EXHIBIT 2.1
________________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MOBILEPRO CORP.,
AFFINITY ACQUISITION CORP.,
C.L.Y.K., INC.,
CHRISTOPER LADUKE,
JOHN KOPANAKIS,
AND
JEREMY MAYNARD
DATED AS OF JULY 30, 2004
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AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER, dated as of July 30th, 2004 (this
"AGREEMENT") is made by and among Mobilepro Corp., a Delaware corporation
("BUYER"), Affinity Acquisition Corp., a Michigan corporation and a direct
wholly owned subsidiary of Buyer ("BUYER
SUB"), C.L.Y.K.,
Inc., d/b/a
Affinity
Telecom, a Michigan corporation (the
"COMPANY"),
Christopher Laduke ("LADUKE"),
John Kopanakis ("KOPANAKIS"), and Jeremy Maynard ("MAYNARD")
(Laduke, Kopanakis
and Maynard being collectively referred to as the "STOCKHOLDERS"), all being
residents of the State of Michigan and together constituting the only
stockholders of the Company.
WHEREAS,
the Board of Directors
of Buyer, Buyer Sub
and the Company have
determined that it is in the best interests
of their respective
companies and
their stockholders to consummate the
business combination
transaction
provided
for herein in which Buyer Sub will, subject to the terms and
conditions
set
forth herein, merge with and into the Company, with the Company being the
surviving entity (the "MERGER"); and
WHEREAS,
the parties desire to
make certain
representations,
warranties
and agreements in connection with the Merger and also to
prescribe certain
conditions to the Merger;
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants,
warranties and agreements contained herein, and intending to be legally
bound
hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
SECTION
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, in accordance with the Michigan Business Corporation Act (the
"MICHIGAN LAW"), upon the execution of this
Agreement and concurrent with the
filing of Certificate of Merger (the
"CERTIFICATE OF MERGER") with the Secretary
of State of the State of Michigan (in
accordance with the relevant provision of
Michigan Law), Buyer Sub shall merge with and
into the Company.
The separate
corporate existence of the Buyer Sub will cease upon the filing of the
Certificate of Merger (the "EFFECTIVE
TIME"), and the Company will continue
as
the surviving corporation (hereinafter sometimes referred to as the
"SURVIVING
CORPORATION") in the Merger. The Company,
as the surviving corporation after the
Merger, will be governed by the laws of the
State of Michigan.
For
purposes of this Agreement, the date of the filing of the
Certificate
of Merger and the execution of this Agreement shall be known as the "CLOSING
DATE" and the actions taken on such date
and at such time, the "Closing."
SECTION
1.2 EFFECT OF THE
MERGER; CLOSING. At and after the Effective
Time, the Merger shall have the effects set forth in this
Agreement and the
applicable provisions of Michigan Law.
Without limiting the generality of the
foregoing, and subject thereto, at the
Effective Time all the property, rights,
privileges, powers and franchises of the
Company and Buyer Sub will vest in the
Surviving Corporation, and all debts, liabilities and
duties of the Company and
Buyer Sub will become the debts, liabilities and duties of the Surviving
Corporation.
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SECTION
1.3 ARTICLES OF INCORPORATION. At the Effective Time, the
Articles
of Incorporation of the Company, as in
effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation,
provided however, that Article I of the Articles of Incorporation of the
Surviving Corporation will be amended to
reflect that the name of the Surviving
Corporation will be Affinity Telecom,
Inc.
SECTION
1.4 BYLAWS. At the
Effective Time, the bylaws of the Company, as
in effect immediately prior to the Effective Time,
shall be the Bylaws of
the
Surviving Corporation, provided however, that the bylaws of the Surviving
Corporation will be amended to reflect that the name of the Surviving
Corporation will be Affinity Telecom,
Inc.
SECTION
1.5 BOARD OF DIRECTORS AND OFFICERS. Jay O. Wright ("WRIGHT") and
Kevin D. Kuykendall ("KUYKENDALL") were the only directors and corporate
officers of Buyer Sub immediately prior to the Effective Time. As of
and after
the Effective Time, Wright, Kuykendall and Kopanakis shall be the three
directors and the corporate officers of the Surviving Corporation, with
Kopanakis being appointed as Chief
Executive Officer and
Laduke being appointed
as President, and with each of them to continue
to hold such officer
positions
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation, until their respective
successors are duly elected or appointed (as
the case may be) and qualified.
SECTION
1.6 CONVERSION OF CAPITAL STOCK/MERGER CONSIDERATION. At the
Effective Time, by virtue of the Merger and
without any action on
the part of
the Buyer Sub, the Company or the holder of any
shares of capital
stock of the
Company or Buyer Sub:
(a) Each
share of Company Stock (as defined in Section 2.2(a)) issued and
outstanding immediately prior to the Effective
Time shall be converted into and
become the right to receive: (i) Twenty-Two and 33/100 Dollars ($22.33) per
share (for an aggregate cash consideration to the Stockholders of $1,340,000)
(the "CASH CONSIDERATION") and (ii) 83.33 shares of Buyer's
restricted $0.001
par value common stock. It is expressly understood by the Parties
hereto that
$140,000 of the Cash Consideration shall be retained by Buyer and paid to
Stockholders on January 7, 2005. It is understood that the purpose of this
holdback is directly related to that
certain billing dispute between the Company
and SBC, which is reflected in the Footnotes to the Company's Financial
Statements.
(b) Buyer
shall issue to the
Stockholders a promissory note in the amount
of $300,000 in the form attached hereto as
Exhibit "A."
(c)
Buyer shall pay to Stockholders twenty-five percent (25%) of the
Company's accounts receivable balance
greater than 60 days old but less than 180
days old, as reflected in the Company's Financial Statements and Accounts
Receivable Aging Report; it being
understood that this amount shall be a maximum
of $50,000.
(d) Buyer
shall issue to the Stockholders a convertible promissory note
in
the principal amount of $750,000 (the "EARN
OUT NOTE
CONSIDERATION" in the form
attached hereto as Exhibit "B" [the
"CONVERTIBLE NOTE"], together with (a), (b),
and (c) the "MERGER CONSIDERATION"), such note convertible into shares of
Mobilepro's common stock pursuant to the
terms therein.
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(e)
Notwithstanding
anything
to the contrary contained herein, no
fractional shares of Buyer common stock will be issued in the
Merger. If the
Stockholder would have been entitled to a fraction of a share
of Buyer common
stock, he shall receive in lieu thereof cash
(without interest) in an amount
determined by multiplying the fractional share interest to Stockholder
would
otherwise be entitled (after taking into account all shares of Company
Stock
owned by such holder at the Effective Time)
by $0.20.
(f) The
shares of Mobilepro's
common stock issued upon conversion of the
Convertible Note will not have been registered and will be deemed to be
"restricted securities" under federal securities laws and may not be resold
without registration under or exemption from the Securities Act of 1933, as
amended (the "SECURITIES Act"). Each certificate evidencing shares of
Mobilepro's common stock issuable upon
conversion of the Convertible Note will
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
SUCH SHARES MAY NOT BE
SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION
WITHOUT EXEMPTION UNDER THE
SECURITIES ACT OR AN OPINION OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO
MOBILEPRO CORP. THAT SUCH
REGISTRATION IS NOT REQUIRED.
SECTION
1.7 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a)
At the Closing, Stockholder will surrender Stockholder's
Certificate(s) to Buyer. Until so surrendered, such Certificate(s) will
represent solely the right to receive the
Merger Consideration relating thereto.
(b) At the
Effective Time, the stock transfer books of the Company will be
closed and there will not be any further registration of transfers of any
Shares, options or warrants thereafter on
the records of the Company. If, at or
after the Effective Time, Certificates are presented to the Surviving
Corporation for transfer, they will be canceled and exchanged for Merger
Consideration as provided in Section
1.6.
(c) In the
event any Certificate that has been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, Buyer and Buyer Sub will issue
in
exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration deliverable in respect
thereof as determined
in accordance with
Section 1.6 if the Person to whom the
Merger Consideration
is paid will,
as a
condition precedent to the payment
thereof, give the Surviving Corporation a
bond in such sum as the Surviving
Corporation may reasonably direct or otherwise
indemnify the Surviving Corporation in a manner
reasonably
satisfactory to it
against any claim that may be made against the Surviving Corporation with
respect to the Certificate claimed to have
been lost, stolen or destroyed.
For
purposes of this Agreement, the term "PERSON" shall mean any
individual, firm, corporation, partnership, limited liability company,
trust,
joint venture, Governmental Entity or other
entity.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY AND STOCKHOLDERS
Except as
set forth in the
Company Disclosure
Letter attached to this
Agreement (the "COMPANY DISCLOSURE
LETTER"), the Company and the
Stockholders,
jointly and severally, represent and
warrant to the Buyer as follows:
SECTION
2.1 ORGANIZATION, QUALIFICATION AND CORPORATION POWER. The
Company
(a) is a corporation duly organized,
validly existing and in good standing under
the Laws of the jurisdiction in which it is organized and has the requisite
corporate power and authority to own,
operate or lease its
properties
and to
carry on its business as is now being
conducted and proposed to be conducted,
except where the failure to be so
organized, existing and in good standing or to
have such power and authority would not reasonably be expected to have,
individually or in the aggregate,
a Material
Adverse Effect (as
defined below)
on the Company, and (b) is duly qualified
and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such
qualification necessary, other than in such
jurisdictions where the failure so to qualify or
to be in good standing
would
not reasonably be expected to have,
individually or in the aggregate, a Material
Adverse Effect on the Company. The Company has furnished to Buyer
true, correct
and complete copies of its Articles of
Incorporation and bylaws.
For
purposes of this
Agreement, the term
"MATERIAL ADVERSE
EFFECT" when
used in connection with an entity means any change, event, circumstance or
effect whether or not such change, event,
circumstance or effect is caused by or
arises in connection with a breach of a
representation,
warranty, covenant or
agreement of such entity in this Agreement
that is or is reasonably likely to be
materially adverse to the business, assets (including intangible assets),
capitalization, financial condition, operations or results of operations,
employees or prospects of such entity taken as a whole
with its
subsidiaries,
except to the extent that any such change, event, circumstance or effect is
caused by results from (i) changes in
general economic conditions, (ii) changes
affecting the industry generally in which such entity
operates or (iii) changes
in the trading prices for such entity's
capital stock.
SECTION
2.2 CAPITALIZATION; SUBSIDIARIES.
(a) The
authorized capital
stock of the Company consists of 60,000 shares
of common stock, no par value, of which
60,000 shares are issued and outstanding
(the "COMPANY STOCK") as follows: (i) 28,500 shares issued to
Kopanakis; (ii)
28,500 shares issued to Laduke; and (iii)
3,000 shares issued to Maynard. Other
than common stock, there are no other
classes, series or
types of stock for the
Company. The Stockholders hold good and
marketable title to such Company Stock,
free and clear of all liens, agreements, voting trusts, proxies and other
arrangements or restrictions of any kind whatsoever (other than normal
restrictions on transfer under applicable
federal and state
securities
laws).
All issued and outstanding shares of
Company Stock have been duly authorized and
were validly issued, are fully paid and nonassessable, are not subject to any
right of rescission, are not subject to preemptive rights by statute, the
Articles of Incorporation or Bylaws of
Company, or any
agreement or document to
which Company is a party or by which it is
bound and have been offered, issued,
sold and delivered by Company in compliance with all registration or
qualification requirements (or applicable
exemptions
therefrom) of
applicable
federal and state securities laws. The Company is not under any
obligation to
register under the Securities Act any of
its presently outstanding securities or
any securities that may be subsequently issued. There is no liability for
dividends accrued but unpaid with respect to the Company's outstanding
securities.
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(b) There
are no existing (i) options, warrants, calls, preemptive
rights,
subscriptions or other rights, convertible
securities, agreements or commitments
of any character obligating the Company to
issue, transfer or sell any shares of
capital stock or other equity interest in,
the Company or securities convertible
into or exchangeable for such shares or equity interests, (ii) contractual
obligations of the Company to repurchase, redeem or otherwise acquire any
capital stock of the Company or (iii)
voting trusts or
similar agreements
to
which the Company is a party with respect
to the voting of the capital stock of
the Company.
(c) The
Company does not have any direct or indirect Subsidiaries or any
interest, direct or indirect, in any
corporation,
partnership, joint venture or
other business entity.
For
purposes of this
Agreement, the term
"SUBSIDIARY" of a
Person means
any corporation or other legal entity of which such Person
(either alone or
through or together with any other
Subsidiary)
owns, directly or indirectly,
more than 50% of the stock or other
equity interests the holders of which are
generally entitled to vote for the
election of the board
of directors or other
governing body of such corporation or other
legal entity.
SECTION 2.3
OWNERSHIP OF SHARES.
(a) The
Stockholders
are the record and
beneficial
owners of, and
have
good and valid title to, all of the Company
Stock, which Company Stock (i) is
free and clear of all liens, mortgages,
encumbrances, pledges,
claims, options,
charges, easements, restrictions,
covenants,
conditions
of record,
encroachments, security interests and claims of
every kind and character (each,
a "LIEN") and (ii) are free of any other
restriction (including
any restriction
on the right to vote, sell or otherwise dispose of such capital stock or
other
ownership interests).
(b)
There are no
outstanding
existing (i) options, warrants, calls,
preemptive rights, subscriptions or other rights, convertible securities,
agreements or commitments of any character
to which such
Stockholder is a party
obligating the Stockholder to issue,
transfer or sell any Company Stock or other
equity interest in the Company or
securities convertible
into or
exchangeable
for such shares or equity interests or (ii) voting trusts, stockholders'
agreements or similar agreements to which such Stockholder is a party with
respect to the voting of the Company Stock
owned by such Stockholder.
SECTION
2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the
necessary corporate power and authority to enter into this Agreement and,
subject to the filing of the Certificate of Merger as required
by Michigan Law,
to carry out its obligations hereunder. The Stockholders have the necessary
competency, power and authority to enter into
this Agreement and
carry out the
obligations hereunder. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all
necessary corporate
action on the part
of the Company and the Stockholders and, subject to the filing of the
Certificate of Merger as required by
Michigan Law, no other corporate proceeding
is necessary for the execution and delivery of this Agreement by the Company,
the performance by the Company of its
obligations hereunder and the consummation
by the Company of the transactions
contemplated hereby.
As of the Closing Date,
this Agreement has been duly executed and delivered by the Company and the
Stockholders and, assuming the due
authorization, execution and delivery of this
Agreement by Buyer and Buyer Sub, constitutes a legal, valid and binding
obligation of the Company, enforceable against it in
accordance with its terms,
except that (a) the enforceability hereof may be subject to applicable
bankruptcy, insolvency or other similar Laws,
now or hereinafter in effect,
affecting creditors' rights generally,
and (b) the general
principles of equity
(regardless of whether enforceability is
considered at a proceeding at Law or in
equity).
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SECTION
2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The
execution and delivery of this Agreement by the Company and
the
Stockholders does not, and the consummation by
the Company and the Stockholders
of the transactions contemplated hereby will not, (i) conflict with
or violate
any Law, court order, judgment or decree applicable to the Company, its
Subsidiaries or the Stockholders or by which any of their
property is bound,
(ii) violate or conflict with the Articles of Incorporation or Bylaws (or
comparable organizational documents) of the Company or its Subsidiaries, or
(iii) result in any breach of or
constitute
a default (or an event
which with
notice or lapse of time of both would
become a default) under, or give to others
any rights of termination or cancellation of, or result in the creation of
a
Lien on any of the properties or assets of the Company or its Subsidiaries
pursuant to, any contract, instrument,
Permit or license to which the Company or
its Subsidiaries is a party or by
which the Company or its Subsidiaries or any
of their property is bound, except in the case of clauses (i) and (iii) for
conflicts, violations, breaches or defaults which, individually or in the
aggregate, would not have or result in a
Material Adverse Effect on the Company.
(b) Except
for the filing of the
Certificate
of Merger as
required by
Michigan Law and applicable requirements,
if any, under "takeover" or "blue sky"
Laws of various states, neither the Company nor any of its subsidiaries is
required to submit any notice, report or
other filing with any federal, state or
local or foreign government, political subdivision thereof, any court,
administrative, regulatory or other
governmental agency, commission or authority
or any non-governmental United States or foreign self-regulatory agency,
commission or authority or any arbitral
tribunal (each, a "GOVERNMENTAL ENTITY")
in connection with the execution, delivery or performance of this
Agreement or
the consummation of the transactions
contemplated hereby the failure of which to
submit would, individually or in the aggregate, have or result in a Material
Adverse Effect on the Company. No waiver,
consent, approval or
authorization of
any Governmental Entity or any third party
is required to be obtained or made by
the Company or its Subsidiaries in connection
with its execution,
delivery or
performance of this Agreement the failure of which to obtain or make,
individually or in the aggregate, would have or result in a Material
Adverse
Effect on the Company.
SECTION
2.6 INVESTMENT. Each Stockholder:
(a) Is
acquiring the shares
of Buyer common stock
pursuant to the Merger
for investment for his own account,
not as a nominee or
agent, and not with the
view to, or for resale in connection with,
any distribution thereof;
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(b)
Understands
that the shares of
Mobilepro common stock to be issued
pursuant to Section 1.6 will not have been registered and will be deemed
"restricted securities" under federal securities laws and may not be sold
without registration under or exemption
from the Securities Act;
(c) Has
such knowledge and
experience in
financial and business
matters
that it is capable of evaluating the merits
and risks of its investment in Buyer
and has the capacity to protect its own
interests; and
(d)
Acknowledges
that his investment in
shares of Mobilepro common stock
by way of the Merger is highly speculative and entails a
substantial degree
of
risk, and Stockholder has the ability to bear the economic risk of its
investment.
SECTION
2.7 FINANCIAL STATEMENTS; DEBT.
(a)
Attached as Section
2.7(a) of the Company
Disclosure Letter are
the
Company's (i) audited balance sheet dated as of December
31, 2003 (the "COMPANY
BALANCE SHEET"), and income statement for the year then ended and (ii) the
Company's unaudited balance sheet (the "CLOSING
BALANCE SHEET"),
statement of
cash flows and income statement each dated as of the
Closing Date (the "BALANCE
SHEET DATE") and (iii) the Company's Accounts Receivable Aging Report
(collectively, the "COMPANY FINANCIAL STATEMENTS"). The Company Financial
Statements (a) are in accordance with the
books and records of the Company, (b)
fairly present the financial condition of the Company at the date therein
indicated and the results of operation for
the period therein
specified and (c)
have been prepared in accordance with United States generally accepted
accounting principles applied on a
consistent basis ("GAAP").
(b) The
Company has no
material debt,
liability or obligation of any
nature, whether accrued, absolute, contingent or otherwise, and
whether due or
to become due, that is not reflected or reserved against in the Company
Financial Statements and Footnotes in the ordinary course of its business,
consistent with past practice and that are not material in amount either
individually or collectively.
SECTION
2.8 ABSENCE OF CERTAIN CHANGES. Since the date of the Company
Financial Statements, there has not been with
respect to the Company or any
Subsidiary:
(a)
any change in the financial condition, properties, assets,
liabilities, business or operations thereof which change by itself or in
conjunction with all other such changes,
whether or not arising
in the ordinary
course of business, has had or will have a
material adverse effect thereon;
(b) any
material loss of
customers.
Set forth on Section
2.8(b) of the
Company Disclosure Letter is a true,
correct and complete list of all customers
lost in the preceding twelve (12)
months;
(c) no notice of
impending
cancellation, or a
material price
increase,
from any Incumbent Local Exchange Carrier
or other provider of data transmission
and/or telecommunication services;
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(d) any
contingent liability
incurred thereby as guarantor or
otherwise
with respect to the obligations of
others;
(e) any
mortgage, encumbrance or lien placed on any of the properties
thereof;
t 6 0 (f)
any material obligation or liability incurred thereby other
than
obligations and liabilities incurred in the
ordinary course of business;
(g) any
purchase or sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any of the
properties or assets thereof other than in
the ordinary course of business;
(h) any
damage, destruction or
loss, whether or not covered by insurance,
materially and adversely affecting the
properties, assets or business thereof;
(i) any
declaration,
setting aside or
payment of any dividend on, or the
making of any other distribution in respect of, the
capital stock thereof,
any
split, combination or recapitalization of the capital stock thereof or any
direct or indirect redemption, purchase or other acquisition of the capital
stock thereof;
(j) any
labor dispute or claim
of unfair labor
practices, any change
in
the compensation payable or to become
payable to any of its officers, employees
or agents, or any bonus payment or arrangement made to or with any of such
officers, employees or agents;
(k) any
change with respect to the management, supervisory or other key
personnel thereof;
(l) any
payment or discharge of a material lien or liability thereof
which
lien was not either shown on the Company Balance Sheet or incurred in the
ordinary course of business thereafter;
or
(m) any
obligation or liability incurred thereby to any of its
officers,
directors or stockholders or any loans or advances
made thereby to any of
its
officers, directors or stockholders except normal compensation and expense
allowances payable to officers.
SECTION
2.9 TAX MATTERS.
(a) The
Company and its
Subsidiaries have
timely filed or will
file all
Tax Returns that it was required to file,
and all such Tax
Returns were correct
and complete in all material respects. All Tax liabilities of the Company and
its Subsidiaries for all taxable
periods or portions thereof ending on or prior
to the Effective Time have been, or will be
prior to the Effective Time, timely
paid or are adequately reserved for in the
Company Financial
Statements, other
than such Tax liabilities as are being
contested in good faith by the Company or
its Subsidiaries. There are no ongoing federal,
state, local or
foreign audits
or examination of any Tax Return of the
Company or its Subsidiaries. Neither the
Company nor its Subsidiaries has waived any
statute of limitations in respect of
Taxes or agreed to any extension of time, nor has any such waiver or
extension
been required with respect to a Tax
assessment or deficiency. No claim has ever
been made by an authority in a jurisdiction where the Company and its
Subsidiaries do not file Tax Returns that
it is or may be subject to taxation by
that jurisdiction. There are no Liens on
any of the assets of the Company or its
Subsidiaries that arose in connection with any
failure (or alleged
failure) to
pay any Tax.
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(b) The
Company and its
Subsidiaries have
withheld or collected and paid
or deposited in accordance with law all Taxes required to
have been withheld or
collected and paid or deposited by the
Company or its Subsidiaries in connection
with amounts paid or owing to any employee,
independent
contractor,
creditor,
stockholder, or other third party.
(c) There
is no dispute
or claim concerning any Tax liability of the
Company or its Subsidiaries either (i) claimed or raised by
any authority
in
writing or (ii) as to which the Company has
Knowledge.
(d) The
Shareholders expressly
acknowledge and agree
that any Taxes owed
pursuant to the 2003 Company tax return shall be the personally liability of
Shareholders and shall not be paid out of
funds of the Surviving Entity.
(e) For
purposes of this Agreement:
(i) "KNOWLEDGE"
or words of similar
import means all
information
that is actually known, and in the case of
the Company, by the Shareholders.
(ii) "TAXES" means all taxes, charges, fees, levies or other
similar
assessments or liabilities, including income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, payroll and franchise taxes imposed by a
Governmental Entity, and any interest, fines, penalties, assessments or
additions to tax resulting from,
attributable to or
incurred in connection with
any tax or any contest or dispute thereof;
and
(iii) "TAX
RETURNS" means all reports, returns, declarations,
statements or other information
supplied or required
to be supplied to a taxing
authority in connection with Taxes including any schedules, attachments or
amendments thereto.
SECTION
2.10 TITLE TO
PROPERTIES.
The Company
has good and
marketable
title to all of its assets as shown on the
Company Balance Sheet, free and clear
of all liens, charges, restrictions or encumbrances
(other than for taxes
not
yet due and payable). All machinery and
equipment included in such properties is
in good condition and repair, normal wear and tear excepted. Otherwise, the
machinery and equipment is being sold "as is,
where is." All leases of real or
personal property to which Company or any
its Subsidiaries is a party are fully
effective and afford Company or its Subsidiaries peaceful and undisturbed
possession of the subject matter of the lease. Neither Company nor any of its
Subsidiaries is in violation of any zoning,
building, safety or environmental
ordinance, regulation or requirement
or other law or
regulation applicable
to
the operation of owned or leased properties
(the violation of which would have a
material adverse effect on its business), or has received any notice of
violation with which it has not
complied.
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<PAGE>
SECTION
2.11 ENVIRONMENTAL MATTERS.
(a) During
the period that the Company has leased or owned its properties
or owned or operated any facilities, to the
Knowledge of the Company, there have
been no disposals, releases or threatened
releases of Hazardous
Materials (as
defined below) on, from or under such
properties or facilities. The Company has
no knowledge of any presence, disposals, releases or threatened releases of
Hazardous Materials on, from or under any of such
properties
or facilities,
which may have occurred prior to the
Company having taken
possession of any
of
such properties or facilities.
For the purposes of
this Agreement,
the terms
"DISPOSAL," "RELEASE," and "THREATENED RELEASE" shall have the definitions
assigned thereto by the Comprehensive
Environmental
Response, Compensation
and
Liability Act of 1980, 42 U.S.C.
ss. 9601 et seq., as
amended ("CERCLA").
For
the purposes of this Agreement "HAZARDOUS
MATERIALS" shall mean any hazardous or
toxic substance, material or waste which is or becomes prior to the Closing
regulated under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous materials," "toxic substance" or
"hazardous chemical" under (1) CERCLA; (2)
any similar federal,
state or local
law; or (3) regulations promulgated under
any of the above laws or statutes.
(b) None
of the properties or facilities of the Company is in violation
of
any federal, state or local law, ordinance, regulation or order relating to
industrial hygiene or to the environmental conditions on, under or about
such
properties or facilities, including, but not limited to, soil and
ground water
condition. During the time that the Company
has owned or leased its properties
and facilities, to the Company's knowledge,
no third party, has used, generated,
manufactured or stored on, under or about such properties or facilities or
transported to or from such properties or
facilities any Hazardous Materials.
(c) During
the time that the
Company has owned or
leased its
properties
and facilities, there has been no litigation
brought or threatened
against the
Company by, or any settlement reached by the Company with, any
party or parties
alleging the presence, disposal, release or threatened
release of any Hazardous
Materials on, from or under any of such
properties or facilities.
SECTION
2.12 INTELLECTUAL PROPERTY.
(a)
The term "INTELLECTUAL PROPERTY" means any (i) patents, (ii)
trademarks, service marks, trade names,
brand names, trade dress, slogans, logos
and internet domain names, (iii) inventions, discoveries, ideas, processes,
formulae, designs, models, industrial designs, know-how, proprietary
information, trade secrets, and confidential information (including customer
lists, training materials and related
matters, research and
marketing and sales
plans), whether or not patented or
patentable, (iv)
copyrights,
writings and
other copyrightable works and works in
progress, databases and software, (v) all
other intellectual property rights and foreign
equivalent or counterpart rights
and forms of protection of a similar or analogous nature or having similar
effect in any jurisdiction throughout the world, (vi) all registrations and
applications for registration of any of the foregoing, (vii) all common law
trademarks and service marks used by the
Company or its
Subsidiaries and (viii)
any renewals, extensions, continuations,
divisionals, reexaminations or reissues
or equivalent or counterpart of any of the foregoing in any jurisdiction
throughout the world. The term "COMPANY IP"
means any Intellectual Property used
or held for use by the Company or its Subsidiaries, in the conduct of their
businesses as currently conducted and
currently proposed to be conducted.
11
<PAGE>
(b)
Section 2.12(b) of the
Company Disclosure
Letter sets forth a
true,
correct and complete list (including, the owner, title, registration or
application number and country of
registration or application, as applicable) of
all of the following Company IP: (i) registered
trademarks,
(ii) applications
for trademark registration, (iii) domain names, (iv) patents,
(v) applications
for patents, (vi) registered copyrights (vii) applications for copyright
registration and (viii) licenses of all Intellectual Property (other than
off-the-shelf business productivity software that is the subject of a
shrink
wrap or click wrap software license
agreement ("DESKTOP
SOFTWARE")) to or
from
the Company. The Company has delivered or made
available to Buyer
prior to the
execution of this Agreement true, complete
and correct copies of all licenses of
Company IP both to and from the Company
and its Subsidiaries, except Desktop
Software.
(c) The
Company IP set forth on Section 2.12(b) of the Company Disclosure
Letter constitutes all of the
Intellectual
Property used by and
necessary for
the Company and its Subsidiaries to operate their respective business as
currently conducted and currently proposed
to be conducted. The
Company or its
Subsidiaries owns all legal and beneficial right, title and interests in the
Company IP, and the Company or its Subsidiaries has the valid, sole and
exclusive right to use, assign, transfer
and license all such Company IP for the
life thereof for any purpose, free from (i) any Liens, and (ii)
any requirement
of any past, present or future royalty
payments, license
fees, charges or other
payments, or conditions or restrictions
whatsoever.
(d) All
patent, trademark, service mark, copyright, patent and domain
name
registrations or applications set forth on Section 2.12(b) of the Company
Disclosure Letter are in full force and effect and have not been abandoned,
dedicated, disclaimed or allowed to lapse for
non-payment
of fees or taxes
or
for any other reason.
(e) None
of the Company IP
owned by the Company or its Subsidiaries has
been declared or adjudicated invalid, null or void, unpatentable or
unregistrable in any judicial or
administrative
proceeding. To the Knowledge of
the Company, none of the Company IP used (but
not owned) by the Company or its
Subsidiaries has been declared or adjudicated invalid, null or void,
unpatentable or unregistrable in any
judicial or administrative proceeding.
(f)
Neither the Company
nor its Subsidiaries
has received any written
notices of, or has Knowledge of, any
infringement or
misappropriation by or of,
or conflict with, any third party with
respect to the Company IP or Intellectual
Property owned by any third party.
Neither the Company
nor its Subsidiaries has
infringed, misappropriated or otherwise violated or conflicted with any
Intellectual Property of any third party.
The operation of the
Company and its
Subsidiaries does not, as currently conducted and currently proposed to be
conducted, infringe, misappropriate or otherwise violate or conflict
with the
Intellectual Property of any third
party.
(g) The
transactions
contemplated
by this Agreement will
not affect the
right, title and interest of the Company or its Subsidiaries in and to the
Company IP, and each of the Company and its
Subsidiaries has taken all necessary
action to maintain and protect the Company IP set forth
on Section 2.12(b)
of
the Company Disclosure Letter and, until the Effective
Time, will continue
to
maintain and protect such Company IP so as
to not materially
adversely affect
the validity or enforceability of such
Company IP.
12
<PAGE>
(h) To the
Knowledge of the Company, no officer, employee or director or
the Company or its Subsidiaries is obligated under
any contract
(including any
license, covenant or commitment of any
nature) or other agreement, or subject to
any judgment, decree or order of any court or
administrative agency, that would
conflict or interfere with the performance of such person's duties as an
officer, employee or director of the Company or its Subsidiaries, the use of
such person's best efforts to promote the interests of the Company and its
Subsidiaries or the Company's or its
Subsidiary's
business as conducted
or as
currently proposed to be conducted by the
Company and its Subsidiaries. No prior
employer of any current or former
employee of the
Company or its
Subsidiaries
has any right, title or interest in the Company
IP and to the
Knowledge of the
Company, no person or entity has any right,
title or interest in any Company IP.
It is not and will not be with respect to
the business as currently proposed to
be conducted necessary for the Company or
its Su
