Capitalized terms used in the Schedules and not otherwise defined therein shall have the meanings ascribed to such terms in this Agreement.
Section 3.01 Organization and Qualification. Except as set forth on Schedule 3.01, each of the
Stockholders is a U.S. citizen, and the Company is a corporation duly incorporated, validly existing and in good standing under the Delaware Code. The Company has full corporate power and authority to own or lease its properties and to conduct its businesses in the manner and in the places where such properties are owned or leased and where such businesses are currently conducted. The copies of the Company's certificate of incorporation and bylaws, each as amended to date and each heretofore made available to the Buyer and/or its agents, are complete and correct, and no amendments thereto are pending. Except as set forth on Schedule 3.01, the copies of the Company's minute books containing the records of meetings of the stockholders, board of directors, the stock certificate books, the stock record books and similar organizational records of the Company, in the form made available to the Buyer and/or its agents, are complete and correct in all material respects. The Company is duly licensed and qualified to do business and in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification to do business necessary.
Section 3.02 Subsidiaries. The Company has no direct or indirect Subsidiaries. Except as set forth on Schedule 3.02 hereto, the Company does not own, or hold the right to acquire, any securities, partnership interest, joint venture interest or other security or interest in any other Person. Section 3.03 Capitalization.
(a) The total authorized capital stock of the Company consists of 1,000,000 shares of Common Stock, 290,155 of which are issued and outstanding, and 250,000 shares of preferred stock, none of which are outstanding, as of the date hereof. All of the issued and outstanding shares of Common Stock are duly and validly issued and outstanding, and are fully paid and non-assessable. On the date hereof, all of the issued and outstanding shares of Common Stock are held of record by the Stockholders as set forth on Schedule 3.03 hereto, free and clear of all pledges, Liens, encumbrances or other claims or charges, except pledges, Liens, encumbrances or other claims or charges that will be released at the Closing. Except as set forth on Schedule 3.03, there are no authorized or outstanding subscriptions, options, warrants, commitments, preemptive rights, subscription rights, exchange rights, agreements,
arrangements, commitments or obligations (contingent or otherwise) of any kind for or relating to the repurchase, acquisition, issuance, sale, registration or voting of, or outstanding securities convertible into or exchangeable for, any shares of capital stock of any class or other equity interests of the Company. Section 3.04 Authority and Noncontravention.
(a) The Company has full right, power and authority to enter into each agreement, document and instrument to be executed and delivered by it pursuant to or as contemplated by this Agreement (the \and delivery of this Agreement and each Other Document and the performance of the Company's
obligations hereunder and thereunder have been duly authorized by all necessary corporate action on the part of the Company, and no other corporate proceedings on the part of the Company and no other stockholder votes are necessary to authorize each Other Document and the transactions contemplated hereby. This Agreement and each Other Document constitutes, or will when executed and delivered
constitute, a valid and binding obligation of the Company, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(b) The execution and delivery by the Company of each Other Document and the performance of the Company's obligations hereunder and thereunder:
6
(i) do not and will not violate any provision of the certificate of incorporation or bylaws or other equivalent governing document of the Company;
(ii) do not and will not violate any laws of the United States, or any state or other jurisdiction
applicable to the Company, or require the Company to obtain any approval, consent or waiver of, or make any filing with, or provide notice to, any Person (governmental or otherwise) that has not been obtained or made; and
(iii) do not and will not result in a breach of, constitute a default under, accelerate any obligation under, or give rise to a right of termination, acceleration, modification, cancellation of, or require any notice, consent, authorization, approval or exemption under any indenture, loan or credit agreement, or any other material agreement, contract, understanding, commitment, instrument, mortgage, deed of trust, lien, lease, permit, authorization, order, writ, judgment, injunction, decree, determination or arbitration award, whether written or oral, to which the Company is a party or by which the property of the Company is bound (or result in the imposition of any Liens upon any of its assets), except as otherwise set forth on Schedule 3.04(b)(iii) hereto.
(c) The execution, delivery and performance by such Stockholder of
this Agreement and the consummation of the transactions contemplated hereby:
(i) do not and will not (i) violate any material law, rule, regulations, judgment, injunction, order or decree applicable to the transactions contemplated hereby or (ii) require any material consent, notice, authorization, approval or exemption or other material action by any Person under, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of such Stockholder under any provisions of any material agreement or other material instrument binding upon such Stockholder;
(ii) requires no material action by or in respect of, or material filing with, any governmental body, agency or official; and
(iii) constitutes a valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except as enforceability may be limited by applicable equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws from time to time in effect affecting the enforcement of creditors' rights generally.
Section 3.05 Compliance with Laws. Except as set forth on Schedule 3.05 hereto, the Company is in material compliance with all applicable laws, judgments, decrees, injunctions, statutes, ordinances, orders, rules and regulations (\agency or authority, any court or judicial authority, any arbitral tribunal or any other public authority, whether foreign, transnational, federal, state, municipal, local or other governmental authority (a \presently conducted. Except as set forth on Schedule 3.05 hereto, the Company has not received any notice or other communication from any Governmental Authority regarding any actual, alleged, possible, or potential violation of, or failure to comply materially with any Law by the Company. Neither the Company, nor to the Knowledge of the Company, any of its directors, officers, employees or agents has, with respect to the businesses of the Company, (a) used any funds for any unlawful contribution, endorsement, gift, entertainment or other unlawful expense relating to political activity, (b) made any direct or indirect unlawful payment to any foreign or domestic official or employee of a Governmental Authority, (c) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (d) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any Person or entity.
Section 3.06 Advisory and Other Fees. The Company has not incurred nor shall become liable for any advisory fee, broker's commission or finder's fee relating to or in connection with the transactions contemplated by this Agreement.
7
Section 3.07 Taxes. Except as set forth on Schedule 3.07 hereto:
(a) (i) The Company has complied in all material respects with all Laws related to Taxes. All income Tax Returns of or with respect to the Company required by Law to be filed have been timely filed and all other Tax Returns of or with respect to the Company required by applicable federal, foreign, state, local or other Law to be filed have been filed and all such Tax Returns were true, correct and complete in all material respects;
(ii) The Company has timely paid or caused to be paid as of the date hereof all Taxes (whether or not shown as due on the Tax Returns referred to in Section 3.07(a)(i));
(iii) There has not been any audit of any Tax Return filed by or with respect to the Company for which the applicable statute of limitations has not expired, no audit of any such Tax Return of or including the Company is in progress, and the Company has not been notified by any taxing authority that any audit is contemplated or pending. No claim has been made by any Governmental Authority in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction; and
(iv) The Company has provided to the Buyer (A) true, correct and complete copies of all Tax Returns relating to income Taxes and other material Tax Returns filed by the Company since inception and (B) true, correct, and complete copies of all notices of deficiencies, notices of proposed adjustments, notices of assessments, revenue agent reports, closing agreements, settlement agreements, information document requests, protests, and any other similar document, notice, or correspondence, in each such case, that the Company (or representative thereof) has received from, sent to, or entered with the Internal Revenue Service or other Governmental Authority since inception or that relates to any Taxes or Tax Return which is not closed by the applicable statute of limitations.
(b) The Company is not a party to, is not bound by and has no obligation under, any agreement
relating to allocating or sharing the payment of, or liability for, Taxes or has any liability for Taxes of any Person as a transferee or successor, by contract or otherwise.
(c) No closing agreement pursuant to Section 7121 of the Code or any similar provision of any state, local or foreign law has been entered into by or with respect to the Company. The Company has not agreed to, nor is required to, make any adjustment for any period after the Closing Date pursuant to Section 481(a) of the Code by reason of any change in any accounting method,
there is no application pending with any taxing authority requesting permission for any such change in any accounting method of the Company and the Internal Revenue Service has not proposed in writing any such adjustment or change in accounting method. The Company does not have any private letter ruling, technical advice or other similar requests presently pending with any Governmental Authority. (d) The Company has not waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to any Tax assessment or deficiency and no power of attorney granted by the Company with respect to any Taxes is currently in force.
(e) The Company has (i) withheld and paid over to the relevant Governmental Authority all Taxes required to have been withheld and paid in connection with payments to employees, independent
contractors, creditors, stockholders or other third parties, including any Taxes denominated as \contributions\respect to employee income Tax withholding, social security Taxes and premiums, and unemployment Taxes and premiums, all in compliance with the Code (and other applicable federal, state, local or foreign laws relating to Taxes) as in effect for the applicable year.
(f) The Company will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof) ending on or after the Closing Date as a result of any (i) intercompany transaction or any excess loss account described in Treasury Regulations under Code § 1502 (or any corresponding or similar provision of state, local, or foreign Tax
8
law); (ii) installment sale or open transaction disposition made on or prior to the Closing Date; or (iii) prepaid amount received on or prior to the Closing Date.
(g) The Company has not distributed stock of another Person, or has had its stock distributed by
another Person, in a transaction that was purported or intended to be governed in whole or in part by Code § 355 or Code § 361.
(h) Except as set forth in Schedule 3.07(h), neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereunder, either by themselves or in connection with any other event, will entitle any employee, officer, or director of the Company to any payment that could individually or in combination with any other such payment constitute an \defined in Code § 280G(b)(1) of the Code (or any corresponding or similar provision of state, local, or foreign Tax law).
(i) There are no Liens for Taxes on any assets of the Company , other than Liens for Taxes not yet due and payable.
(j) The Company is not, nor has ever been, a \the meaning of Code section 897(c).
(k) Based on the Internal Revenue Code, Treasury Regulations and other applicable guidance as of the Closing Date, and taking into account the transition period rules and other mitigation provisions contained therein, none of the Company's \section 409A is likely to result in a participant's incurring income acceleration or penalties under Code section 409A. The Company does not have any indemnity obligation for any Taxes imposed under Code section 409A.
(l) No asset of the Company is tax-exempt use property under Code section 168(h). No portion of the cost of any asset of the Company has been financed directly or indirectly from the proceeds of any
tax-exempt state or local government obligation described in Code section 103(a). None of the assets of the Company is property that the Company is required to treat as being owned by any other person pursuant to the safe harbor lease provision of former Code section 168(f)(8).
(m) The Company has not engaged in any \meaning of Section 6707A of the Code or Treasury Regulations promulgated thereunder or pursuant to notices or other guidance published by the Internal Revenue Service (irrespective of the effective dates). Section 3.08 Litigation. Schedule 3.08 hereto sets forth each action, suit, claim, complaint, charge,
grievance, arbitration, investigation, formal or informal inquiry or other proceeding related in any way to the Company (whether or not brought, settled, terminated, pending, threatened or otherwise) since its inception.
Section 3.09 Financial Statements.
(a) The Company has delivered to the Buyer the following financial statements, attached as
Schedule 3.09 hereto: unaudited balance sheets of the Company as of December 31, 2005, 2006 and 2007 and unaudited statements of operations, shareholder's equity, and cash flows for the fiscal years then ended, and an unaudited balance sheet of the Company as of November 30, 2008 (the \Sheet\receipts and disbursements record since inception (collectively, the \
(b) Except as set forth on Schedule 3.09, the Financial Statements have been prepared in accordance with GAAP applied consistently during the periods covered thereby, and present fairly in all material respects the financial
condition of the Company at the dates of such statements and the results of its operations and cash flows for the periods covered thereby, except that they do not contain the materials and disclosures to be found in notes to financial statements prepared in accordance with GAAP.
9
(c) Except as set forth on Schedule 3.09 hereto, the Company does not have any liabilities of any nature (whether accrued, absolute, contingent, direct, indirect, known, unknown, or otherwise, whether due or to become due and regardless of when or by whom asserted), except for the Indebtedness reflected or reserved against on the Latest Balance Sheet, Indebtedness incurred in the ordinary course or Indebtedness incurred in connection with the transactions contemplated hereby.
Section 3.10 Transactions with Affiliates. Except as set forth on Schedule 3.10 hereto and except to the extent reflected in the Financial Statements, there have been no material transactions, contracts,
understandings or agreements of any kind between the Company and any Person (other than the Company) who is an Affiliate of the Company or any Subsidiary, or officer, director or stockholder, or any employee of the Company, or any individual related by marriage or adoption to any such individual or entity in which any such individual owns a material interest. Section 3.11 Real Properties.
(a) The Company does not own any real property.
(b) Schedule 3.11(b) hereto sets forth each lease or other agreement under which the Company leases or has rights in any real property. True and complete copies of these leases (including all amendments, extensions, renewals, guaranties and other agreements with respect thereto) have been made available to the Buyer and/or its agents by the Company. Except as set forth on Schedule 3.11(b) hereto, the Company has a valid and subsisting leasehold interest in all the real property which is the subject of each of these leases, and the Company has not subleased, licensed or otherwise granted any Person the right to use or occupy such leased property or any portion thereof.
(c) No material permit, license or certificate of occupancy pertaining to the leasing or operation of any leased property is required by any Governmental Authority which has not been obtained by the Company. Section 3.12 Absence of Material Adverse Effect.
Except as set forth on Schedule 3.12 hereto, since the date of the Latest Balance Sheet, there has not been any Material Adverse Effect.
Section 3.13 Absence of Certain Changes.
Except as set forth on Schedule 3.13 hereto, or as contemplated by this Agreement, the Company and each Subsidiary have complied in all material respects with the covenants and restrictions set forth in Section 5.01 hereof to the same extent as if this Agreement had been executed on, and had been in effect since, the date of the Latest Balance Sheet. Section 3.14 Tangible Personal Property.
Except as set forth on Schedule 3.14 hereto, (a) the Company has good and marketable title to all of the items of tangible personal property and assets reflected on the Latest Balance Sheet, and (b) all such tangible personal property is owned free and clear of all liens, encumbrances, mortgages, pledges, options, licenses, contracts and security interests (collectively, \Schedule 3.14 hereto and (ii) Permitted Liens. Section 3.15 Intellectual Property.
(a) Schedule 3.15 hereto sets forth a complete and accurate list of all: (i) patents and patent
applications, (ii) trademark and service mark registrations and applications for registration thereof, and Internet domain name registrations, (iii) registered copyrights and applications for registration of
copyrights, and (iv) material software (including, without limitation, generic descriptions of firmware, libraries, middleware, and applications) that is embodied in any product or service of the Company, in each of the foregoing cases that are owned by the Company (collectively, \Intellectual Property\
(b) Except as set forth on Schedule 3.15, the Company (i) owns and possesses all right, title and interest in and to all Company Scheduled Intellectual Property, free and clear of all Liens other than
(1) Permitted Liens or (2) any applicable licenses set forth on Schedule 3.16, and (ii) owns and possesses
10