaning set forth in §2(b) below.
"DGCL"
means
the General Corporation Law of the State of Delaware, as from time to time
amended and in effect.
"Disclosure
Schedule"
has the
meaning set forth in §3 below.
"Indemnified
Party"
has the
meaning set forth in §8(d) below.
"Indemnifying
Party"
has the
meaning set forth in §8(d) below.
"Knowledge"
means
actual knowledge without independent inquiry or investigation, which, in the
case of an entity or Person other than a natural person, shall mean the actual
knowledge of the directors and senior executive officers of such entity or
other
Person without independent inquiry or investigation.
"Lien"
means
any mortgage, pledge, lien, encumbrance, charge, or other security interest,
other than (a) liens incurred or arising (other than in connection with the
borrowing of money) in the Ordinary Course of Business for amounts (x) not
yet
due and payable or (y) otherwise being actively contested in good faith through
appropriate proceedings, in each case for which appropriate reserves are being
maintained in accordance with generally accepted accounting principles, and
(b)
solely in the case of the Purchased Shares, transfer restrictions and similar
limitations imposed thereon pursuant to the express provisions of the
Certificate of Incorporation or Bylaws of Seller, the DGCL, the Securities
Act
or federal and state securities laws.
-4-
"Losses"
means
all actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Market
Central Technology Consideration"
has the
meaning set forth in §2(b) below.
"Material
Adverse Effect"
or
"Material
Adverse Change"
means
any effect or change that would be materially adverse to the business of Seller
and its Subsidiaries, taken as a whole, or on the ability of any Party to
consummate timely the transactions contemplated hereby; provided
that
none of the following shall be deemed to constitute, and none of the following
shall be taken into account in determining whether there has been, a Material
Adverse Effect or Material Adverse Change: (a) any adverse change, event,
development, or effect arising from or relating to (1) general business or
economic conditions, including such conditions related to the business of Seller
and its Subsidiaries, (2) national or international political or social
conditions, including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war,
or
the occurrence of any military or terrorist attack upon the United States,
or
any of its territories, possessions, or diplomatic or consular offices or upon
any military installation, equipment or personnel of the United States, (3)
financial, banking, or securities markets (including any disruption thereof
and
any decline in the price of any security or any market index), (4) changes
in
United States generally accepted accounting principles, (5) changes in law,
rules, regulations, orders, or other binding directives issued by any
governmental entity, or (6) the taking of any action contemplated by this
Agreement and the other agreements contemplated hereby, (b) any existing event,
occurrence, or circumstance with respect to which Buyer has Knowledge as of
the
date hereof, and (c) any adverse change in or effect on the business of Seller
and its Subsidiaries that is cured by Seller before the earlier of (1) the
Closing Date and (2) the date on which this Agreement is terminated pursuant
to
§10 hereof.
"Ordinary
Course of Business"
means
the ordinary course of business of any specified Person(s) consistent with
past
custom and practice (including with respect to quantity and frequency) of such
Person(s).
"Party"
has the
meaning set forth in the preamble hereto.
"Person"
means
an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, any other business entity or a governmental entity (or any
department, agency, or political subdivision thereof).
"Purchase
Consideration"
has the
meaning set forth in §2(b) below.
"Purchased
Shares"
has the
meaning set forth in the recital above.
"Securities
Act"
means
the Securities Act of 1933, as amended.
"Securities
Exchange Act"
means
the Securities Exchange Act of 1934, as amended.
"Seller"
has the
meaning set forth in the preamble hereto.
"Seller
Common Stock"
has the
meaning set forth in the recital above.
"Subsidiary"
shall
mean, at any time, with respect to any Person (the "Subject Person"), (i) any
Person of which either (x) more than 50% of the shares of stock or other
interests entitled to vote in the election of directors or comparable Persons
performing similar functions (excluding shares or other interests entitled
to
vote only upon the failure to pay dividends thereon or other contingencies)
or
(y) more than a 50% interest in the profits or capital of such Person are at
the
time owned or controlled directly or indirectly by the Subject Person or through
one or more Subsidiaries of the Subject Person or by the Subject Person and
one
or more Subsidiaries of the Subject Person, or (ii) any Person whose assets,
or
portions thereof, are consolidated with the net earnings of the Subject Person
and are recorded on the books of the Subject Person for financial reporting
purposes in accordance with GAAP.
-5-
"Tax"
or
"Taxes"
means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Third
Party Claim"
has the
meaning set forth in §8(d) below.
§2. Purchase
and Sale of Purchased Shares.
(a) Basic
Transaction.
On and
subject to the terms and conditions of this Agreement, Buyer agrees to purchase
from Seller, and Seller agrees to sell to Buyer, all of the Purchased Shares
for
the Purchase Consideration specified below in §2(b).
(b) Purchase
Consideration.
Buyer
agrees to deliver to Seller at the Closing aggregate purchase consideration
having a total value to Seller of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) (the "Purchase
Consideration"),
payment of such Purchase Consideration to be effected by Buyer's execution
and
delivery to Seller at Closing of: (i) an agreement in form and substance
satisfactory to Seller whereby Buyer shall commit to provide to Seller, free
of
charge or any other cost or expense whatsoever to Seller, the products, services
and related interests and rights with respect to Market Central Technology
as
are described in Exhibit
A
hereto
(the "Market
Central Technology Consideration"),
which
Market Central Technology Consideration shall, as and when provided in
accordance with the foregoing agreement, have an aggregate value to Seller
of
not less than Two Hundred Thousand and No/100 Dollars ($200,000.00),
plus
(ii) an
agreement in form and substance satisfactory to Seller whereby Buyer shall
commit to provide to Seller, free of charge or any other cost or expense
whatsoever to Seller, certain business development and strategic support
services related to telecommunications and technology M&A, marketing and
technology activities, as well strategic business planning and related
assistance and services (the "Development/Support
Services Consideration"),
which
Development/Support Services Consideration shall be rendered by Buyer's senior
executives as and when directed by Seller and, when so rendered, shall have
an
aggregate value to Seller of not less than Fifty Thousand and No/100 Dollars
($50,000.00) as are described in Exhibit
A
hereto.
(c) Closing.
The
closing of the transactions contemplated by this Agreement (the "Closing")
shall
take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, in Vienna, Virginia,
commencing at 10:00 a.m. local time on the third (3rd)
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will
take
at the Closing itself) or such other date as Buyer and Seller may mutually
determine in writing (the "Closing
Date").
(d) Deliveries
at Closing.
At the
Closing, (i) Seller shall deliver to Buyer the various certificates,
instruments, and documents referred to in §7(a) below, (ii) Buyer will deliver
to Seller the various certificates, instruments, and documents referred to
in
§7(b) below, (iii) Seller will deliver to Buyer newly-issued stock certificates
representing all of the Purchased Shares, and (iv) Buyer will deliver to Seller
the Purchase Consideration specified in §2(b) above.
§3. Seller's
Representations and Warranties.
Seller
represents and warrants to Buyer that the statements contained in this §3 are
correct and complete as of the date of this Agreement and will be correct and
complete in all material respects as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this §3(a)), except as set forth in the Disclosure
Schedule
delivered by Seller to Buyer as attached hereto as Exhibit B, Annex I on and
as
of the date hereof (the "Disclosure
Schedule").
-6-
(a) Organization,
Qualification, and Corporate Power.
Seller
is duly incorporated, validly existing, and in good standing under the laws
of
the State of Delaware. Seller is duly authorized to conduct business and is
in
good standing under the laws of each jurisdiction where such qualification
is
required, except where the lack of such qualification would not have a Material
Adverse Effect. Seller has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. §3(a) of the Disclosure Schedule lists the directors and officers of
Seller.
(b) Authorization
of Transaction.
Seller
has corporate full power and authority to execute and deliver this Agreement
and
to perform its obligations hereunder. This Agreement constitutes the valid,
legal and binding obligation of Seller, enforceable against Seller in accordance
with its terms and conditions. Seller is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any
government or governmental agency in order for Seller to duly and fully perform
its obligations as stipulated in this Agreement. The execution, delivery and
performance of this Agreement and all other agreements contemplated hereby
have
been duly authorized by all requisite corporate action of Seller.
(c) Non-contravention.
Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Seller
is
subject or any provision of Seller's charter, bylaws, or other governing
documents, (B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any material
agreement, contract, lease, license, instrument, or other arrangement to which
Seller is a party or by which Seller is bound or to which any of its assets
is
subject, or (C) result in the imposition or creation of a Lien upon or with
respect to Purchased Shares.
(d) Capitalization.
The
entire authorized capital stock of Seller consists of one hundred million
(100,000,000) shares of Seller Common Stock out of which fourteen million
(14,000,000) shares are issued and outstanding, two million (2,000,000) shares
are reserved for issuance as the Purchase Shares hereunder and four million
(4,000,000) shares are held in treasury. All of the issued and outstanding
shares of Seller Common Stock as aforesaid have been duly authorized, are
validly issued, fully paid, and non-assessable, and are owned of record by
such
Persons and in such amounts as listed in §3(d) of the Disclosure Schedule. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or
commitments (other than this Agreement) that could require Seller to issue,
sell, or otherwise cause to become outstanding any of its capital stock.
Notwithstanding the foregoing, Buyer expressly acknowledges and agrees that
Seller is presently contemplating, and shall in all respects be entitled and
authorized to effect in Seller's sole and absolute discretion at any time or
from time to time prior to, at or after the Closing, one or more issuances
of
all or any portion of the four million (4,000,000) unreserved shares of Seller
Common Stock currently held by Seller in treasury in connection with any
potential acquisition or equity-financing transaction(s) as Seller may desire
to
effect hereafter. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to any
capital stock of Seller. Section 3(d) of the Disclosure Schedule sets forth
true, correct, and complete copies of the unaudited balance sheet, and the
related profit and loss statement for the Seller and each Subsidiary, on a
consolidated basis, as, at and for the period beginning on January 1, 2004
and
ending on September 23, 2004 (the "Seller Financial Statements"). The Seller
Financial Statements (i) have been prepared from, and are consistent with,
the
books and records of the Seller and each respective Subsidiary; (ii) are
accurate and complete in all material respects; and (iii) fairly present, in
all
material respects, the financial condition and results of operations of the
Seller and its Subsidiaries, on a consolidated basis, as at the dates, and
for
the periods, stated therein. The financial books and records of the Seller
and
each of its Subsidiaries are maintained in accordance with sound business
practices and applicable legal requirements.
-7-
(e) Subsidiaries
and Equity Investments.
Except
as set forth in §3(e) of the Disclosure Schedule, Seller does not have or
maintain any direct or indirect subsidiaries, nor does Seller otherwise own
or
have any right or commitment to acquire, directly or indirectly, any outstanding
capital stock of, or other equity interests in, any Person.
(f) No
Material Adverse Change; Subsequent Events.
At no
time since the date of Seller's original incorporation in Delaware on September
8, 2004, has there occurred or existed any Material Adverse Change. Without
limiting the generality of the foregoing, at no time since such date has Seller
or any of its Affiliates engaged in any practice, taken any action, or entered
into any transaction outside the Ordinary Course of Business the primary purpose
or effect of which has been to decrease, deplete or impair the value of any
of
its assets, businesses or prospects in any material respect.
(g) Legal
Compliance.
To the
Knowledge of Seller, Seller has complied with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), except where the failure to comply
would
not have a Material Adverse Effect.
(h) Litigation.
§3(h)
of the Disclosure Schedule sets forth each instance in which Seller (i) is
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction, except where
the
injunction, judgment, order, decree, ruling, action, suit, proceeding, hearing,
or investigation would not have a Material Adverse Effect.
(i) Certain
Business Relationships with Affiliates.
Except
as set forth in §3(i) of the Disclosure Schedule, no Affiliate, director or
officer of Seller has been involved in any material business arrangement or
relationship with Seller within the past 12 months nor owns any material asset,
tangible or intangible, that is used in the business of Seller.
(j) Brokers'
Fees.
Neither
Seller nor any of its Affiliates has any liability or obligation to pay any
fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement except as set forth in §3(i) of the Disclosure
Schedule.
(k) Purchased
Shares.
Upon
Buyer's delivery of the Purchase Consideration at Closing as and in the manner
provided in §2 above, the Purchased Shares shall be duly authorized, validly
issued, fully paid and non-assessable, and shall be issued to Buyer free and
clear of any and all Liens. The Purchased Shares are not and, upon issuance
thereof at Closing, shall not be subject to any (x) option, warrant, purchase
right, or other contract or commitment in favor of any Person other than Buyer
or (y) voting trust, proxy, or other agreement or understanding with respect
to
the voting thereof.
(l) Disclaimer
of Other Representations and Warranties.
Except
as expressly set forth in this §3, Seller makes no representation or warranty,
express or implied, at law or in equity, as to the Purchased Shares or otherwise
in respect of Seller, any Affiliate of Seller, or any of their respective
assets, liabilities or operations, including with respect to merchantability
or
fitness for any particular purpose, and any such other representations or
warranties are hereby expressly disclaimed. Buyer hereby acknowledges and agrees
that, except to the extent specifically set forth in this §3, Buyer is
purchasing the Purchased Shares on an "as-is, where-is" basis.
§4 Buyer's
Representations and Warranties.
Buyer
represents and warrants to Seller that the statements contained in this §4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this §4), except
as set forth in Exhibit B, Annex
II
attached
hereto.
(a) Organization,
Qualification, and Corporate Power.
Buyer
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Buyer is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would
not
have a Material Adverse Effect. Buyer has full corporate power and authority
to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. §4(a) of the Disclosure Schedule lists the directors and
officers of Buyer.
-8-
(b) Authorization
of Transaction.
Buyer
has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and under any and all agreements relating
the
Purchase Consideration as contemplated hereby. This Agreement (and each related
agreement as aforesaid) constitutes the valid, legal and binding obligation
of
Buyer, enforceable against Buyer in accordance with its terms and conditions.
Buyer is not required to give any notice to, make any filing with, or obtain
any
authorization, consent, or approval of any government or governmental agency
in
order to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement and all other agreements
contemplated hereby have been duly authorized by Buyer. Buyer has good and
unencumbered title to and/or other legally-sufficient rights to or interests
in,
and is fully and unconditionally entitled to furnish and convey to Seller,
any
and all products, services, rights and interests included or to be included
in
the Convey OnDemand Consideration and the Development/Support Services
Consideration deliverable to Seller upon and after the Closing.
(c) Non-contravention.
Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Buyer
is
subject or any provision of Buyer's charter, bylaws, or other governing
documents or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material agreement, contract, lease, license, instrument, or other arrangement
to which Buyer is a party or by which it is bound or to which any of its assets
is subject.
(d) Brokers'
Fees.
Neither
Buyer nor any of its Affiliates has any liability or obligation to pay any
fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(e) Investment.
Buyer
(A) understands that the Purchased Shares have not been, and will not be,
registered under the Securities Act, or under any state securities laws, and
are
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (B) is acquiring the Purchased
Shares solely for its own account for investment purposes and, other than any
proposed dividend thereof (which shall not constitute a "distribution" for
purposes of this §4(e)(B)) by Buyer to its stockholders as expressly
acknowledged by the Parties under §6(a) below, not with a view to the
distribution thereof; (C) is a sophisticated investor with knowledge and
experience in business and financial matters, (D) has received certain
information concerning Seller and the Purchased Shares and has had the
opportunity to obtain additional information as desired in order to evaluate
the
merits and the risks inherent in holding the Purchased Shares, (E) is able
to
bear the economic risk and lack of liquidity inherent in holding the Purchased
Shares, and (F) together with its applicable Affiliate(s), is an Accredited
Investor.
§5. Pre-Closing
Covenants.
The
Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing.
(a) General.
Each of
the Parties will use its reasonable best efforts to take all action and to
do
all things necessary or otherwise reasonably proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing conditions set forth
in
§7 below).
(b) Operation
of Business.
Seller
will not, and will not cause or permit any of its Affiliates to, engage in
any
practice, take any action, or enter into any transaction with respect to Seller
outside the Ordinary Course of Business of Seller. Without limiting the
generality of the foregoing, Seller will not, and will not cause or permit
any
of its Affiliates to, engage in any practice, take any action, or enter into
any
transaction outside the Ordinary Course of Business the primary purpose or
effect of which is to decrease, deplete or impair the value of any of its
assets, businesses or prospects in any material respect. Seller will cause
its
executive officers to use their respective commercially reasonable efforts
to
preserve intact Seller's business organization and the good will of its
customers, suppliers, employees and others having material business relations
with Seller.
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(c) Full
Access.
Seller
will permit representatives of Buyer (including legal counsel and accountants)
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of Seller and its Affiliates,
to
all premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to Seller and the Purchased Shares.
Buyer will treat and hold as such any Confidential Information it receives
from
any of Seller and/or its Affiliates and representatives in the course of the
reviews contemplated by this §5(c), will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement
is
terminated for any reason whatsoever, will return to Seller all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession.
(d) Notice
of Developments.
(i) Seller
may elect at any time to notify Buyer of any development causing a breach of
any
of the representations and warranties in §3 above. Unless Buyer has the right to
terminate this Agreement pursuant to §9(a)(ii) below by reason of the
development and exercises that right within the period of fifteen (15) business
days referred to in §9(a)(ii) below, the written notice pursuant to this
§5(d)(i) will be deemed to have amended the Disclosure Schedule, to have
qualified the representations and warranties contained in §3 above, and to have
cured any misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development.
(ii) Each
Party will give prompt written notice to the others of any material adverse
development causing a breach of any of his or its own representations and
warranties in §3 above. No disclosure by any Party pursuant to this §5(d)(ii),
however, shall be deemed to amend or supplement Annex I or the Disclosure
Schedule or to prevent or cure any misrepresentation or breach of warranty.
(e) Exclusivity.
Seller
will not (and will not cause or permit any Affiliate, officer, director,
employee or agent to) solicit, initiate, or encourage the submission of any
proposal or offer (including by engaging in any discussions or negotiations
or
furnishing any information with respect to any such matters) from any Person
relating to the acquisition or disposition of any material portion of the
capital stock or assets of Seller (including any acquisition structured as
a
merger, consolidation, or share exchange); provided,
however,
that
Seller, its Affiliates and their respective directors and officers will remain
free to participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing to the extent (x) relating to any proposed acquisition or
equity-financing transaction with respect to Seller Common Stock held in
treasury as referred to in §3(d) above, or (y) their fiduciary duties may
require.
§6. Post-Closing
Acknowledgements and Covenants.
The
Parties agree as follows with respect to the period following the Closing.
(a) Mutual
Acknowledgements Regarding Post-Closing Dividend of Purchased
Shares.
Subject
to and in compliance with all applicable requirements of Buyer's charter, bylaws
and other governing documents and all federal, state and local laws, rules
and
regulations pertaining thereto, Buyer intends to effect, as soon as practicable
following the Closing, an in-kind dividend to its stockholders of all or some
portion of the Purchased Shares, but no less than eighty percent (80%) of the
Purchased Shares. For purposes of, but subject to, Buyer's undertaking to make
the foregoing dividend of the Purchased Shares, Seller agrees to cooperate
with
Buyer in using commercially reasonable efforts to effect the registration,
at
the Seller’s expense, of the Purchased Shares under the Securities Act and to
provide such other notices and effect such other filings under the Securities
Act, Securities Exchange Act and/or comparable state securities laws as may
be
necessary or reasonably appropriate in connection with such registration and
the
authorization of such Purchased Shares for public resale.
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(b) Further
Assurances.
In case
at any time after the Closing any further action is necessary or reasonably
appropriate to carry out the purposes and intent (including the Parties' intent
as expressed in the foregoing §6(a)) of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at
the
sole cost and expense of the requesting Party (unless the requesting Party
is
entitled to indemnification therefor under §8 below).
§7. Conditions
to Obligation to Close.
(a) Conditions
to Buyer's Obligation.
Buyer's
obligation to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the
representations and warranties set forth in §3 above shall be true and correct
in all material respects at and as of the Closing Date, except to the extent
that such representations and warranties are qualified by terms such as
"material" and "Material Adverse Effect," in which case such representations
and
warranties shall be true and correct in all respects at and as of the Closing
Date;
(ii) Seller
shall have performed and complied with all of its pre-Closing covenants
hereunder in all material respects as of and through the Closing, except to
the
extent that such covenants are qualified by terms such as "material" and
"Material Adverse Effect," in which case Seller shall have performed and
complied with all of such covenants in all respects as of and through the
Closing;
(iii) there
shall not be in effect any injunction, judgment, order, decree, ruling, or
change in law, rule or regulation preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Seller
shall have signed and executed Convertible Debenture and Standby Equity
Distribution Agreement with Cornell Capital Partners, LP; and
(v) Seller
shall have delivered to Buyer a certificate to the effect that each of the
conditions specified above in §7(a)(i)-(iv) has been, and remains as of the
Closing Date, satisfied in all respects.
Buyer
may
waive any condition specified in this §7(a) by written notice to such effect
delivered in Buyer's sole and absolute discretion at any time prior to or as
of
the Closing.
(b) Conditions
to Seller's Obligation.
Seller's obligation to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the
representations and warranties set forth in §4 above shall be true and correct
in all material respects at and as of the Closing Date, except to the extent
that such representations and warranties are qualified by terms such as
"material" and "Material Adverse Effect," in which case such representations
and
warranties shall be true and correct in all respects at and as of the Closing
Date;
(ii) Buyer
shall have performed and complied with all of its pre-Closing covenants
hereunder in all material respects as of and through the Closing, except to
the
extent that such covenants are qualified by terms such as "material" and
"Material Adverse Effect," in which case Buyer shall have performed and complied
with all of such covenants in all respects as of and through the Closing;
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(iii) Seller
shall have received from Buyer duly-executed counterparts of the agreements
with
respect to the Purchase Consideration referred to in clauses (i) and (ii) of
§2(b) above, with such agreements in each case being in form and substance
satisfactory to Seller;
(iv) there
shall not be in effect any injunction, judgment, order, decree, ruling, or
change in law, rule or regulation preventing consummation of any of the
transactions contemplated by this Agreement;
(v) the
Board
of Directors of Buyer shall have approved the transactions contemplated by
this
Agreement; and
(vi) Buyer
shall have delivered to Seller a certificate to the effect that each of the
conditions specified above in §7(b)(i)-(v) has been, and remains as of the
Closing Date, satisfied in all respects.
Seller
may waive any condition specified in this §7(b) by written notice to such effect
delivered in Seller's sole and absolute discretion at any time prior to or
as of
the Closing.
§8. Remedies
for Breaches of This Agreement.
(a) Survival
of Representations and Warranties.
All of
the representations and warranties of Seller contained in §3 above shall survive
the Closing hereunder (unless Buyer had Knowledge of any misrepresentation
or
breach of warranty at the time of Closing) and continue in full force and effect
until the twelve (12) month anniversary of the Closing Date, whereupon any
right, remedy or claim by, through or on behalf of Buyer with respect to
misrepresentation or breach of any thereof shall be immediately and irrevocably
waived and forever barred. All of the representations and warranties of Buyer
contained in §4 above shall survive the Closing hereunder (unless Seller knew or
had reason to know of any misrepresentation or breach of warranty at the time
of
Closing) and continue in full force and effect until the twelve (12) month
anniversary of the Closing Date, whereupon any right, remedy or claim by,
through or on behalf of Seller with respect to misrepresentation or breach
of
any thereof shall be immediately and irrevocably waived and forever
barred.
(b) Indemnification
Provisions for Buyer's Benefit.
(i) In
the
event Seller breaches any of its representations, warranties, and covenants
contained herein, and provided that Buyer makes a written claim for
indemnification against Seller within the survival period (if there is an
applicable survival period pursuant to §8(a) above), then Seller shall indemnify
Buyer from and against any and all Losses (but excluding
any
Losses suffered after the end of any applicable survival period) reasonably
and
proximately resulting from such breach; provided
that
Seller will be obligated only to indemnify Buyer from and against such Losses
to
the extent that (A) the total amount of all such Losses incurred by Buyer as
of
and through the relevant date equals or exceeds Twenty-Five Thousand Dollars
($25,000) in the aggregate (which indemnity shall commence from the first Dollar
of Loss exceeding such threshold amount), and (B) the total amount of Losses
for
which Seller has previously indemnified Buyer would not, when added together
with the indemnifiable Losses currently claimed by Buyer, exceed the total
value
to Seller of the Purchase Consideration recited in §2(b) above, which amount
shall constitute Seller's maximum liability under any indemnity obligation
hereunder or any other theory or claim of damages or recovery asserted or
alleged by, through or on behalf of Buyer in connection with any matters subject
or in any manner related to this Agreement; and
(ii)
Seller agrees to indemnify and hold harmless Buyer, each person, if any, who
controls Buyer within the meaning of Section 15 of the 1933 Act or Section
20 of
the 1934 Act, and each director and officer of Buyer as follows:
(A)
against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in the registration statement (or any amendment thereto)
referenced in Section 6(a) of this Agreement, or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary or final prospectus (or any amendment or supplement thereto), or
the
omission or alleged omission therefrom of a material fact necessary in order
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading;
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(B)
against any and all loss, liability, claim, damage and expense whatsoever,
as
incurred, arising out of any claim that the dividend of the Purchased Shares
by
Buyer to its stockholders was in any in violation of any applicable provision
of
the Delaware General Corporation Code;
(C)
against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in settlement of any litigation,
or
any investigation or proceeding by any governmental agency or body, commenced
or
threatened, or of any claim whatsoever based upon any such untrue statement
or
omission, or any such alleged untrue statement or omission or in connection
with
any violation of the nature referred to above; provided that any such settlement
is effected with the written consent of Seller; and
(D)
against
any and all expense whatsoever, as incurred (including the reasonable fees
and
disbursements of counsel chosen by Buyer), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any
claim whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation of
the
nature referred to above;
provided,
however,
that
this indemnity agreement shall not apply to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to Seller by Buyer expressly for use in
such
registration statement (or any amendment thereto), or any preliminary or final
prospectus (or any amendment or supplement thereto). The indemnification
provisions set forth in Section 8(b)(ii) shall not be limited by the provisions
of Section 8(b)(i).
(c) Indemnification
Provisions for Seller's Benefit.
In the
event Buyer breaches any of its representations, warranties, and covenants
contained herein, and provided that Seller makes a written claim for
indemnification against Buyer within the survival period (if there is an
applicable survival period pursuant to §8(a) above), then Buyer shall indemnify
Seller from and against any and all Losses (but excluding
any
Losses suffered after the end of any applicable survival period) reasonably
and
proximately resulting from such breach; provided
that
Buyer will be obligated only to indemnify Seller from and against such Losses
to
the extent that (A) the total amount of all such Losses incurred by Seller
as of
and through the relevant date equals or exceeds Twenty-Five Thousand Dollars
($25,000) in the aggregate (which indemnity shall commence from the first Dollar
of Loss exceeding such threshold amount), and (B) the total amount of Losses
for
which Buyer has previously indemnified Seller would not, when added together
with the indemnifiable Losses currently claimed by Seller, exceed the total
value to Seller of the Purchase Consideration recited in §2(b) above, which
amount shall constitute Buyer's maximum liability under any indemnity obligation
hereunder or any other theory or claim of damages or recovery asserted or
alleged by, through or on behalf of Seller in connection with any matters
subject or in any manner related to this Agreement.
(d) Matters
Involving Third Parties.
(i) If
any
third party shall notify any Party (the "Indemnified
Party")
with
respect to any matter (a "Third
Party Claim")
which
may give rise to a claim for indemnification against any other Party (the
"Indemnifying
Party")
under
this §8, then the Indemnified Party shall promptly (and in any event within five
(5) business days after receiving notice of the Third Party Claim) notify each
Indemnifying Party thereof in writing.
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(ii) Any
Indemnifying Party will have the right at any time to assume and thereafter
conduct the defense of the Third Party Claim with counsel of his or its choice
reasonably satisfactory to the Indemnified Party; provided,
however,
that
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (such consent not to be unreasonably
withheld, conditioned or delayed if the applicable judgment or proposed
settlement involves only the payment of money damages and does not impose an
injunction or other equitable relief upon the Indemnified Party).
(iii) Unless
and until an Indemnifying Party assumes the defense of the Third Party Claim
as
provided in §8(d)(ii) above, however, the Indemnified Party may defend against
the Third Party Claim in any manner it reasonably may deem appropriate.
(iv) In
no
event will the Indemnified Party consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be unreasonably withheld,
conditioned or delayed).
(e) Determination
of Losses.
All
indemnification payments under this §8 shall be paid by the Indemnifying Party
net of any Tax benefits and insurance coverage that may be available to the
Indemnified Party.
(f) Exclusive
Remedy.
Buyer
and Seller acknowledge and agree that the foregoing indemnification provisions
in this §8 shall be the exclusive remedy of Buyer and Seller with respect to
Seller, Buyer, their respective Affiliates, the Purchased Shares and the
transactions contemplated by this Agreement.
§9. Termination.
(a) Termination
of Agreement.
This
Agreement shall be subject to termination as follows:
(i) Buyer
and
Seller may terminate this Agreement by mutual written consent at any time prior
to the Closing;
(ii) Buyer
may
terminate this Agreement by giving written notice to Seller at any time prior
to
the Closing in the event (A) Seller has within the then-previous ten (10)
business days given Buyer any notice pursuant to §5(d)(i) above and (B) the
development that is the subject of the notice has had a Material Adverse Effect;
(iii) Buyer
may
terminate this Agreement by giving written notice to Seller at any time prior
to
the Closing (A) in the event Seller has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect,
Buyer
has notified Seller of the breach, and the breach has continued without cure
for
a period of fifteen (15) business days after the notice of breach or (B) if
the
Closing shall not have occurred on or before September 30, 2004, by reason
of
the failure of any condition precedent under §7(a) hereof (unless the failure
results primarily from Buyer itself breaching any representation, warranty,
or
covenant contained in this Agreement); and
(iv) Seller
may terminate this Agreement by giving written notice to Buyer at any time
prior
to the Closing (A) in the event Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any material respect,
Seller has notified Buyer of the breach, and the breach has continued without
cure for a period of fifteen (15) business days after the notice of breach
or
(B) if the Closing shall not have occurred on or before September 30, 2004,
by
reason of the failure of any condition precedent under §7(b) hereof (unless the
failure results primarily from Seller breaching any representation, warranty,
or
covenant contained in this Agreement).
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(b) Effect
of Termination.
If any
Party terminates this Agreement pursuant to §9(a) above, all rights and
obligations of the Parties hereunder shall terminate without any liability
of
any Party to any other Party (except for any liability of any Party then in
breach); provided,
however,
that
the confidentiality provisions contained in §5(d) above shall survive
termination.
§10. Miscellaneous.
(a) Incorporation
of Exhibits, Annexes, and Schedules.
The
Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
(b) Press
Releases and Public Announcements.
No
Party shall issue any press release or make any public announcement relating
to
the subject matter of this Agreement without the prior written approval of
the
other Party, except for such public disclosures to the minimum extent reasonably
and in good faith believed by a Party, on the advice of its legal counsel,
to be
required by applicable law or any listing or trading agreement concerning the
publicly-traded securities of such Party (in which case the disclosing Party
will use its best efforts to advise and cooperate with the other Party prior
to
making such disclosure in order to minimize the scope and effect thereof to
the
extent practicable in the circumstances).
(c) No
Third-Party Beneficiaries.
This
Agreement shall not confer any rights or remedies upon any Person other than
the
Parties and their respective successors and permitted assigns. Without limiting
the foregoing, no stockholder or Affiliate of Buyer shall, by virtue of any
Purchased Shares dividend or distribution reference made in §6(a) above or
otherwise, have any right or interest whatsoever in any transactions or other
matters contemplated by this Agreement.
(d) Construction.
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall
be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word " including" shall mean including
without limitation.
(e) Entire
Agreement.
This
Agreement (including the documents referred to herein) constitutes the entire
and exclusive agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they relate in any way to the subject matter hereof.
(f) Succession
and Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Parties named
herein and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other Party hereto (such
approval not to be unreasonably withheld, condition or delayed in the case
of
any proposed assignment by a Party of any or all of its rights and interests
hereunder to one or more of its Affiliates, subject to such Party's remaining
fully responsible for the performance of all of its obligations hereunder).
(g) Counterparts.
This
Agreement may be executed in one or more counterparts (including by means of
facsimile), each of which shall be deemed an original but all of which together
will constitute one and the same instrument.
(h) Headings.
The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this Agreement.
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(i) Notices.
All
notices, requests, demands, claims, and other communications hereunder will
be
in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given (i) when delivered personally to the recipient,
(ii)
one business day after being sent to the recipient by reputable overnight
courier service (charges prepaid), (iii) one business day after being sent
to
the recipient by facsimile transmission or electronic mail, or (iv) four
business days after being mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid, and addressed to the
intended recipient as set forth below:
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If
to Seller:
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Copy
to:
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Ariel
Way, Inc.
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▇▇▇▇ & ▇▇▇▇▇▇ LLP
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Attention:
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Facsimile:
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Facsimile:
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If
to Buyer:
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Copy
to:
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Market
Central, Inc.
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Trauig, LLP
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Facsimile:
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Facsimile:
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Any
Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(j) Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the Commonwealth of Virginia without giving effect to any choice or
conflict of law provision or rule (whether of the Commonwealth of
Virginia or
any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the Commonwealth of Virginia.
Each
Party hereby irrevocably and unconditionally submits to the non-exclusive
jurisdiction, forum and venue of any federal or state court located in the
Commonwealth of Virginia with respect to any dispute, controversy or suit
arising under or in connection with this Agreement or any matter(s) contemplated
hereby.
(k) Amendments
and Waivers.
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by Buyer and Seller. No waiver by any Party
of
any provision of this Agreement or any default, misrepresentation, or breach
of
warranty or covenant hereunder, whether intentional or not, shall be valid
unless the same shall be in writing and signed by the Party making such waiver,
nor shall such waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in
any
way any rights arising by virtue of any prior or subsequent such occurrence.
(l) Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of
the remaining terms and provisions hereof or the validity or enforceability
of
the offending term or provision in any other situation or in any other
jurisdiction.
(m) Expenses.
Each of
Buyer and Seller will bear its own costs and expenses (including legal fees
and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby; provided,
however,
that all
transfer, documentary, sales, use, stamp, registration and other such Taxes,
and
all conveyance fees, recording charges and other fees and charges (including
any
penalties and interest) incurred in connection with the consummation of the
transactions contemplated by this Agreement shall be paid by Buyer when due,
and
Buyer shall, at its own expense, file all necessary Tax returns and other
documentation with respect to all such Taxes, fees and charges, and, if required
by applicable law.
*
* * * *
-16-
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date
first above written.
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Seller:
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ARIEL WAY, INC. | |
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| By: | ||
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Title:
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Buyer:
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MARKET CENTRAL, INC. | |
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| By: | ||
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Title:
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-17-
EXHIBIT
A
PURCHASE
CONSIDERATION
Purchase
Consideration.
Buyer
agrees to deliver to Seller at the Closing aggregate purchase consideration
having a total value to Seller of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) (the "Purchase
Consideration"),
payment of such Purchase Consideration to be effected by Buyer's execution
and
delivery to Seller at Closing of:
(i)
an
agreement in form and substance satisfactory to Seller whereby Buyer shall
commit to provide to Seller, free of charge or any other cost or expense
whatsoever to Seller, the products, services and related interests and rights
with respect to Market Central Technology as are described in Exhibit
A, Attachment A hereto
(the "Market
Central Technology Consideration"),
which
Market Central Technology Consideration shall, as and when provided in
accordance with the foregoing agreement, have an aggregate value to Seller
of
not less than Two Hundred Thousand and No/100 Dollars ($200,000.00). Buyer
shall
have the right of Software License and Service Agreements as described by the
respective Attachments below for a total license fee of Two Hundred Thousand
and
No/100 Dollars ($200,000.00).
Attachment
A
- Convey
on Demand and SNAP Software - Software License and Service
Agreement
(ii)
an
agreement in form and substance satisfactory to Seller whereby Buyer shall
commit to provide to Seller, free of charge or any other cost or expense
whatsoever to Seller, certain business development and strategic support
services related to telecommunications and technology M&A, marketing and
technology activities, as well strategic business planning and related
assistance and services (the "Development/Support
Services Consideration"),
which
Development/Support Services Consideration shall be rendered by Buyer's senior
executives as and when directed by Seller and, when so rendered, shall have
an
aggregate value to Seller of not less than Fifty Thousand and No/100 Dollars
($50,000.00) as are described in Exhibit
A, Attachment B
-
Assistance with Business Development and Strategic Support Services hereto.
-18-
EXHIBIT
A
ATTACHMENT
A
MARKET
CENTRAL TECHNOLOGY CONSIDERATION
CONVEY
ON
DEMAND AND SNAP SOFTWARE - SOFTWARE LICENSE AND SERVICES AGREEMENT
(See
Separate Document)
-19-
EXHIBIT
A
ATTACHMENT
B
DEVELOPMENT/SUPPORT
SERVICES CONSIDERATION
ASSISTANCE
WITH BUSINESS DEVELOPMENT AND STRATEGIC SUPPORT SERVICES
Services
Provided: Market
Central senior executives will provide the Seller with business development
and
strategic support services as independent consultants related to telecom and
technology M&A, marketing and technology activities, and strategic business
planning.
Senior
Executives Providing the Services: The
services provided shall be by ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, both
senior executive representatives of Market Central, Inc., the Buyer
Period
of
Duration of Services Provided: Over
a
twelve (12) month period starting upon the Closing Date of this
Agreement
Minimum
Number of Hours of Services Provided: A
minimum
of two hundred fifty (250) hours of services over a twelve (12) month
period
Point
of
Contact within Seller: The
Chairman of the Board
Value
of
Services Provided: The
services provided by Market Central are valued at $50,000.00 based on an hourly
rate of $200.00 per hour.
-20-
EXHIBIT
B
DISCLOSURE
SCHEDULE
ANNEX
I
EXCEPTION
TO SELLER’S REPRESENTATIONS AND WARRANTIES
§3(d)
Issued
and outstanding shares of Seller Common Stock:
|
The
Dunhem Family Trust
|
7,600,000
shares
|
|
▇▇▇▇▇
▇▇▇▇▇
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2,800,000
shares
|
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇
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1,100,000
shares
|
|
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
480,000
shares
|
|
▇▇▇▇▇
▇▇▇▇▇▇
|
400,000
shares
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
300,000
shares
|
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
300,000
shares
|
|
▇▇▇▇
▇▇▇▇▇▇▇
|
300,000
shares
|
|
▇▇▇▇▇▇
▇▇▇▇
|
200,000
shares
|
|
Others,
Reserve
|
520,000
shares
|
|
Total
Issued
|
14,000,000
shares
|
§3(d)
Outstanding
Options
None
Outstanding
§3(d)
Outstanding
Warrants
Three
members of the Management Team ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
respectively have been granted a warrant to acquire shares
of
the Seller’s Common Stock as follows from their respective employment
agreements:
Mr.
Dunhem, Kumar and Battikha respectively will, upon the completion of
an
application by Ariel Way, Inc to become a public company or of an acquisition
or
merger of Ariel Way, Inc. with a public corporate entity making the surviving
company a public company with the Ariel Way, Inc.’s shareholders controlling at
least eighty five percent (85%) of the surviving company, be granted a
warrant,
assuming that the total number of outstanding public shares of the Company
is
twenty million (20,000,000) shares of Common Stock, to acquire 1,150,000,
980,000, and 780,000 respectively shares of the Company’s common stock at an
exercise price of $0.010 per share (the “Warrant Shares”) to vest as follows:
(i) 30,000, 25,000, and 20,000 respectively Warrant Shares shall vest each
month during the term of this Agreement or immediately if Mr. Dunhem, Kumar
and
Battikha’s respective employment is terminated without cause or for good reason
or due to a change in control, sale of a majority of the common stock or
substantially all of the assets of the Company or merger of the Company into
or
with another company (unless such company is less than fifty percent (50%)
of
the size (measured by market value) of the Company) or reverse merger with
another company; and (ii) 430,000, 380,000, and 300,000 respectively Warrant
Shares will vest immediately upon the Company achieving a $25 million market
cap
for ten (10) consecutive trading days and a price per share of not less
than $0.50. The Warrant Shares granted hereunder must be exercised by the tenth
anniversary of the date of vesting or shall be forfeited by Mr. Dunhem, Kumar
and Battikha respectively. All Warrant Shares granted hereunder shall have
a
“cashless” exercise provision which enables Mr. Dunhem, Kumar and Battikha
respectively to give up a portion of his Warrant Shares in order to exercise
others without paying cash for them. The number of warrant shares shall be
prorate adjusted if the assumption that the initial total number of outstanding
shares of public Common Stock of the surviving Company is different from twenty
million (20,000,000) shares of Common Stock. Further, the number, kind and
strike price of the stock Warrant Shares granted hereunder shall be
appropriately and equitably adjusted to reflect any stock dividend, stock split,
spin-off, split-off, extraordinary cash dividend, recapitalization,
reclassification or other major corporate action affecting the stock of the
Company to the end that after such event Mr. Dunhem, Kumar and Battikha’s
respectively proportionate interest in the Company shall be maintained as before
the occurrence of such event. Mr. Dunhem, Kumar and Battikha respectively shall
also receive payment of any cash dividend or stock dividend declared and paid
by
the Company as if Mr. Dunhem, Kumar and Battikha respectively had already
exercised all of his Warrant Shares, including unvested Warrant
Shares.
-21-
§3(d)
Seller
Financial Statements
| a. |
See
separate document “Ariel Way, Inc., Balance Sheet, As of September 23,
2004”
|
| b. |
See
separate document “Ariel Way, Inc., Profit & Loss, January 1, 2004
through September 23, 2004”
|
§3(i)
Brokers'
Fees
Seller
has engaged ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as Consultant, on a non-exclusive basis to
locate and refer to Seller companies that wish to engage in M&A activities
with Seller and to refer companies to Seller. Consultant is to be paid upon
the
closing of a transaction as defined as the execution of a definitive agreement
and closing of a transaction between Seller and a company, referred to Seller
by
Consultant. A total of 300,000 shares of Common Stock of Seller has been set
aside as compensation for Consultant.
-22-
EXHIBIT
B
DISCLOSURE
SCHEDULE
ANNEX
II
EXCEPTION
TO BUYER’S REPRESENTATIONS AND WARRANTIES
-23-