\n 11.12 Counterparts……………………………………………..35
\n 11.13 Severability……………………………………………..35
\n 11.14 Publicity………………………………………………..35
\n 11.15 Schedules………………………………………………..35
\n<\/c><\/s><\/caption>\n<\/table>\n iv<\/p>\n
EXHIBITS
\n ——–<\/p>\n
Exhibit A – Certificate of Merger
\nExhibit B-1 – Articles of Merger
\nExhibit B-2 – Plan of Merger
\nExhibit C – Non-Competition Agreement
\nExhibit D – Amended and Restated Investors’ Rights Agreement
\nExhibit E – Amended and Restated Stockholders’ Agreement
\nExhibit F – Voting Agreement
\nExhibit G – Employment Agreements
\nExhibit H – Non-Disclosure Agreement
\nExhibit I – System Use Agreement
\nExhibit J – Intercompany Service Agreement
\nExhibit K – Supply Agreement
\nExhibit L – Sublease
\nExhibit M – Master Database License Agreement
\nExhibit N – Form of Bass, Berry & Sims PLC Legal Opinion
\nExhibit O – Form of Brobeck, Phleger & Harrison LLP Legal Opinion<\/p>\n
v<\/p>\n
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
\n ———————————————–<\/p>\n
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the “Agreement”)
\n ———
\nis entered into as of October 26, 1998, by and among Buy Corp., a Delaware
\ncorporation (“BC”), Speedserve.com Inc., a Delaware corporation and wholly owned
\n —
\nsubsidiary of BC (“Merger Sub”), SpeedServe Inc., a Tennessee corporation
\n ———-
\n(“SI”), Ingram Entertainment Inc., a Tennessee corporation (“IE”), David C.
\n — —
\nMason (“DMason”), and Michael G. Mason (“MMason”, together with IE and DMason,
\n —— ——
\nthe “Sellers”).
\n ——- <\/p>\n
RECITALS<\/p>\n
A. The Boards of Directors of BC and SI believe it is in the best
\ninterests of their respective companies and the stockholders of their respective
\ncompanies that SI and Merger Sub combine into a single company through the
\nstatutory merger of SI with and into Merger Sub (the “Merger”) and, in
\n ——
\nfurtherance thereof, have approved the Merger.<\/p>\n
B. Pursuant to the Merger, among other things, the outstanding shares
\nof SI Common Stock, no par value (“SI Common Stock”), shall be converted into
\n —————
\nshares of BC Common Stock, $.0001 par value (“BC Stock”), at the rate set forth
\n ——–
\nherein.<\/p>\n
C. SI, BC and Merger Sub desire to make certain representations and
\nwarranties and other agreements in connection with the Merger.<\/p>\n
D. The parties intend, by executing this Agreement, to adopt a plan
\nof reorganization within the meaning of Section 368 of the Internal Revenue Code
\nof 1986, as amended (the “Code”), and to cause the Merger to qualify as a
\n —-
\nreorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(D) of
\nthe Code.<\/p>\n
NOW, THEREFORE, in consideration of the covenants and representations
\nset forth herein, and for other good and valuable consideration, the parties
\nagree as follows:<\/p>\n
ARTICLE I
\n THE MERGER
\n ———-<\/p>\n
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
\nsubject to and upon the terms and conditions of this Agreement, SI shall be
\nmerged with and into Merger Sub, the separate corporate existence of SI shall
\ncease and Merger Sub shall continue as the surviving corporation. Merger Sub as
\nthe surviving corporation after the Merger is hereinafter sometimes referred to
\nas the “Surviving Corporation.”
\n ——————— <\/p>\n
1.2 Closing; Effective Time. The closing of the transactions
\n ———————–
\ncontemplated hereby (the “Closing”) shall take place as soon as practicable
\n ——-
\nafter the satisfaction or waiver of each of the conditions set forth in Article
\nVI hereof or at such other time as the parties hereto agree (the “Closing
\n ——-
\nDate”). The Closing shall take place at the offices of Brobeck, Phleger & —-
\nHarrison LLP, 38 Technology Drive, Irvine, California 92618, or at such other
\nlocation as the parties hereto agree. In connection with the Closing, the
\nparties hereto shall cause the Merger to be consummated by properly executing
\nand filing the Certificate of Merger in the form attached <\/p>\n
1<\/p>\n
hereto as Exhibit A (the “Certificate of Merger”) with the Delaware Secretary of
\n ——— ———————
\nState in accordance with the applicable provisions of the Delaware General
\nCorporation Law (the “Delaware Law”) and Articles of Merger and a Plan of
\n ————
\nMerger, in the forms attached hereto as Exhibits B-1 and B-2, respectively (the
\n ———— —
\n“Articles of Merger and Plan of Merger”), with the Tennessee Secretary of State
\n ————————————-
\nin accordance with the provisions of the Tennessee Business Corporation Act (the
\n“Tennessee Law”). The Merger shall become effective upon the filing of the
\n ————-
\nCertificate of Merger with the Delaware Secretary of State and the Articles of
\nMerger and Plan of Merger with the Tennessee Secretary of State (the time of
\nsuch filings being the “Effective Time”).
\n ————–<\/p>\n
1.3 Effect of the Merger. At the Effective Time, the effect of the
\n ——————–
\nMerger shall be as provided in this Agreement, the Certificate of Merger, the
\nArticles of Merger and Plan of Merger and the applicable provisions of Delaware
\nand Tennessee Law. Without limiting the generality of the foregoing, and subject
\nthereto, at the Effective Time, all the property, rights, privileges, powers and
\nfranchises of SI and Merger Sub shall vest in the Surviving Corporation, and all
\ndebts, liabilities and duties of SI and Merger Sub shall become the debts,
\nliabilities and duties of the Surviving Corporation.<\/p>\n
1.4 Certificate of Incorporation; Bylaws.
\n ———————————— <\/p>\n
(a) At the Effective Time, the Certificate of Incorporation of
\nMerger Sub, as in effect immediately prior to the Effective Time, shall be the
\nCertificate of Incorporation of the Surviving Corporation until thereafter
\namended as provided by Delaware Law and such Certificate of Incorporation.<\/p>\n
(b) The Bylaws of Merger Sub, as in effect immediately prior to
\nthe Effective Time, shall be the Bylaws of the Surviving Corporation until
\nthereafter amended.<\/p>\n
1.5 Directors and Officers. At the Effective Time, the directors and
\n ———————-
\nofficers of the Merger Sub shall become the directors and officers of the
\nSurviving Corporation, until their respective successors are duly elected or
\nappointed and qualified.<\/p>\n
1.6 Effect on Capital Stock. By virtue of the Merger and without any
\n ———————–
\naction on the part of Merger Sub, SI or the holders of any of the following
\nsecurities:<\/p>\n
(a) Conversion of Target Common Stock. At the Effective Time,
\n ———————————
\neach share of SI Common Stock issued and outstanding immediately prior to the
\nEffective Time (other than any shares of SI Common Stock to be canceled pursuant
\nto Section 1.6(b)) will be canceled and extinguished and be converted
\nautomatically into the right to receive 58.9819 validly issued, fully paid and
\nnon-assessable shares of BC Stock (the “Exchange Ratio”).
\n ————–<\/p>\n
(b) Cancellation of Target Common Stock Owned by SI. At the
\n ———————————————–
\nEffective Time, all shares of SI Common Stock that are owned by SI as treasury
\nstock and or any direct or indirect wholly owned subsidiary of SI immediately
\nprior to the Effective Time shall be canceled and extinguished without any
\nconversion thereof.<\/p>\n
(c) Capital Stock of Merger Sub. At the Effective Time, each
\nshare of Common Stock, $.0001 par value, of Merger Sub (“Merger Sub Common
\n —————–
\nStock”) issued and
\n—–<\/p>\n
2<\/p>\n
outstanding immediately prior to the Effective Time shall remain issued and
\noutstanding. Each stock certificate of Merger Sub evidencing ownership of any
\nsuch shares shall continue to evidence ownership of such shares of capital stock
\nof the Surviving Corporation.<\/p>\n
(d) Adjustments to Exchange Ratio. The Exchange Ratio shall be
\n —————————–
\nadjusted to reflect fully the effect of any stock split, reverse split, stock
\ndividend (including any dividend or distribution of securities convertible into
\nBC Stock or SI Common Stock), reorganization, recapitalization or other like
\nchange with respect to BC Stock or SI Common Stock occurring after the date
\nhereof and prior to the Effective Time.<\/p>\n
(e) Fractional Shares. No fraction of a share of BC Stock will be
\n —————–
\nissued in the Merger and the number of shares of BC Stock issuable to a Seller
\nhereunder shall be rounded upward to the nearest whole share of BC Stock.<\/p>\n
1.7 No Further Ownership Rights in Target Common Stock. All shares of BC
\n ————————————————–
\nStock issued upon the surrender for exchange of shares of SI Common Stock in
\naccordance with the terms hereof shall be deemed to have been issued in full
\nsatisfaction of all rights pertaining to such shares of SI Common Stock, and
\nthere shall be no further registration of transfers on the records of the
\nSurviving Corporation of shares of SI Common Stock which were outstanding
\nimmediately prior to the Effective Time. If, after the Effective Time,
\nCertificates are presented to the Surviving Corporation for any reason, they
\nshall be canceled and exchanged as provided in this Article I.<\/p>\n
1.8 Taking of Necessary Action; Further Action. If, at any time after the
\n ——————————————
\nEffective Time, any further action is necessary or desirable to carry out the
\npurposes of this Agreement and to vest the Surviving Corporation with full
\nright, title and possession to all assets, property, rights, privileges, powers
\nand franchises of SI and Merger Sub, the officers and directors of SI and Merger
\nSub are fully authorized in the name of their respective corporations or
\notherwise to take, and will take, all such lawful and necessary action, so long
\nas such action is not inconsistent with this Agreement.<\/p>\n
1.9 Surrender of Certificates.
\n ————————- <\/p>\n
(a) Exchange Procedures. Promptly after the Effective Time, each
\nholder of record of a certificate or certificates (“Certificates”) which
\n ————
\nimmediately prior to the Effective Time represented outstanding shares of SI
\nCommon Stock, whose shares were converted into the right to receive shares of BC
\nStock (and cash in lieu of fractional shares) shall surrender such Certificates
\n(duly endorsed in favor of BC or accompanied by stock powers duly executed in
\nfavor of and in a form reasonably acceptable to BC and its counsel, free from
\nany charge, lien, encumbrance or adverse claim of any kind whatsoever) in
\nexchange for certificates representing shares of BC Stock (and cash in lieu of
\nfractional shares). Upon surrender of a Certificate for cancellation to BC, the
\nholder of such Certificate shall be entitled to receive in exchange therefor a
\ncertificate representing the number of whole shares of BC Stock and payment in
\nlieu of fractional shares which such holder has the right to receive pursuant to
\nSection 1.6 of this Agreement, and the Certificate so surrendered shall
\nforthwith be canceled. Until so surrendered, each outstanding Certificate that,
\nprior to the Effective Time, represented shares of SI Common Stock will be
\ndeemed from and after the Effective Time, for all corporate <\/p>\n
3<\/p>\n
purposes, other than the payment of dividends, to evidence the ownership of the
\nnumber of full shares of BC Stock into which such shares of Target Common Stock
\nshall have been so converted in accordance with Article I hereof.<\/p>\n
(b) Distributions With Respect to Unexchanged Shares. No
\n ————————————————
\ndividends or other distributions with respect to BC Stock with a record date
\nafter the Effective Time will be paid to the holder of any unsurrendered
\nCertificate with respect to the shares of BC Stock represented thereby until the
\nholder of record of such Certificate shall surrender such Certificate. Subject
\nto applicable law, following surrender of any such Certificate, there shall be
\npaid to the record holder of the certificates representing whole shares of BC
\nStock issued in exchange therefor, without interest, at the time of such
\nsurrender, the amount of any such dividends or other distributions with a record
\ndate after the Effective Time theretofore payable (but for the provisions of
\nthis Section 1.9(b)) with respect to such shares of BC Stock.<\/p>\n
(c) Transfers of Ownership. If any certificate for shares of BC
\n ———————-
\nStock is to be issued in a name other than that in which the Certificate
\nsurrendered in exchange therefor is registered, it will be a condition of the
\nissuance thereof that the Certificate so surrendered will be properly endorsed
\nand otherwise in proper form for transfer and that the person requesting such
\nexchange will have paid to BC or any agent designated by it any transfer or
\nother taxes required by reason of the issuance of a certificate for shares of BC
\nStock in any name other than that of the registered holder of the Certificate
\nsurrendered, or established to the satisfaction of BC or any agent designated by
\nit that such tax has been paid or is not payable.<\/p>\n
(d) No Liability. Notwithstanding anything to the contrary in
\n ————
\nthis Section 1.9, neither the Surviving Corporation nor any party hereto shall
\nbe liable to any person for any amount properly paid to a public official
\npursuant to any applicable abandoned property, escheat or similar law.<\/p>\n
1.10 Consent to Merger; Waiver of Dissenters’ Rights. By their
\n ———————————————–
\nexecution of this Agreement, each Seller (a) consents to the Merger and to the
\ntaking of shareholder action to approve the Merger without a meeting; (b)
\nacknowledges that he or it is aware of his or its right to dissent to the Merger
\nand demand payment for shares of SI Common Stock in accordance with Tennessee
\nLaw; and (c) waives such rights to dissent and demand payment with respect to
\nthe Merger.<\/p>\n
1.11 Lost, Stolen or Destroyed Certificates. In the event any
\n ————————————–
\nCertificates shall have been lost, stolen or destroyed, BC shall issue in
\nexchange for such lost, stolen or destroyed Certificates, upon the making of an
\naffidavit of that fact by the holder thereof, such shares of BC Stock as may be
\nrequired pursuant to Section 1.6; provided, however, that BC may, in its
\ndiscretion and as a condition precedent to the issuance thereof, require the
\nowner of such lost, stolen or destroyed Certificates to deliver a bond in such
\nsum as it may reasonably direct as indemnity against any claim that may be made
\nagainst BC or the Surviving Corporation or with respect to the Certificates
\nalleged to have been lost, stolen or destroyed.<\/p>\n
1.12 Minute Books, Stock Ledger and Other Corporate Records. At the
\n ——————————————————
\nClosing, SI shall deliver to BC, in addition to those items set forth in Section
\n8.2, the minute books, stock ledger and other corporate records of SI.<\/p>\n
4<\/p>\n
1.13 Legends on BC Stock. In addition to any other legend that may be
\n ——————-
\nrequired by federal or state securities laws, each certificate for BC Stock that
\nis issued hereunder shall bear a legend in substantially the following form:<\/p>\n
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
\n REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
\n ANY STATE SECURITIES LAWS. THEY MAY NOT BE OFFERED, SOLD OR
\n OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
\n ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
\n TO SUCH SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL
\n REASONABLY SATISFACTORY TO THE ISSUER OF SUCH SECURITIES
\n THAT SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS
\n IN FULL COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS
\n AMENDED, OR UNLESS SOLD IN COMPLIANCE WITH RULE 144 UNDER
\n SUCH ACT.”<\/p>\n
ARTICLE II
\n REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND SI
\n —————————————————-<\/p>\n
Each of the Sellers and SI agrees with and represents and warrants to
\nBC and Merger Sub as follows:<\/p>\n
2.1 Corporate Existence, Good Standing and Authority. SI is a
\n ————————————————
\ncorporation duly incorporated, validly existing and in good standing under the
\nlaws of the State of Tennessee. SI has full corporate power and corporate
\nauthority to carry on its business as now being conducted and to own, lease or
\noperate the property and assets now owned, leased or operated by it. SI is
\nqualified to do business, is in good standing and has all required and
\nappropriate licenses in each jurisdiction in which its failure to obtain or
\nmaintain such qualification, good standing or licensing would, individually or
\nin the aggregate, have a material adverse effect on the assets, liabilities,
\nbusiness, financial condition or results of operations of SI (a “Material
\n ——–
\nAdverse Effect”). SI and each Seller have all requisite power and authority to
\n————–
\nenter into this Agreement and all agreements and other documents to be entered
\ninto in connection herewith and to consummate the transactions contemplated
\nhereby. This Agreement has been duly executed and delivered by the Sellers and
\nSI, has been authorized by all necessary corporate and other action of SI and
\nthe Sellers and constitutes a legal, valid and binding obligation of each of the
\nSellers and SI, enforceable against each such party in accordance with its
\nterms, except as enforcement may be limited by equitable principles or
\nbankruptcy, insolvency, reorganization, moratorium or similar laws relating to
\ncreditors’ rights generally.<\/p>\n
2.2 Capitalization. Except as set forth in Schedule 2.2, the
\n ————–
\nauthorized capital stock of SI consists of Ten Thousand (10,000) shares of
\ncommon stock, no par value, of which Ten Thousand (10,000) shares are issued and
\noutstanding (the “Shares”). All of the Shares are owned, beneficially and of
\n ——
\nrecord by the Sellers, and immediately prior to the Closing, all of the Shares
\nwill be owned, beneficially and of record, by the Sellers. The Shares are free
\nfrom any <\/p>\n
5<\/p>\n
charge, lien, encumbrance, restriction or adverse claim of any kind whatsoever,
\nother than restrictions imposed by applicable securities laws. All of the Shares
\nhave been duly authorized and validly issued and are fully paid and
\nnonassessable. There are no options, warrants, conversion rights, rights of
\nexchange, or other rights, plans, agreements or commitments of any nature
\nwhatsoever (including, without limitation, conversion or preemptive rights)
\nproviding for the purchase, issuance or sale of any shares of capital stock of
\nSI or any securities convertible into or exchangeable for any shares of capital
\nstock of SI.<\/p>\n
2.3 Subsidiaries. SI does not presently own, directly or indirectly,
\n ————
\nany interest in any other corporation, association, joint venture or other
\nbusiness entity. On the Closing Date, SI will not own, directly or indirectly,
\nany interest in any foreign sales corporation.<\/p>\n
2.4 Financial Statements. The unaudited balance sheet and related
\n ——————–
\nstatements of income and cash flows of SI at and for its fiscal year ended
\nDecember 31, 1997 and the unaudited balance sheet and related statement of
\nincome and cash flow of SI for the period from January 1, 1998 through August
\n28, 1998 (collectively the “SI Financial Statements”) have been delivered to BC.
\n ———————–
\nThe internal books and records of SI from which the SI Financial Statements were
\nprepared are complete and correct in all material respects and have been
\nmaintained in accordance with sound business practices. The SI Financial
\nStatements (i) were prepared in accordance with such books and records; (ii)
\nwere prepared in accordance with the accounting policies and principles of SI,
\nand are in accordance with generally accepted accounting principles (“GAAP”),
\n —-
\napplied on a consistent basis throughout the periods presented; and (iii)
\npresent fairly the financial position and results of operations of SI at the
\ndates and for the periods reflected therein.<\/p>\n
2.5 Absence of Certain Changes. Except as set forth in Schedule 2.5,
\n ————————–
\nsince August 28, 1998, there has not been:<\/p>\n
(a) Any Material Adverse Effect;<\/p>\n
(b) Any increase in the compensation paid or payable by SI,
\nother than in the ordinary course of business, to any of its officers,
\ndirectors, employees, agents or shareholders;<\/p>\n
(c) Any declaration, setting aside or payment of dividends, or
\nany direct or indirect redemption, purchase or other acquisition of any capital
\nstock or any agreement to do any of the foregoing;<\/p>\n
(d) Any indebtedness incurred by SI in excess of Fifty Thousand
\nDollars ($50,000), other than indebtedness permitted pursuant to Section
\n4.2(a)(i) hereof and indebtedness incurred in the ordinary course of business
\nconsistent with SI’s past practices;<\/p>\n
(e) Any loan made by SI other than travel loans or advances made
\nto its employees in the ordinary course of business consistent with SI’s past
\npractices, nor has SI become liable or agreed to become liable as a guarantor
\nwith respect to any loan;<\/p>\n
(f) Any waiver or compromise by SI of any right or rights of
\nmaterial value, or any payment, direct or indirect, of any material debt,
\nliability or other obligation;<\/p>\n
6<\/p>\n
(g) Any change in the accounting methods, practices or policies
\nfollowed by SI since its inception, other than as disclosed in the Notes to the
\nSI Financial Statements;<\/p>\n
(h) Any sale, assignment, or transfer of any patents,
\ntrademarks, copyrights, trade secrets or other proprietary rights of material
\nvalue other than in the ordinary course of business consistent with SI’s past
\npractices;<\/p>\n
(i) Any purchase or other acquisition of, or any sale,
\ndisposition of, or subjection to any lien or encumbrance on, any material
\nproperty or asset, tangible or intangible, of SI other than in the ordinary
\ncourse of business consistent with SI’s past practices;<\/p>\n
(j) Any actual or threatened amendment, termination or loss of
\n(i) any material contract, lease, license or other agreement to which SI was or
\nis a party; (ii) any certificate, license or other authorization required for
\nthe continued operation by SI of any material portion of any of its business; or
\n(iii) any material customer or other revenue source;<\/p>\n
(k) Any resignation or termination of employment of any key
\nofficer or employee of SI, and the Sellers and SI do not know of the impending
\nresignation or termination of employment of any such officer or employee; or<\/p>\n
(l) Any agreement or commitment by SI, or the Sellers on behalf
\nof SI, to do any of the things described in this Section 2.5.<\/p>\n
2.6 Properties. SI does not own or hold title to any real property.
\n ———-
\nWith respect to the property and assets it leases, SI is in compliance in all
\nmaterial respects with such leases and holds a valid leasehold interest in such
\nproperty and assets free of any liens or encumbrances of any kind whatsoever,
\nexcept those for taxes not yet due and payable or such liens or other
\nimperfections of title, if any, as do not materially detract from the value of
\nor interfere with the present use of the property, or assets affected thereby.
\nThere is set forth in Schedule 2.6 hereto: (i) a list of all leases or rental
\ncontracts under which SI is a lessee, lessor, sublessee or sublessor and (ii) a
\nlist of all equipment used by SI in the operation of its business which is owned
\nor leased by SI and which had an original cost of Fifty Thousand Dollars
\n($50,000) or more. All real and tangible personal property currently used by SI
\nin, and necessary for the conduct of, the operation of its business is, and at
\nthe time of Closing will be, in good operating condition and repair, ordinary
\nwear and tear excepted, and is adequate and suitable for the purposes for which
\nit is presently being used. All improvements on leased property used by SI in
\nthe operation of its business and their present use comply in all material
\nrespects with all applicable laws and the agreements under which such
\nimprovements are leased.<\/p>\n
2.7 Inventories. Any inventory of SI consists, and at the time of
\n ———–
\nClosing will consist, solely of inventory of the kind and quality regularly and
\ncurrently used in its business, subject to normal allowances for excess and
\nobsolete inventory in accordance with standard business practices.<\/p>\n
2.8 Accounts and Notes Receivable. The Sellers have delivered (i) a
\n —————————–
\ncomplete and accurate list of the accounts payable, accrued liabilities and
\naccounts and notes receivable of SI as of October 2, 1998, and (ii) a complete
\nand accurate schedule showing the aging of such <\/p>\n
7<\/p>\n
accounts and notes receivable. Such accounts payable, accrued liabilities and
\naccounts receivable and notes receivable arose in bona-fide arms length
\ntransactions in the normal course of business. The accounts receivable are and
\nwill be at the Closing valid and binding obligations of the account debtors
\nwithout counterclaims, set-offs or other defenses thereto except in the ordinary
\ncourse of business, and to the knowledge of the Sellers and SI, such accounts
\nreceivable are (except to the extent of the reserves thereon as set forth in the
\nSI Financial Statements or in the accounting records of SI on the date of this
\nAgreement) collectible in the ordinary course of business. The values at which
\naccounts receivable are carried on the books and records of SI accounts payable,
\naccrued liabilities and are consistent with SI’s past practice and in accordance
\nwith GAAP, applied on a consistent basis.<\/p>\n
2.9 Indebtedness. Schedule 2.9 hereto contains a complete list of each
\n ————
\nand every agreement or other instrument under or pursuant to which SI has
\noutstanding indebtedness for borrowed money. SI (and the Sellers to the extent
\nresponsible for the payment of the obligations thereunder) are not in default in
\nany material respect under any such agreement or instrument. Existing defaults,
\nif any, do not trigger acceleration of such indebtedness.<\/p>\n
2.10 Litigation. No litigation, arbitration or other proceeding is
\n ———-
\npending or, to the knowledge of the Sellers and SI, threatened by or against SI,
\nits properties or assets, or the Shares before any court or any governmental
\nagency and, to the knowledge of the Sellers and SI, no facts exist which might
\nform the basis for any such litigation, arbitration or proceeding. To the
\nknowledge of the Sellers and SI, SI is not the subject of any investigation for
\nviolation of any laws, regulations or administrative orders applicable to its
\nbusiness. There is no judgment, writ, decree, injunction, rule or order of any
\ncourt, governmental department, commission, agency, instrumentality or
\narbitrator outstanding against SI, its properties or assets or the Shares.<\/p>\n
2.11 Taxes. SI has (i) timely filed or caused to be filed all federal,
\n —–
\nstate and local tax returns required to be filed by SI prior to the date of this
\nAgreement which relate to SI or with respect to which SI is liable or otherwise
\nin any way subject, and all such tax returns (A) are complete, accurate and in
\nall material respects in accordance with all legal requirements applicable
\nthereto and (B) as of the time of filing, correctly reflected the facts
\nregarding the income, business assets, operations, activities, status or other
\nmatters of SI required to be shown thereon, (ii) paid, when due, all taxes shown
\nto be due and payable on such returns, or pursuant to any assessment or
\notherwise, or is contesting in good faith the payment thereof and (iii) properly
\naccrued, charged or established adequate reserves for all taxes assessed or
\nassessable against SI (including amounts being contested in good faith) relating
\nto the business, assets or employees or independent contractors of SI arising in
\nrespect of any fiscal year of SI or portion thereof ended prior to the Closing.
\nNo tax liabilities, disallowances or assessments relating to the business,
\nassets or employees or independent contractors of SI have been assessed against
\nSI or are such to the knowledge of the Sellers and SI proposed as of the date
\nhereof, and to the knowledge of the Sellers and SI there is no basis for any
\nsuch liabilities, disallowances or assessments. SI is not a party to or bound by
\n(nor will SI become a party to or bound by prior to the Closing) any tax
\nindemnity, tax sharing or tax allocation agreement.<\/p>\n
2.12 No Breach. Except as set forth on Schedule 2.12 hereto, the
\n ———
\nconsummation of the transactions contemplated by this Agreement will not result
\nin or constitute any of the following: (i) a conflict, violation or default with
\nor an event that, with notice or lapse <\/p>\n
8<\/p>\n
of time or both, would be a default, breach, or violation of the Charter or
\nBylaws of SI, any License (as hereinafter defined) or any material contract or
\nother material agreement, instrument or arrangement to which SI is a party or by
\nwhich SI or its assets or the Shares are bound; (ii) an event that would permit
\nany party to terminate any material agreement to which SI is a party or by which
\nSI or its assets or the Shares are bound or to accelerate the maturity of or
\npermit the subordination of any material indebtedness or other material
\nobligation of SI; (iii) the creation or imposition of any material lien, charge,
\nor encumbrance on the assets of SI or the Shares; or (iv) conflict with or
\nresult in the violation or breach of any law, rule or regulation of any
\ngovernmental authority, or any judgment, order, injunction or decree applicable
\nto SI, its assets or the Shares.<\/p>\n
2.13 Employees. Schedule 2.13 contains a listing of (i) each
\n ———
\ncollective bargaining agreement and other labor agreement to which SI is a party
\nor by which it is bound; (ii) each employment, consulting, severance, deferred
\ncompensation, bonus, and any other employee benefit plan, contract, agreement,
\nor other arrangement (whether or not in writing) providing for compensation or
\nother benefits to employees (including officers), or independent contractors,
\nindividually or as a group, to which SI is a party or by which it is bound;
\n(iii) each “employee pension benefit plan” as defined in Section 3(2) of the
\nEmployee Retirement Income Security Act of 1974 (“ERISA”) and not exempted under
\n —–
\nSection 4(b) or 201 of ERISA maintained by SI or to which SI is required to
\ncontribute including any multi-employer pension plan; and (iv) each “employee
\nwelfare benefit plan” as defined in Section 3(1) of ERISA maintained by SI or to
\nwhich SI contributes or is required to contribute, including any multi-employer
\nwelfare plan, and each other plan under which “fringe benefits” (including,
\nwithout limitation, vacation plans or programs, severance benefits, sick leave
\nplans or programs, dental or medical plans or programs, and related or similar
\nbenefits) are afforded to employees of, or otherwise required to be provided by,
\nSI. SI has complied in all material respects with all applicable laws, rules and
\nregulations relating to employment, including those relating to wages, hours,
\ncollective bargaining and the payment and withholding of taxes and other sums as
\nrequired by appropriate governmental authorities.<\/p>\n
2.14 Insurance. SI, or the Sellers on behalf of SI, maintains policies
\n ———
\nof insurance covering SI’s assets, properties and business in types and amounts
\nthat are consistent with SI’s past practices. Neither SI nor, to the extent that
\nthe Sellers maintain policies on behalf of SI, the Sellers are in default under
\nany of such policies, and neither SI or the Sellers have failed to give any
\nnotice or to present any claim under any such policy in a due and timely
\nfashion.<\/p>\n
2.15 Contracts and Permits. There is set forth in Schedule 2.15 hereto
\n ———————
\na complete and accurate list of:<\/p>\n
(a) Each customer contract, whether written or oral, between SI
\nand any party to whom SI provides products or services which involved payments
\nto SI of more than Fifty Thousand Dollars ($50,000) during SI’s last fiscal year
\nor can reasonably be expected to involve payments to SI of more than Fifty
\nThousand Dollars ($50,000) during SI’s next fiscal year ;<\/p>\n
9<\/p>\n
(b) Each contract (except for leases or rental contracts,
\nevidence of indebtedness and insurance contracts), whether written or oral,
\nbetween SI and any party to whom SI is obligated, or can reasonably be expected
\nto pay more than Fifty Thousand Dollars ($50,000) for any twelve (12)-month
\nperiod commencing on or after the Closing Date; and<\/p>\n
(c) Each material permit, license, franchise, certificate or
\nauthorization issued to SI by any governmental or other authority having
\njurisdiction in any area where SI provides products or services (individually, a
\n“License” and collectively, the “Licenses”).
\n ——- ——–<\/p>\n
The contracts and agreements which are required to be identified in
\nSchedule 2.6 or in Schedule 2.15 pursuant to subsections (a) and (b) above are
\nhereinafter referred to as the “Contracts.” Except as set forth in Schedules
\n ———
\n2.6 or 2.15:<\/p>\n
(i) Each of the Contracts is a valid, binding and
\nenforceable agreement of SI and, to the knowledge of the Sellers and SI, the
\nother parties thereto, and to their knowledge will continue to be a valid,
\nbinding and enforceable agreement of Merger Sub after the Closing Date;<\/p>\n
(ii) As of the date hereof, the Sellers and SI have no
\nreason to believe that SI will not be able to fulfill all of its obligations
\nunder the Contracts which remain to be performed after the date hereof to the
\nextent BC’s operation of the business of SI after the Closing Date is consistent
\nwith SI’s past practices, and neither the Sellers nor SI has been notified by
\nany governmental or other party that such parties intend to cancel, terminate or
\nmodify any of such Contracts or the basis upon which SI is paid thereunder, and
\nneither the Sellers nor SI knows of any valid grounds for any such cancellation,
\ntermination or modification;<\/p>\n
(iii) There has not occurred any material default (or event
\nwhich upon the provision of notice or lapse of time or both would become a
\nmaterial default) by SI under any of the Contracts;<\/p>\n
(iv) To the knowledge of the Sellers and SI, the Licenses
\nare the only permits, licenses, franchises, certificates and authorizations that
\nmay be issued by any governmental or other authority having jurisdiction in any
\narea where SI provides products or services that are required for and are
\nmaterial to the operation of the business of SI as such business is conducted;<\/p>\n
(v) The Licenses are, and as of the Closing will be, in full
\nforce and effect and the continuing validity and effectiveness of such Licenses
\nwill not be affected by the Merger as herein contemplated; and<\/p>\n
(vi) The Sellers and SI are and have been in compliance in
\nall material respects with all material conditions or requirements of the
\nLicenses, and neither the Sellers nor SI has been notified by any governmental
\nor licensing authority that such parties intend to cancel, terminate or modify
\nany of such Licenses, and neither the Sellers nor SI knows of any valid grounds
\nfor any such cancellation, termination or modification.<\/p>\n
10<\/p>\n
2.16 Powers of Attorney; Bank Accounts. Schedule 2.16 hereto
\n ———————————
\nlists (i) the names and addresses of all persons holding a power of attorney on
\nbehalf of SI; and (ii) the names and addresses of all banks or other financial
\ninstitutions in which SI has an account, deposit, or safe-deposit box, with the
\nnumber and a description of the account and the names of all persons authorized
\nto draw on such accounts or deposits or to have access to such boxes.<\/p>\n
2.17 Compliance with Law; Governmental Consents. The business and
\n ——————————————
\noperations of SI have been and are being conducted in material compliance with
\nall laws, rules, regulations and licensing requirements applicable thereto,
\nincluding, without limitation, federal, state and local laws and regulations
\naffecting the protection of the environment, the health and safety of employees
\nand equal employment opportunities. The Sellers and SI are unaware of any facts
\nwhich might form the basis for a claim that any material violation by SI of such
\nlaws exists. Except for (i) the filing of a pre-merger notification and
\ntermination or expiration of the waiting period under the Hart-Scott-Rodino
\nAntitrust Improvements Act of 1976, as amended (the “HSR Act”), (ii) the
\n ——-
\nfiling of the Certificate of Merger and (iii) the filing of the Articles of
\nMerger and Plan of Merger, no consent, approval, order or authorization of, or
\nregistration, qualification, designation, declaration or filing with, any
\nfederal, state or local governmental authority on the part of SI or the Sellers
\nis required in connection with the execution, delivery and performance by the
\nSellers and SI of this Agreement, the consummation of the transactions
\ncontemplated hereby or BC’s operation of the business of SI following the
\nClosing Date in a manner that is consistent with SI’s past practices.<\/p>\n
2.18 Intentionally Omitted.
\n ———————<\/p>\n
2.19 Intentionally Omitted.
\n ——————— <\/p>\n
2.20 Intellectual Property Rights.
\n —————————-<\/p>\n
(a) Except as set forth in Schedule 2.20, SI has sufficient
\ntitle and ownership of all patents, trademarks, service marks, trade names,
\nInternet domain names, copyrights, trade secrets, customer lists, information,
\nproprietary rights and processes, registrations and applications therefor
\n(collectively, “Intellectual Property”) necessary for and material to its
\n ———————
\nbusiness as now conducted and as proposed to be conducted, including all
\nIntellectual Property used in connection with or contained in any SI site on the
\nworld wide web, without any conflict with or infringement of the rights of
\nothers. Neither the Sellers nor SI has received any communications nor is either
\nof the Sellers or SI aware of any entity alleging that SI or any SI employee has
\nviolated or, by conducting its business in a manner that is consistent with SI’s
\npast practices, would violate any Intellectual Property of any other person or
\nentity. Neither the Sellers nor SI is aware that any of SI’s employees is
\nobligated under any contract (including licenses, covenants or commitments of
\nany nature) or other agreement, or subject to any judgment, decree or order of
\nany court or administrative agency, that would interfere with the use of his or
\nher best efforts to promote the interests of SI or that would conflict with the
\noperation of SI’s business consistent with SI’s past practices. SI does not
\nbelieve it is or will be necessary in connection with its business to utilize
\nany inventions of any of its employees (or persons it currently intends to hire)
\nmade prior to their employment by SI. To the knowledge of the Sellers and SI,
\nall of the Intellectual Property is vested in (or, if applicable, leased or
\nlicensed by) SI free and clear of any equities, claims, liens, encumbrances or
\nrestrictions of any kind <\/p>\n
11<\/p>\n
whatsoever. Schedule 2.20 sets forth all patents, patent applications, copyright
\nregistrations, copyright applications, trademarks and trade names (registered or
\nunregistered), Internet domain names and any other Intellectual Property owned
\nor licensed by SI or in which SI has any material interest.<\/p>\n
(b) Except as set forth in Schedule 2.20, SI does not currently
\nuse nor, to the knowledge of the Sellers and SI, does it propose to use any
\nIntellectual Property, invention or confidential information in which any of the
\nSellers and other employees of SI claims a proprietary interest.<\/p>\n
(c) Except as set forth in Schedule 2.20, to the knowledge of the
\nSellers and SI, SI is not making use of any Intellectual Property, invention or
\nany confidential information in which any of its present or past employees has
\nclaimed a proprietary interest; and the Sellers and SI are not actually aware of
\nany facts that would give rise to such a claim.<\/p>\n
2.21 Year 2000 Compliance. SI has reviewed the areas within its
\n ——————–
\nbusiness and operations which could be adversely affected by Year 2000 issues
\nand evaluated the costs associated with modifying and testing its systems for
\nthe Year 2000. To the knowledge of SI, the cost of Year 2000 compliance for its
\ninternal information systems will not have a Material Adverse Effect on SI.<\/p>\n
2.22 Purchase for Investment. Each Seller acknowledges that he or it
\n ———————–
\nis acquiring the BC Stock in the Merger for his or its own account and not with
\na view to, or present intention of, distribution thereof in violation of the
\nSecurities Act of 1933, as amended (the “1933 Act”) or any state securities
\n ——–
\nlaws, and the BC Stock will not be disposed of in contravention of the 1933 Act
\nor state securities laws.<\/p>\n
2.23 BC Stock Not Registered. Each Seller acknowledges that the BC
\n ———————–
\nStock has not been registered under the 1933 Act or any state securities laws
\nand, therefore, cannot be sold, and must be held indefinitely, unless
\nsubsequently registered under the 1933 Act and state securities laws or unless
\nan exemption from such registration is available.<\/p>\n
2.24 Economic Risk. Each Seller acknowledges that his or its
\n ————-
\ninvestment in the BC Stock involves a high degree of risk and represents that he
\nor it is able to bear the economic risk of his or its investment in the BC Stock
\nfor an indefinite period of time.<\/p>\n
2.25 Access to Information. Each Seller acknowledges that he or it has
\n ———————
\nmade such investigations and inquiries as he or it has deemed necessary for the
\npurpose of informing himself or itself about BC or its businesses prior to
\nentering into this Agreement.<\/p>\n
2.26 No Undisclosed Liabilities. To the knowledge of the Sellers and
\n ————————–
\nSI, SI does not have, or as of the Closing Date will not have, any material
\nliabilities, obligations or commitments (absolute, accrued, contingent or
\notherwise) matured or unmatured (“Liabilities”) except (i) Liabilities which are
\n ———–
\nadequately reflected or fully reserved against in the SI Financial
\nStatements; (ii) Liabilities incurred after the date of the SI Financial
\nStatements that were incurred in the ordinary course of SI’s business and are
\nconsistent with past practices; (iii) Liabilities disclosed in the Schedules
\nhereto and (iv) Liabilities permitted under Section 4.2(a)(i) hereof.<\/p>\n
12<\/p>\n
ARTICLE III
\n REPRESENTATIONS AND WARRANTIES OF BC AND MERGER SUB
\n —————————————————<\/p>\n
BC and Merger Sub, jointly and severally, represent and warrant to
\neach of the Sellers that:<\/p>\n
3.1 Incorporation. Each of BC and Merger Sub has been duly
\n ————-
\nincorporated and is validly existing and in good standing under the laws of the
\nState of Delaware. Prior to the date hereof, Merger Sub has not engaged in any
\nactivity other than the transactions contemplated by this Agreement. Each of BC
\nand Merger Sub has full corporate power and corporate authority to carry on its
\nbusiness as now being conducted and to own, lease or operate the property and
\nassets now owned, leased or operated by it. Each of BC and Merger Sub is
\nqualified to do business, is in good standing and has all required and
\nappropriate licenses in each jurisdiction in which its failure to obtain or
\nmaintain such qualification, good standing or licensing (i) would, individually
\nor in the aggregate, have or reasonably could be expected to have a material
\nadverse effect on the assets, liabilities, business, financial condition,
\nresults of operations, or prospects of BC and its subsidiaries (including Merger
\nSub) taken together, or (ii) would result in a material breach of any of the
\nother representations, warranties or covenants of BC set forth in this
\nAgreement.<\/p>\n
3.2 Capitalization. Immediately prior to the Closing, the authorized
\n ————–
\ncapital stock of BC will consist of 12,666,542 shares of Common Stock, $.0001
\npar value, of which 8,675,315 shares are issued and outstanding, and 1,298,742
\nshares of Series A Preferred Stock, $.0001 par value, all of which are issued
\nand outstanding. The authorized capital of Merger Sub consists of 1,000 shares
\nof Common Stock, $.001 par value, all of which are issued and outstanding and
\nheld by BC. All outstanding shares of BC and Merger Sub capital stock have been
\nduly authorized and validly issued and are fully paid and nonassessable. Except
\nas set forth on Schedule 3.2 hereof and as of the date of this Agreement, BC
\ndoes not own, directly or indirectly, or have any obligation to acquire, any
\ninterest or investment in any corporation, partnership, joint venture, business
\ntrust, limited liability company or other entity. Schedule 3.2 sets forth the
\naggregate number of all options, warrants, conversion rights, rights of
\nexchange, or other rights, plans, agreements or commitments of any nature
\nwhatsoever (including, without limitation, conversion or preemptive rights)
\nproviding for the purchase, issuance, or sale of any capital stock of BC or any
\nsecurities convertible or exchangeable for any shares of capital stock of BC.<\/p>\n
3.3 BC Stock Fully Paid and Non-Assessable. The BC Stock deliverable
\n ————————————–
\npursuant to Section 1.6, when issued and delivered as herein provided, will be
\nduly authorized, validly issued and outstanding shares of Common Stock of BC,
\nfully paid and non-assessable, free and clear of all liens, encumbrances,
\nrestrictions and claims of every kind.<\/p>\n
3.4 Corporate Power and Authority. Each of BC and Merger Sub has full
\n —————————–
\ncorporate power and authority to enter into, deliver, perform its obligations
\nunder and carry out this Agreement and all agreements and documents contemplated
\nhereby. This Agreement constitutes, and all agreements and documents
\ncontemplated hereby when executed and delivered pursuant hereto will constitute,
\nthe valid and legally binding obligations of BC and Merger Sub enforceable in
\naccordance with their terms, subject as to enforcement to bankruptcy,<\/p>\n
13<\/p>\n
insolvency, reorganization and other laws of general applicability relating to
\nor affecting creditors’ rights and to general equity principles.<\/p>\n
3.5 Intentionally Omitted.
\n ——————— <\/p>\n
3.6 Financial Statements. The unaudited balance sheet and related
\n ——————–
\nstatements of income and cash flows of BC at and for its fiscal year ended
\nDecember 31, 1997 and the unaudited balance sheet and related statement of
\nincome and cash flow of SI for the period from January 1, 1998 through July 31,
\n1998 (collectively the “BC Financial Statements”) have been delivered to
\n ———————–
\nSellers. The internal books and records of BC from which the BC Financial
\nStatements were prepared are complete and correct in all material respects and
\nhave been maintained in accordance with sound business practice. The BC
\nFinancial Statements (i) were prepared in accordance with such books and
\nrecords; (ii) were prepared in accordance with the accounting policies and
\nprinciples of BC, and are in accordance with GAAP, applied on a consistent basis
\nthroughout the periods presented; and (iii) present fairly the financial
\nposition and results of operations of BC at the dates and for the periods
\nreflected therein.<\/p>\n
3.7 Properties. Neither BC nor Merger Sub owns or holds title to any
\n ———-
\nreal property. With respect to the property and assets it leases, each of BC and
\nMerger Sub is in compliance in all material respects with such leases and holds
\na valid leasehold interest in such property and assets free of any liens or
\nencumbrances of any kind whatsoever, except those for taxes not yet due and
\npayable or such liens or other imperfections of title, if any, as do not
\nmaterially detract from the value of or interfere with the present use of the
\nproperty, or assets affected thereby. All real and tangible personal property
\ncurrently used by each of BC and Merger Sub in, and necessary for the conduct
\nof, the operation of their respective businesses is, and at the time of Closing
\nwill be, in good operating condition and repair, ordinary wear and tear
\nexcepted, and is adequate and suitable for the purposes for which it is
\npresently being used. All improvements on leased property used by each of BC and
\nMerger Sub in the operation of their respective businesses and the present use
\ncomply in all material respects with all applicable laws and the agreements
\nunder which such improvements are leased.<\/p>\n
3.8 Litigation. No litigation, arbitration or other proceeding is
\n ———-
\npending or, to the knowledge of BC or Merger Sub, threatened by or against BC or
\nMerger Sub, their respective properties or assets before any court or any
\ngovernmental agency, and, to the knowledge of BC or Merger Sub, no facts exist
\nwhich might form the basis for any such litigation, arbitration or proceeding.
\nTo the knowledge of BC or Merger Sub, neither BC nor Merger Sub is the subject
\nof any investigation for violation of any laws, regulations or administrative
\norders applicable to their respective businesses. There is no judgment, writ,
\ndecree, injunction, rule or order of any court, governmental department,
\ncommission, agency, instrumentality or arbitrator outstanding against either BC
\nor Merger Sub, their respective properties or assets.<\/p>\n
3.9 No Breach. The consummation of the transactions contemplated by
\n ———
\nthis Agreement will not result in or constitute any of the following: (i) a
\nconflict, violation or default with or an event that, with notice or lapse of
\ntime or both, would be a default, breach, or violation of the Certificate of
\nIncorporation or Bylaws of BC or Merger Sub, or any material contract or other
\nmaterial agreement, instrument or arrangement to which BC or Merger Sub is a
\nparty or by which BC or Merger Sub or their respective assets are bound; (ii) an
\nevent that would <\/p>\n
14<\/p>\n
permit any party to terminate any material agreement to which BC or Merger Sub
\nis a party or by which BC of Merger Sub or their respective assets are bound or
\nto accelerate the maturity of or permit the subordination of any material
\nindebtedness or other material obligation of BC or Merger Sub; (iii) the
\ncreation or imposition of any lien, charge, or encumbrance on the assets of BC
\nor Merger Sub, except for such item that would not have a BC Material Adverse
\nEffect; or (iv) conflict with or result in the violation or breach of any law,
\nrule or regulation of any governmental authority, or any judgment, order,
\ninjunction or decree applicable to BC or Merger Sub or their respective assets.<\/p>\n
3.10 Compliance with Law; Governmental Consents. The business and
\n ——————————————
\noperations of BC and Merger Sub have been and are being conducted in material
\ncompliance with all laws, rules, regulations and licensing requirements
\napplicable thereto, including, without limitation, federal, state and local laws
\nand regulations affecting the protection of the environment, the health and
\nsafety of employees and equal employment opportunities. Neither BC nor Merger
\nSub is aware of any facts which might form the basis for a claim that any
\nmaterial violation by BC or Merger Sub of such laws exists. Except for (i) the
\nfiling of a pre-merger notification and termination or expiration of the waiting
\nperiod under the HSR Act, (ii) the filing of the Certificate of Merger and (iii)
\nthe filing of the Articles of Merger and Plan of Merger, no consent, approval,
\norder or authorization of, or registration, qualification, designation,
\ndeclaration or filing with, any federal, state or local governmental authority
\non the part of BC or the Merger Sub is required in connection with the
\nexecution, delivery and performance by BC and the Merger Sub of this Agreement
\nor the consummation of the transactions contemplated hereby.<\/p>\n
3.11 No Undisclosed Liabilities. Except as set forth on Schedule 3.11
\n ————————–
\nhereof, to the knowledge of BC and Merger Sub, neither BC nor Merger Sub has, or
\nas of the Closing Date will have, any material liabilities, obligations or
\ncommitments (absolute, accrued, contingent or otherwise) matured or unmatured
\n(“BC Liabilities”) except (i) BC Liabilities which are adequately reflected or
\n ————–
\nfully reserved against in the BC Financial Statements; (ii) BC Liabilities
\nincurred after the date of the BC Financial Statements that were incurred in the
\nordinary course of BC’s business and are consistent with past practices; and
\n(iii) BC Liabilities disclosed in the Schedules hereto.<\/p>\n
3.12 Taxes. BC has (i) timely filed or caused to be filed all federal,
\n —–
\nstate and local tax returns required to be filed by BC prior to the date of this
\nAgreement which relate to BC or with respect to which BC is liable or otherwise
\nin any way subject, and all such tax returns (A) are complete, accurate and in
\nall material respects in accordance with all legal requirements applicable
\nthereto and (B) as of the time of filing, correctly reflected the facts
\nregarding the income, business assets, operations, activities, status or other
\nmatters of BC required to be shown thereon, (ii) paid, when due, all taxes shown
\nto be due and payable on such returns, or pursuant to any assessment or
\notherwise, or is contesting in good faith the payment thereof and (iii) properly
\naccrued, charged or established adequate reserves for all taxes assessed or
\nassessable against BC (including amounts being contested in good faith) relating
\nto the business, assets or employees or independent contractors of BC arising in
\nrespect of any fiscal year of BC or portion thereof ended prior to the Closing.
\nNo tax liabilities, disallowances or assessments relating to the business,
\nassets or employees or independent contractors of BC have been assessed against
\nBC or are such to the knowledge of BC proposed as of the date hereof, and to the
\nknowledge of<\/p>\n
15<\/p>\n
BC there is no basis for any such liabilities, disallowances or assessments.
\nBC is not a party to or bound by (nor will BC become a party to or bound by
\nprior to the Closing) any tax indemnity, tax sharing or tax allocation
\nagreement.<\/p>\n
3.13 Year 2000 Compliance. BC has reviewed the areas within its business
\n ——————–
\nand operations which could be adversely affected by Year 2000 issues and
\nevaluated the costs associated with modifying and testing its systems for the
\nYear 2000. To the knowledge of BC, the cost of Year 2000 compliance for its
\ninternal information systems will not have a Material Adverse Effect on BC.<\/p>\n
3.14 Intellectual Property Rights.
\n —————————-<\/p>\n
(a) Except as set forth in Schedule 3.14, each of BC and Merger Sub
\nhas sufficient title and ownership of all patents, trademarks, service marks,
\ntrade names, Internet domain names, copyrights, trade secrets, customer lists,
\ninformation, proprietary rights and processes, registrations and applications
\ntherefor (collectively, “Intellectual Property”) necessary for and material to
\n ———————
\nits business as now conducted and as proposed to be conducted, including all
\nIntellectual Property used in connection with or contained in any BC site on the
\nworld wide web, without any conflict with or infringement of the rights of
\nothers. BC has not received any communications nor is BC aware of any entity
\nalleging that BC, Merger Sub or any BC employee has violated or, by conducting
\nits business in a manner that is consistent with BC’s past practices, would
\nviolate any Intellectual Property of any other person or entity. BC is not aware
\nthat any of BC’s or Merger Sub’s employees is obligated under any contract
\n(including licenses, covenants or commitments of any nature) or other agreement,
\nor subject to any judgment, decree or order of any court or administrative
\nagency, that would interfere with the use of his or her best efforts to promote
\nthe interests of BC or that would conflict with the operation of BC’s business
\nconsistent with BC’s past practices. BC does not believe it is or will be
\nnecessary in connection with its business to utilize any inventions of any of
\nits employees (or persons it currently intends to hire) made prior to their
\nemployment by BC. To the knowledge of BC, all of the Intellectual Property is
\nvested in (or, if applicable, leased or licensed by) BC or Merger Sub free and
\nclear of any equities, claims, liens, encumbrances or restrictions of any kind
\nwhatsoever. Schedule 3.14 sets forth all patents, patent applications, copyright
\nregistrations, copyright applications, trademarks and trade names (registered or
\nunregistered), Internet domain names and any other Intellectual Property owned
\nor licensed by BC or Merger Sub or in which BC or Merger Sub has any material
\ninterest.<\/p>\n
(b) Except as set forth in Schedule 3.14, neither BC nor Merger Sub
\ncurrently uses nor, to the knowledge of BC, does either BC or Merger Sub propose
\nto use any Intellectual Property, invention or confidential information in which
\nany employees of BC or Merger Sub claims a proprietary interest.<\/p>\n
(c) Except as set forth in Schedule 3.14, to the knowledge of BC,
\nneither BC nor Merger Sub is making use of any Intellectual Property, invention
\nor any confidential information in which any of its present or past employees
\nhas claimed a proprietary interest; and BC is not actually aware of any facts
\nthat would give rise to such a claim.<\/p>\n
16<\/p>\n
3.15 Absence of Certain Changes. Except as set forth in Schedule 3.15,
\n ————————–
\nsince August 28, 1998, there has been:<\/p>\n
(a) Any Material Adverse Effect;<\/p>\n
(b) Any increase in the compensation paid or payable by BC or Merger
\nSub, other than in the ordinary course of business, to any of their respective
\nofficers, directors, employees, agents or shareholders;<\/p>\n
(c) Any declaration, setting aside or payment of dividends, or any
\ndirect or indirect redemption, purchase or other acquisition of any capital
\nstock of BC or Merger Sub or any agreement to do any of the foregoing;<\/p>\n
(d) Any indebtedness incurred by BC or Merger Sub in excess of Fifty
\nThousand Dollars ($50,000), other than indebtedness incurred in the ordinary
\ncourse of business consistent with BC’s or Merger Sub’s past practices;<\/p>\n
(e) Any loan made by BC or Merger Sub other than travel loans or
\nadvances made to its employees in the ordinary course of business consistent
\nwith BC’s or Merger Sub’s past practices, nor has BC or Merger Sub become liable
\nor agreed to become liable as a guarantor with respect to any loan;<\/p>\n
(f) Any waiver or compromise by BC or Merger Sub of any right or
\nrights of material value, or any payment, direct or indirect, of any material
\ndebt, liability or other obligation;<\/p>\n
(g) Any change in the accounting methods, practices or policies
\nfollowed by BC since its inception, other than as disclosed in the Notes to the
\nBC Financial Statements;<\/p>\n
(h) Any sale, assignment, or transfer of any patents, trademarks,
\ncopyrights, trade secrets or other proprietary rights of material value other
\nthan in the ordinary course of business consistent with BC’s past practices;<\/p>\n
(i) Any purchase or other acquisition of, or any sale, disposition of,
\nor subjection to any lien or encumbrance on, any material property or asset,
\ntangible or intangible, of BC or Merger Sub other than in the ordinary course of
\nbusiness consistent with BC’s or Merger Sub’s past practices;<\/p>\n
(j) Any actual or threatened amendment, termination or loss of (i) any
\nmaterial contract, lease, license or other agreement to which BC or Merger Sub
\nwas or is a party; (ii) any certificate, license or other authorization required
\nfor the continued operation by BC or Merger Sub of any material portion of any
\nof its business; or (iii) any material customer or other revenue source;<\/p>\n
(k) Any resignation or termination of employment of any key officer or
\nemployee of BC or Merger Sub, and BC does not know of the impending resignation
\nor termination of employment of any such officer or employee; or<\/p>\n
17<\/p>\n
(l) Any agreement or commitment by BC or Merger Sub to do
\nany of the things described in this Section 3.15.<\/p>\n
ARTICLE IV
\n COVENANTS OF THE SELLERS AND SI
\n ——————————-<\/p>\n
4.1 Maintenance of Business. From the date hereof until the Closing,
\n ———————–
\neach of the Sellers and SI shall use its diligent, good faith efforts, to cause
\nSI to carry on and preserve the business, goodwill and the relationships of SI
\nwith suppliers, employees, agents and others in substantially the same manner as
\nthey have been prior to the date hereof.<\/p>\n
4.2 Conduct of Business.
\n ——————- <\/p>\n
(a) From the date hereof until the Closing, except as expressly
\npermitted hereby, SI shall not, and the Sellers shall not permit SI to, without
\nBC’s prior express written consent:<\/p>\n
(i) incur any additional indebtedness, or guarantee any
\n indebtedness or obligation of any other party, except (A) in the ordinary
\n course of business or (B) for indebtedness to IE in an amount not to exceed
\n $1,000,000 in the aggregate, which amount: (1) shall only be advanced by IE
\n to SI in incremental amounts necessary, in the good faith judgment of the
\n Sellers, to comply with Section 4.1 hereof; (2) will bear interest at a
\n rate not to exceed the prime lending rate as reported in the Wall Street
\n Journal from time to time; and (3) SI agrees to repay by wire transfer of
\n immediately available funds immediately prior to the Closing;<\/p>\n
(ii) except in connection with the capital contribution
\n contemplated by Section 4.7, issue, redeem, pledge, sell or repurchase any
\n capital stock of SI or securities convertible into its capital stock or
\n grant or issue any options, warrants or rights to subscribe for its capital
\n stock or securities convertible into its capital stock or commit to do any
\n of the foregoing;<\/p>\n
(iii) enter into or terminate any material agreement or
\n arrangement;<\/p>\n
(iv) increase the compensation or bonuses payable or to
\n become payable to any officers, employees or agents of SI, or adopt or
\n amend any employee benefit plan or arrangement;<\/p>\n
(v) enter into any employment contract or agreement with
\n any existing or prospective employee which is not terminable at will;<\/p>\n
(vi) pay any obligation or liability, fixed or contingent,
\n other than current liabilities or except as such payment becomes due;<\/p>\n
(vii) cancel, without full payment, any note, loan or other
\n obligation owing to SI, or waive any rights of material value;<\/p>\n
18<\/p>\n
(viii) acquire or dispose of any properties, assets or
\n business except in the ordinary course of its business;<\/p>\n
(ix) create or suffer to be imposed any lien, mortgage,
\n security interest or other charge on or against the properties or assets of
\n SI, other than in the ordinary course of business consistent with SI’s past
\n practices, or the Shares;<\/p>\n
(x) engage in any activities or transactions outside the
\n ordinary course of SI’s e-commerce business as conducted at the date
\n hereof;<\/p>\n
(xi) make or adopt any change in the Charter or Bylaws of
\n SI as in force and effect on the date hereof;<\/p>\n
(xii) declare or pay any dividends on or make any other
\n distributions in respect of any shares of its capital stock; or<\/p>\n
(xiii) pay, agree to pay or make any accrual or arrangement
\n for payment of any pension, retirement allowance or other employee benefit
\n pursuant to any plan, agreement or arrangement to any officer, director or
\n employee.<\/p>\n
(b) From the date hereof until the Closing, except as expressly
\npermitted hereby, SI shall, and the Sellers shall cause SI to, unless otherwise
\nexpressly consented to in writing by BC :<\/p>\n
(i) maintain the existing insurance policies of SI, unless
\n comparable insurance is substituted therefor, and shall not take any action
\n to terminate or modify those insurance policies ;<\/p>\n
(ii) maintain the books and records of SI consistent with
\n past practices and policies and in accordance with GAAP ;<\/p>\n
(iii) maintain in good working condition, ordinary wear and
\n tear excepted, and in compliance in all material respects with all
\n applicable laws and regulations, all fixed assets owned, leased or
\n operated, as the case may be, by SI ;<\/p>\n
(iv) observe and perform, and remain in compliance with, all
\n obligations of SI in agreements and contracts the breach or violation of
\n which would have, individually or in the aggregate, a Material Adverse
\n Effect and not enter into any agreements or contracts which would require
\n payments by SI of more than Fifty Thousand Dollars ($50,000) over any
\n period of twelve (12) months, except for inventory purchased in the
\n ordinary course of business disclosed in advance to BC and customer
\n contracts and purchase orders entered in the ordinary course of business
\n consistent with SI’s past practices; and<\/p>\n
(v) maintain compliance with the terms and conditions of all
\n Licenses held by SI or under which it operates or conducts its business and
\n use best efforts to maintain all such Licenses in full force and effect.<\/p>\n
19<\/p>\n
4.3 Necessary Consents. Prior to the Closing, the Sellers and SI
\n ——————
\nwill obtain such written consents and take such other actions as may be
\nnecessary or appropriate to allow the consummation of the transactions
\ncontemplated hereby and to allow the continuation of the business of SI by BC
\nand Merger Sub after the Closing as conducted at the date hereof in all material
\nrespects.<\/p>\n
4.4 Access to Information. The Sellers shall cause SI to give BC
\n ———————
\nand its accountants, legal counsel and other representatives reasonable access,
\nduring normal business hours throughout the period prior to the Closing, to all
\nof the properties, books, contracts, commitments and records relating to the
\nbusiness, assets and liabilities of SI, and will furnish BC, its accountants,
\nlegal counsel and other representatives during such period all such information
\nconcerning its affairs as BC may reasonably request; provided that any
\nfurnishing of such information pursuant hereto or any investigation by BC shall
\nnot affect BC’s right to rely on the representations, warranties and covenants
\nmade by the Sellers and SI in this Agreement except to the extent BC had, as of
\nthe Closing Date, actual knowledge (based upon its investigation of written
\ninformation) of any misrepresentation, breach or alleged breach thereof on or
\nprior to the Closing Date. BC and its accountants, legal counsel and other
\nrepresentatives (as “Representatives” of Buycomp LLC under the Confidentiality
\n —————
\nAgreement, dated as August 28, 1998, as amended September 16, 1998, between
\nBuyComp LLC and SI (the “Confidentiality Agreement”)) shall keep all such
\n ————————-
\ninformation confidential accordance with the terms of the Confidentiality
\nAgreement.<\/p>\n
4.5 Certain Defaults; Litigation. The Sellers and SI will give prompt
\n —————————-
\nnotice to BC of:<\/p>\n
(a) any notice of default or other notice received by the Sellers
\nor SI subsequent to the date of this Agreement and prior to the Closing under
\nany instrument or agreement to which SI is a party or by which its assets are
\nbound or otherwise, which default could, if not remedied, result in a Material
\nAdverse Effect or which would render incorrect any representation made herein,
\nand<\/p>\n
(b) any suit, action, proceeding or investigation instituted or
\nthreatened against or affecting SI subsequent to the date of this Agreement and
\nprior to the Closing which could result in a Material Adverse Effect or which
\nwould render incorrect any representation made herein.<\/p>\n
4.6 Other Negotiations. Prior to the Closing, or such earlier date on
\n ——————
\nwhich this Agreement is terminated in accordance with its terms, the Sellers
\nwill not, and the Sellers will cause SI and the officers, directors, employees,
\nagents and representatives of SI not to, directly or indirectly, initiate
\ndiscussions or negotiate, or authorize any person or entity to discuss or
\nnegotiate on behalf of the Sellers or SI, with any other party, or entertain or
\nconsider any inquiries or proposals received from any other party, concerning
\nthe possible disposition of SI, its business, assets or capital stock, in whole
\nor in part. The Sellers and SI will not furnish any information concerning SI to
\nany person other than BC for the purpose of, or with the intent of, permitting
\nsuch person or entity to evaluate a possible acquisition of SI, its business,
\nassets or capital stock, in whole or in part.<\/p>\n
20<\/p>\n
4.7 Capital Infusion. Immediately prior to the Closing, IE shall make
\n —————-
\na capital contribution to SI in the amount of $1,000,000, payable by wire
\ntransfer in immediately available funds .<\/p>\n
4.8 Best Efforts. The Sellers and SI will each use their best efforts
\n ————
\nto perform and fulfill all obligations on their respective parts to be performed
\nand fulfilled under this Agreement, and to cause all the conditions precedent to
\nthe consummation of the transactions to be timely satisfied, to the end that the
\ntransactions contemplated by this Agreement shall be effected substantially in
\naccordance with its terms, including the “tax-free” reorganization status of the
\ntransactions. The Sellers and SI shall each cooperate with BC in such actions
\nand in securing requisite approvals and shall deliver such further documents as
\nBC may reasonably request as necessary to evidence such transactions.<\/p>\n
4.9 Market Stand-Off. Each Seller hereby agrees that, during the one
\n —————-
\nhundred twenty (120) period following the effective date of a registration
\nstatement of BC filed under the 1933 Act (the “Market Stand-Off Period”), he or
\n ———————–
\nit shall not, to the extent requested by BC and\/or the managing underwriter,
\nsell or otherwise transfer or dispose of (other than to donees who agree to be
\nsimilarly bound) any securities of BC held by him or it at any time during such
\nperiod except common stock included in such registration; provided, that
\nofficers and directors of BC (as determined by the managing underwriter) enter
\ninto similar agreements. Each of the Sellers agrees to increase the Market
\nStand-Off Period to 180 days at the request of the managing underwriter;
\nprovided, that officers and directors of BC (as determined by the managing
\nunderwriter) agree to the same increase. The Sellers agree that, as a condition
\nto any transfer or disposition of the BC securities held by the Sellers, any
\ntransferee or assignee of the BC securities shall agree in writing to be bound
\nby the terms of this Section 4.9.<\/p>\n
In order to enforce the foregoing covenant, the Company may impose
\nstop-transfer instructions with respect to the BC securities held by each Seller
\n(and the shares or securities of every other person subject to the foregoing
\nrestriction) until the end of such one hundred twenty (120) day or longer
\nperiod.<\/p>\n
ARTICLE V
\n COVENANTS OF BC AND MERGER SUB
\n ——————————<\/p>\n
5.1 Necessary Consents. Prior to the Closing, BC and Merger Sub will
\n ——————
\nobtain such consents and take such other actions as may be necessary or
\nappropriate to allow the consummation of the transactions contemplated hereby.<\/p>\n
5.2 BC Board of Directors. At the Closing, BC shall take such actions
\n ———————
\nas may be necessary to appoint David B. Ingram (“Ingram”) to its Board of
\n ——
\nDirectors and, assuming acceptance of such position, to grant Ingram an option
\nto purchase 10,000 shares of Common Stock of BC at a price per share equal to
\nthe fair market value of such stock as determined by BC’s Board of Directors. So
\nlong as Ingram remains on BC’s Board of Directors, BC agrees (i) to maintain
\nDirectors and Officer’s liability insurance; (ii) engage outside auditors that
\nare reasonably acceptable to Ingram; provided that any of the Big 5 public
\naccounting firms shall be deemed acceptable by Ingram; and (iii) to compensate
\nand reimburse Ingram to the same extent as other non-employee directors of BC.<\/p>\n
21<\/p>\n
5.3 Best Efforts. Each of BC and Merger Sub will use its best efforts
\n ————
\nto perform and fulfill all obligations on its part to be performed and fulfilled
\nunder this Agreement, and to cause all the conditions precedent to the
\nconsummation of the transactions to be timely satisfied, to the end that the
\ntransactions contemplated by this Agreement shall be effected substantially in
\naccordance with its terms. Each of BC and Merger Sub shall cooperate with the
\nSellers and SI in such actions and in securing requisite approvals and shall
\ndeliver such further documents as the Sellers and SI may reasonably request as
\nnecessary to evidence such transactions.<\/p>\n
5.4 Indemnification. After the Closing, BC shall cause the Surviving
\n —————
\nCorporation to, and the Surviving Corporation shall, indemnify and hold harmless
\neach present and former employee, agent, director or officer of SI (the
\n“Indemnified Parties”) to the full extent required or permitted under (a)
\n ——————-
\nDelaware Law, (b) as provided in the Surviving Corporation’s Certificate of
\nIncorporation and Bylaws, and (c) as otherwise provided for or permitted
\npursuant to any agreement or arrangement in effect at the date hereof (to the
\nextent consistent with applicable law), which rights to be indemnified and held
\nharmless shall survive the Closing and shall continue in full force and effect
\nfor a period of not less than six years from the Closing Date, provided, that,
\nin the event any claim or claims (a “Claim or Claims”) are asserted or made
\n —– ——
\nwithin such six-year period, all rights to indemnification in respect of any
\nsuch Claim or Claims shall continue until disposition of any and all such Claim
\nor Claims. Without limiting the foregoing, to the extent permitted by applicable
\nlaw, BC shall cause the Surviving Corporation to, and the Surviving Corporation
\nshall, periodically (no less than on a quarterly basis) advance expenses as
\nincurred with respect to any Claim to the fullest extent permitted by applicable
\nlaw, provided the person to whom the expenses are advanced provides an
\nundertaking to repay such advances if it is ultimately determined that such
\nperson is not entitled to indemnification.<\/p>\n
5.5 Maintenance of Business. From the date hereof until the Closing,
\n ———————–
\nBC shall use its diligent, good faith efforts, to carry on and preserve the
\nbusiness, goodwill and the relationships of BC with suppliers, employees, agents
\nand others in substantially the same manner as they have been prior to the date
\nhereof.<\/p>\n
5.6 Access to Information. BC shall give the Sellers and their
\naccountants, legal counsel and other representatives reasonable access, during
\nnormal business hours throughout the period prior to the Closing, to all of the
\nproperties, books, contracts, commitments and records relating to the business,
\nassets and liabilities of BC, and will furnish the Sellers, their accountants,
\nlegal counsel and other representatives during such period all such information
\nconcerning its affairs as the Sellers may reasonably request; provided that any
\nfurnishing of such information pursuant hereto or any investigation by the
\nSellers shall not affect the Sellers’ right to rely on the representations,
\nwarranties and covenants made by BC in this Agreement except to the extent SI or
\nthe Sellers had, as of the Closing Date, actual knowledge (based upon their
\ninvestigation of written information) of any misrepresentation, breach or
\nalleged breach thereof on or prior to the Closing Date. The Sellers, SI and
\ntheir accountants, legal counsel and other representatives (as “Representatives”
\n —————
\nof SI under the Confidentiality Agreement) shall keep all such information
\nconfidential in accordance with the terms of the Confidentiality Agreement.<\/p>\n
22<\/p>\n
5.7 Certain Defaults; Litigation. BC will give prompt notice to the
\n —————————-
\nSellers of:<\/p>\n
(a) any notice of default or other notice received by BC
\nsubsequent to the date of this Agreement and prior to the Closing under any
\ninstrument or agreement to which BC is a party or by which its assets are bound
\nor otherwise, which default could, if not remedied, result in a material adverse
\neffect on the assets, liabilities, business, financial condition or results of
\noperations of BC (a “BC Material Adverse Effect”) or which would render
\n ————————–
\nincorrect any representation made herein, and<\/p>\n
(b) any suit, action, proceeding or investigation instituted or
\nthreatened against or affecting BC subsequent to the date of this Agreement and
\nprior to the Closing which could result in a BC Material Adverse Effect or which
\nwould render incorrect any representation made herein.<\/p>\n
5.8 Other Negotiations. Prior to the Closing, or such earlier date on
\n ——————
\nwhich this Agreement is terminated in accordance with its terms, BC will not,
\nand BC will cause the officers, directors, employees, agents and representatives
\nof BC not to, directly or indirectly, initiate discussions or negotiate, or
\nauthorize any person or entity to discuss or negotiate on behalf of BC, with any
\nother party, or entertain or consider any inquiries or proposals received from
\nany other party, concerning the possible acquisition by BC (including, without
\nlimitation, any reorganization, merger or sale of assets) of any business that
\nis competitive with the business of SI.<\/p>\n
5.9 Conduct of Business. From the date hereof until the Closing,
\n ——————-
\nexcept as expressly permitted hereby, BC shall not, without SI’s prior express
\nwritten consent:<\/p>\n
(a) incur any additional indebtedness, or guarantee any
\nindebtedness or obligation of any other party, except in the ordinary course of
\nbusiness;<\/p>\n
(b) dispose of any properties, assets or business except in the
\nordinary course of its business ;<\/p>\n
(c) make or adopt any change in the Certificate of Incorporation
\nor Bylaws of BC as in force and effect on the date hereof; provided, however,
\nthat BC may amend its Certificate of Incorporation to (i) change its name; (ii)
\nreduce the number of options that may be issued by BC which do not result in an
\nadjustment to the conversion price of Series A Preferred Stock (Section 6E of
\nthe Certificate of Incorporation); (iii) increase the authorized capital stock
\nof BC to accommodate a stock split or stock dividend by BC and (iv) increase the
\nauthorized capital stock of BC to accommodate the sale and issuance of shares of
\nBC capital stock to John Ingram; or<\/p>\n
(d) issue additional shares of capital stock without first
\noffering IE the opportunity to purchase up to five percent (5%) of any such
\nadditional shares proposed to be issued by BC; provided that, IE shall have five
\ndays from the receipt of notice delivered pursuant to Section 11.9 hereof of a
\nproposed issuance to elect to purchase shares under this subsection (d); and
\nprovided further that, the right of first offer provided to IE under this
\nsubsection (d) shall not apply to any stock split or stock dividend effected by
\nBC.<\/p>\n
23<\/p>\n
ARTICLE VI
\n CONDITIONS PRECEDENT TO
\n ———————–
\n OBLIGATIONS OF BC AND MERGER SUB
\n ——————————–<\/p>\n
The obligation of each of BC and Merger Sub to consummate the
\ntransactions contemplated by this Agreement is subject to the satisfaction, at
\nor before the Closing, of all the following conditions, unless waived in writing
\nby BC:<\/p>\n
6.1 Certificates for Shares. BC shall have received for cancellation
\n ———————–
\nin the Merger certificates for the Shares, which shall constitute all of the
\nissued and outstanding capital stock of SI.<\/p>\n
6.2 Representations and Warranties True. All representations and
\n ———————————–
\nwarranties of the Sellers and SI in this Agreement or the Schedules and Exhibits
\nhereto, or in any written statement or certificate that shall be delivered to BC
\nby the Sellers or SI under this Agreement, shall be true and correct on and as
\nof the date made and as of the Closing Date as if made on the date thereof
\n(except to the extent such representation or warranty relates to an earlier
\ndate).<\/p>\n
6.3 Covenants Performed. The Sellers and SI shall have performed,
\n ——————-
\nsatisfied, and complied in all material respects with all covenants, agreements,
\nand conditions required by this Agreement to be performed or complied with by
\nthe Sellers and SI on or before the Closing Date.<\/p>\n
6.4 Certificate. BC shall have received from the Sellers a
\n ———–
\ncertificate, dated the Closing Date, certifying that the conditions specified in
\nthis Article VI have been satisfied.<\/p>\n
6.5 No Violations; No Actions. Consummation of the transactions
\n ————————-
\ncontemplated by this Agreement shall not violate any order, decree or judgment
\nof any court or governmental body having competent jurisdiction and no action or
\nproceeding shall have been instituted or threatened by any person, entity or
\ngovernmental agency which, in any such case, in the sole judgment of BC, has a
\nreasonable probability of resulting in (i) the obtaining of material damages
\nfrom BC or SI; (ii) an order, judgment or decree restraining, prohibiting or
\nrendering unlawful the consummation of the transactions contemplated by this
\nAgreement; or (iii) other relief in connection therewith.<\/p>\n
6.6 Proceedings and Documents. All corporate and other proceedings in
\n ————————-
\nconnection with the transactions contemplated hereby and all documents and
\ninstruments incident to such transactions shall be in form and substance
\nreasonably satisfactory to BC and its counsel, and BC shall have received all
\nsuch counterpart originals or certified or other copies of such documents as it
\nmay reasonably request.<\/p>\n
6.7 Delivery of Documents. BC shall have received all documents and
\n ———————
\nother items to be delivered by the Sellers under Section 8.2.<\/p>\n
6.8 Required Consents. All consents, approvals and waivers from third
\n —————–
\nparties and governmental authorities necessary to the transactions as
\ncontemplated hereby, including, without limitation, the expiration or
\ntermination of applicable waiting periods under the HSR <\/p>\n
24<\/p>\n
Act, and to the continued validity and effectiveness of the Licenses shall have
\nbeen obtained without the imposition on BC or SI of any burdensome conditions,
\nrestrictions, or obligations.<\/p>\n
6.9 Repayment of IE Indebtedness. SI shall have repaid in full, by
\n —————————-
\nwire transfer of immediately available funds, any amounts owed to IE that have
\nbeen incurred prior to the date hereof or otherwise in accordance with Section
\n4.2(a)(i) of this Agreement.<\/p>\n
ARTICLE VII
\n CONDITIONS PRECEDENT TO
\n ———————–
\n OBLIGATIONS OF THE SELLERS
\n ————————–<\/p>\n
The obligation of the Sellers to consummate the transactions
\ncontemplated by this Agreement is subject to the satisfaction, at or before the
\nClosing, of all the following conditions, unless waived in writing by a majority
\nin interest of the Sellers:<\/p>\n
7.1 Representations and Warranties True. All representations and
\n ———————————–
\nwarranties by BC and Merger Sub in this Agreement or the Schedules and Exhibits
\nhereto, or in any written statement or certificate that shall be delivered to
\nthe Sellers by BC under this Agreement, shall be true and correct on and as of
\nthe date made and as of the Closing Date as if made on the date thereof (except
\nto the extent such representation or warranty relates to an earlier date).<\/p>\n
7.2 Covenants Performed. BC and Merger Sub shall have performed,
\n ——————-
\nsatisfied, and complied in all material respects with all covenants, agreements,
\nand conditions required by this Agreement to be performed or complied with by BC
\nand Merger Sub in all material respects on or before the Closing Date.<\/p>\n
7.3 Certificate. The Sellers shall have received from BC a certificate
\n ———–
\nsigned by the Chief Financial Officer of BC, dated the Closing Date, certifying
\nthat the conditions specified in this Article VII have been satisfied.<\/p>\n
7.4 No Violations; No Actions. Consummation of the transactions
\n ————————-
\ncontemplated by this Agreement shall not violate any order, decree or judgment
\nof any court or governmental body having competent jurisdiction and no action or
\nproceeding shall have been instituted or threatened by any person, entity or
\ngovernmental agency which, in any such case, in the sole judgment of the
\nSellers, has a reasonable probability of resulting in (i) the obtaining of
\nmaterial damages from the Sellers or BC, (ii) an order, judgment or decree
\nrestraining, prohibiting or rendering unlawful the consummation of the
\ntransactions contemplated by this Agreement, or (iii) other relief in connection
\ntherewith.<\/p>\n
7.5 Proceedings and Documents. All corporate and other proceedings in
\n ————————-
\nconnection with the transactions contemplated hereby and all documents and
\ninstruments incident to such transactions shall be in form and substance
\nreasonably satisfactory to the Sellers and their counsel, and the Sellers shall
\nhave received all such counterpart originals or certified or other copies of
\nsuch documents as they may reasonably request.<\/p>\n
7.6 Delivery of Documents. The Sellers shall have received (a) all
\n ———————
\ndocuments and other items to be delivered by BC under Section 8.3 and (b) the
\ntax opinion of Bass, Berry & Sims PLC to be delivered under Section 8.5.<\/p>\n
25<\/p>\n
7.7 Required Consents. All consents, approvals and waivers from third
\n —————–
\nparties and governmental authorities necessary to the transactions as
\ncontemplated hereby shall have been obtained, including, without limitation, the
\nexpiration or termination of applicable waiting periods under the HSR Act.<\/p>\n
7.8 Closing of Purchase of Shares by Softbank. The sale of shares of
\n —————————————–
\nBC Stock by The Scott A. Blum Separate Property Trust u\/d\/t 8\/2\/95 to Softbank
\nHoldings Inc. pursuant to a certain Stock Purchase Agreement dated as of
\nSeptember 30, 1998 shall have been consummated.<\/p>\n
7.9 Repayment of IE Indebtedness. SI shall have replied in full, by
\n —————————-
\nwire transfer of immediately available funds, any amounts owed to IE that have
\nbeen incurred prior to the date hereof or otherwise in accordance with Section
\n4.2(a)(i) of this Agreement.<\/p>\n
ARTICLE VIII
\n CLOSING
\n ——-<\/p>\n
8.1 Time and Place. The Closing shall occur at the time and place
\n ————–
\nspecified in Section 1.2 of this Agreement.<\/p>\n
8.2 Deliveries of the Sellers. At the Closing, the Sellers will
\n ————————-
\nexecute and deliver or cause to be executed and delivered to BC:<\/p>\n
(a) Stock Certificates. Certificates representing the Shares,
\n ——————
\npresented to BC for conversion into BC Stock ;<\/p>\n
(b) Corporate Documents. The Charter of SI, certified by the Secretary
\n ——————-
\nof State of Tennessee as of a recent date and the Bylaws of SI, certified by the
\nSecretary of SI as in effect at the Closing;<\/p>\n
(c) Certificates of Good Standing. Certificates of Good Standing,
\n —————————–
\ndated as of a recent date, with respect to SI, issued by the Secretary of State
\nof each of the States listed in Schedule 8.2(c);<\/p>\n
(d) Books and Records. All of the minute books, stock ledgers and
\n —————–
\nsimilar corporate records of SI;<\/p>\n
(e) The Sellers’ Certificate. A certificate from the Sellers, dated
\n ————————
\nthe Closing Date, containing the information required pursuant to Section 6.4;<\/p>\n
(f) Non-Competition Agreements. Non-Competition Agreements dated the
\n ————————–
\nClosing Date between BC and Merger Sub, on the one hand, and each of DMason,
\nMMason, IE and Ingram, on the other hand, substantially in form of Exhibit C
\nattached hereto (the “Non-Competition Agreements”);<\/p>\n
(g) Amended and Restated Investors’ Rights Agreement. An Amended and
\n ————————————————
\nRestated Investors’ Rights Agreement dated the Closing Date among BC, the<\/p>\n
26<\/p>\n
Sellers and other BC stockholders named therein substantially in the form of
\nExhibit D attached hereto (the “Amended and Restated Investors’ Rights
\n ————————————–
\nAgreement”);
\n———<\/p>\n
(h) Amended and Restated Stockholders’ Agreement. An Amended and
\n ——————————————–
\nRestated Stockholders’ Agreement dated the Closing Date among BC, the Sellers
\nand other BC stockholders named therein substantially in the form of Exhibit E
\nattached hereto (the “Amended and Restated Stockholders’ Agreement”);<\/p>\n
(i) Voting Agreement. A voting agreement dated the Closing Date among
\n —————-
\nBC, the Sellers and other BC stockholders named therein substantially in the
\nform of Exhibit F attached hereto (the “Voting Agreement”);
\n —————-<\/p>\n
(j) Employment Agreements. Employment Agreements between Merger Sub
\n ———————
\nand each of DMason and MMason, substantially in the form of Exhibit G attached
\nhereto (the “Employment Agreements”);
\n ———————<\/p>\n
(k) Intercompany Agreements. IE and SI (or Merger Sub, if more
\n ———————–
\nappropriate) shall enter into the System Use Agreement in the form attached
\nhereto as Exhibit I, the Intercompany Services Agreement in the form attached
\nhereto as Exhibit J, the Supply Agreement in the form attached hereto as Exhibit
\nK, the Sublease in the form attached hereto as Exhibit L, and the Master
\nDatabase License Agreement in the form attached hereto as Exhibit M (the
\n“Intercompany Agreements”).
\n ———————– <\/p>\n
(l) Non-Disclosure Agreements. Non-disclosure agreements between
\n ————————-
\nMerger Sub, on the one hand, and the persons listed on Schedule 8.2 who accept
\nemployment with Merger Sub as of the Closing on the other hand, substantially in
\nthe form of Exhibit H attached hereto ;<\/p>\n
(m) Resolutions. A copy of the resolutions of the Board of Directors
\n ———–
\nof SI, certified by the Secretary thereof as having been duly and validly
\nadopted and being in full force and effect, and a copy of shareholder
\nresolutions or consents authorizing execution and delivery of this Agreement and
\nperformance of the transactions contemplated hereby by SI;<\/p>\n
(n) Legal Opinion. A legal opinion of Bass, Berry & Sims PLC
\n ————-
\nsubstantially in the form of Exhibit N attached hereto; and<\/p>\n
(o) Other Documents. Such other documents and instruments as BC or
\n —————
\nits counsel reasonably shall deem necessary to consummate the transactions
\ncontemplated hereby.<\/p>\n
All documents delivered to BC shall be in form and substance
\nreasonably satisfactory to BC and its counsel.<\/p>\n
8.3 Deliveries of BC. At the Closing, BC and\/or Merger Sub will execute and
\n —————-
\ndeliver or cause to be executed and delivered to the Sellers simultaneously with
\ndelivery of the items referred to in Section 8.2 above:<\/p>\n
27<\/p>\n
(a) BC Stock. Certificates representing the BC Stock issuable in
\n ——–
\naccordance with Article I hereof;<\/p>\n
(b) Resolutions. A copy of the resolutions of the Board of Directors
\n ———–
\nof each of BC and Merger Sub, certified by the Secretary thereof as having been
\nduly and validly adopted and being in full force and effect, and a copy of
\nstockholder consents for Merger Sub authorizing execution and delivery of this
\nAgreement and performance of the transactions contemplated hereby by BC;<\/p>\n
(c) Corporate Documents. The Amended and Restated Certificate of
\n ——————-
\nIncorporation of BC and the Certificate of Incorporation of Merger Sub,
\ncertified by the Secretary of State of Delaware as of a recent date and the
\nBylaws of BC and Merger Sub, certified by the secretaries of BC and Merger Sub,
\nrespectively, as in effect at the Closing;<\/p>\n
(d) Officer’s Certificate. A certificate dated the Closing Date
\n ———————
\ncontaining the information required pursuant to Section 7.3;<\/p>\n
(e) Non-Competition Agreements. The Non-Competition Agreements;
\n ————————–<\/p>\n
(f) Amended and Restated Investors’ Rights Agreement. The Amended and
\n ————————————————
\nRestated Investors’ Rights Agreement;<\/p>\n
(g) Amended and Restated Stockholders’ Agreement. The Amended and
\n ——————————————–
\nRestated Stockholders’ Agreement ;<\/p>\n
(h) Voting Agreement. The Voting Agreement;
\n —————-<\/p>\n
(i) Employment Agreements. The Employment Agreements;
\n ——————— <\/p>\n
(j) Intercompany Agreements. The Intercompany Agreements;
\n ———————–<\/p>\n
(k) Legal Opinion. A legal opinion of Brobeck, Phleger & Harrison LLP
\n ————-
\nsubstantially in the form of Exhibit O attached hereto; and<\/p>\n
(l) Other Documents. Such other documents and instruments as the
\nSellers or their counsel reasonably shall deem necessary to consummate the
\ntransactions contemplated hereby.<\/p>\n
All documents delivered to the Sellers shall be in form and substance
\nreasonably satisfactory to the Sellers and their counsel.<\/p>\n
8.4 Certificate of Merger, Articles of Merger and Plan of Merger. At the
\nClosing, the parties hereto shall cause to filed the Certificate of Merger with
\nthe Delaware Secretary of State in accordance with the Delaware Law and the
\nArticles of Merger and Plan of Merger with the Tennessee Secretary of State in
\naccordance with the Tennessee Law.<\/p>\n
28<\/p>\n
8.5 Tax Opinion of Bass, Berry & Sims PLC. A tax opinion of Bass,
\n ————————————-
\nBerry & Sims PLC to the effect that the Merger will constitute a reorganization
\nwithin the meaning of Section 368(a) of the Code.<\/p>\n
ARTICLE IX
\n OBLIGATIONS OF THE SELLERS AND BC AFTER CLOSING
\n ———————————————–<\/p>\n
9.1 Indemnification by the Sellers. The Sellers shall severally
\n ——————————
\nindemnify and hold harmless BC, Merger Sub and the Surviving Corporation and
\ntheir respective officers, directors, employees, successors and assigns in
\nrespect of any and all claims, actions, suits or other proceedings and any and
\nall losses, costs, expenses, liabilities, fines, penalties, interest, and
\ndamages, whether or not arising out of any claim, action, suit or other
\nproceeding (and including reasonable counsel and accountants’ fees and expenses
\nand all other reasonable costs and expenses of investigation, defense or
\nsettlement of claims and amounts paid in settlement) incurred by, imposed on or
\nborne by BC, Merger Sub, the Surviving Corporation or such other parties
\n(collectively “Damages”) resulting from:
\n ——- <\/p>\n
(a) The breach of any of the representations or warranties made
\nby the Sellers or SI in this Agreement; and<\/p>\n
(b) The payment of any taxes (including interest and penalties)
\nof any kind or nature imposed, whether before or after the Closing, by any
\ngovernmental agency upon SI or its business, assets or employees or independent
\ncontractors of SI, or otherwise resulting from or relating to the business or
\noperations of SI prior to the Closing or upon any of its properties or assets as
\nthey existed as of or any time prior to the Closing Date, or as a result of the
\ntransactions contemplated by this Agreement.<\/p>\n
Damages shall exclude any amount with respect to which BC or SI as the
\ncase may be shall have received under any insurance policy which provides
\ncoverage for the liability to which such amount relates.<\/p>\n
9.2 Indemnification by BC, Merger Sub and Surviving Corporation. Each
\n ———————————————————–
\nof BC, Merger Sub and the Surviving Corporation, jointly and severally, shall
\nindemnify and hold harmless the Sellers, in respect of any and all claims,
\nactions, suits or other proceedings and any and all losses, costs, expenses,
\nliabilities, fines, penalties, interest, and damages, whether or not arising out
\nof any claim, action, suit or other proceeding (and including reasonable counsel
\nand accountants’ fees and expenses and all other reasonable costs and expenses
\nof investigation, defense or settlement of claims and amounts paid in
\nsettlement) incurred by, imposed on or borne by the Sellers resulting from the
\nbreach of any of the representations, warranties or agreements made by BC and
\nMerger Sub in this Agreement.<\/p>\n
9.3 Indemnification Procedure for Claims. Whenever any claim shall
\n ————————————
\narise for indemnification hereunder, the party entitled to indemnification (the
\n“indemnified party”) shall promptly notify in writing the other party or parties
\n —————–
\n(the “indemnifying party”) of the claim and, when known, the facts constituting
\n ——————
\nthe basis for such claim; provided, that the indemnified party’s failure to give
\nsuch written notice shall not affect any rights or remedies of an indemnified
\nparty hereunder with respect to indemnification for damages except to the extent<\/p>\n
29<\/p>\n
that the indemnifying party is materially prejudiced thereby. In the event of
\nany claim for indemnification hereunder resulting from or in connection with any
\nclaim or legal proceedings by a third party, the written notice to the
\nindemnifying party shall specify, if known, the amount or an estimate of the
\namount of the liability arising therefrom. The indemnified party shall not
\nsettle or compromise any claim by a third party for which it is entitled to
\nindemnification hereunder, without the prior written consent of the indemnifying
\nparty (which shall not be unreasonably withheld), unless suit shall have been
\ninstituted against it and the indemnifying party shall not have taken control of
\nand conducted in a diligent manner the defense of such suit after notification
\nthereof as provided in Section 9.4 of this Agreement.<\/p>\n
9.4 Defense by Indemnifying Party. In connection with any claim giving
\n —————————–
\nrise to indemnity hereunder or resulting from or arising out of any claim or
\nlegal proceeding by a person who is not a party to this Agreement, the
\nindemnifying party at its sole cost and expense may, upon written notice to the
\nindemnified party, assume the defense of any such claim or legal proceeding if
\nit acknowledges to the indemnified party in writing its obligations to indemnify
\nthe indemnified party with respect to all elements of such claim, and thereafter
\ndiligently conducts the defense thereof with counsel reasonably acceptable to
\nthe indemnified party. If the indemnifying party acknowledges in writing as
\nspecified above that it shall assume the defense of any such action, then the
\nindemnifying party shall keep the indemnified party informed with respect to the
\ndefense of such action and the indemnified party shall be entitled to
\nparticipate in (but not control) the defense of such action, with its counsel
\nand at its own expense. If (A) the indemnifying party does not acknowledge in
\nwriting as specified above that it shall assume or fails to conduct in a
\ndiligent manner the defense of any such claim or litigation resulting therefrom,
\nor (B) the indemnified party shall have reasonably concluded that there may be
\none or more legal defenses available to it which are different from, or,
\nadditional to those available to the indemnifying party or other indemnified
\nparties with respect to such claim or litigation, then, (i) the indemnified
\nparty may defend against such claim or litigation, in such manner as it may deem
\nappropriate, including, without limitation, settling such claim or litigation,
\nafter giving notice of the same to the indemnifying party, on such terms as the
\nindemnified party may deem appropriate, and (ii) the indemnifying party shall be
\nentitled to participate in (but not control) the defense of such action, with
\nits counsel and at its own expense. If the indemnifying party thereafter seeks
\nto question the manner in which the indemnified party defended such third party
\nclaim or the amount or nature of any such settlement, the indemnifying party
\nshall have the burden to prove by a preponderance of the evidence that the
\nindemnified party did not defend or settle such third party claim in a
\nreasonably prudent manner. Each party agrees to cooperate fully with the other,
\nsuch cooperation to include, without limitation, attendance at depositions and
\nthe provision of relevant documents as may be reasonably requested by the
\nindemnifying party; provided, that the indemnifying party will hold the
\nindemnified party harmless from all of its expenses, including reasonable
\nattorneys’ fees, incurred in connection with such cooperation by the indemnified
\nparty .
\n 9.5 Arbitration. The rights of the indemnified party to
\n ———–
\nindemnification and the estimated amount thereof, as set forth in the notice,
\nshall be deemed objected to by the indemnifying party unless the indemnifying
\nparty notified the indemnified party in writing as specified in Section 9.4
\nabove that the indemnifying party accepts and agrees with the right of the
\nindemnified party to indemnification or that the indemnifying party elects to
\ndefend such claim. If the claim to indemnification is deemed objected to, the
\nparties shall attempt to settle<\/p>\n
30<\/p>\n
and compromise the same, or if unable to do so within sixty (60) days of
\nreceipt of the notice of the claim, such dispute shall be submitted to and
\nresolved by prompt binding arbitration in a mutually agreed location or, absent
\nagreement in New York, New York, and any rights of indemnification established
\nby reason of such settlement, compromise or arbitration shall promptly
\nthereafter be paid and satisfied by the indemnifying party. Arbitration shall
\nbe final and binding according to the Commercial Arbitration Rules of the
\nAmerican Arbitration Association, and judgment upon the award rendered by the
\narbitrator(s) may be entered in any state or federal court in Orange County,
\nCalifornia.<\/p>\n
9.6 Limitations on Indemnification.
\n ——————————
\n (a) Notwithstanding any provision of this Agreement to the
\n contrary,<\/p>\n
(i) the Sellers shall have no obligation to indemnify any
\n person entitled to indemnity under Section 9.1 unless the persons so
\n entitled to indemnity thereunder have suffered Damages in an aggregate
\n amount in excess of One Hundred Thousand Dollars ($100,000) (the
\n “Deductible”) and then only to the extent of such excess;
\n ———- <\/p>\n
(ii) each of MMason’s and DMason’s liability under Section
\n 9.1 shall in no event exceed the lesser of (A) the fair market value on the
\n Closing Date of the BC Stock received by each under Section 1.6 or (B) the
\n fair market value of BC Stock received by each under Section 1.6 on the
\n date DMason, MMason or both are required to satisfy any obligation under
\n this Article IX; and<\/p>\n
(iii) IE’s liability under Section 9.1 shall in no event
\n exceed the fair market value on the Closing Date of the BC Stock received
\n by IE under Section 1.6.<\/p>\n
Notwithstanding the foregoing, there shall be no Deductible applied against
\nindemnification for any of the matters set forth in subsection 9.1(c) or any
\nbreach of the representations of the Sellers and SI in Section 2.2. Each of
\nDMason and MMason shall satisfy any obligation to BC under this Article IX only
\nby return to BC of BC Stock with a fair market value equal to the amount of such
\nobligation. IE shall have the right to satisfy any obligation to BC under this
\nArticle IX by return to BC of BC Stock with a fair market value equal to the
\namount of such obligation; provided, however, that if the fair market value of
\nsuch BC Stock is less than IE’s liability under this Article IX, IE shall pay
\nany difference to BC by wire transfer in immediately available funds.<\/p>\n
(b) Notwithstanding any provision of this Agreement to the contrary,
\nBC shall have no obligation to indemnify any person entitled to indemnity under
\nSection 9.2, (i) unless the persons so entitled to indemnity thereunder have
\nsuffered Damages in an aggregate amount in excess of One Hundred Thousand
\nDollars ($100,000) and then only to the extent of such excess and (ii) BC’s
\nliability under Section 9.2 shall in no event exceed the fair market value on
\nthe Closing Date of the BC Stock to be delivered by BC under Section 1.2.<\/p>\n
(c) No party to this Agreement shall have any right to indemnification
\nunder this Article IX or otherwise for damages relating to any untruth or
\ninaccuracy in any representation or warranty herein in the event and to the
\nextent such party had actual knowledge<\/p>\n
31<\/p>\n
(based upon its investigation of written materials) of such untruth or
\ninaccuracy prior to the Closing Date.<\/p>\n
9.7 Indemnification for Genesys Partners Letter Agreement. The
\n —————————————————–
\nSellers shall, jointly and severally, indemnify and hold harmless BC, Merger Sub
\nand the Surviving Corporation and their respective officers, directors,
\nemployees, successors and assigns in respect of any and all claims, actions,
\nsuits or other proceedings and any and all losses, costs, expenses, liabilities,
\nfines, penalties, interest, and damages, whether or not arising out of any
\nclaim, action, suit or other proceeding (and including reasonable counsel and
\naccountants’ fees and expenses and all other reasonable costs and expenses of
\ninvestigation, defense or settlement of claims and amounts paid in settlement)
\nincurred by, imposed on or borne by BC, Merger Sub, the Surviving Corporation or
\nsuch other parties resulting from that certain Letter Agreement dated August 17,
\n1998 between SI and Genesys Partners, Inc. The obligations of the Sellers under
\nthis Section 9.7 shall be in addition to any other liability or obligation of
\nthe Sellers under this Article IX.<\/p>\n
ARTICLE X
\n TERMINATION
\n ———–<\/p>\n
10.1 Termination by Mutual Consent. At any time prior to the Closing,
\n —————————–
\nthis Agreement may be terminated by written consent of BC and the Sellers.<\/p>\n
10.2 Termination by Default. At the Closing this Agreement may be
\n ———————-
\nterminated and abandoned:<\/p>\n
(a) By BC if (i) any of SI or the Sellers has violated or
\nbreached in any material respect any of the agreements, representations or
\nwarranties contained in this Agreement which violation or breach has not been
\nwaived in writing and has not been cured within ten (10) business days following
\nBC’s written notice thereof; and (ii) any of the conditions precedent to BC’s
\nobligations set forth in Article VI above had not been fulfilled or waived at
\nand as of the Closing;<\/p>\n
(b) By SI and\/or the Sellers if (i) BC or Merger Sub has
\nviolated or breached in any material respect any of the agreements,
\nrepresentations or warranties contained in this Agreement which violation or
\nbreach has not been waived in writing and has not been cured within ten (10)
\nbusiness days following SI’s written notice thereof; and (b) any of the
\nconditions precedent to SI’s and\/or the Sellers’ obligations set forth in
\nArticle VII above have not been fulfilled or waived at and as of the Closing; or<\/p>\n
(c) By either party in the event the Closing has not occurred
\non or before December 15, 1998.<\/p>\n
10.3 Effectiveness of Termination. Any termination of this Agreement
\n —————————-
\nunder this Article X will be effective upon the delivery of notice by the
\nterminating party to the other parties hereto.<\/p>\n
10.4 Effect of Termination. In the event of termination as provided
\n ———————
\nabove, this Agreement shall forthwith become of no further force or effect and
\nall parties hereto shall bear their own costs associated with this Agreement and
\nall transactions mentioned herein; provided,<\/p>\n
32<\/p>\n
that such termination shall not relieve any person of liability for breach of or
\ninterference with this Agreement.<\/p>\n
ARTICLE XI
\n GENERAL PROVISIONS
\n ——————<\/p>\n
11.1 Survival. All representations and warranties made by the parties
\n ——–
\nherein or in any instrument or document furnished in connection herewith shall
\nsurvive until the first year anniversary of the Closing Date. No claim or action
\nfor indemnity pursuant to Sections 9.1 or 9.2 hereof shall be asserted or
\nmaintained by any party hereto after the first year anniversary of the Closing
\nDate except for claims made in writing prior to such date and actions (whether
\ninstituted before or after such date) based on any claim made in writing prior
\nto such date. No claim or action for indemnity pursuant to Section 9.7 hereof
\nshall be asserted or maintained by any party hereto after the statute of
\nlimitations applicable to any claim under Section 9.7 has run except for claims
\nmade in writing prior to such date and actions (whether instituted before or
\nafter such date) based on any claim made in writing prior to such date.<\/p>\n
11.2 Intentionally Omitted.
\n ———————
\n 11.3 No Broker or Finder. Each of the parties represents and warrants
\n ——————-
\nthat, except as set forth on Schedule 11.3, it has dealt with no broker or
\nfinder in connection with any of the transactions contemplated by this
\nAgreement, and, insofar as it knows, no broker or other person is entitled to
\nany conversion or finder’s fee, in connection with these transactions.<\/p>\n
11.4 Transaction Costs. BC shall pay all costs and expenses incurred
\n —————–
\nor to be incurred by it in negotiating and preparing this Agreement and carrying
\nout the transactions contemplated by this Agreement. The Sellers and SI shall
\npay their respective costs and expenses incurred or to be incurred by SI or the
\nSellers in negotiating and preparing this Agreement and carrying out the
\ntransactions contemplated by this Agreement.<\/p>\n
11.5 Headings. The subject headings of the Articles and Sections of
\n ——–
\nthis Agreement are included for purposes of convenience only, and shall not
\naffect the construction or interpretation of any of its provisions.<\/p>\n
11.6 Entire Agreement; Waivers. This Agreement, the Exhibits and
\n ————————-
\nSchedules hereto and the Confidentiality Agreement constitute the entire
\nagreement between the parties pertaining to the contemporaneous agreements,
\nrepresentations, and understandings of the parties. No waiver of any of the
\nprovisions of this Agreement shall be deemed, or shall constitute, a waiver of
\nany other provision, whether or not similar, nor shall any waiver constitute a
\ncontinuing waiver. No waiver shall be binding unless executed in writing by the
\nparty making the waiver.<\/p>\n
11.7 Third Parties. Except as set forth in Article IX, nothing in
\n ————-
\nthis Agreement, whether express or implied, is intended to confer any rights or
\nremedies under or by reason of this Agreement on any persons other than the
\nparties to it and their respective successors and assigns, nor is anything in
\nthis Agreement intended to relieve or discharge the obligation or liability of
\nany third person to any party to this Agreement, nor shall any provision give
\nany third persons any right of subrogation or action over against any party to
\nthis Agreement.<\/p>\n
33<\/p>\n
11.8 Successors and Assigns. This Agreement shall be binding on, and
\n ———————-
\nshall inure to the benefit of, the parties to it and their respective heirs,
\nlegal representatives, successors, and assigns.<\/p>\n
11.9 Notices. All notices, requests, demands, and other
\n ——-
\ncommunications under this Agreement shall be in writing and shall be delivered
\nduring normal business hours by hand, by Federal Express, Express Mail, United
\nParcel Service or other reputable overnight delivery service, by telecopy
\n(confirmation of receipt received) or by first class mail, certified, postage
\nprepaid, and shall be deemed delivered when so delivered by hand, overnight
\ndelivery or telecopy, or if mailed, five (5) days after the date of mailing,
\nproperly addressed as follows:<\/p>\n
To the Sellers at: Ingram Entertainment Inc.
\n Attn: President
\n Two Ingram Blvd.
\n La Vergne, TN 37089
\n Facsimile (615) 287-4985<\/p>\n
With a copy to: Ingram Entertainment Inc.
\n Attn: General Counsel
\n Two Ingram Blvd.
\n La Vergne, TN 37089
\n Facsimile (615) 287-4465<\/p>\n
To SI at: SpeedServe Inc.
\n Attn: President
\n Two Ingram Blvd.
\n La Vergne, TN 37089
\n Facsimile (615) 793-2225<\/p>\n
To BC or Merger Sub at: Buy Corp.
\n Attn: Chief Financial Officer
\n 21 Brookline
\n Aliso Viejo, CA 92656
\n Facsimile (949) 425-5300<\/p>\n
Any party may change its address for purposes of this paragraph by giving notice
\nof the new address to each of the other parties in the manner set forth above.
\nRejection or other refusal to accept, or the inability to deliver because of a
\nchanged address of which no notice was given, shall not affect the date of such
\nnotice sent in accordance with the foregoing provisions.<\/p>\n
11.10 Attorneys’ Fees. If any party to this Agreement shall bring any
\n —————
\naction, suit, counterclaim or appeal for any relief against the other,
\ndeclaratory or otherwise, to enforce the terms hereof or to declare rights
\nhereunder (collectively, an “Action”), the Prevailing Party (as defined herein)
\n ——
\nshall be entitled to recover as part of any such Action its reasonable
\nattorneys’ fees and costs, including any fees and costs incurred in bringing and
\nprosecuting such Action and\/or enforcing any order, judgment, ruling or award
\ngranted as part of such Action. “Prevailing Party” within the meaning of this
\nSection 11.10 includes the party whose prayer for<\/p>\n
34<\/p>\n
relief is granted by the tribunal, or which obtains a judgment or equitable
\nrelief, and includes, without limitation, a party who agrees to dismiss an
\nAction upon the other party’s payment of all or a portion of the sums allegedly
\ndue or performance of the covenants allegedly breached, or a party which obtains
\nsubstantially the relief sought by the party.<\/p>\n
11.11 Governing Law. The terms of this Agreement shall be governed by
\n ————-
\nand construed in accordance with the laws of the State of Delaware without
\nreference to the choice of law principles thereof.<\/p>\n
11.12 Counterparts. This Agreement may be executed in two or more
\n ————
\ncounterparts, each of which shall be deemed an original but all of which shall
\nconstitute one and the same instrument.<\/p>\n
11.13 Severability. All provisions contained herein are severable and
\n ————
\nin the event that any of them shall be held to be to any extent invalid or
\notherwise unenforceable by any court of competent jurisdiction, such provision
\nshall be construed as if it were written so as to effectuate to the greatest
\npossible extent the parties’ expressed intent; and in every case the remainder
\nof this Agreement shall not be affected thereby and shall remain valid and
\nenforceable, as if such affected provision were not contained herein.<\/p>\n
11.14 Publicity. None of the parties shall issue or make, or cause to
\n ———
\nhave issued or made, any press release or announcement concerning, or otherwise
\ndisclose to any third person, the terms of the transactions contemplated hereby
\n(including the existence of the Merger and the transactions contemplated hereby)
\nwithout the advance approval in writing of the form and substance thereof by the
\nother parties, unless otherwise required by applicable law, it being understood
\nthat the parties will use their best efforts not to disclose the terms or
\nexistence of the transaction prior to the Closing. Further, prior to and
\nfollowing the Closing none of the parties shall disclose the material terms of
\nthis Agreement or the Merger to any third party other than a third party which
\nmust have such information in rendering financial, business, or tax advice to
\nsuch party, as required by law, or with the written consent (not, following the
\nClosing, to be unreasonably withheld) of each other party hereto.<\/p>\n
11.15 Schedules. All schedules, exhibits, appendices and documents
\n ———
\nreferred to in or attached to this Agreement are integral parts of this
\nAgreement as if fully set forth herein, and all statements appearing therein
\nshall be deemed disclosed for all purposes and not only in connection with the
\nspecific representation to which they are explicitly referenced.<\/p>\n
[Signature Page to Follow]<\/p>\n
35<\/p>\n
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
\nand Plan of Merger and Reorganization as of the date first above written.<\/p>\n
THE SELLERS<\/p>\n
INGRAM ENTERTAINMENT INC.<\/p>\n
By: ______________________________________
\n John J. Fletcher
\n Vice President and General Counsel<\/p>\n
__________________________________________
\n David C. Mason<\/p>\n
__________________________________________
\n Michael G. Mason<\/p>\n
SPEEDSERVE INC.<\/p>\n
By: ______________________________________
\n John J. Fletcher
\n Vice President and General Counsel<\/p>\n
BUY CORP.<\/p>\n
By: ______________________________________
\n Scott A. Blum
\n President\/CEO<\/p>\n
SPEEDSERVE.COM INC.<\/p>\n
By: ______________________________________
\n Murray Williams
\n Chief Financial Officer<\/p>\n
Signature Page For Agreement And Plan Of Merger And Reorganization<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6979],"corporate_contracts_industries":[9497],"corporate_contracts_types":[9622,9626],"class_list":["post-43014","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-buycom-inc","corporate_contracts_industries-retail__electronics","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43014","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43014"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43014"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43014"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}