\nARTICLE 9. TERMINATION, AMENDMENT AND WAIVER……………………………………………….. 40<\/p>\n 9.1 Termination………………………………………………………………….. 40
\n 9.2 Effect of Termination…………………………………………………………. 42
\n 9.3 Amendment……………………………………………………………………. 42
\n 9.4 Extension; Waiver…………………………………………………………….. 42<\/p>\n
ARTICLE 10. GENERAL PROVISIONS……………………………………………………………. 42<\/p>\n
10.1 Notices……………………………………………………………………… 42
\n 10.2 Interpretation……………………………………………………………….. 44
\n 10.3 Counterparts…………………………………………………………………. 44
\n 10.4 Entire Agreement; Assignment…………………………………………………… 44
\n 10.5 Severability…………………………………………………………………. 44
\n 10.6 Other Remedies……………………………………………………………….. 44
\n 10.7 Governing Law………………………………………………………………… 44
\n 10.8 Rules of Construction…………………………………………………………. 45
\n 10.9 Attorneys’ Fees………………………………………………………………. 45
\n<\/c><\/s><\/caption>\n<\/table>\n
Exhibit A Shareholders and Payments
\nExhibit B Form of Promissory Note
\nExhibit C Form of Employment and Non-Competition Agreement
\nExhibit D Form of Non-Competition and Non-Solicitation Agreement
\nExhibit E Form of Consulting and Non-Competition Agreement
\nExhibit F Form of Pledge Agreement
\nExhibit G List of Employees Signing Employment and Non-Competition Agreements
\nExhibit H Form of Snell & Wilmer L.L.P. Legal Opinion
\nExhibit I Form of Fenwick & West LLP Legal Opinion <\/p>\n
-iii-<\/p>\n
STOCK PURCHASE AGREEMENT<\/p>\n
This STOCK PURCHASE AGREEMENT (the “Agreement”) is made and entered into as
\nof October 12, 1999 by and among homestore.com, Inc., a Delaware corporation
\n(“Purchaser”), The FAS-Hotline, Inc., an Arizona corporation (“FAS”), the
\nshareholders of FAS as listed on Exhibit A hereto (collectively, the
\n“Shareholders” and each, a “Shareholder”) and, also with respect to Article 8,
\nCentral Newspapers, Inc., an Indiana corporation (“CNI”), as Shareholder Agent.<\/p>\n
RECITALS<\/p>\n
A. The Shareholders own and will own all of the outstanding capital stock
\nof FAS (including all options, warrants and other rights to acquire capital
\nstock of FAS).<\/p>\n
B. Upon the terms and subject to the conditions hereof, the Shareholders
\nwish to sell to the Purchaser, and the Purchaser wishes to purchase from the
\nShareholders, all of the outstanding capital stock of FAS (including all
\noptions, warrants and other rights to acquire capital stock of FAS) for an
\naggregate purchase price of six million four hundred twelve thousand eight
\nhundred thirty dollars ($6,412,830.00) in cash to be paid at the Closing (as
\ndefined in Section 1.2 hereof), thirty three thousand and sixty two (33,062)
\nshares of common stock of the Purchaser to be issued at the Closing, and six
\nmillion nine hundred twenty two thousand nine hundred thirty two dollars
\n($6,922,932.00) principal amount in the form of secured subordinated promissory
\nnotes in the form attached hereto as Exhibit B (the “Notes”) to be delivered at
\nthe Closing.<\/p>\n
C. Purchaser shall have the right to set off a portion of the principal
\nand interest on the Notes for purposes of satisfying certain liabilities,
\ndamages, losses, expenses and other similar charges which result from a breach
\nof the representations, warranties, covenants and agreements of FAS and the
\nShareholders as set forth in Article 8.<\/p>\n
D. As a material inducement for Purchaser to purchase the capital stock
\nof FAS, certain key employees are entering into employment and non-competition
\nagreements in the form attached hereto as Exhibit C (the “Employment and Non-
\nCompetition Agreement”) with Purchaser, each of which shall become effective as
\nof the Closing.<\/p>\n
E. As a material inducement for Purchaser to purchase the capital stock
\nof FAS, CNI is entering into the non-competition and non-solicitation agreement
\nin the form attached hereto as Exhibit D (the “Non-Competition and
\nNon-Solicitation Agreement”) with Purchaser, which shall become effective as of
\nthe Closing.<\/p>\n
F. As a material inducement for Purchaser to purchase the capital stock
\nof FAS, Richard Ganley is entering into the consulting and non-competition
\nagreement in the form attached hereto as Exhibit E (the “Consulting Agreement”)
\nwith Purchaser, which will become effective as of the Closing.<\/p>\n
G. In connection with the Notes, the Purchaser will enter into a stock
\npledge agreement in the form attached hereto as Exhibit F (the “Pledge
\nAgreement”) at the Closing.<\/p>\n
H. As a material inducement for Purchaser to purchase the capital stock
\nof FAS, certain stockholders and employees of FAS are terminating existing
\nemployment and contingent payment obligations on the part of FAS.<\/p>\n
I. The parties hereto desire to make certain representations, warranties,
\ncovenants and other agreements in connection with the transactions contemplated
\nhereby.<\/p>\n
NOW, THEREFORE, in consideration of the covenants, promises and
\nrepresentations set forth herein, and for other good and valuable consideration,
\nthe parties agree as follows:<\/p>\n
ARTICLE 1.<\/p>\n
PURCHASE AND SALE OF THE SECURITIES<\/p>\n
1.1 Purchase and Sale of the Securities. On the Closing Date and
\neffective as of the Closing (each as defined in Section 1.2 hereof), upon the
\nterms and subject to the conditions of this Agreement, the Shareholders shall
\nsell, convey, assign, transfer and deliver to the Purchaser, and the Purchaser
\nshall purchase from the Shareholders, the securities set forth opposite each
\nsuch shareholder’s name on Exhibit A hereto, in exchange for the total
\nconsideration, consisting of the Cash Payment, the Share Payment and the Notes
\n(the “Total Consideration”). The Total Consideration shall be payable by the
\nPurchaser to the Shareholders in accordance with the following:<\/p>\n
(a) Six million four hundred twelve thousand eight hundred thirty
\ndollars ($6,412,830.00) of the total consideration shall be payable in cash at
\nthe Closing (the “Cash Payment”);<\/p>\n
(b) Thirty three thousand and sixty two (33,062) shares of Common
\nStock of the Purchaser shall be delivered at Closing (the “Share Payment”); and<\/p>\n
(c) Six million nine hundred twenty two thousand nine hundred thirty
\ntwo dollars ($6,922,932) principal amount of the Notes shall be delivered at the
\nClosing and will be subject to Purchaser’s right of set off according to the
\nterms of Article 8 hereof.<\/p>\n
(d) The Cash Payment, the Share Payment and the Notes shall be
\nallocated among Shareholders in accordance with, and in the manner set forth on,
\nExhibit A hereto (such allocation being referred to herein as the “Allocation
\nPortion”).<\/p>\n
1.2 Closing. Subject to the satisfaction or waiver of the conditions set
\nforth in Article 7 hereof, the consummation of the transactions contemplated
\nhereby pursuant to the terms and<\/p>\n
-2-<\/p>\n
provisions hereof (the “Closing”) shall take place at the offices of Wilson
\nSonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo
\nAlto, California 94306, at 10:00 a.m. local California time, no later than the
\nsecond business day after satisfaction or waiver of the conditions set forth in
\nArticle 7 hereof, or at such other place, time and date as shall be mutually
\nagreed upon in writing by the parties hereto. The date upon which the Closing
\nshall actually occur shall be referred to herein as the “Closing Date.”<\/p>\n
1.3 Closing Deliveries.<\/p>\n
(a) At the Closing, upon the terms and subject to the conditions
\nset forth herein, Shareholders shall jointly deliver each of the following:<\/p>\n
(i) Certificates representing all of the outstanding
\ncapital stock of FAS (including all original instruments evidencing outstanding
\noptions, warrants or other rights to acquire capital stock of FAS);;<\/p>\n
(ii) Duly and validly executed copies of the
\nEmployment and Non-Competition Agreements for each employee listed on Exhibit G
\nhereto;<\/p>\n
(iii) A duly and validly executed copy of the Non-
\nCompetition and Non-Solicitation Agreement;<\/p>\n
(iv) Duly and validly executed copies of the
\nemployment agreement termination and release described in Section 6.12 below for
\neach employee of HBF or its subsidiaries of FAS subject to an employment
\nagreement with HBF or any of its subsidiaries or FAS;<\/p>\n
(v) Duly and validly executed copies of the
\ncontingent payment termination and release described in Section 6.14 below for
\neach individual or entity to which FAS has an existing obligation to make
\npayments based upon the financial performance of FAS;<\/p>\n
(vi) A duly and validly executed copy of the Pledge
\nAgreement executed by each Shareholder;<\/p>\n
(vii) Evidence of the First Refusal Release (as
\ndefined in Section 7.2(i) below); and<\/p>\n
(viii) A duly and validly executed copy of the
\nConsulting Agreement.<\/p>\n
(b) The Purchaser shall deliver:<\/p>\n
(i) The Cash Payment payable by check or wire
\ntransfer to the accounts designated by the Shareholders; and<\/p>\n
-3-<\/p>\n
(ii) Stock certificates representing the Share
\nPayment, registered in the names designated by the Shareholders, which stock
\ncertificates shall carry the legend set forth in Section 6.1(a) hereof.<\/p>\n
(iii) The Notes, in favor of the persons designated on
\nExhibit A hereto, subject to Purchaser’s right of set off in accordance with the
\nterms of Article 8;<\/p>\n
(iv) A duly and validly executed copy of the Pledge
\nAgreement executed by the Purchaser; and<\/p>\n
(v) Evidence of the Underwriter Consent (as defined
\nin Section 6.18 below);<\/p>\n
1.4 Further Assurances. On and after the Closing, upon the reasonable
\nrequest of any of the other parties hereto, the parties hereto shall prepare,
\nexecute and deliver such other and further agreements, instruments,
\ncertificates, and other documents, and take, do and perform such other and
\nfurther actions, as may be necessary or appropriate in order to effectuate
\ncompletely the purposes and intent of this Agreement and to fully consummate the
\ntransactions contemplated hereby .<\/p>\n
ARTICLE 2.<\/p>\n
REPRESENTATIONS AND WARRANTIES OF FAS AND THE SHAREHOLDERS<\/p>\n
As of the date hereof and as of the Closing Date, FAS and each of the
\nShareholders represents and warrants to Purchaser, subject to the exceptions
\nspecifically disclosed in writing in the disclosure letter and referencing a
\nspecific representation (unless it would be clearly apparent to a reasonable
\nperson that the disclosure would be relevant to another representation) supplied
\nby FAS and the Shareholders to Purchaser dated as of the date hereof and
\ncertified by a duly authorized officer of FAS and each of the Shareholders (the
\n“FAS Schedules”), as follows:<\/p>\n
2.1 Organization of FAS.<\/p>\n
(a) Except as disclosed in Part 2.1(a) of the FAS Schedules, FAS
\nhas no subsidiaries and FAS owns no capital stock of, or any equity interest of
\nany nature in, any other entity. FAS has not agreed and is not obligated to
\nmake, nor bound by any written, oral or other agreement, contract, subcontract,
\nlease, binding understanding, instrument, note, option, warranty, purchase
\norder, license, sublicense, insurance policy, benefit plan or legally binding
\ncommitment or undertaking of any nature, as in effect as of the date hereof or
\nas may hereinafter be in effect (“Contract”) under which Contract it may become
\nobligated to make any future investment in or capital contribution to any other
\nentity. FAS has not, at any time, been a general partner of any general
\npartnership, limited<\/p>\n
-4-<\/p>\n
partnership or other entity. When used herein, as applicable “FAS” refers to
\nFAS, its subsidiaries and predecessor entities.<\/p>\n
(b) FAS is a corporation duly organized, validly existing and in
\ngood standing under the laws of the jurisdiction of its incorporation and has
\nall necessary power and authority: (i) to conduct its business in the manner in
\nwhich its business is currently being conducted; (ii) to own and use its assets
\nin the manner in which its assets are currently owned and used; and (iii) to
\nperform its obligations under all Contracts by which it is bound.<\/p>\n
(c) FAS is qualified to do business as a foreign corporation,
\nand is in good standing, under the laws of all jurisdictions where the nature of
\nits business requires such qualification and where the failure to so qualify
\nwould have a Material Adverse Effect (as defined below) on FAS. With respect to
\nany entity, “Material Adverse Effect” shall mean any change, event or effect
\nthat is materially adverse to the consolidated business, assets (including
\nintangible assets), financial condition or results of operations of such entity.<\/p>\n
(d) FAS has delivered or made available to Purchaser a true and
\ncorrect copy of the Articles of Incorporation and Bylaws of FAS, each as amended
\nto date (collectively, the “FAS Charter Documents”), and each such instrument is
\nin full force and effect. FAS is not in violation of any of the provisions of
\nthe FAS Charter Documents.<\/p>\n
(e) There are no proposed or considered amendments to FAS
\nCharter Documents.<\/p>\n
2.2 FAS Capital Structure.<\/p>\n
(a) The authorized capital stock of FAS consists of: 100,000
\nshares of FAS Common Stock, of which 2,000 shares are outstanding as of the date
\nof this Agreement. The FAS Common Stock, together with any other capital stock
\n(including any options, warrants or other rights to acquire FAS capital stock),
\nshall herein be referred to as the “FAS Capital Stock”. All of the outstanding
\nshares of FAS Capital Stock have been duly authorized and validly issued, and
\nare fully paid and nonassessable. As of the date of this Agreement, there are no
\nshares of FAS Capital Stock held in treasury by FAS. Part 2.2(a) of the FAS
\nSchedules contains a true, correct and complete list of the persons and entities
\nwho are record holders of any issued and outstanding shares of FAS Capital
\nStock, the respective number of shares, and the class or series, of FAS Capital
\nStock held by each such person or entity, as of the date hereof and as of the
\nClosing. There are no declared or accrued and unpaid dividends payable in
\nrespect of any shares of FAS Capital Stock.<\/p>\n
(b) All outstanding shares of FAS Capital Stock have been issued
\nand granted in compliance with (i) all applicable securities laws and other
\napplicable Legal Requirements (as defined below) and (ii) all requirements set
\nforth in applicable Contracts. For the purposes of this Agreement, “Legal
\nRequirements” means any federal, state, local, municipal, foreign or other law,
\nstatute, constitution, principle of common law, resolution, ordinance, code,
\nedict, decree, rule,<\/p>\n
-5-<\/p>\n
regulation, ruling or requirement issued, enacted, adopted, promulgated,
\nimplemented or otherwise put into effect by or under the authority of any
\nGovernmental Entity (as defined below).<\/p>\n
2.3 Obligations With Respect to Capital Stock . Except as set forth in
\nSection 2.2(a) hereof, there are no equity securities, partnership interests or
\nsimilar ownership interests of any class of any FAS equity security, or any
\nsecurities exchangeable or convertible into or exercisable for such equity
\nsecurities, partnership interests or similar ownership interests, issued,
\nreserved for issuance or outstanding. Except for securities FAS owns free and
\nclear of all claims and Encumbrances, as of the date of this Agreement, there
\nare no equity securities, partnership interests or similar ownership interests
\nof any class of equity security of any subsidiary of FAS, or any security
\nexchangeable or convertible into or exercisable for such equity securities,
\npartnership interests or similar ownership interests, issued, reserved for
\nissuance or outstanding. For the purposes of this Agreement, “Encumbrances”
\nmeans any lien, pledge, hypothecation, charge, mortgage, security interest,
\nencumbrance, claim, infringement, interference, option, trust, right of first
\nrefusal, preemptive right, community property interest or restriction of any
\nnature (including any restriction on the voting of any security, any restriction
\non the transfer of any security or other asset, any restriction on the receipt
\nof any income derived from any asset, any restriction on the use of any asset
\nand any restriction on the possession, exercise or transfer of any other
\nattribute of ownership of any asset). There are no subscriptions, options,
\nwarrants, equity securities, partnership interests or similar ownership
\ninterests, calls, rights (including preemptive rights), commitments or
\nagreements of any character to which FAS is a party or by which it is bound
\nobligating FAS to issue, deliver or sell, or cause to be issued, delivered or
\nsold, or repurchase, redeem or otherwise acquire, or cause the repurchase,
\nredemption or acquisition of, any shares of capital stock, partnership interests
\nor similar ownership interests of FAS or obligating FAS to grant, extend,
\naccelerate the vesting of or enter into any such subscription, option, warrant,
\nequity security, call, right, commitment or agreement. As of the date of this
\nAgreement, there are no registration rights and there is no voting trust, proxy,
\nrights plan, antitakeover plan or other agreement or understanding to which FAS
\nis a party or by which it is bound with respect to any equity security of any
\nclass of FAS.<\/p>\n
2.4 Authority; Non-Contravention.<\/p>\n
(a) FAS has all requisite corporate power and authority to enter
\ninto this Agreement and to consummate the transactions contemplated hereby. The
\nexecution and delivery of this Agreement and the consummation of the
\ntransactions contemplated hereby have been duly authorized by all necessary
\ncorporate action on the part of FAS. This Agreement has been duly executed and
\ndelivered by FAS and, assuming due execution and delivery by the other parties
\nhereto, constitutes a valid and binding obligation of FAS, enforceable against
\nFAS in accordance with its terms, except as enforceability may be limited by
\nbankruptcy and other similar laws and general principles of equity. The
\nexecution and delivery of this Agreement by FAS does not, and the performance of
\nthis Agreement by FAS will not, (i) conflict with or violate the FAS Charter
\nDocuments, (ii) conflict with or violate any law, rule, regulation, order,
\njudgment or decree applicable to FAS or by which FAS or any of its respective
\nproperties is bound or affected, subject<\/p>\n
-6-<\/p>\n
to compliance with the requirements set forth in Section 2.4(b) below or (iii)
\nresult in any material breach of or constitute a material default (or an event
\nthat with notice or lapse of time or both would become a material default)
\nunder, or impair FAS’s rights or alter the rights or obligations of any third
\nparty under, or give to others any rights of termination, amendment,
\nacceleration or cancellation of, or result in the creation of a material lien or
\nEncumbrance on any of the material properties or assets of FAS or any of its
\nsubsidiaries pursuant to, any material note, bond, mortgage, indenture,
\ncontract, agreement, lease, license, permit, franchise, concession, or other
\ninstrument or obligation to which FAS or any of its subsidiaries is a party or
\nby which FAS or any of its subsidiaries or its or any of their respective assets
\nare bound or affected. Part 2.4(a) of the FAS Schedules lists all consents,
\nwaivers and approvals under any of FAS’s or any of its subsidiaries’ agreements,
\ncontracts, licenses or leases required to be obtained in connection with the
\nconsummation of the transactions contemplated hereby, which, if individually or
\nin the aggregate not obtained, would result in a material loss of benefits to
\nFAS or the Purchaser.<\/p>\n
(b) No consent, approval, order or authorization of, or
\nregistration, declaration or filing with any court, administrative agency or
\ncommission or other governmental authority or instrumentality, foreign or
\ndomestic (“Governmental Entity”), is required to be obtained or made by FAS in
\nconnection with the execution and delivery of this Agreement or the consummation
\nof the transactions contemplated by this Agreement, except for (i) such
\nconsents, approvals, orders, authorizations, registrations, declarations and
\nfilings as may be required under applicable federal, foreign and state
\nsecurities (or related) laws, the Hart-Scott-Rodino Antitrust Improvements Act
\nof 1976, as amended (the “HSR Act”) and the securities or antitrust laws of any
\nforeign country, and (ii) such other consents, authorizations, filings,
\napprovals and registrations which if not obtained or made would not be material
\nto Purchaser or FAS or have a material adverse effect on the ability of the
\nparties hereto to consummate the transactions contemplated hereby.<\/p>\n
2.5 HBF Financial Statements. Part 2.5 of the FAS Schedules sets forth
\nunaudited balance sheet of The Homebuyer’s Fair, Inc., an Arizona corporation
\n(“HBF”), as of December 31, 1997 and the related unaudited statements of income
\nand cash flow for the 12 months ended December 31, 1997, and HBF’s unaudited
\nbalance sheet as of December 31, 1998 and the related unaudited statements of
\nincome and cash flow for the 12 months ended December 31, 1998 (collectively,
\nthe “Year End Financials”) (which Year End Financials include the results of
\nFAS), and (ii) HBF’s unaudited balance sheet as of June 27, 1999 (the “HBF
\nCurrent Balance Sheet”) and the related unaudited statements of income and cash
\nflow for the six (6) months then ended (collectively, the “HBF Current
\nFinancials”) (which Current Financials include the results of FAS). The Year End
\nFinancials and the HBF Current Financials shall collectively be referred to as
\nthe “HBF Financials.” The HBF Financials are correct in all material respects
\nand have been prepared in accordance with GAAP, applied on a basis consistent
\nthroughout the periods indicated and consistent with each other except as may be
\nindicated therein. The HBF Financials present fairly the financial condition,
\noperating results and cash flows of HBF as of the dates and during the periods
\nindicated therein, subject in the case of the HBF Current Financials, to normal
\nyear-end adjustments, which will not be material in amount or significance.<\/p>\n
-7-<\/p>\n
2.6 Absence of Certain Changes or Events. Since the date of the HBF
\nCurrent Balance Sheet there has not been: (i) any Material Adverse Effect on
\nFAS, (ii) any declaration, setting aside or payment of any dividend on, or other
\ndistribution (whether in cash, stock or property) in respect of, any of FAS
\nCapital Stock, or any purchase, redemption or other acquisition by FAS of any of
\nFAS’s Capital Stock or any options, warrants, calls or rights to acquire any
\nsuch shares or other securities, (iii) any split, combination or
\nreclassification of any FAS Capital Stock, (iv) any granting by FAS of any
\nincrease in compensation or fringe benefits, except for normal increases of cash
\ncompensation in the ordinary course of business consistent with past practice,
\nor any payment by FAS of any bonus, except for bonuses made in the ordinary
\ncourse of business consistent with past practice, or any granting by FAS of any
\nincrease in severance or termination pay or any entry by FAS into any currently
\neffective employment, severance, termination or indemnification agreement or any
\nagreement the benefits of which are contingent or the terms of which are
\nmaterially altered upon the occurrence of a transaction involving FAS of the
\nnature contemplated hereby, (v) entry by FAS into any licensing or other
\nagreement with regard to the acquisition or disposition of any material
\nIntellectual Property (as defined in Section 2.9) other than licenses in the
\nordinary course of business consistent with past practice, (vi) any material
\nchange by FAS in its accounting methods, principles or practices, except as
\nrequired by concurrent changes in GAAP or (vii) any revaluation by FAS of any of
\nits assets, including, without limitation, writing down the value of capitalized
\ninventory or writing off notes or accounts receivable other than in the ordinary
\ncourse of business and consistent with past practice.<\/p>\n
2.7 Taxes.<\/p>\n
(a) Definition of Taxes. For the purposes of this Agreement,
\n“Tax” or “Taxes” refers to any and all federal, state, local and foreign taxes,
\nassessments and other governmental charges, duties, impositions and liabilities
\nrelating to taxes, including taxes based upon or measured by gross receipts,
\nincome, profits, sales, use and occupation, and value added, ad valorem,
\ntransfer, franchise, withholding, payroll, recapture, employment, excise and
\nproperty taxes, together with all interest, penalties and additions imposed with
\nrespect to such amounts and any obligations under any agreements or arrangements
\nwith any other person with respect to such amounts and including any liability
\nfor taxes of a predecessor entity.<\/p>\n
(b) Tax Returns and Audits.<\/p>\n
(i) FAS has timely filed all federal, state, local
\nand foreign returns, estimates, information statements and reports (“Returns”)
\nrelating to Taxes required to be filed by FAS with any Tax authority. FAS has
\npaid all Taxes shown to be due on such Returns.<\/p>\n
(ii) FAS as of the Closing will have withheld and
\nremitted on a timely basis to the appropriate authority all federal and state
\nincome taxes, Taxes pursuant to the Federal Insurance Contribution Act (“FICA”),
\nTaxes pursuant to the Federal Unemployment Tax Act (“FUTA”) and other Taxes
\nrequired to be withheld.<\/p>\n
-8-<\/p>\n
(iii) FAS has not been delinquent in the payment of
\nany Tax nor is there any material Tax deficiency outstanding, proposed or
\nassessed against FAS, nor has FAS executed any unexpired waiver of any statute
\nof limitations on or extending the period for the assessment or collection of
\nany material Tax.<\/p>\n
(iv) No audit or other examination of any Return of
\nFAS by any Tax authority is presently in progress, nor has FAS been notified of
\nany request for such an audit or other examination.<\/p>\n
(v) No adjustment relating to any Returns filed by
\nFAS has been proposed in writing formally or informally by any Tax authority to
\nFAS or any of its representatives.<\/p>\n
(vi) FAS has no liability for unpaid Taxes which has
\nnot been accrued for or reserved on the HBF Current Balance Sheet, whether
\nasserted or unasserted, contingent or otherwise, which is material to FAS, other
\nthan any liability for unpaid Taxes that may have accrued since the date of the
\nHBF Current Balance Sheet in connection with the operation of the business of
\nFAS in the ordinary course.<\/p>\n
(vii) There is no contract, agreement, plan or
\narrangement to which FAS is a party as of the date of this Agreement, including
\nbut not limited to the provisions of this Agreement, covering any employee or
\nformer employee of FAS (including leased employees from Novacare) that,
\nindividually or collectively, could give rise to the payment of any amount that
\nwould not be deductible pursuant to Sections 280G, 404 or 162(m) of the Code.<\/p>\n
(viii) FAS has not filed any consent agreement under
\nSection 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
\nto any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
\nthe Code) owned by FAS.<\/p>\n
(ix) FAS is not a party to or has any obligation
\nunder any tax-sharing, tax indemnity or tax allocation agreement or arrangement.<\/p>\n
(x) Except as may be required as a result of this
\nAgreement, FAS has not been and will not be required to include any adjustment
\nin taxable income for any Tax period (or portion thereof) pursuant to Section
\n481 or Section 263A of the Code or any comparable provision under state or
\nforeign Tax laws as a result of transactions, events or accounting methods
\nemployed prior to the Closing.<\/p>\n
(xi) None of FAS’s assets are tax-exempt use property
\nwithin the meaning of Section 168(h) of the Code.<\/p>\n
(xii) Part 2.7 of the FAS Schedules lists (A) any
\nforeign Tax holidays, (B) any inter-company transfer pricing agreements, or
\nother arrangements that have been established by FAS with any Tax authority and
\n(C) any expatriate programs or policies affecting FAS.<\/p>\n
-9-<\/p>\n
2.8 Title to Properties; Absence of Liens and Encumbrances.<\/p>\n
(a) Part 2.8(a) of the FAS Schedules lists all real property
\nleases to which FAS is a party as of the date of this Agreement and each
\namendment thereto that is in effect as of the date of this Agreement. All such
\ncurrent leases are in full force and effect, are valid and effective in
\naccordance with their respective terms, and there is not, under any of such
\nleases, any existing default or event of default (or event which with notice or
\nlapse of time, or both, would constitute a default) that would give rise to a
\nmaterial claim. Other than the leaseholds created under the real property leases
\nidentified in Part 2.8(a) of the FAS Schedules, FAS owns no interest in real
\nproperty.<\/p>\n
(b) FAS has good and valid title to, or, in the case of leased
\nproperties and assets, valid leasehold interests in, all of its tangible
\nproperties and assets, real, personal and mixed, used or held for use in its
\nbusiness, free and clear of any liens, pledges, charges, claims, security
\ninterests or other encumbrances of any sort (“Liens”), except as reflected in
\nthe HBF Financials and except for liens for taxes not yet due and payable,
\nstatutory liens and such Liens or other imperfections of title and encumbrances,
\nif any, which are not material in character, amount or extent, and which do not
\nmaterially detract from the value, or materially interfere with the present use,
\nof the property subject thereto or affected thereby.<\/p>\n
2.9 Intellectual Property. For the purposes of this Agreement, the
\nfollowing terms have the following definitions:<\/p>\n
“Intellectual Property” shall mean any or all of the following
\n and all rights in, arising out of, or associated therewith: (i)
\n all United States, international and foreign patents and
\n applications therefor and all reissues, divisions, renewals,
\n extensions, provisionals, continuations and continuations-in-part
\n thereof; (ii) all inventions (whether patentable or not),
\n invention disclosures, improvements, trade secrets, proprietary
\n information, know how, technology, technical data and customer
\n lists, and all documentation relating to any of the foregoing;
\n (iii) all copyrights, copyrights registrations and applications
\n therefor, and all other rights corresponding thereto throughout
\n the world; (iv) all industrial designs and any registrations and
\n applications therefor throughout the world; (v) all trade names,
\n logos, URLs, common law trademarks and service marks, trademark
\n and service mark registrations and applications therefor
\n throughout the world; (vi) all databases and data collections and
\n all rights therein throughout the world; (vii) all moral and
\n economic rights of authors and inventors, however denominated,
\n throughout the world and (viii) any similar or equivalent rights
\n to any of the foregoing anywhere in the world.<\/p>\n
“FAS Intellectual Property” shall mean any Intellectual Property
\n that is owned by, or exclusively licensed to, FAS.<\/p>\n
“Registered Intellectual Property” means all United States,
\n international and foreign: (i) patents and patent applications
\n (including provisional applications); (ii)<\/p>\n
-10-<\/p>\n
registered trademarks, applications to register trademarks, intent-to-
\n use applications, or other registrations or applications related to
\n trademarks; (iii) registered copyrights and applications for copyright
\n registration; and (iv) any other Intellectual Property that is the
\n subject of an application, certificate, filing, registration or other
\n document issued, filed with, or recorded by any state, government or
\n other public legal authority.<\/p>\n
“FAS Registered Intellectual Property” means all of the Registered
\n Intellectual Property owned by, or filed in the name of, FAS.<\/p>\n
(a) No material FAS Intellectual Property or product or service of FAS
\nis subject to any proceeding or outstanding decree, order, judgment, agreement
\nor stipulation restricting in any manner the use, transfer, or licensing thereof
\nby FAS, or which may affect the validity, use or enforceability of such FAS
\nIntellectual Property.<\/p>\n
(b) Part 2.9(b) of the FAS Schedules is a complete and accurate list
\nof all FAS Registered Intellectual Property as of the date hereof and specifies,
\nwhere applicable, the jurisdictions in which each such item of FAS Registered
\nIntellectual Property has been issued or registered or in which an application
\nfor such issuance and registration has been filed, including the respective
\nregistration or application numbers. Each material item of FAS Registered
\nIntellectual Property is valid and subsisting, all necessary registration,
\nmaintenance and renewal fees currently due in connection with such Registered
\nIntellectual Property have been made and all necessary documents, recordations
\nand certificates currently due in connection with such Registered Intellectual
\nProperty have been filed with the relevant patent, copyright, trademark or other
\nauthorities in the United States or foreign jurisdictions, as the case may be,
\nfor the purposes of maintaining such Registered Intellectual Property.<\/p>\n
(c) FAS owns and has good and exclusive title to, or has license
\n(sufficient for the conduct of its business as currently conducted and as
\ncurrently proposed to be conducted) to, each item of FAS Intellectual Property
\nor other material Intellectual Property used by FAS free and clear of any lien
\nor encumbrance (excluding licenses and related restrictions); and FAS is the
\nexclusive owner of all trademarks and trade names used in connection with the
\noperation or conduct of the business of FAS, including the sale of any products
\nor the provision of any services by FAS, within the scope of FAS ‘s use of such
\ntrademarks and trade names.<\/p>\n
(d) FAS owns exclusively, and has good title to, all copyrighted works
\nthat are FAS products or which FAS otherwise expressly purports to own.<\/p>\n
(e) To the extent that any material Intellectual Property has been
\ndeveloped or created by a third party for FAS, FAS has a written agreement with
\nsuch third party with respect thereto and FAS thereby either (i) has obtained
\nownership of, and is the exclusive owner of or (ii) has obtained a license
\n(sufficient for the conduct of its business as currently conducted and as
\ncurrently proposed to <\/p>\n
-11-<\/p>\n
be conducted) to all such third party’s Intellectual Property in such work,
\nmaterial or invention by operation of law or by valid assignment, to the fullest
\nextent it is legally possible to do so.<\/p>\n
(f) FAS has not transferred ownership of, or granted any exclusive
\nlicense with respect to, any Intellectual Property that is or was material to
\nFAS Intellectual Property, to any third party.<\/p>\n
(g) The FAS Schedules list all material contracts, licenses and
\nagreements to which FAS is a party as of the date hereof (i) with respect to FAS
\nIntellectual Property licensed or transferred to any third party (other than
\nend-user licenses in the ordinary course); or (ii) pursuant to which a third
\nparty has licensed or transferred any material Intellectual Property to FAS.<\/p>\n
All material contracts, licenses and agreements relating to FAS
\nIntellectual Property are in full force and effect. The consummation of the
\ntransactions contemplated by this Agreement will neither violate nor result in
\nthe breach, modification, cancellation, termination or suspension of such
\ncontracts, licenses and agreements. FAS is in material compliance with, and has
\nnot materially breached any term any of such contracts, licenses and agreements
\nand, to the knowledge of FAS, all other parties to such contracts, licenses and
\nagreements are in compliance with, and have not materially breached any term of,
\nsuch contracts, licenses and agreements. Following the Closing Date, the FAS
\nwill be permitted to exercise all of FAS’s rights under such contracts, licenses
\nand agreements to the same extent FAS would have been able to had the
\ntransactions contemplated by this Agreement not occurred and without the payment
\nof any additional amounts or consideration other than ongoing fees, royalties or
\npayments which FAS would otherwise be required to pay.<\/p>\n
(h) The operation of the business of FAS, including FAS’s design,
\ndevelopment, manufacture, marketing and sale of the products or services of FAS
\n(including products and services currently under development) has not, does not
\nand will not infringe or misappropriate the Intellectual Property of any third
\nparty in any respect adverse to such party or constitute unfair competition or
\ntrade practices under the laws of any jurisdiction.<\/p>\n
(i) FAS has not received notice from any third party that the
\noperation of the business of FAS or any act, product or service of FAS,
\ninfringes or misappropriates the Intellectual Property of any third party or
\nconstitutes unfair competition or trade practices under the laws of any
\njurisdiction.<\/p>\n
(j) To the knowledge of FAS, no person has or is infringing or
\nmisappropriating, in any respect materially adverse to FAS, any FAS Intellectual
\nProperty.<\/p>\n
(k) FAS has taken reasonable steps to protect FAS’s rights in FAS’s
\nconfidential information and trade secrets that it wishes to protect or any
\ntrade secrets or confidential information of third parties provided to FAS, and,
\nwithout limiting the foregoing, FAS has and enforces a policy requiring each
\nemployee (including leased employees from Novacare) and software and\/or web
\ndevelopment contractor (and the like) to execute a proprietary
\ninformation\/confidentiality agreement <\/p>\n
-12-<\/p>\n
and all current employees (including leased employees from Novacare), software
\nand\/or web development contractors (and the like) of FAS have executed such an
\nagreement.<\/p>\n
2.10 Compliance; Permits; Restrictions. FAS is not in any material respect
\nin conflict with, or in default or in violation of (i) any law, rule,
\nregulation, order, judgment or decree applicable to FAS or by which FAS or any
\nof its respective properties is bound or affected or (ii) any material note,
\nbond, mortgage, indenture, contract, agreement, lease, license, permit,
\nfranchise or other instrument or obligation to which FAS is a party or by which
\nFAS or any of its respective properties is bound or affected, except for
\nconflicts, violations and defaults that (individually or in the aggregate) would
\nnot cause FAS to lose any material benefit or incur any material liability. To
\nFAS’s knowledge, no investigation or review by any Governmental Entity is
\npending or has been threatened against FAS, nor, to FAS’s knowledge, has any
\nGovernmental Entity indicated an intention to conduct an investigation of FAS.
\nThere is no material agreement, judgment, injunction, order or decree binding
\nupon FAS which has or would reasonably be expected to have the effect of
\nprohibiting or materially impairing any business practice of FAS or Purchaser,
\nany acquisition of material property by FAS or the conduct of business by FAS as
\ncurrently conducted.<\/p>\n
(a) FAS holds, to the extent legally required, all permits, licenses,
\nvariances, exemptions, orders and approvals from Governmental Entities that are
\nmaterial to and required for the operation of the business of FAS as currently
\nconducted (collectively, the “FAS Permits”). FAS is in compliance in all
\nmaterial respects with the terms of the FAS Permits, except where the failure to
\nbe in compliance with the terms of the FAS Permits would not be material to FAS
\nor Purchaser.<\/p>\n
(b) There is no agreement (non-compete or otherwise), commitment,
\njudgment, injunction, order or decree to which FAS is a party or otherwise
\nbinding upon FAS which has, or may have the effect of, prohibiting or impairing
\nany business practice of FAS, any acquisition of property or assets (whether
\ntangible or intangible) by FAS, the conduct of business by FAS in any manner or
\notherwise limiting the freedom of FAS to engage in any line of business or
\ncompete with any person. FAS has not entered into any agreement, understanding
\nor other arrangement under which FAS is prohibited or restricted in any manner
\nfrom selling, licensing or otherwise distributing any technology or products to,
\nor providing services to, customers or potential customers or any class of
\ncustomers, in any geographic area, during any period of time or in any segment
\nof the market.<\/p>\n
2.11 Litigation. There are no claims, suits, actions or proceedings
\npending or, to the knowledge of FAS, threatened against, relating to or
\naffecting FAS, before any court, governmental department, commission, agency,
\ninstrumentality or authority, or any arbitrator that seeks to restrain or enjoin
\nthe consummation of the transactions contemplated by this Agreement or which
\nwould reasonably be expected, either singularly or in the aggregate with all
\nsuch claims, suits, actions or proceedings, to be material and adverse to FAS.
\nNo Governmental Entity has at any time challenged or questioned in a writing
\ndelivered to FAS the legal right of FAS to design, manufacture, offer or sell
\nany of its products or services in the present manner or style thereof. As of
\nthe date hereof, to <\/p>\n
-13-<\/p>\n
the knowledge of FAS, no event has occurred, and no claim, dispute or other
\ncondition or circumstance exists, that will, or that would reasonably be
\nexpected to, cause or provide a bona fide basis for a director or executive
\nofficer of FAS to seek indemnification from FAS.<\/p>\n
2.12 Brokers’ and Finders’ Fees. FAS has not incurred, nor will it incur,
\ndirectly or indirectly, any liability for brokerage or finders’ fees or agents’
\ncommissions or any similar charges in connection with this Agreement or any
\ntransaction contemplated hereby.<\/p>\n
2.13 Interested Party Transactions. No officer or director of FAS (nor, to
\nthe knowledge of FAS, any shareholder of FAS or any ancestor (up to once
\nremoved), sibling, descendant (up to once removed), spouse, parent, subsidiary
\nor other affiliate of any officer, director or shareholder, or any trust,
\npartnership or corporation in which any of such persons has or has had an
\ninterest), has or has had, directly or indirectly, (i) any material interest in
\nany entity that furnished or sold, or furnishes or sells, services, products or
\ntechnology that FAS furnishes or sells, or proposes to furnish or sell, (ii) any
\nmaterial interest in any entity that purchases from or sells or furnishes to FAS
\nany goods or services or (iii) a material beneficial interest in any Contract
\nother than employment or consulting agreements with officers of FAS and
\nindemnification agreements with directors and officers of FAS, in each case
\npreviously provided or made available to Purchaser; provided, however, that
\nownership of no more than one percent (1%) of the outstanding voting stock of a
\npublicly traded corporation and no more than percent (5%) of the outstanding
\nequity of any other entity shall not be deemed a material “interest in any
\nentity” for purposes of this Section 2.13.<\/p>\n
2.14 Employee Benefit Plans.<\/p>\n
(a) Definitions. With the exception of the definition of “Affiliate”
\nset forth in Section 2.14(a)(i) below (which definition shall apply only to this
\nSection 2.14), for purposes of this Agreement, the following terms shall have
\nthe meanings set forth below:<\/p>\n
(i) “Affiliate” shall mean any other person or entity
\nunder common control with FAS within the meaning of Section 414(b), (c), (m) or
\n(o) of the Code and the regulations issued thereunder;<\/p>\n
(ii) “FAS Employee Plan” shall mean any plan, program,
\npolicy, practice, contract, agreement or other arrangement providing for
\ncompensation, severance, termination pay, performance awards, stock or stock-
\nrelated awards, fringe benefits or other employee benefits or remuneration of
\nany kind, whether written or unwritten or otherwise, funded or unfunded,
\nincluding without limitation, each “employee benefit plan,” within the meaning
\nof Section 3(3) of ERISA which is or has been maintained, contributed to, or
\nrequired to be contributed to, by FAS or any Affiliate for the benefit of any
\nEmployee;<\/p>\n
(iii) “COBRA” shall mean the Consolidated Omnibus Budget
\nReconciliation Act of 1985, as amended;<\/p>\n
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(iv) “DOL” shall mean the United States Department of
\nLabor;<\/p>\n
(v) “Employee” shall mean any current, former, or retired
\nemployee, officer, or director of FAS or any Affiliate (including any leased
\nemployee from Novacare);<\/p>\n
(vi) “Employee Agreement” shall mean each management,
\nemployment, severance, consulting, relocation, repatriation, expatriation,
\nvisas, work permit or similar agreement or contract between FAS or any Affiliate
\nor Novacare and any Employee or consultant;<\/p>\n
(vii) “ERISA” shall mean the Employee Retirement Income
\nSecurity Act of 1974, as amended;<\/p>\n
(viii) “FMLA” shall mean the Family Medical Leave Act of
\n1993, as amended;<\/p>\n
(ix) “International Employee Plan” shall mean each FAS
\nEmployee Plan that has been adopted or maintained by FAS, whether informally or
\nformally, for the benefit of Employees outside the United States;<\/p>\n
(x) “IRS” shall mean the Internal Revenue Service;<\/p>\n
(xi) “Multiemployer Plan” shall mean any multiemployer
\nplan as defined in Section 4001(a)(3) of ERISA;<\/p>\n
(xii) “PBGC” shall mean the Pension Benefit Guaranty
\nCorporation; and<\/p>\n
(xiii) “Pension Plan” shall mean each FAS Employee Plan
\nwhich is an “employee pension benefit plan,” within the meaning of Section 3(2)
\nof ERISA.<\/p>\n
(b) Schedule. Part 2.14(b) of the FAS Schedules contains an accurate
\nand complete list of each FAS Employee Plan and each Employee Agreement. FAS
\ndoes not have any plan or commitment to establish any new FAS Employee Plan, to
\nmodify any FAS Employee Plan or Employee Agreement (except to the extent
\nrequired by law or to conform any such FAS Employee Plan or Employee Agreement
\nto the requirements of any applicable law, in each case as previously disclosed
\nto Purchaser in writing, or as required by this Agreement), or to enter into any
\nFAS Employee Plan or Employee Agreement, nor does it have any intention or
\ncommitment to do any of the foregoing.<\/p>\n
(c) Documents. FAS has provided or, except in the case of clause (i)
\nbelow, made available through Novacare to Purchaser: (i) correct and complete
\ncopies of all documents relating to each FAS Employee Plan and each Employee
\nAgreement including all amendments thereto and written interpretations thereof;
\n(ii) the most recent annual actuarial valuations, if any, prepared for each FAS
\nEmployee Plan; (iii) the three (3) most recent annual reports (Form Series 5500
\nand all <\/p>\n
-15-<\/p>\n
schedules and financial statements attached thereto), if any, required under
\nERISA or the Code in connection with each FAS Employee Plan or related trust;
\n(iv) if FAS Employee Plan is funded, the most recent annual and periodic
\naccounting of FAS Employee Plan assets; (v) the most recent summary plan
\ndescription together with the summary of material modifications thereto, if any,
\nrequired under ERISA with respect to each FAS Employee Plan; (vi) all IRS
\ndetermination, opinion, notification and advisory letters, and rulings relating
\nto FAS Employee Plans and copies of all applications and correspondence to or
\nfrom the IRS or the DOL with respect to any FAS Employee Plan; (vii) all
\nmaterial written agreements and contracts relating to each FAS Employee Plan,
\nincluding, but not limited to, administrative service agreements, group annuity
\ncontracts and group insurance contracts; (viii) all communications material to
\nany Employee or Employees relating to any FAS Employee Plan and any proposed FAS
\nEmployee Plans, in each case, relating to any amendments, terminations,
\nestablishments, increases or decreases in benefits, acceleration of payments or
\nvesting schedules or other events which would result in any material liability
\nto FAS; (ix) all COBRA forms and related notices; and (x) all registration
\nstatements and prospectuses prepared in connection with each FAS Employee Plan.<\/p>\n
(d) Employee Plan Compliance. (i) FAS has performed in all material
\nrespects all obligations required to be performed by it under, is not in default
\nor violation of, and has no knowledge of any default or violation by any other
\nparty to each FAS Employee Plan, and each FAS Employee Plan has been established
\nand maintained in all material respects in accordance with its terms and in
\ncompliance with all applicable laws, statutes, orders, rules and regulations,
\nincluding but not limited to ERISA or the Code; (ii) to the knowledge of FAS,
\neach FAS Employee Plan intended to qualify under Section 401(a) of the Code and
\neach trust intended to qualify under Section 501(a) of the Code has either
\nreceived a favorable determination letter from the IRS with respect to each such
\nPlan as to its qualified status under the Code, including all amendments to the
\nCode effected by the Tax Reform Act of 1986 and subsequent legislation, or has
\nremaining a period of time under applicable Treasury regulations or IRS
\npronouncements in which to apply for such a determination letter and make any
\namendments necessary to obtain a favorable determination; (iii) to the knowledge
\nof FAS, no “prohibited transaction,” within the meaning of Section 4975 of the
\nCode or Sections 406 and 407 of ERISA, and not otherwise exempt under Section
\n408 of ERISA or 4975 of the Code, has occurred with respect to any FAS Employee
\nPlan; (iv) to the knowledge of FAS, there are no actions, suits or claims
\npending, threatened or reasonably anticipated (other than routine claims for
\nbenefits) against any FAS Employee Plan or against the assets of any FAS
\nEmployee Plan; (v) to the knowledge of FAS, each FAS Employee Plan can be
\namended, terminated or otherwise discontinued after the Closing Date in
\naccordance with its terms, without liability to Purchaser, FAS or any of its
\nAffiliates (other than ordinary administration expenses typically incurred in a
\ntermination event); (vi) to the knowledge of FAS, there are no audits, inquiries
\nor proceedings pending or threatened by the IRS or DOL with respect to any FAS
\nEmployee Plan; and (vii) to the knowledge of FAS, either FAS nor any Affiliate
\nis subject to any penalty or tax with respect to any FAS Employee Plan under
\nSection 402(i) of ERISA or Sections 4975 through 4980 of the Code.<\/p>\n
-16-<\/p>\n
(e) Pension Plans. FAS does not now, nor has it ever, maintained,
\nestablished, sponsored, participated in, or contributed to, any Pension Plan
\nwhich is subject to Title IV of ERISA or Section 412 of the Code.<\/p>\n
(f) Multiemployer Plans. At no time has FAS contributed to or been
\nrequested to contribute to any Multiemployer Plan.<\/p>\n
(g) No Post-Employment Obligations. No FAS Employee Plan provides, or
\nhas any liability to provide, retiree life insurance, retiree health or other
\nretiree employee welfare benefits to any person for any reason, except as may be
\nrequired by COBRA or other applicable statute, and FAS has never represented,
\npromised or contracted (whether in oral or written form) to any Employee (either
\nindividually or to Employees as a group) or any other person that such
\nEmployee(s) or other person would be provided with retiree life insurance,
\nretiree health or other retiree employee welfare benefit, except to the extent
\nrequired by statute.<\/p>\n
(h) To the knowledge of FAS, neither FAS nor any Affiliate has, prior
\nto the Closing, and in any material respect, violated any of the health care
\ncontinuation requirements of COBRA, the requirements of FMLA or any similar
\nprovisions of state law applicable to its Employees.<\/p>\n
(i) Effect of Transaction. The execution of this Agreement and the
\nconsummation of the transactions contemplated hereby will not (either alone or
\nupon the occurrence of any additional or subsequent events) constitute an event
\nunder any FAS Employee Plan or Employee Agreement that will or may result in any
\npayment (whether of severance pay or otherwise), acceleration, forgiveness of
\nindebtedness, vesting, distribution, increase in benefits or obligation to fund
\nbenefits with respect to any Employee.<\/p>\n
(j) Employment Matters. FAS: (i) is in compliance in all material
\nrespects with all applicable foreign, federal, state and local laws, rules and
\nregulations respecting employment, employment practices, terms and conditions of
\nemployment and wages and hours, in each case, with respect to Employees; (ii)
\nhas withheld all amounts required by law or by agreement to be withheld from the
\nwages, salaries and other payments to Employees; (iii) is not liable for any
\narrears of wages or any taxes or any penalty for failure to comply with any of
\nthe foregoing; and (iv) is not liable for any material payment to any trust or
\nother fund or to any governmental or administrative authority, with respect to
\nunemployment compensation benefits, social security or other benefits or
\nobligations for Employees (other than routine payments to be made in the normal
\ncourse of business and consistent with past practice). There are no pending,
\nthreatened or reasonably anticipated claims or actions against FAS under any
\nworker’s compensation policy or long-term disability policy. To FAS’s
\nknowledge, no employee of FAS has violated any employment contract,
\nnondisclosure agreement or noncompetition agreement by which such employee is
\nbound due to such employee being employed by FAS and disclosing to FAS or using
\ntrade secrets or proprietary information of any other person or entity.<\/p>\n
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(k) Labor. To the knowledge of FAS, no work stoppage or labor strike
\nagainst FAS is pending, threatened or reasonably anticipated. FAS has no
\nknowledge of any activities or proceedings of any labor union to organize any
\nEmployees. To the knowledge of FAS, there are no actions, suits, claims, labor
\ndisputes or grievances pending, threatened or reasonably anticipated relating to
\nany labor, safety or discrimination matters involving any Employee, including,
\nwithout limitation, charges of unfair labor practices or discrimination
\ncomplaints, which, if adversely determined, would, individually or in the
\naggregate, result in any material liability to FAS. FAS has not engaged in any
\nunfair labor practices within the meaning of the National Labor Relations Act.
\nFAS is not presently, nor has it been in the past, a party to, or bound by, any
\ncollective bargaining agreement or union contract with respect to Employees and
\nno collective bargaining agreement is being negotiated by FAS.<\/p>\n
(l) International Employee Plan. FAS does not now, nor has it ever
\nhad the obligation to, maintain, establish, sponsor, participate in, or
\ncontribute to any International Employee Plan.<\/p>\n
2.15 Environmental Matters.<\/p>\n
(a) Hazardous Material. Except as would not result in material
\nliability to FAS, no underground storage tanks and no amount of any substance
\nthat has been designated by any Governmental Entity or by applicable federal,
\nstate or local law to be radioactive, toxic, hazardous or otherwise a danger to
\nhealth or the environment, including, without limitation, PCBs, asbestos,
\npetroleum, urea-formaldehyde and all substances listed as hazardous substances
\npursuant to the Comprehensive Environmental Response, Compensation, and
\nLiability Act of 1980, as amended, or defined as a hazardous waste pursuant to
\nthe United States Resource Conservation and Recovery Act of 1976, as amended,
\nand the regulations promulgated pursuant to said laws, but excluding office and
\njanitorial supplies (a “Hazardous Material”) are present, as a result of the
\nactions of FAS or any affiliate of FAS, or, to FAS’s knowledge, as a result of
\nany actions of any third party or otherwise, in, on or under any property,
\nincluding the land and the improvements, ground water and surface water thereof,
\nthat FAS or any of its subsidiaries has at any time owned, operated, occupied or
\nleased.<\/p>\n
(b) Hazardous Materials Activities. Except as would not result in a
\nmaterial liability to FAS (in any individual case or in the aggregate) (i) FAS
\nhas not transported, stored, used, manufactured, disposed of, released or
\nexposed its employees or others to Hazardous Materials in violation of any law
\nin effect on or before the Closing Date and (ii) FAS has not disposed of,
\ntransported, sold, used, released, exposed its employees or others to or
\nmanufactured any product containing a Hazardous Material (collectively
\n“Hazardous Materials Activities”) in violation of any rule, regulation, treaty
\nor statute promulgated by any Governmental Entity in effect prior to or as of
\nthe date hereof to prohibit, regulate or control Hazardous Materials or any
\nHazardous Material Activity.<\/p>\n
-18-<\/p>\n
(c) Permits. FAS holds all environmental approvals, permits,
\nlicenses, clearances and consents (the “FAS Environmental Permits”) necessary
\nfor the conduct of FAS’s and its subsidiaries’ Hazardous Material Activities and
\nother businesses of FAS and its subsidiaries as such activities and businesses
\nare currently being conducted.<\/p>\n
(d) Environmental Liabilities. No action, proceeding, revocation
\nproceeding, amendment procedure, writ or injunction is pending, and to the
\nknowledge of FAS, no action, proceeding, revocation proceeding, amendment
\nprocedure, writ or injunction has been threatened by any Governmental Entity
\nagainst FAS or any of its subsidiaries in a writing delivered to FAS concerning
\nany FAS Environmental Permit, Hazardous Material or any Hazardous Materials
\nActivity of FAS. FAS has no knowledge of any fact or circumstance which would
\ninvolve FAS in any environmental litigation or impose upon FAS any material
\nenvironmental liability.<\/p>\n
2.16 Year 2000 Compliance. FAS’s products and internal systems have been
\ndesigned to ensure date and time entry recognition, calculations that
\naccommodate same century and multi-century formulas and date values, leap year
\nrecognition and calculations, and date data interface values that accurately
\nreflect the century. FAS’s products and internal systems manage and manipulate
\ndata involving dates and times, including single century formulas and multi-
\ncentury formulas, and do not cause an abnormal ending scenario within the
\napplication or generate incorrect values or invalid results involving such
\ndates.<\/p>\n
2.17 Agreements, Contracts and Commitments. Except as otherwise set forth
\nin Part 2.17 of the FAS Schedules, as of the date hereof FAS is not a party to
\nor bound by:<\/p>\n
(a) any employment or consulting agreement, contract or commitment
\ncurrently in force with any employee, officer or member of FAS’s Board of
\nDirectors, other than those that are terminable by FAS or any of its
\nsubsidiaries on no more than thirty (30) days’ notice without liability or
\nfinancial obligation, except to the extent general principles of wrongful
\ntermination law may limit FAS’s ability to terminate employees at will;<\/p>\n
(b) any agreement of indemnification or any guaranty by FAS currently
\nin force other than any agreement of indemnification entered into in connection
\nwith the sale or license of software products in the ordinary course of
\nbusiness;<\/p>\n
(c) any agreement, contract or commitment containing any covenant
\ncurrently in force limiting in any respect the right of FAS to engage in any
\nline of business or to compete with any person or granting any exclusive
\ndistribution rights;<\/p>\n
(d) any agreement, contract or commitment currently in force relating
\nto the disposition or acquisition by FAS after the date of this Agreement of a
\nmaterial amount of assets not in the ordinary course of business or pursuant to
\nwhich FAS has any material ownership interest in any corporation, partnership,
\njoint venture or other business enterprise other than FAS’s subsidiaries;<\/p>\n
-19-<\/p>\n
(e) any joint marketing or development agreement currently in force
\nunder which FAS or any of its subsidiaries have continuing material obligations
\nto jointly market any product, technology or service and which may not be
\ncanceled without penalty upon notice of ninety (90) days or less, or any
\nmaterial agreement pursuant to which FAS has continuing material obligations to
\njointly develop any intellectual property that will not be owned, in whole or in
\npart, by FAS and which may not be canceled without penalty upon notice of ninety
\n(90) days or less;<\/p>\n
(f) any agreement, contract or commitment currently in force to
\nprovide source code to any third party for any product or technology that is
\nmaterial to FAS;<\/p>\n
(g) any agreement or plan currently in force, including, without
\nlimitation, any stock option plan, stock appreciation right plan or stock
\npurchase plan, any of the benefits of which will be increased, or the vesting of
\nbenefits of which will be accelerated, by the occurrence of any of the
\ntransactions contemplated by this Agreement or the value of any of the benefits
\nof which will be calculated on the basis of any of the transactions contemplated
\nby this Agreement;<\/p>\n
(h) any agreement, contract or commitment currently in force to sell
\nor distribute any FAS products, service or technology except agreements with
\ndistributors or sales representatives in the normal course of business
\ncancelable without penalty upon notice of ninety (90) days or less and
\nsubstantially in the form previously provided or made available to Purchaser;<\/p>\n
(i) any mortgages, indentures, guarantees, loans or credit agreements,
\nsecurity agreements or other agreements or instruments currently in force
\nrelating to the borrowing of money or extension of credit;<\/p>\n
(j) any settlement agreement entered into within two (2) years prior
\nto the date of this Agreement; or<\/p>\n
(k) any other agreement, contract or commitment that has a value of
\n$50,000 or more individually.<\/p>\n
Neither FAS, nor to FAS’s knowledge any other party to a material Contract,
\nis in breach, violation or default under, and FAS has not received written
\nnotice that it has breached, violated or defaulted under, any of the material
\nterms or conditions of any material Contract to which FAS is bound, in such a
\nmanner as would permit any other party to cancel or terminate any such material
\nContract, or would permit any other party to seek material damages or other
\nremedies (for any or all of such breaches, violations or defaults, in the
\naggregate).<\/p>\n
2.18 Insurance. FAS maintains insurance policies and fidelity bonds
\ncovering the assets, business, equipment, properties, operations, employees,
\nofficers and directors of FAS (collectively, the “Insurance Policies”) which are
\nset forth on Part 2.18 of the FAS Schedules. There is no material claim by FAS
\npending under any of the material Insurance Policies as to which coverage has
\nbeen questioned, denied or disputed by the underwriters of such policies or
\nbonds.<\/p>\n
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2.19 Contingent Payment Arrangements. Following the Closing, neither
\nPurchaser nor FAS will have any obligation to make any payments to any
\nindividual or entity based upon the financial performance of FAS.<\/p>\n
ARTICLE 3.<\/p>\n
REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER<\/p>\n
As of the date hereof and as of the Closing Date, each of the Shareholders
\nfurther represents and warrants to Purchaser, as follows:<\/p>\n
3.1 Ownership of Shares. As of the date hereof, such Shareholder is the
\nsole record and beneficial owner of the shares of FAS Capital Stock designated
\nas being owned by such Shareholder opposite such Shareholder’s name in Part
\n2.2(a) of the FAS Schedules. As of the Closing, such Shareholder will be the
\nsole record and beneficial owner of the shares of FAS Capital Stock designated
\nas being owned by such Shareholder opposite such Shareholder’s name in Part
\n2.2(a) of the FAS Schedules. Such shares are not subject to any Encumbrances and
\nwill not become subject to any Encumbrances upon transfer to the Purchaser, and
\nsuch Shareholder has not granted any rights to purchase such shares to any other
\nperson or entity. Such Shareholder has the sole right to transfer such shares to
\nPurchaser. Such shares constitute all of the FAS Capital Stock owned by such
\nShareholder, and such Shareholder has no options, warrants or other rights to
\nacquire FAS Capital Stock. Upon the Closing, Purchaser will receive good title
\nto such shares, subject to no Encumbrances retained, granted or permitted by
\nsuch stockholder or FAS. Such Shareholder has not engaged in any sale or other
\ntransfer of any FAS Capital Stock in contemplation of the transactions
\ncontemplated by this Agreement.<\/p>\n
3.2 Authority; Non-Contravention.<\/p>\n
(a) Such Shareholder has all requisite power and authority to
\nenter into this Agreement and to consummate the transactions contemplated
\nhereby. The execution and delivery of this Agreement and the consummation of the
\ntransactions contemplated hereby have been duly authorized by all necessary
\naction on the part of such Shareholder. This Agreement has been duly executed
\nand delivered by such Shareholder and, assuming due execution and delivery by
\nother parties hereto, constitutes a valid and binding obligation of such
\nShareholder, enforceable against such Shareholder in accordance with its terms,
\nexcept as enforceability may be limited by bankruptcy and other similar laws and
\ngeneral principles of equity. The execution and delivery of this Agreement by
\nsuch Shareholder does not, and the performance of this Agreement by such
\nShareholder will not, (i) if applicable, conflict with the organizational
\ndocuments of such Shareholder, (ii) conflict with or violate any law, rule,
\nregulation, order, judgment or decree applicable to such Shareholder or by which
\nShareholder or, if applicable, any of its respective properties is bound or
\naffected, subject to compliance with the requirements set forth in Section
\n3.2(b) below<\/p>\n
-21-<\/p>\n
(b) No consent, approval, order or authorization of, or registration,
\ndeclaration or filing with any Governmental Entity, is required to be obtained
\nor made by such Shareholder in connection with the execution and delivery of
\nthis Agreement or the consummation of the transactions contemplated hereby,
\nexcept for (i) such consents, approvals, orders, authorizations, registrations,
\ndeclarations and filings as may be required under applicable federal, foreign
\nand state securities (or related) laws, the HSR Act and the securities or
\nantitrust laws of any foreign country, and (ii) such other consents,
\nauthorizations, filings, approvals and registrations which if not obtained or
\nmade would not be material to Purchaser or FAS or have a material adverse effect
\non the ability of the parties hereto to consummate the transactions contemplated
\nby the Agreement.<\/p>\n
3.3 Investment Representations.<\/p>\n
(a) Shareholder is aware of the Purchaser’s business affairs and
\nfinancial condition and has acquired sufficient information about the Purchaser
\nto reach an informed and knowledgeable decision to acquire the securities.
\nShareholder is purchasing such Shareholder’s allocation of the Share Payment for
\ninvestment for his own account only and not with a view to, or for resale in
\nconnection with, any “distribution” thereof within the meaning of the Securities
\nAct of 1933, as amended (the “Securities Act”).<\/p>\n
(b) Shareholder understands that the shares constituting the Share
\nPayment have not been registered under the Securities Act by reason of a
\nspecific exemption therefrom, which exemption depends upon, among other things,
\nthe bona fide nature of his investment intent and other representations as
\nexpressed herein.<\/p>\n
(c) Shareholder further acknowledges and understands that the
\nShareholder’s portion of the shares constituting the Share Payment must be held
\nindefinitely unless they are subsequently registered under the Securities Act or
\nan exemption from such registration is available. Shareholder understands that
\nthe certificate evidencing such Shareholder’s portion of the Share Payment will
\nbe imprinted with a legend which prohibits the transfer of the securities unless
\nthey are registered or such registration is not required in the opinion of
\ncounsel for the Purchaser. Shareholder further acknowledges that the Purchaser
\nis under no obligation to register the shares constituting the Share Payment.<\/p>\n
(d) Shareholder is an accredited investor as defined in Rule 501(a)
\nof Regulation D promulgated under the Securities Act or Shareholder, by reason
\nof Shareholder’s business or financial experience has the capacity to protect
\nShareholder’s own interests in connection with the receipt of the shares
\nconstituting the Share Payment.<\/p>\n
(e) Shareholder is aware of the adoption of Rule 144 by the
\nSecurities and Exchange Commission (the “SEC”), promulgated under the Securities
\nAct, which permits limited public resale of securities acquired in a non-public
\noffering subject to the satisfaction of certain conditions set forth therein,
\nincluding, among other things, a one-year holding period, the availability of
\ncertain public information about the issuer, the requirement that the sale be
\neffect through a “broker’s<\/p>\n
-22-<\/p>\n
transaction” or in transactions directly with a “market maker” (as defined in
\nRule 144) and the number of shares being sold in any three-month period not
\nexceeding specific limitations.<\/p>\n
(f) Shareholder further acknowledges that in the event all of the
\nrequirements of Rule 144 are not met, some other registration exemption will be
\nrequired; and that although Rule 144 is not exclusive, the staff of the SEC has
\nexpressed its opinion that persons proposing to sell private placement
\nsecurities other than in a registered offering and other than pursuant to Rule
\n144 will have a substantial burden of proof in establishing that an exemption
\nfrom registration is available for such offers or sales and that such persons
\nand the brokers who participate in the transactions do so at their own risk.<\/p>\n
(g) The Shareholder understands that Shareholder (and not the
\nPurchaser) shall be responsible for his own federal, state, local or foreign tax
\nliability and any of his other tax consequences that may arise as a result of
\nthe transactions contemplated by this Agreement. Shareholder shall rely solely
\non the determinations of his tax advisors or his own determinations, and not on
\nany statements or representations by the Purchaser or any of its agents, with
\nregard to all such tax matters.<\/p>\n
(h) Shareholder understands that the transfer of the Shares has not
\nbeen qualified with the Commissioner of Corporations of the State of California
\nand the issuance of such securities or the payment or receipt of any part of the
\nconsideration therefor prior to such qualification is unlawful unless the sale
\nof securities is exempt from qualification by the California Corporations Code.<\/p>\n
ARTICLE 4.<\/p>\n
REPRESENTATIONS AND WARRANTIES OF PURCHASER<\/p>\n
As of the date hereof and as of the Closing Date, Purchaser represents and
\nwarrants to each Shareholder, subject to the exceptions specifically disclosed
\nin writing in the disclosure letter and referencing a specific representation
\n(unless it would be clearly apparent to a reasonable person that the disclosure
\nwould be relevant to another representation) supplied by Purchaser to each of
\nthe Shareholders dated as of the date hereof and certified by a duly authorized
\nofficer of Purchaser (the “Purchaser Schedules”), as follows:<\/p>\n
4.1 Authority; Non-Contravention.<\/p>\n
(a) Purchaser has all requisite corporate power and authority to
\nenter into this Agreement and to consummate the transactions contemplated
\nhereby. The execution and delivery of this Agreement and the consummation of the
\ntransactions contemplated hereby have been duly authorized by all necessary
\ncorporate action on the part of Purchaser. This Agreement has been duly executed
\nand delivered by Purchaser and assuming execution and delivery by the other
\nparties hereto constitutes a valid and binding obligation of Purchaser,
\nenforceable against Purchaser in accordance with its terms, except as
\nenforceability may be limited by bankruptcy and other similar laws and<\/p>\n
-23-<\/p>\n
general principles of equity. The execution and delivery of this Agreement by
\nPurchaser does not, and the performance of this Agreement by Purchaser will not,
\n(i) conflict with the Purchaser Charter Documents (as defined below), (ii)
\nconflict with or violate any law, rule, regulation, order, judgment or decree
\napplicable to Purchaser or any of its subsidiaries or by which Purchaser or any
\nof its subsidiaries or any of their respective properties are bound or affected,
\nsubject to compliance with the requirements set forth in Section 4.1(b) below or
\n(iii) result in any breach of or constitute a default (or an event that with
\nnotice or lapse of time or both would become a material default) under, or
\nimpair Purchaser’s rights or alter the rights or obligations of any third party
\nunder, or give to others any rights of termination, amendment, acceleration or
\ncancellation of, or result in the creation of lien or Encumbrance on any of the
\nproperties or assets of Purchaser or any of its subsidiaries pursuant to, any
\nnote, bond, mortgage, indenture, contract, agreement, lease, license, permit,
\nfranchise, concession, or other instrument or obligation to which Purchaser or
\nany of its subsidiaries is a party or by which Purchaser or any of its
\nsubsidiaries or its or any of their respective assets are bound or affected, any
\nof which would result in a Material Adverse Effect on Purchaser. Part 4.1(a) of
\nthe Purchaser Schedules lists all consents, waivers and approvals under any of
\nPurchaser’s or any of its subsidiaries’ agreements, contracts, licenses or
\nleases required to be obtained in connection with the consummation of the
\ntransactions contemplated hereby, which, if individually or in the aggregate not
\nobtained, would result in a material loss of benefits to the Purchaser.<\/p>\n
(b) No consent, approval, order or authorization of, or registration,
\ndeclaration or filing with any Governmental Entity, is required to be obtained
\nor made by Purchaser or any of its subsidiaries in connection with the execution
\nand delivery of this Agreement or the consummation of the transactions
\ncontemplated by this Agreement, except for (i) such consents, approvals, orders,
\nauthorizations, registrations, declarations and filings as may be required under
\napplicable federal, foreign and state securities (or related) laws, the HSR Act
\nand the securities or antitrust laws of any foreign country and (ii) such other
\nconsents, authorizations, filings, approvals and registrations which if not
\nobtained or made would not be material to Purchaser or have a material adverse
\neffect on the ability of the parties hereto to consummate the transactions
\ncontemplated by this Agreement.<\/p>\n
4.2 Organization of Purchaser.<\/p>\n
(a) Purchaser is a corporation duly organized, validly existing and
\nin good standing under the laws of the jurisdiction of its incorporation and has
\nall necessary power and authority: (i) to conduct its business in the manner in
\nwhich its business is currently being conducted; (ii) to own and use its assets
\nin the manner in which its assets are currently owned and used; and (iii) to
\nperform its obligations under all material Contracts by which it is bound.<\/p>\n
(b) Purchaser is qualified to do business as a foreign corporation,
\nand is in good standing, under the laws of all jurisdictions where the nature of
\nits business requires such qualification and where the failure to so qualify
\nwould have a Material Adverse Effect on Purchaser.<\/p>\n
(c) Purchaser has delivered or made available to FAS a true and
\ncorrect copy of the Certificate of Incorporation and Bylaws of Purchaser, each
\nas amended to date (collectively, the<\/p>\n
-24-<\/p>\n
“Purchaser Charter Documents”), and each such instrument is in full force and
\neffect. Purchaser is not in violation of any of the provisions of the Purchaser
\nCharter Documents.<\/p>\n
4.3 Purchaser SEC Filings; Financial Statements.<\/p>\n
(a) Purchaser has filed all forms, reports and document required to
\nbe filed with the SEC since August 4, 1999. All such required forms, reports and
\ndocuments (including those that Purchaser may file subsequent to the date
\nhereof) are referred to herein as the “Purchaser SEC Reports”). As of their
\nrespective dates (or, if amended, as of the respective dates of such
\namendments), Purchaser SEC Reports (i) complied as to form in all material
\nrespects with the requirements of the Securities Act, or the Exchange Act of
\n1934, as amended (the “Exchange Act”), as the case may be, and the rules and
\nregulations of the SEC thereunder applicable to such Purchaser SEC Reports and
\n(ii) did not at the time they were filed contain any untrue statement of a
\nmaterial fact or omit to state a material fact required to be stated therein or
\nnecessary in order to make the statements therein, in the light of the
\ncircumstances under which they were made, not misleading. None of Purchaser’s
\nsubsidiaries is required to file any forms, reports or other documents with the
\nSEC.<\/p>\n
(b) Each of the consolidated financial statements (including, in each
\ncase, any related notes thereto) contained in Purchaser SEC Reports (the
\n“Purchaser Financials”) (i) complied as to form in all material respects with
\nthe published rules and regulations of the SEC with respect thereto, (ii) was
\nprepared in accordance with GAAP applied on a consistent basis throughout the
\nperiods involved (except as may be indicated in the notes thereto or, in the
\ncase of unaudited interim financial statements, as may be permitted by the SEC
\non Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated
\nfinancial position of Purchaser and its subsidiaries as at the respective dates
\nthereof and the consolidated results of Purchaser’s operations and cash flows
\nfor the periods indicated, except that unaudited interim financial statements
\nmay not contain footnotes and were or are subject to normal and recurring year-
\nend adjustments which would not have a Material Adverse Effect on Purchaser.<\/p>\n
4.4 No Material Adverse Change. Since June 30, 1999, there has not been a
\nMaterial Adverse Effect on Purchaser.<\/p>\n
4.5 Brokers’ and Finders’ Fees. Neither Purchaser nor its subsidiaries have
\nincurred, nor will they incur, directly or indirectly, any liability for
\nbrokerage or finders’ fees or agents’ commissions or any similar charges in
\nconnection with this Agreement or any transaction contemplated hereby.<\/p>\n
4.6 Corporate Approvals. The Board of Directors of Purchaser has, as of the
\ndate of this Agreement, approved this Agreement and the transactions
\ncontemplated hereby. To the extent necessary, as of the Closing, the
\nStockholders of the Purchaser will have approved this Agreement and the
\ntransactions contemplated hereby.<\/p>\n
-25-<\/p>\n
4.7 Share Issuance. The shares representing the Share Payment when
\ndelivered will be duly authorized, fully paid and non-assessable.<\/p>\n
ARTICLE 5.<\/p>\n
CONDUCT PRIOR TO THE CLOSING DATE<\/p>\n
5.1 Conduct of Business of FAS. During the period from the date of this
\nAgreement and continuing until the earlier of the termination of this Agreement
\nor the Closing, FAS agrees to, and the Shareholders agree to cause FAS to, carry
\non FAS’s business in the usual, regular and ordinary course in substantially the
\nsame manner as heretofore conducted, to pay the debts and Taxes of FAS when due,
\nto pay or perform other obligations when due, and, to the extent consistent with
\nsuch business, use all reasonable efforts consistent with past practice and
\npolicies to preserve intact FAS’s present business organization, keep available
\nthe services of FAS’s present officers and employees and preserve FAS’s
\nrelationships with customers, suppliers, distributors, licensors, licensees and
\nothers having business dealings with it, all with the goal of preserving
\nunimpaired FAS’s goodwill and ongoing business at the Closing. Except as
\nexpressly contemplated by Part 5.1 of the FAS Schedules or as otherwise
\nexpressly provided in this Agreement, FAS shall not, and the Shareholders shall
\ncause FAS to not, without the prior written consent of Purchaser:<\/p>\n
(a) other than performing the Contracts listed in the FAS Schedules
\nin accordance with their terms existing on the date hereof, make any expenditure
\nor enter into any transaction exceeding $50,000 or any commitment or transaction
\nof the type described in Section 2.17 hereof;<\/p>\n
(b) sell, license or transfer to any person or entity of any rights
\nto any FAS Intellectual Property or enter into any agreement with respect to the
\nFAS Intellectual Property with any person or entity other than in the ordinary
\ncourse of business consistent with past practice;<\/p>\n
(c) amend or change its Articles of Incorporation or Bylaws;<\/p>\n
(d) revalue any of its assets, including without limitation writing
\ndown the value of inventory or writing off notes or accounts receivable other
\nthan in the ordinary course of business consistent with past practice;<\/p>\n
(e) issue, sell, grant, contract to issue, grant or sell, or
\nauthorize the issuance, delivery, sale or purchase of any shares of FAS Capital
\nStock or securities convertible into, or exercisable or exchangeable for, shares
\nof FAS Capital Stock, or any securities, warrants, options or rights to purchase
\nany of the foregoing;<\/p>\n
(f) declare, set aside or pay any dividends on or make any other
\ndistributions (whether in cash, stock or property) in respect of any FAS Capital
\nStock, or split, combine or reclassify any shares of FAS Capital Stock, or issue
\nor authorize the issuance of any other securities in respect of, in lieu of or
\nin substitution for shares of FAS Capital Stock, or repurchase, redeem, or<\/p>\n
-26-<\/p>\n
otherwise acquire, directly or indirectly, any shares of FAS Capital Stock (or
\noptions, warrants or other rights convertible into, exercisable or exchangeable
\ntherefor);<\/p>\n
(g) grant any severance or termination pay (i) to any director or
\nofficer or (ii) to any employee, or increase in the salary or other compensation
\npayable or to become payable by FAS to any of its officers, directors, employees
\nor advisors, or declare, pay or make any commitment or obligation of any kind
\nfor the payment by FAS of a bonus or other additional salary or compensation to
\nany such person, or adopt or amend any employee benefit plan or enter into any
\nemployment contract other than in the ordinary course of business consistent
\nwith past practice;<\/p>\n
(h) sell, lease, license or otherwise dispose of any of the assets or
\nproperties of FAS which are not Intellectual Property other than in the ordinary
\ncourse of business and consistent with past practices, including but not limited
\nto the performance of obligations under contractual arrangements existing as of
\nthe date hereof set forth on the FAS Schedules, or create any security interest
\nin such assets or properties;<\/p>\n
(i) grant any loan to any person or entity except for accounts
\nreceivable in the ordinary course of business consistent with past practice,
\nincur any indebtedness or guarantee any indebtedness except for accounts payable
\nincurred in the ordinary course of business consistent with past practice, issue
\nor sell any debt securities, guarantee any debt securities of others, purchase
\nany debt securities of others or amend the terms of any outstanding agreements
\nrelated to borrowed money, except for advances to employees for travel and
\nbusiness expenses in the ordinary course of business consistent with past
\npractice;<\/p>\n
(j) amend in any material respect or otherwise modify (or agree to do
\nso), or violate the terms of any of the Contracts set forth or described in the
\nFAS Schedules or enter into any material Contract except in the ordinary course
\nof business consistent with past practice;<\/p>\n
(k) commence or settle any litigation;<\/p>\n
(l) acquire or agree to acquire by merging or consolidating with, or
\nby purchasing any assets or equity securities or, or by any other manner, any
\nbusiness or any corporation, partnership, association or other business
\norganization or division thereof, or otherwise acquire or agree to acquire any
\nassets which are material, individually or in the aggregate, to FAS’s business;<\/p>\n
(m) pay, discharge or satisfy, in an amount in excess of $50,000 (in
\nany one case) or $100,000 (in the aggregate), any claim, liability or obligation
\n(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
\nthe payment, discharge or satisfaction of liabilities in the ordinary course of
\nbusiness and in a manner consistent with past practice;<\/p>\n
(n) make or change any material election in respect of Taxes, adopt
\nor change any accounting method in respect of Taxes, enter into any closing
\nagreement, settle any claim or<\/p>\n
-27-<\/p>\n
assessment in respect of Taxes, or consent to any extension or waiver of the
\nlimitation period applicable to any claim or assessment in respect of Taxes;<\/p>\n
(o) terminate any employees other than for cause or encourage any
\nemployees to resign from FAS;<\/p>\n
(p) enter into any contract, purchase order or other agreement
\npursuant to which FAS would be required to book any amounts due thereunder as
\ndeferred revenue; or<\/p>\n
(q) take or agree in writing or otherwise to take any of the actions
\ndescribed in the preceding clauses (a) through (p) of this Section 5.1 or any
\nother action that would prevent FAS from performing or cause FAS not to perform
\nits covenants hereunder.<\/p>\n
5.2 Exclusivity. Until the earlier of (i) the Closing or (ii) the date of
\ntermination of this Agreement pursuant to the provisions of Section 9.1 hereof,
\nFAS and the Shareholders, jointly and severally, agree that they shall not (nor
\nshall they permit any of their respective officers, directors, agents,
\nrepresentatives or affiliates to) directly or indirectly, take any of the
\nfollowing actions with any party other than Purchaser and its designees: (a)
\nsolicit, encourage, initiate or participate in any inquiry, negotiations or
\ndiscussions or enter into any agreement with respect to any offer or proposal to
\nacquire any portion of FAS’s business and properties or any shares of FAS
\nCapital Stock (whether or not outstanding) whether by merger, purchase of
\nassets, tender offer or otherwise, or effect any such transaction, (b) disclose
\nany information not customarily disclosed to such person concerning FAS’s
\nbusiness, technologies, or properties, or afford to any person or entity access
\nto its properties, technologies, books or records, not customarily afforded such
\naccess, (c) assist or cooperate with any person to make any proposal to purchase
\nall or any part of the FAS Capital Stock or FAS’s assets or (d) solicit,
\nnegotiate or enter into any agreement with any person providing for the
\nacquisition of FAS (whether by way of merger, purchase of assets, tender offer
\nor otherwise). In the event FAS or any Shareholder shall receive, prior to the
\nClosing or the termination of this Agreement, any offer or proposal, directly or
\nindirectly, of the type referred to in clause (a) or (c) above, or any request
\nfor disclosure or access pursuant to clause (b) above, FAS and the Shareholders
\nshall immediately inform Purchaser as to any such offer or proposal, including
\ninformation as to the identity of the offeror or the party making such offer or
\nproposal and the specific terms of such offer or proposal, as the case may be.
\nThe parties hereto agree that irreparable damage would occur in the event that
\nthe provisions of this Section 5.2 were not performed in accordance with their
\nspecific terms or were otherwise breached. It is accordingly agreed by FAS and
\nthe Shareholders that Purchaser shall be entitled to seek an injunction or
\ninjunctions to prevent breaches of the provisions of this Section 5.2 and to
\nenforce specifically the terms and provisions hereof in any court of the United
\nStates or any state having jurisdiction, this being in addition to any other
\nremedy to which Purchaser may be entitled at law or in equity. Without limiting
\nthe foregoing, it is understood that any violation of the restrictions set forth
\nin this Section 5.2 by any officer, director or employee of FAS or a Shareholder
\nor any investment banker, attorney or other advisor or representative of FAS or
\na Shareholder shall be deemed to be a breach of this Section 5.2.<\/p>\n
-28-<\/p>\n
ARTICLE 6.<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
6.1 Restrictions on Transfer<\/p>\n
(a) All certificates representing Common Stock of Purchaser and
\ndeliverable to any Shareholder pursuant to this Agreement and any certificates
\nsubsequently issued with respect thereto or in substitution therefor (including
\nany shares issued or issuable in respect of any such shares upon any stock
\nsplit, stock dividend, recapitalization, conversion or similar event) shall be
\nstamped or otherwise imprinted with legends in the following form:<\/p>\n
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
\n UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES REPRESENTED
\n BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
\n SUCH REGISTRATION OR A LEGAL OPINION IN ACCORDANCE WITH A WRITTEN
\n OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
\n SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
\n SECURITIES ACT OF 1933.<\/p>\n
THE TRANSFER RESTRICTIONS APPLICABLE TO THESE SHARES ARE BINDING ON
\n TRANSFEREES OF THESE SHARES.<\/p>\n
(b) The certificates evidencing the Share Payment Shares shall also
\nbear any legend required by the Commissioner of Corporations of the State of
\nCalifornia or such as are required pursuant to any state, local or foreign law
\ngoverning such securities.<\/p>\n
(c) The shares comprising the Share Payment will not be registered
\nunder the Securities Act.<\/p>\n
(d) No Shareholder shall be permitted to sell or otherwise dispose of
\nany of the shares comprising the Share Payment pursuant to this Agreement,
\nunless the resale of such shares has been registered under the Securities Act by
\nthe Purchaser or Purchaser receives an unqualified written opinion of counsel
\nreasonably acceptable to it stating that the proposed transfer of such shares
\nmay be effected without registration under the Securities Act.<\/p>\n
(e) Purchaser shall be entitled to impose “stop-transfer” orders with
\nthe transfer agent for its Common Stock to enforce the provisions of this
\nSection 6.1.<\/p>\n
(f) Each Shareholder agrees not to sell or otherwise transfer or
\ndispose of any shares of Purchaser Common Stock deliverable to pursuant to this
\nAgreement unless the transferee agrees to be bound by the restrictions of this
\nSection 6.1.<\/p>\n
-29-<\/p>\n
6.2 Access to Information. FAS shall afford, and the Shareholders shall
\ncause FAS to afford, Purchaser and its accountants, counsel and other
\nrepresentatives reasonable access during normal business hours during the period
\nprior to the Closing to (a) all of FAS’s properties, books, contracts,
\ncommitments and records, (b) all other information concerning the business,
\nproperties and personnel (subject to restrictions imposed by applicable law) of
\nFAS and (c) all key employees of FAS. FAS agrees, and the Shareholders shall
\ncause FAS, to provide to Purchaser and its accountants, counsel and other
\nrepresentatives copies of internal financial statements promptly upon request.
\nNo information or knowledge obtained in any investigation pursuant to this
\nSection 6.3 shall affect or be deemed to modify any representation or warranty
\ncontained herein or the conditions to the obligations of the parties to
\nconsummate the transactions contemplated by this Agreement.<\/p>\n
6.3 Confidentiality. Each of the parties hereto hereby agrees that the
\ninformation obtained in any investigation pursuant to Section 6.2 hereof, or
\npursuant to the negotiation and execution of this Agreement or the effectuation
\nof the transactions contemplated hereby, shall be governed by the terms of the
\nConfidentiality Agreements, executed effective as of June 10, 1999, and
\nSeptember 2, 1999, respectively, between CNI and Purchaser (collectively, the
\n“Confidentiality Agreements”). Each Shareholder agrees to be bound by the terms
\nof the Confidentiality Agreements as if such Shareholder were a party to the
\nConfidentiality Agreements.<\/p>\n
6.4 Expenses. Whether or not the transactions are consummated, all fees and
\nexpenses incurred in connection with the transactions contemplated hereby
\nincluding, without limitation, all legal, accounting, financial advisory,
\nconsulting and all other fees and expenses of third parties incurred by a party
\nhereto in connection with the negotiation and effectuation of the terms and
\nconditions of this Agreement and the transactions contemplated hereby or
\nthereby, shall be the obligation of the respective party incurring such fees and
\nexpenses.<\/p>\n
6.5 Public Disclosure. Unless otherwise required by law, no disclosure
\n(whether or not in response to an inquiry) of the subject matter of this
\nAgreement shall be made by any party hereto unless approved by the other party
\nprior to release; provided, however, that such approval shall not be
\nunreasonably withheld, subject in the case of Purchaser, to Purchaser’s
\nobligation to comply with applicable securities laws and the rules of The Nasdaq
\nStock Market and, subject in the case of CNI, to CNI’s obligation to comply with
\napplicable securities laws and the rules of the New York Stock Exchange.<\/p>\n
6.6 Consents. FAS shall use commercially reasonable efforts, and the
\nShareholders shall use commercially reasonable efforts to cause FAS, to obtain
\nthe consents, waivers and approvals under any of the Contracts required in
\nconnection with the transactions contemplated hereby, including all such
\nconsents, waivers and approvals set forth in FAS Schedules, so as to preserve
\nall rights of, and benefits to, Purchaser thereunder.<\/p>\n
6.7 HSR Act. Purchaser, FAS and any applicable Shareholder each shall file
\nwith the United States Federal Trade Commission (“FTC”) and the Antitrust
\nDivision of the United States. <\/p>\n
-30-<\/p>\n
Department of Justice (the “DOJ”) any Notification and Report Forms relating to
\nthe transactions contemplated herein required by the HSR Act. Each of the
\nparties hereto shall promptly (i) supply the others with any information which
\nmay be required in order to effectuate such filings and (ii) supply any
\nadditional information which may reasonably be required by the FTC or the DOJ.<\/p>\n
6.8 FIRPTA Compliance. On the Closing Date, FAS shall deliver, and the
\nShareholders shall cause FAS to deliver, to Purchaser a properly executed
\nstatement in a form reasonably acceptable to Purchaser for purposes of
\nsatisfying Purchaser’s obligations under Treasury Regulation Section 1.1445-
\n2(c)(3).<\/p>\n
6.9 Reasonable Efforts. Subject to the terms and conditions provided in
\nthis Agreement, each of the parties hereto shall use commercially reasonable
\nefforts to take promptly, or cause to be taken, all actions, and to do promptly,
\nor cause to be done, all things necessary, proper or advisable under applicable
\nlaws and regulations to consummate and make effective the transactions
\ncontemplated hereby, to obtain all necessary waivers, consents and approvals and
\nto effect all necessary registrations and filings (including any filings or
\nregistrations necessary to perfect Purchaser’s ownership of any FAS Registered
\nIntellectual Property after the Closing) and to remove any injunctions or other
\nimpediments or delays, legal or otherwise, in order to consummate and make
\neffective the transactions contemplated by this Agreement for the purpose of
\nsecuring to the parties hereto the benefits contemplated by this Agreement.<\/p>\n
6.10 Notification of Certain Matters. FAS and the Shareholders shall give
\nprompt notice to Purchaser of (i) the occurrence or non-occurrence of any event,
\nthe occurrence or non-occurrence of which would cause any representation or
\nwarranty of FAS or the Shareholders contained in this Agreement to be untrue or
\ninaccurate, such that the condition set forth in Section 7.2(a) would not be
\nsatisfied and (ii) any failure of FAS or the Shareholders, as the case may be,
\nto comply with or satisfy in all material respects any covenant, condition or
\nagreement to be complied with or satisfied by it hereunder; provided, however,
\nthat the delivery of any notice pursuant to this Section 6.10 shall not limit or
\notherwise affect any remedies available to the party receiving such notice. No
\ndisclosure by FAS pursuant to this Section 6.10 shall be deemed to amend or
\nsupplement the FAS Schedules or prevent or cure any misrepresentation, breach of
\nwarranty or breach of covenant.<\/p>\n
Purchaser shall give prompt notice to FAS and the Shareholders of (i) the
\noccurrence or non-occurrence of any event, the occurrence or non-occurrence of
\nwould cause any representation or warranty of Purchaser contained in this
\nAgreement to be untrue or inaccurate, such that the condition set forth in
\nSection 7.3(a) would not be satisfied and (ii) any failure of Purchaser to
\ncomply with or satisfy in all material respects any covenant, condition or
\nagreement to be complied with or satisfied by it hereunder; provided, however,
\nthat the delivery of any notice pursuant to this Section 6.10 shall not limit or
\notherwise affect any remedies available to the party receiving such notice. No
\ndisclosure by Purchaser pursuant to this Section 6.10 shall be deemed to amend
\nor supplement the Purchaser Schedules or prevent or cure any misrepresentation,
\nbreach of warranty or breach of covenant.<\/p>\n
-31-<\/p>\n
6.11 Cooperation of Independent Accountants. At Purchaser’s request, FAS
\nshall use commercially reasonable efforts, and the Stockholders shall use
\ncommercially reasonable efforts to cause FAS, to cause its independent
\naccountants, PricewaterhouseCoopers LLP, to provide assistance, to Purchaser,
\nits affiliates and successors and Purchaser’s independent accountants in
\nconnection with the filing of any (i) registration statement under the
\nSecurities Act (and any amendments or supplements thereto), including but not
\nlimited to, consenting to the inclusion of the HBF Audited Financials in the
\nregistration statement as required by Regulation S-X under the Exchange Act, and
\nproviding, at Purchaser’s expense, a “comfort letter” addressed to the
\nunderwriters containing such representations as the underwriters may reasonably
\nrequest and (ii) periodic or current reports required to be filed by Purchaser
\npursuant to the Exchange Act.<\/p>\n
6.12 Employment Matters. FAS and the Shareholders shall use all reasonable
\nefforts to cause each existing employment agreement between FAS or its
\nsubsidiaries and an employee of FAS or its subsidiaries to be terminated as of
\nor before the Closing and shall use all reasonable efforts to obtain a release
\nfrom each such employee releasing Purchaser and FAS and their respective
\nsubsidiaries against any and all claims arising out of such employee’s
\nemployment arrangement.<\/p>\n
6.13 Employment and Non-Competition Agreements. Prior the Closing, each
\nShareholder listed on Exhibit G shall deliver to Purchaser a duly executed
\nEmployment and Non-Competition Agreement and the Shareholders shall use all
\nreasonable efforts to deliver or cause to be delivered to Purchaser a duly
\nexecuted Employment and Non-Competition Agreement from each of the other
\nindividuals listed on Exhibit G. Prior to Closing, CNI shall deliver a duly
\nexecuted Non-Competition and Non-Solicitation Agreement and Richard Ganley shall
\ndeliver a duly executed Consulting Agreement.<\/p>\n
6.14 Contingent Payment Agreements. Each of the Shareholders shall cause
\nany existing obligation of FAS or any of its subsidiaries to make payments to
\nsuch Shareholder based upon the financial performance of FAS or any of its
\nsubsidiaries to be terminated as of immediately prior to the Closing and shall
\nprovide a release from each such Shareholder releasing Purchaser, CNI and FAS
\nand their respective subsidiaries against any and all claims arising out of such
\ncontingent payment arrangement. FAS and the Shareholders shall use all
\nreasonable efforts to cause any other existing obligation of FAS to make
\npayments to any individual or entity based upon the financial performance of FAS
\nto be terminated as of immediately prior to the Closing and shall obtain a
\nrelease from each such individual or entity releasing Purchaser, CNI and FAS and
\ntheir respective subsidiaries against any and all claims arising out of such
\ncontingent payment arrangement.<\/p>\n
6.15 Director Resignations. Each Shareholder who is a director, by
\nsignature below, hereby tenders resignation from the FAS Board of Directors,
\neffective on the Closing. Each Shareholder who has the right to appoint and
\nremove a director shall take all measures to remove all directors elected by
\nsuch Shareholder effective on the Closing.<\/p>\n
6.16 Release. As of and following the Closing, each Shareholder, on behalf
\nof himself, herself or itself, as the case may be, and his, her or its
\nrespective heirs, family members, executors,<\/p>\n
-32-<\/p>\n
successors and assigns, hereby fully and forever releases HBF and FAS, and their
\nrespective officers, directors, employees, investors, shareholders,
\nadministrators, affiliates, divisions, subsidiaries, predecessor and successor
\ncorporations, and assigns (collectively, the “Released Parties”), from, and
\nagrees not to sue concerning, any claim, duty, obligation or cause of action
\nrelating to any matters of any kind, whether presently known or unknown,
\nsuspected or unsuspected, that he, she or it may possess arising from any
\nomissions, acts or facts that have occurred up until the Closing (other than
\nwith respect to claims for payment of ordinary course salary not in arrears as
\nof the date hereof), including:<\/p>\n
(a) any and all claims arising under Shareholder’s employment
\narrangements or employment relationship with CNI, HBF or FAS and their
\nrespective subsidiaries;<\/p>\n
(b) any and all claims arising under that certain Stockholder’s
\nAgreement by and among CNI, HBF and certain shareholders of HBF (“HBF
\nStockholder’s Agreement”); that certain Earn-Out Agreement between HBF, National
\nSchool Reporting Services, Inc. (“NSRS”) (“NSRS Earn-Out Agreement”), and the
\nformer stockholders of NSRS; that certain Stockholder’s Agreement by and among
\nCNI and the former stockholders of FAS (the “FAS Stockholder’s Agreement”), and
\nany other bonus sharing, earn-out or contingent payment arrangement to which
\nHBF, FAS or any of their respective subsidiaries is a party (each, a “Contingent
\nPayment Arrangement”), and any share repurchase, buyback or similar arrangement
\nbetween such Shareholder to which HBF or FAS or any of their respective
\nsubsidiaries is party (each, a “Buyback Arrangement”); and<\/p>\n
(c) any and all claims relating to, or arising from, Shareholder’s
\nacquisition of shares of stock of HBF or FAS or any of their subsidiaries,
\nincluding any claims for fraud, misrepresentation, breach of fiduciary duty,
\nbreach of duty under applicable state corporate law, and securities fraud under
\nany state or federal law.<\/p>\n
Shareholder agrees that the releases set forth in this section shall be and
\nremain in effect in all respects as a complete general release as to the matters
\nreleased. This release does not extend to any obligations incurred under this
\nAgreement. Each Shareholder represents that he, she or it, as the case may be,
\nis not aware of any claims against the Released Parties other than the claims
\nreleased by this Agreement. Each Shareholder acknowledges that he, she or it, as
\nthe case may be, has been advised by legal counsel and is familiar with the
\nprovisions of California Civil Code Section 1542, which provides as follows:<\/p>\n
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
\n NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
\n RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
\n SETTLEMENT WITH THE DEBTOR.<\/p>\n
-33-<\/p>\n
Shareholder, being aware of said code section, agrees to expressly waive
\nany rights he, she or it, as the case may be, may have thereunder, as well as
\nunder any other statute or common law principles of similar effect.<\/p>\n
6.17 Termination of Employment, Contingent Payment and Buyback
\nArrangements. If and to the extent a Shareholder is a party to any employment
\narrangement with HBF, FAS or any of their subsidiaries, the HBF Stockholder’s
\nAgreement, the NSRS Earn-Out Agreement, the FAS Stockholder’s Agreement, a
\nContingent Payment Arrangement and\/or a Buyback Arrangement, such Shareholder
\nagrees that such employment arrangement, HBF Stockholder’s Agreement, NSRS Earn-
\nOut Agreement, FAS Stockholder’s Agreement, Contingent Payment Arrangement or
\nBuyback Arrangement, as the case may be, shall terminate and be of no further
\nforce effect at and following the Closing.<\/p>\n
6.18 Morgan Stanley Consent. Purchaser will use commercially reasonable
\nefforts to obtain the written consent to issue the Shares of Morgan Stanley & Co. Incorporated under the terms of Section 2 of that certain underwriting
\nagreement dated August 4, 1999 by and among the Purchaser and Morgan Stanley & Co. Incorporated, Donaldson Lufkin & Jenrette Securities Corporation, BancBoston
\nRobertson Stephens Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated as
\nrepresentatives of the several underwriters named in Schedule I thereto (the
\n“Underwriter Consent”).<\/p>\n
ARTICLE 7.<\/p>\n
CONDITIONS TO THE PURCHASE AND SALE OF THE SHARES<\/p>\n
7.1 Conditions to Obligations of the Parties. The respective obligations
\nof each party to this Agreement to the purchase and sale of the securities set
\nforth in Section 1 shall be subject to the satisfaction at or prior to the
\nClosing of the following conditions:<\/p>\n
(a) No Injunctions or Restraints; Illegality. No temporary
\nrestraining order, preliminary or permanent injunction or other order issued by
\nany court of competent jurisdiction or other legal restraint or prohibition
\npreventing the consummation of the transaction contemplated by this Agreement
\nshall be in effect, nor shall any proceeding brought by an administrative agency
\nor commission or other governmental authority or instrumentality, domestic or
\nforeign, seeking any of the foregoing be pending; nor shall there be any action
\ntaken, or any statute, rule, regulation or order enacted, entered, enforced or
\ndeemed applicable to the transactions contemplated hereby, which makes the
\nconsummation of the transactions contemplated hereby illegal.<\/p>\n
(b) Permits. All approvals from government authorities, including
\nany requisite Blue Sky approvals or HSR Act approvals, which are appropriate or
\nnecessary for the consummation of the transactions contemplated by this
\nAgreement, shall have been obtained.<\/p>\n
-34-<\/p>\n
(c) The Homebuyer’s Fair, Inc. Closing. All of the conditions to the
\nobligations of the parties to consummate the transactions contemplated by the
\nStock Purchase Agreement dated as of the date hereof among Purchaser, HBF, the
\nShareholders of HBF and CNI, as Shareholder Agent (the “HBF Agreement”) shall
\nhave been satisfied or waived.<\/p>\n
7.2 Conditions to Obligations of Purchaser. The obligation of Purchaser to
\nconsummate and effect this Agreement and the transactions contemplated hereby
\nshall be subject to the satisfaction at or prior to the Closing Date of each of
\nthe following conditions, any of which may be waived, in writing, exclusively by
\nPurchaser:<\/p>\n
(a) Representations and Warranties. Each representation and warranty
\nof FAS and the Shareholders contained in this Agreement (i) shall have been true
\nand correct as of the date of this Agreement and (ii) shall be true and correct
\non and as of the Closing Date with the same force and effect as if made on the
\nClosing Date except, (A) in each case, or in the aggregate, as does not
\nconstitute a Material Adverse Effect on FAS or materially affect any of the
\nShareholders’ ability to consummate the transactions contemplated hereby;
\nprovided, however, such Material Adverse Effect qualification shall be
\ninapplicable with respect to the representations and warranties contained in
\nSection 2.2, the first three sentences of Section 2.4(a), Section 3.1 and the
\nfirst three sentences of Section 3.2(a) (which representations and warranties
\nshall have been, and shall be, true and correct in all respects) and (B) for
\nthose representations and warranties which address matters only as of a
\nparticular date (which representations shall have been true and correct (subject
\nto the qualifications set forth in the preceding clause (A)) as of such
\nparticular date) (it being understood that, for purposes of determining the
\naccuracy of such representations and warranties, any update of or modification
\nto the FAS Schedules made or purported to have been made after the execution of
\nthis Agreement shall be disregarded). Purchaser shall have received a
\ncertificate with respect to the foregoing signed on behalf of FAS by an
\nauthorized executive officer of FAS.<\/p>\n
(b) Agreements and Covenants. FAS and the Shareholders shall have
\nperformed or complied in all material respects with all agreements and covenants
\nrequired by this Agreement to be performed or complied with by them on or prior
\nto the Closing Date, and Purchaser shall have received a certificate to such
\neffect signed on behalf of FAS by an authorized executive officer of FAS.<\/p>\n
(c) Legal Opinion. Purchaser shall have received an opinion from
\nSnell & Wilmer L.L.P., legal counsel to CNI, substantially in the form attached
\nhereto as Exhibit H.<\/p>\n
(d) Employment and Non-Competition. Each of the individuals set forth
\non Exhibit G shall have entered into the Employment and Non-Competition
\nAgreement, and such agreements shall be in full force and effect.<\/p>\n
(e) Non-Competition and Non-Solicitation Agreement. CNI shall have
\nentered into the Non-Competition and Non-Solicitation Agreement, and such
\nagreement shall be in full force and effect.<\/p>\n
-35-<\/p>\n
(f) Third Party Consents. The consents, waivers and approvals listed
\nin the FAS Schedules shall have been obtained.<\/p>\n
(g) Termination of Employment Agreements. Each existing employment
\nagreement between FAS or its subsidiaries and an employee of FAS or its
\nsubsidiaries shall have been terminated and Purchaser shall have obtained a
\nrelease from each such employee in form and substance satisfactory to Purchaser
\nreleasing Purchaser and FAS and their respective subsidiaries against any and
\nall claims arising out of such employee’s employment arrangement.<\/p>\n
(h) Termination of Contingent Payment Obligations. All obligations of
\nthe Purchaser or FAS or their respective subsidiaries to make payments to based
\nupon the financial performance of FAS shall have been terminated and Purchaser
\nshall have obtained releases in form and substance satisfactory to it to such
\neffect.<\/p>\n
(i) Richard Ganley Consulting Agreement. Richard Ganley shall have
\nentered into the Consulting Agreement, and such agreement shall be in full force
\nand effect.<\/p>\n
7.3 Conditions to the Obligations of the Shareholders. The obligations of
\nthe Shareholders to consummate and effect this Agreement and the transactions
\ncontemplated hereby shall be subject to the satisfaction at or prior to the
\nClosing Date of each of the following conditions, any of which may be waived, in
\nwriting, exclusively by the Shareholders acting together:<\/p>\n
(a) Representations and Warranties. Each representation and warranty
\nof Purchaser contained in this Agreement (i) shall have been true and correct as
\nof the date of this Agreement and (ii) shall be true and correct on and as of
\nthe Closing Date with the same force and effect as if made on the Closing Date
\nexcept, (A) in each case, or in the aggregate, as does not constitute a Material
\nAdverse Effect on Purchaser; provided, however, such Material Adverse Effect
\nqualification shall be inapplicable with respect to the representations and
\nwarranties contained in the first three sentences of Section 4.1(a) and Section
\n4.7 (which representations and warranties shall have been, and shall be, true
\nand correct in all respects) and (B) for those representations and warranties
\nwhich address matters only as of a particular date (which representations shall
\nhave been true and correct (subject to the qualifications set forth in the
\npreceding clause (A)) as of such particular date) (it being understood that, for
\npurposes of determining the accuracy of such representations and warranties, any
\nupdate of or modification to the Purchaser Schedules made or purported to have
\nbeen made after the execution of this Agreement shall be disregarded). The
\nShareholders shall have received a certificate with respect to the foregoing
\nsigned on behalf of Purchaser by an authorized executive officer of Purchaser.<\/p>\n
(b) Agreements and Covenants. Purchaser shall have performed or
\ncomplied in all material respects with all agreements and covenants required by
\nthis Agreement to be performed or complied with by them on or prior to the
\nClosing Date, and the Shareholders shall have received a certificate to such
\neffect signed on behalf of Purchaser by an authorized executive officer of
\nPurchaser.<\/p>\n
-36-<\/p>\n
(c) Pledge Agreement. Purchaser shall have entered into the Pledge
\nAgreement, and such agreement shall be in full force and effect.<\/p>\n
(d) Legal Opinion. The Shareholders shall have received an opinion
\nfrom Fenwick & West LLP, legal counsel to Purchaser, substantially in the form
\nattached hereto as Exhibit I.<\/p>\n
(e) Underwriter Consent. The Shareholders shall have obtained from
\nPurchaser the Underwriter Consent.<\/p>\n
ARTICLE 8.<\/p>\n
SURVIVAL OF REPRESENTATIONS AND WARRANTIES<\/p>\n
8.1 Survival of Representations and Warranties. All representations and
\nwarranties in this Agreement or in any instrument delivered pursuant to this
\nAgreement shall survive the Closing and continue until 5:00 p.m., California
\ntime, on the first anniversary of the Closing Date (the “Expiration Date”).<\/p>\n
8.2 Indemnification.<\/p>\n
(a) Indemnification. The Shareholders shall severally indemnify
\nPurchaser for any claims, losses, liabilities, deficiencies, costs and expenses,
\nincluding reasonable attorneys’ fees and expenses and expenses of investigation
\nand defense, net of any benefits or proceeds of insurance (hereinafter
\nindividually a “Loss” and collectively “Losses”) incurred by Purchaser, its
\nofficers, directors, or affiliates (including FAS) as a result of (i) any
\ninaccuracy or breach of a representation or warranty of FAS or the Shareholders
\ncontained herein (as modified by FAS Schedules) or (ii) any failure by FAS to
\nperform or comply with any covenant contained herein. Purchaser, FAS and the
\nShareholders each acknowledge that such Losses, if any, would relate to
\nunresolved contingencies existing at the Closing Date, which if resolved at the
\nClosing Date would have led to a reduction in the aggregate Total Consideration.
\nNothing herein shall limit the liability of FAS or the Shareholders for any
\nbreach of any representation, warranty or covenant if the transactions
\ncontemplated hereby do not close.<\/p>\n
(b) Right of Set-Off; Limitations Thereon. Purchaser shall have the
\nright to recover Losses indemnifiable pursuant to Section 8.2(a) by means of a
\nright of set-off pro rata against the principal amount of any of the Notes and
\nany interest paid or payable in respect of such principal amount (the “Set-Off
\nRight”). In the case of Losses relating to a breach of representations and
\nwarranties set forth in Sections 2.2, 2.3, 2.4, 2.9(c), 2.9(d), 2.9(h), 3.1 and
\n3.2, Purchaser may bring action directly against the former Shareholders (the
\n“Direct Right”) in the manner set forth in Sections 8.2(d) and 8.2(e) below.
\nPurchaser may not utilize the Set-Off Right or the Direct Right unless and until
\nOfficer’s Certificate(s) (as defined below) identifying Losses, the aggregate
\namount<\/p>\n
-37-<\/p>\n
of which, when aggregated with Losses (under and as defined in the HBF
\nAgreement) exceed $200,000, have been delivered to the Shareholder Agent as
\nprovided in paragraph (d); in such case, Purchaser may utilize the Set-off Right
\nor the Direct Right for the total of its Losses; provided, however, Purchaser
\nshall not be entitled to utilize the Set-off Right for Losses which exceed, when
\naggregated with Losses (as defined in the HBF Agreement) for which the Set-off
\nRight has been utilized, $8.5 million. Notwithstanding the foregoing, in the
\nevent that Purchaser shall set off any amounts against the Note an amount in
\nexcess of the amount of an indemifiable Loss, following the determination of
\namount of the indemnifiable Loss in accordance with Sections 8.2(d) and 8.2(e)
\nbelow, Purchaser shall pay to the holders of the Notes the amount of such
\nexcess, together with interest accrued on the amount of such excess from the
\nMaturity Date (as defined in the Notes) to the date of such payment at a rate
\nequal to ten and seven-eighths percent (10.875%) per annum, computed based on
\nthe basis of the actual number of days elapsed and a year of 365 days.<\/p>\n
(c) Limited Remedy. Except for claims with respect to breaches of the
\nrepresentations and warranties set forth in Sections 2.2, 2.3, 2.4, 2.9(c)
\n2.9(d), 2.9(h), 3.1 and 3.2, the Set-off Right shall be Purchaser’s exclusive
\nremedy for Losses after the Closing. With respect to breaches of the
\nrepresentations and warranties set forth in Sections 2.2, 2.3, 2.4, 2.9(c),
\n2.9(d), 2.9(h), 3.1 and 3.2, the maximum amount the Purchaser shall be entitled
\nto recover from each Shareholder shall not exceed the aggregate of such
\nShareholder’s Allocated Portion of the Total Consideration set forth in Exhibit
\nA hereof and such Shareholder’s Allocated Portion of Total Consideration set
\nforth in Exhibit A of the HBF Agreement.<\/p>\n
(d) Set-Off Claims. In connection with utilizing its Set-Off Right or
\nDirect Right, Purchaser shall deliver to the Shareholder Agent a certificate
\nsigned by any officer of Purchaser (an “Officer’s Certificate”): (A) stating
\nthat Purchaser has paid or properly accrued or reasonably anticipates that it
\nwill have to pay or accrue Losses, and (B) specifying in reasonable detail the
\nindividual items of Losses included in the amount so stated, the date each such
\nitem was paid or properly accrued, or the basis for such anticipated liability,
\nand the nature of the misrepresentation, breach of warranty or covenant to which
\nsuch item is related.<\/p>\n
(e) Resolution of Conflicts; Arbitration.<\/p>\n
(i) In case the Shareholder Agent shall object in writing
\nto any claim or claims made in any Officer’s Certificate, the Shareholder Agent
\nand Purchaser shall attempt in good faith to agree upon the rights of the
\nrespective parties with respect to each of such claims.<\/p>\n
(ii) If no such agreement can be reached after good faith
\nnegotiation, either Purchaser or the Shareholder Agent may demand arbitration of
\nthe matter unless the amount of the damage or loss is at issue in pending
\nlitigation with a third party, in which event arbitration shall not be commenced
\nuntil such amount is ascertained or both parties agree to arbitration; and in
\neither such event the matter shall be settled by arbitration conducted by three
\narbitrators. Purchaser and the Shareholder Agent shall each select one
\narbitrator, and the two arbitrators so selected shall select a third arbitrator.
\nThe arbitrators shall set a limited time period and establish procedures<\/p>\n
-38-<\/p>\n
designed to reduce the cost and time for discovery while allowing the parties an
\nopportunity, adequate in the sole judgment of the arbitrators, to discover
\nrelevant information from the opposing parties about the subject matter of the
\ndispute. The arbitrators shall rule upon motions to compel or limit discovery
\nand shall have the authority to impose sanctions, including attorneys’ fees and
\ncosts, to the extent as a court of competent law or equity, if the arbitrators
\ndetermine that discovery was sought without substantial justification or that
\ndiscovery was refused or objected to without substantial justification. The
\ndecision of a majority of the three arbitrators as to the validity and amount of
\nany claim in such Officer’s Certificate shall be binding and conclusive upon the
\nparties to this Agreement. Such decision shall be written and shall be supported
\nby written findings of fact and conclusions which shall set forth the award,
\njudgment, decree or order awarded by the arbitrators.<\/p>\n
(iii) Judgment upon any award rendered by the arbitrators
\nmay be entered in any court having jurisdiction. Any such arbitration shall be
\nheld in Santa Clara County, California under the rules then in effect of the
\nAmerican Arbitration Association. For purposes of this Section 8.2(e), in any
\narbitration hereunder in which any claim or the amount thereof stated in the
\nOfficer’s Certificate is at issue, Purchaser shall be deemed to be the Non-
\nPrevailing Party in the event that the arbitrators award Purchaser less than the
\nsum of one-half (1\/2) of the disputed amount plus any amounts not in dispute;
\notherwise, the former Shareholders as represented by the Shareholder Agent shall
\nbe deemed to be the Non-Prevailing Party. The Non-Prevailing Party to an
\narbitration shall pay its own expenses, the fees of each arbitrator, the
\nadministrative costs of the arbitration and the expenses, including without
\nlimitation, reasonable attorneys’ fees and costs, incurred by the other party to
\nthe arbitration.<\/p>\n
(f) Shareholder Agent; Power of Attorney.<\/p>\n
(i) At the Closing, effective upon such vote, and without
\nfurther act of any Shareholder, CNI (Attention: Thomas K. MacGillivray) shall be
\nappointed as agent and attorney-in-fact (the “Shareholder Agent”) for each
\nShareholder of FAS, for and on behalf of Shareholders of FAS, to give and
\nreceive notices and communications to object to Purchaser’s assertion of its
\nSet-off Right and Direct Right, to agree to, negotiate, enter into settlements
\nand compromises of, and demand arbitration and comply with orders of courts and
\nawards of arbitrators with respect to such claims, and to take all actions
\nnecessary or appropriate in the judgment of Shareholder Agent for the
\naccomplishment of the foregoing. Such agency may be changed by the former
\nShareholders of FAS from time to time upon not less than thirty (30) days prior
\nwritten notice to Purchaser; provided that the Shareholder Agent may not be
\nremoved unless holders of a two-thirds interest of the Shareholders’ shares
\nagree to such removal and to the identity of the substituted agent. Any vacancy
\nin the position of Shareholder Agent may be filled by approval of the holders of
\na majority in interest of the Shareholders’ shares. No bond shall be required of
\nthe Shareholder Agent, and the Shareholder Agent shall not receive compensation
\nfor his or her services. Notices or communications to or from the Shareholder
\nAgent shall constitute notice to or from each of the Shareholders of FAS.<\/p>\n
-39-<\/p>\n
(ii) The Shareholder Agent shall not be liable for any act done
\nor omitted hereunder as Shareholder Agent while acting in good faith and in the
\nexercise of reasonable judgment. The former Shareholders shall severally
\nindemnify the Shareholder Agent and hold the Shareholder Agent harmless against
\nany loss, liability or expense incurred without gross negligence or bad faith on
\nthe part of the Shareholder Agent and arising out of or in connection with the
\nacceptance or administration of the Shareholder Agent’s duties hereunder,
\nincluding the reasonable fees and expenses of any legal counsel retained by the
\nShareholder Agent.<\/p>\n
(g) Actions of the Shareholder Agent. A decision, act, consent or
\ninstruction of the Shareholder Agent shall constitute a decision of all the
\nformer Shareholders and shall be final, binding and conclusive upon each of such
\nformer Shareholders and Purchaser may rely upon any such decision, act, consent
\nor instruction of the Shareholder Agent as being the decision, act, consent or
\ninstruction of each every such former Shareholder. Purchaser is hereby relieved
\nfrom any liability to any person for any acts done by them in accordance with
\nsuch decision, act, consent or instruction of the Shareholder Agent.<\/p>\n
(h) Third-Party Claims. In the event Purchaser becomes aware of a
\nthird-party claim which Purchaser believes may result in an indemnity claim
\n(including those relating to Taxes), Purchaser shall promptly notify the
\nShareholder Agent of such claim, and the Shareholder Agent, as representative
\nfor the former Shareholders shall be entitled, at the former Shareholders’
\nexpense, to participate in any defense of such claim. Purchaser shall have the
\nright in its sole discretion to settle any such claim. In the event that the
\nShareholder Agent has consented (which consent shall not be unreasonably
\nwithheld) to any such settlement or in the event the Shareholder Agent
\nunreasonably withheld its consent, neither the Shareholder Agent nor any
\nShareholder shall have power or authority to object under any provision of this
\nArticle 8 to the amount of any such claim by Purchaser. If the Shareholder Agent
\nhas not consented to the settlement, in the event that the arbitrators, in
\naccordance with Section 8.2(e)(ii), determine that the withholding of consent
\nwas reasonable and the settlement amount was unreasonable based upon the facts
\nand circumstances existing at the time of such settlement, the arbitrators shall
\ndetermine the appropriate settlement for purposes of Sections 8.2(b) and 8.2(c)
\nabove.<\/p>\n
(i) No Right to Indemnity or Contribution. The Shareholders shall
\nhave no contribution, indemnity or similar right against FAS with respect to any
\nclaim by the Purchaser for indemnification pursuant to this Article 8.<\/p>\n
ARTICLE 9.<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
9.1 Termination. Except as provided in Section 9.2 below, this Agreement may
\nbe terminated and the transactions contemplated hereby abandoned at any time
\nprior to the Effective Time:<\/p>\n
-40-<\/p>\n
(a) by mutual consent of each of the parties hereto (other than the
\nShareholder Agent);<\/p>\n
(b) by Purchaser or FAS and the Shareholders acting together if: (i)
\nthe Effective Time has not occurred by the date that is 100 days following but
\nnot including the date of this Agreement (the “End Date”); provided, however,
\nthat the right to terminate this Agreement under this Section 9.1(b)(i), shall
\nnot be available to any party whose action or failure to act has been a
\nprincipal cause of or resulted in the failure of the transactions contemplated
\nby this Agreement to occur on or before such date and such action or failure to
\nact constitutes a breach of this Agreement; (ii) there shall be a final
\nnonappealable order of a federal or state court in effect preventing
\nconsummation of the transactions contemplated by this Agreement; or (iii) there
\nshall be any statute, rule, regulation or order enacted, promulgated or issued
\nor deemed applicable to the transactions contemplated by this Agreement by any
\nGovernmental Entity that would make consummation of the transaction contemplated
\nby this Agreement illegal;<\/p>\n
(c) by Purchaser if there shall be any action taken other than by
\nPurchaser or at Purchaser’s behest, or any statute, rule, regulation or order
\nenacted, promulgated or issued or deemed applicable to the transactions
\ncontemplated by this Agreement by any Governmental Entity, which would: (i)
\nprohibit Purchaser’s ownership or operation of any portion of the business of
\nFAS or (ii) compel Purchaser to dispose of or hold separate all or a portion of
\nthe business or assets of FAS or Purchaser as a result of the transactions
\ncontemplated hereby;<\/p>\n
(d) by Purchaser, upon a breach of any representation, warranty,
\ncovenant or agreement on the part of FAS or any Shareholder set forth in this
\nAgreement, or if any representation or warranty of FAS or any Shareholder shall
\nhave become untrue, in either case such that the conditions set forth in Section
\n7.2(a) or Section 7.2(b) would not be satisfied as of the time of such breach or
\nas of the time such representation or warranty shall have become untrue,
\nprovided that if such inaccuracy in FAS’s or any Shareholder representations and
\nwarranties or breach by FAS or any Shareholder is curable by FAS or the
\nShareholder, as the case may be, through the exercise of either of his, her or
\nits commercially reasonable efforts, then Purchaser may not terminate this
\nAgreement under this Section 9.1(d) prior to the End Date, provided FAS or such
\nShareholder, as the case may be, continues to exercise commercially reasonable
\nefforts to cure such breach (it being understood that Purchaser may not
\nterminate this Agreement pursuant to this Section 9.1(d) if it shall have
\nmaterially breached this Agreement or if such breach by FAS or such Shareholder,
\nas the case may be, is cured prior to the End Date);<\/p>\n
(e) by FAS and the Shareholders acting together, upon a breach of any
\nrepresentation, warranty, covenant or agreement on the part of Purchaser set
\nforth in this Agreement, or if any representation or warranty of Purchaser shall
\nhave become untrue, in either case such that the conditions set forth in Section
\n7.3(a) or Section 7.3(b) would not be satisfied as of the time of such breach or
\nas of the time such representation or warranty shall have become untrue,
\nprovided, that if such inaccuracy in Purchaser’s representations and warranties
\nor breach by Purchaser is<\/p>\n
-41-<\/p>\n
curable by Purchaser through the exercise of its commercially reasonable
\nefforts, then FAS and the Shareholders may not terminate this Agreement under
\nthis Section 9.1(e) prior to the End Date, provided Purchaser continues to
\nexercise commercially reasonable efforts to cure such breach (it being
\nunderstood that FAS and the Shareholders may not terminate this Agreement
\npursuant to this Section 9.1(e) if any of them shall have materially breached
\nthis Agreement or if such breach by the Purchaser is cured prior to the End
\nDate).<\/p>\n
Where action is taken to terminate this Agreement pursuant to this Section
\n9.1, it shall be sufficient (and required) for such action to be authorized by
\nthe Board of Directors (as applicable) of the party taking such action.<\/p>\n
9.2 Effect of Termination. In the event of termination of this Agreement
\nas provided in Section 9.1, this Agreement shall forthwith become void and there
\nshall be no liability or obligation on the part of Purchaser, FAS, the
\nShareholders or their respective officers, directors, shareholders or
\nstockholders provided, however, that each party shall remain liable for any
\nbreaches of this Agreement prior to its termination; and provided, further, that
\nthe provisions of Sections 6.3, 6.4, 6.5, this Section 9.2 and Article 10 of
\nthis Agreement shall remain in full force and effect and survive any termination
\nof this Agreement.<\/p>\n
9.3 Amendment. Subject to applicable law, this Agreement may be amended
\nby the parties hereto at any time by execution of an instrument in writing
\nsigned on behalf of each of the parties hereto; provided, however, execution by
\nthe Shareholder Agent shall only be required for amendments relating to Article
\n8 hereof.<\/p>\n
9.4 Extension; Waiver. At any time prior to the Closing, Purchaser, FAS
\nand the Shareholders may, to the extent legally allowed, (i) extend the time for
\nthe performance of any of the obligations of the other party hereto, (ii) waive
\nany inaccuracies in the representations and warranties made to such party
\ncontained herein or in any document delivered pursuant hereto and (iii) waive
\ncompliance with any of the agreements or conditions for the benefit of such
\nparty contained herein. Any agreement on the part of a party hereto to any such
\nextension or waiver shall be valid only if set forth in an instrument in writing
\nsigned on behalf of such party.<\/p>\n
ARTICLE 10.<\/p>\n
GENERAL PROVISIONS<\/p>\n
10.1 Notices. Every notice, consent and other communications required or
\npermitted to be given hereunder shall be in writing and shall be deemed given if
\ndelivered personally or by commercial messenger or courier service, or mailed by
\nregistered or certified mail (return receipt requested) or sent via facsimile
\n(with acknowledgment of complete transmission) to the parties at the following
\naddresses (or at such other address for a party as shall be specified by like
\nnotice), provided, however, that notices sent by mail will not be deemed
\nguaranteed received:<\/p>\n
-42-<\/p>\n
(a) if to Purchaser to:<\/p>\n
homestore.com, Inc.
\n 225 West Hillcrest Drive, Suite 100
\n Thousand Oaks, CA 91360
\n Attention: General Counsel
\n Telephone No.: (805) 557-2300
\n Facsimile No.: (805) 557-2689<\/p>\n
with a copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati
\n Professional Corporation
\n 650 Page Mill Road
\n Palo Alto, California 94304
\n Attention: Martin W. Korman, Esq.
\n Bradley L. Finkelstein, Esq.
\n Telephone No.: (650) 493-9300
\n Facsimile No.: (650) 493-6811<\/p>\n
(b) if to FAS, CNI or the Shareholder Agent, to:<\/p>\n
Central Newspapers, Inc.
\n 200 E. Van Buren Street
\n Phoenix, Arizona 85004
\n Attention: Thomas K. MacGillivray
\n Telephone No.: (602) 444-1122
\n Facsimile No.: (602) 444-8340<\/p>\n
with a copy to:<\/p>\n
Snell & Wilmer L.L.P.
\n One Arizona Center
\n Phoenix, Arizona 85004
\n Attention: Matthew P. Feeney, Esq.
\n Telephone No.: (602) 382-6000
\n Facsimile No.: (602) 382-6070<\/p>\n
(c) if to the Shareholders, to:<\/p>\n
-43-<\/p>\n
The address, telephone number and facsimile number set forth
\n opposite such Shareholders name on Exhibit A hereto or if no
\n address, telephone number or facsimile number is provided, to the
\n Shareholder Agent.<\/p>\n
10.2 Interpretation. The words “include,” “includes” and “including” when
\nused herein shall be deemed in each case to be followed by the words “without
\nlimitation.” The word “knowledge” when used herein with respect to a corporation
\nmeans the actual knowledge of any of the officers or directors of the
\ncorporation. The table of contents and headings contained in this Agreement are
\nfor reference purposes only and shall not affect in any way the meaning or
\ninterpretation of this Agreement.<\/p>\n
10.3 Counterparts. This Agreement may be executed in one or more
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to the other party, it being understood that all
\nparties need not sign the same counterpart.<\/p>\n
10.4 Entire Agreement; Assignment. This Agreement, the Exhibits hereto, the
\nFAS Schedules and the Purchaser Schedules, and the documents and instruments and
\nother agreements among the parties hereto referenced herein: (a) constitute the
\nentire agreement among the parties with respect to the subject matter hereof and
\nsupersede all prior agreements and understandings both written and oral, among
\nthe parties with respect to the subject matter hereof; (b) are not intended to
\nconfer upon any other person any rights or remedies hereunder; and (c) may not
\nbe assigned unless agreed to by the other parties hereto, except that Purchaser
\nmay assign its rights and delegate its obligations hereunder to majority-owned
\nsubsidiaries of Purchaser provided that Purchaser remains contingently liable.<\/p>\n
10.5 Severability. In the event that any provision of this Agreement or the
\napplication thereof, becomes or is declared by a court of competent jurisdiction
\nto be illegal, void or unenforceable, the remainder of this Agreement will
\ncontinue in full force and effect and the application of such provision to other
\npersons or circumstances will be interpreted so as reasonably to effect the
\nintent of the parties hereto. The parties further agree to replace such void or
\nunenforceable provision of this Agreement with a valid and enforceable provision
\nthat will achieve, to the extent possible, the economic, business and other
\npurposes of such void or unenforceable provision.<\/p>\n
10.6 Other Remedies. Except as otherwise provided herein, any and all
\nremedies herein expressly conferred upon a party will be deemed cumulative with
\nand not exclusive of any other remedy conferred hereby, or by law or equity upon
\nsuch party, and the exercise by a party of any one remedy will not preclude the
\nexercise of any other remedy.<\/p>\n
10.7 Governing Law. This Agreement shall be governed by and construed in
\naccordance with the laws of the State of California, regardless of the laws that
\nmight otherwise govern under applicable principles of conflicts of laws thereof.
\nEach of the parties hereto irrevocably consents to<\/p>\n
-44-<\/p>\n
the non-exclusive jurisdiction and venue of any federal or state court within
\nthe Northern District, State of California, in connection with any matter based
\nupon or arising out of this Agreement or the matters contemplated herein, agrees
\nthat process may be served upon them in any manner authorized by the laws of the
\nState of California for such persons and waives and covenants not to assert or
\nplead any objection which they might otherwise have to such jurisdiction, venue
\nand such process.<\/p>\n
10.8 Rules of Construction. The parties hereto agree that they have been
\nrepresented by counsel during the negotiation and execution of this Agreement
\nand, therefore, waive the application of any law, regulation, holding or rule of
\nconstruction providing that ambiguities in an agreement or other document will
\nbe construed against the party drafting such agreement or document.<\/p>\n
10.9 Attorneys’ Fees. If any action or other proceeding relating to the
\nenforcement of any provision of this Agreement is brought by any party hereto,
\nthe prevailing party shall be entitled to recover reasonable attorneys’ fees,
\ncosts and disbursements (in addition to any other relief to which the prevailing
\nparty may be entitled).<\/p>\n
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]<\/p>\n
-45-<\/p>\n
IN WITNESS WHEREOF, Purchaser, FAS, the Shareholders and, with respect to
\nArticle 8 only, the Shareholder Agent have caused this Agreement to be signed by
\ntheir duly authorized respective officers, all as of the date first written
\nabove.<\/p>\n
HOMESTORE.COM, INC. FAS-HOTLINE, INC.<\/p>\n
By: \/s\/ Stuart Wolff By: \/s\/ Richard Ganley
\n ___________________________ ________________________________<\/p>\n
Title: C.E.O. Title: President
\n ________________________ _____________________________<\/p>\n
SHAREHOLDERS<\/p>\n
CENTRAL NEWSPAPERS, INC. RAMAS, L.P.<\/p>\n
By: \/s\/ Louis A. Weil By: \/s\/ Richard Ganley
\n ___________________________ ________________________________
\n Richard Ganley,
\n its General Partner
\nTitle: Chairman\/President\/C.E.O.
\n ________________________ Address: 12110 E. Gold Dust Ave
\n ___________________________
\n Scottsdale, Arizona 85259
\n ___________________________________<\/p>\n
___________________________________ <\/p>\n
___________________________________<\/p>\n
Phone: (480) 661-7515
\n _____________________________<\/p>\n
Facsimile: (480) 922-1108
\n _________________________<\/p>\n
***FAS STOCK PURCHASE AGREEMENT***<\/p>\n
S-1<\/p>\n
By: \/s\/ Bryan Schutjer By: \/s\/ Stephen Ziomek
\n ______________________________ __________________
\n Bryan Schutjer Stephen Ziomek<\/p>\n
Address: 11653 N. 129th Way Address: 8390 E. Corrine Dr.
\n _________________________ __________________________________
\nScottsdale, AZ 85259 Scottsdale, AZ 85260
\n_________________________________ __________________________________<\/p>\n
_________________________________ __________________________________<\/p>\n
_________________________________ __________________________________<\/p>\n
Phone: (480) 451-6894 Phone: (480) 483-6185
\n ___________________________ ___________________________<\/p>\n
Facsimile: (480) 922-1108 Facsimile: (480) 922-1108
\n _______________________ _________________________<\/p>\n
SHAREHOLDER AGENT<\/p>\n
CENTRAL NEWSPAPERS, INC.<\/p>\n
By: \/s\/ Louis A. Weil
\n ______________________________<\/p>\n
Title: Chairman\/President\/C.E.O.
\n ___________________________<\/p>\n
***FAS STOCK PURCHASE AGREEMENT***<\/p>\n
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