EXHIBIT 10.14
STOCK PURCHASE AGREEMENT
BY AND AMONG
LINEO, INC.
AND
THE SELLERS NAMED HEREIN
DATED AS OF MAY 1, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE 1.DEFINITIONS............................................................................................1
ARTICLE 2.SALE OF SHARES; CLOSING................................................................................5
2.1 Purchase and Sale.....................................................................................5
2.2 Purchase Price........................................................................................6
2.3 Time and Place of Closing.............................................................................6
ARTICLE 3.REPRESENTATIONS AND WARRANTIES OF THE MAJORITY SHAREHOLDERS............................................6
3.1 Organization and Corporate Power......................................................................6
3.2 Capitalization; Share Ownership.......................................................................6
3.3 Subsidiaries; Investments.............................................................................7
3.4 Financial Statements..................................................................................7
3.5 Absence of Undisclosed Liabilities....................................................................7
3.6 Absence of Changes....................................................................................7
3.7 Title; Condition of Property..........................................................................8
3.8 Certain Contracts and Arrangements....................................................................8
3.9 Intellectual Property Rights; Employee Restrictions...................................................9
3.10 Litigation...........................................................................................10
3.11 Tax Matters..........................................................................................11
3.12 Employee Benefits....................................................................................11
3.13 Labor Laws...........................................................................................11
3.14 Employees............................................................................................11
3.15 Hazardous Waste, Etc.................................................................................12
3.16 Business; Compliance with Laws.......................................................................12
3.17 Investment Banking; Brokerage........................................................................12
3.18 Insurance............................................................................................12
3.19 Transactions with Affiliates.........................................................................12
3.20 Suppliers............................................................................................13
3.21 Certain Events.......................................................................................13
3.22 Registration Rights..................................................................................13
3.23 Disclosure...........................................................................................13
3.24 Corporate Documents..................................................................................14
3.25 Governmental Consents................................................................................14
3.26 Equity...............................................................................................14
ARTICLE 4.REPRESENTATIONS AND WARRANTIES OF THE SELLERS.........................................................14
4.1 Capacity; Execution; Validity; Binding Effect........................................................14
4.2 Share Ownership......................................................................................14
4.3 No Other Rights......................................................................................15
4.4 No Conflicting Agreements............................................................................15
4.5 Consents, Approvals, Licenses, Etc...................................................................15
4.6 Litigation...........................................................................................15
4.7 No Brokers...........................................................................................16
4.8 No U.S. Persons......................................................................................16
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ARTICLE 5.REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................16
5.1 Organization and Corporate Power.....................................................................16
5.2 Authorization and Non-Contravention..................................................................16
5.3 Capitalization.......................................................................................17
5.4 Subsidiaries; Investments............................................................................17
5.5 Financial Statements.................................................................................17
5.6 Absence of Undisclosed Liabilities...................................................................18
5.7 Absence of Changes...................................................................................18
5.8 Title; Condition of Property.........................................................................18
5.9 Certain Contracts and Arrangements...................................................................19
5.10 Intellectual Property Rights; Employee Restrictions..................................................20
5.11 Litigation...........................................................................................21
5.12 Tax Matters..........................................................................................21
5.13 Employee Benefit Plans...............................................................................21
5.14 Labor Laws...........................................................................................22
5.15 Employees............................................................................................22
5.16 Hazardous Waste, Etc.................................................................................22
5.17 Business; Compliance with Laws.......................................................................22
5.18 Insurance............................................................................................23
5.19 Transactions with Affiliates.........................................................................23
5.20 Suppliers............................................................................................23
5.21 Certain Events.......................................................................................23
5.22 Registration Rights..................................................................................24
5.23 Disclosure...........................................................................................24
5.24 Corporate Documents..................................................................................24
5.25 Offering.............................................................................................24
5.26 Investment Company...................................................................................24
5.27 Supplemental Remuneration............................................................................24
5.28 Governmental Consents................................................................................25
ARTICLE 6.COVENANTS OF SELLERS AND BUYER........................................................................25
6.1 Investigation of Business; Access to Properties and Records..........................................25
6.2 Regulatory and Other Authorizations..................................................................25
6.3 Reasonable Efforts; Consents and Notifications.......................................................26
6.4 Further Assurances...................................................................................26
6.5 Conduct of Business of the Company...................................................................26
6.6 Preservation of Business.............................................................................28
6.7 Announcements........................................................................................28
6.8 No Solicitation......................................................................................28
6.9 Right to Update and Cure.............................................................................29
6.10 Market Stand-Off Agreement...........................................................................29
6.11 Securities Law Compliance............................................................................30
6.12 Tax Filing Code Section 338(g) Election..............................................................30
6.13 Covenant Not to Compete/Nonsolicitation..............................................................30
ARTICLE 7.CONDITIONS TO BUYER'S OBLIGATION TO CLOSE.............................................................31
7.1 Representations; Warranties and Covenants of the Majority Shareholders and the Sellers...............31
7.2 Filings; Consents; Waiting Periods...................................................................32
7.3 No Injunction........................................................................................32
7.4 Closing Deliveries...................................................................................32
7.5 Absence of Litigation................................................................................32
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7.6 No Claim Regarding Stock Ownership or Sale Proceeds..................................................32
7.7 No Material Adverse Effect...........................................................................33
ARTICLE 8.CONDITIONS TO SELLERS' OBLIGATIONS TO CLOSE...........................................................33
8.1 Representations, Warranties and Covenants of the Buyer...............................................33
8.2 Filings; Consents; Waiting Periods...................................................................33
8.3 No Injunction........................................................................................33
8.4 Closing Deliveries...................................................................................33
8.5 Series C Convertible Preferred Stock of the Buyer....................................................34
8.6 Absence of Litigation................................................................................34
8.7 No Material Adverse Effect...........................................................................34
ARTICLE 9.SURVIVAL; INDEMNIFICATION.............................................................................34
9.1 Indemnification......................................................................................34
9.2 Limitations on Indemnification.......................................................................37
ARTICLE 10.TERMINATION..........................................................................................38
10.1 Termination..........................................................................................38
10.2 Procedure and Effect of Termination..................................................................39
ARTICLE 11.MISCELLANEOUS........................................................................................39
11.1 Counterparts.........................................................................................39
11.2 Governing Law........................................................................................39
11.3 No Third Party Beneficiaries.........................................................................39
11.4 Entire Agreement.....................................................................................39
11.5 Expenses.............................................................................................39
11.6 Notices..............................................................................................40
11.7 Successors and Assigns...............................................................................40
11.8 Headings; Definitions................................................................................40
11.9 Amendments and Waivers...............................................................................40
11.10 Arbitration..........................................................................................41
11.11 Attorneys' Fees......................................................................................42
11.12 Severability of Provisions; Jeopardy.................................................................42
EXHIBITS
Exhibit A List of Sellers
Exhibit B Liquidity Agreement
Exhibit C Stock Option Undertaking
Exhibit D Employment Agreements
SCHEDULES
Majority Shareholders Disclosure Schedule
Buyer Disclosure Schedule
Seller Disclosure Schedule
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of May 1, 2000 is made
and entered into by and among all of the Sellers listed on Exhibit A hereto
(each a "Seller" and collectively the "Sellers"), and Lineo, Inc., a Delaware,
USA, corporation (the "Buyer").
WHEREAS, the Sellers own all of the shares of Inup S.A., a
"societe anonyme" (the "Company"), having its registered office at 9-11, avenue
Michelet - 93400 Saint Ouen - France, incorporated at the Trade Registry of
Bobigny B 421 701 384, with an issued share capital of 187,500 Euros as of the
date of this Agreement, with each Seller owning that number of shares of the
Company set forth opposite such Seller's name in EXHIBIT A hereto; and
WHEREAS, the Buyer desires to purchase from the Sellers, and
the Sellers desire to sell to the Buyer, all of the shares of the Company issued
and outstanding as of the date of this Agreement upon the terms and subject to
the conditions set forth in this Agreement (the sale and purchase of such shares
are referred to in this Agreement as the "Share Purchase");
NOW, THEREFORE, in consideration of the mutual agreements,
covenants, representations and warranties contained herein, and subject to the
terms and conditions hereinafter set forth, the parties to this Agreement hereby
agree as follows:
ARTICLE 1.
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
1.1 "ACCOUNTANTS" shall have the meaning set forth in Section 2.2(b).
1.2 "ACCOUNTS RECEIVABLE" shall have the meaning set forth in Section
3.23.
1.3 "AFFILIATE" shall mean, with respect to any Person, a Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
1.4 "AGREEMENT" shall mean this Share Purchase Agreement, together with
the Buyer Disclosure Schedule, the Majority Shareholders Disclosure Schedule and
the Seller Disclosure Schedule, as the same may be updated or amended from time
to time as provided herein.
1.5 "ASSOCIATE" shall mean, with respect to any Person, any corporation
or other business organization of which such Person is an executive officer (as
such term is defined in Rule 3b-7 under the 1934 Act) or partner or is the
beneficial owner, directly or indirectly, of [ten] percent or more of any class
of equity securities, any trust or estate in which such Person has a substantial
beneficial interest or as to which such Person serves as a trustee or in a
similar capacity and any relative or spouse of such Person.
1.6 "AUTHORITY" shall mean any United States, French, foreign, federal,
provincial state or local entity or municipality or subdivision thereof or any
authority, department, commission, board, bureau, agency, court or
instrumentality thereof.
1.7 "BUSINESS" shall mean the software development business of Inup S.A
as conducted at the date hereof.
1.8 "BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
Salt Lake City, Utah, USA or Paris, France.
1.9 "BUYER" shall have the meaning set forth in the first paragraph of
the Agreement.
1.10 "BUYER INDEMNITIES" shall have the meaning set forth in Section
9.1(a).
1.11 "BUYER RIGHTS" shall have the meaning set forth in Section 5.10.
1.12 "BUYER DISCLOSURE SCHEDULE" shall mean the disclosure schedule,
dated as of the date of this Agreement, delivered to the Sellers by the Buyer.
1.13 "BUYER'S FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 5.5.
1.14 "CASH BALANCE" shall have the meaning set forth in Section 3.2.6.
1.15 "CLOSING" shall have the meaning set forth in Section 2.4.
1.16 "CLOSING BALANCE SHEET" shall have the meaning set forth in
Section 2.2(b).
1.17 "CLOSING DATE" shall mean the date and effective time at which the
Closing occurs.
1.18 "CODE" shall mean the United States of America Internal Revenue
Code of 1986, as amended, together with the regulations promulgated thereunder.
1.19 "COMPANY FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.4.
1.20 "CONTRACT" shall mean any contract, agreement, indenture, note,
bond, loan agreement, letter of credit agreement, line of credit agreement,
instrument, lien, conditional sales contract, mortgage, franchise, commitment,
obligation or other arrangement or agreement, but shall exclude leases of real
or personal property and insurance policies.
1.21 "COMPANY" shall mean Inup S.A., a French company.
1.22 "COMPANY SHARES" shall have the meaning set forth in Section 2.1.
1.23 "DISCLOSURE SCHEDULE" shall mean any of the Majority Shareholders
Disclosure Schedule, the Buyer Disclosure Schedule or the Seller Disclosure.
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1.24 "EMPLOYEE BENEFIT PLAN" shall have the meaning set forth in
Sections 3.12 and 5.13 with respect to the Company and the Buyer, respectively.
1.25 "ENCUMBRANCES" shall mean any security interest, pledge, mortgage,
lien, charge, adverse claim of ownership or other encumbrance of any kind.
1.26 "ERISA" shall have the meaning set forth in Section 3.13.
1.27 "FAMILY MEMBER" shall mean with respect to a particular
individual, such individual's spouse, parents, children, siblings, mothers- and
fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law.
1.28 "GAAP" shall mean generally accepted accounting principles (as
such term is used in the applicable country's professional accounting standards)
from time to time in effect.
1.29 "INDEMNIFIED LOSSES" shall have the meaning set forth in Section
9.1(a).
1.30 "INDEMNIFYING PARTY" shall have the meaning set forth in Section
9.1(d).
1.31 "INDEMNITEES" shall have the meaning set forth in Section 9.1(d).
1.32 "INTELLECTUAL PROPERTY" shall mean each and every and any and all
patents and patent rights, trademarks and trademark rights, trade names and
trade name rights, service marks and service mark rights, service names and
service name rights, brand names, inventions, procedures, formulae, copyrights
and copyright rights, trade dress, business and product names, logos, slogans,
trade secrets, processes, designs, methodologies, computer programs (including
all source codes) and related documentation, linux embedded platforms and
related documentation, technical information, know-how and all pending
applications for and registrations of patents, trademarks, service marks and
copyrights.
1.33 "IRS" shall mean the U.S. Internal Revenue Service.
1.34 "KNOWLEDGE" shall mean (i) in the case of any Seller, knowledge of
such Seller, and if such Seller is an entity, knowledge of any director or any
member of senior management of such entity and (ii) in the case of the Buyer,
knowledge of any officer or director of the Buyer. An individual will be deemed
to have "Knowledge" of a particular fact or other matter if such individual is
actually aware of such fact or other matter.
1.35 "LINEO SHARES" shall have the meaning set forth in Section 2.2.
1.36 "PERMITS" shall mean all permits, licenses and other approvals,
certificates of need, accreditations, participation agreements, consents,
authorizations, certificates of authority and orders
1.37 "MAJORITY SHAREHOLDERS" shall mean Hugo Delchini and Laurent
Rousseau.
1.38 "MAJORITY SHAREHOLDERS DISCLOSURE SCHEDULE" shall mean the
disclosure schedule, dated as of the date of this Agreement, delivered to the
Buyer by the Majority Shareholders.
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1.39 "MATERIAL ADVERSE EFFECT" on a Person shall mean a material
adverse effect on the business, operations, properties, assets (including
intangible assets), liabilities (contingent or otherwise), financial conditi0on
or results of operations of such Person and its Subsidiaries, taken as a whole.
1.40 "PERMITTED ENCUMBRANCES" shall mean (i) Encumbrances for Taxes not
yet due and payable and for property Taxes being contested in good faith, (ii)
Encumbrances and imperfections of title that do not secure payment of borrowed
money and the existence of which, in the aggregate, do not have a Material
Adverse Effect.
1.41 "PERSON" shall mean an individual, firm, trust, association,
corporation, limited liability company, partnership, limited partnership,
limited liability partnership, Authority or other entity.
1.42 "PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
1.43 "RELATED PARTY" shall have the meaning set forth in Section 3.12.
1.44 "SELLER" and "SELLERS" are identified on Exhibit A hereto.
1.45 "SELLER DISCLOSURE SCHEDULE" shall mean the disclosure schedules,
dated as of the date of this Agreement, delivered to the Buyer by any Seller.
1.46 "SELLER INDEMNITIES" shall have the meaning set forth in Section
9.1(c).
1.47 "SHARE PURCHASE" shall have the meaning set forth in the Recitals
hereto.
1.48 "SUBSIDIARY" of a Person shall mean a corporation, partnership or
other entity of which such Person (i) has the power to elect more than fifty
percent (50%) of the board of directors or other governing authority either
directly or indirectly or (ii) owns or controls more than fifty percent (50%) of
the outstanding equity securities or equity interests either directly or through
an unbroken chain of entities as to each of which fifty percent (50%) or more of
the outstanding equity securities or equity interests is owned directly or
indirectly by its parent.
1.49 "SURVIVAL PERIOD" shall have the meaning as set forth in Section
9.2(a).
1.50 "TAKEOVER PROPOSAL" shall mean any proposal for a merger,
consolidation, acquisition of all or substantially all of the capital shares or
assets of a Person or the acquisition of a substantial equity interest in such
Person or a substantial portion of the consolidated assets of such Person, or
any solicitation of proxies in connection with any meeting for the purpose of
effecting a business combination or change in control.
1.51 "TAX" or "TAXES" shall mean all taxes, levies, imposts, duties,
excises, licenses and resignation fees, and charges of any kind or nature
whatsoever including, without limitation, income tax withholding, unemployment
and social security or welfare taxes, value added, sales and use taxes and
property taxes, and interest, penalties and additions to tax with respect to any
of the above.
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1.52 "TAX RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment to such documents and any amendment of such documents.
1.53 "U.S. PERSON" shall mean: (i) any natural person resident in the
United States; (ii) any partnership or corporation organized or incorporated
under the laws of the United States; (iii) any estate of which any executor or
administrator is a U.S. person; (iv) any trust of which any trustee is a U.S.
person; (v) any agency or branch of a foreign entity located in the United
States; (vi) any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit or account
of a U.S. person; (vii) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized, incorporated,
or (if an individual) resident in the United States; and (viii) any partnership
or corporation if: (a) organized or incorporated under the laws of any foreign
jurisdiction; and (b) formed by a U.S. person principally for the purpose of
investing in securities not registered under the Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who
are not natural persons, estates or trusts.
1.54 "UNDISCLOSED LIABILITY" of a Person shall mean an obligation,
indebtedness or liability of any nature (each of which, for purposes of this
definition, is assumed to be material), which is required by applicable country
GAAP to be reserved against or disclosed on a balance sheet of such Person,
which is not so reserved against or disclosed on such Person's balance sheet, or
in the notes thereto, and which is not so reflected, reserved against or
otherwise disclosed in this Agreement or a Disclosure Schedule hereto.
1.55 "1933 ACT" shall mean the U.S. Securities Act of 1933, as amended.
1.56 "1934 ACT" shall mean the U.S. Securities Exchange Act of 1934, as
amended.
1.57 "1940 ACT" shall have the meaning set forth in Section 5.27.
1.58 OTHER DEFINED TERMS. The terms defined in the first paragraph and
in the whereas clauses shall have the meanings given to such terms in such
paragraph and whereas clauses.
ARTICLE 2.
SALE OF SHARES; CLOSING
2.1 PURCHASE AND SALE. Subject to the satisfaction or waiver of the
conditions to the Closing set forth in this Agreement, at the Closing the
Sellers will sell, and the Buyer will purchase, common shares of the Company
which constitute, and will constitute as of the Closing, all of the issued and
outstanding shares of capital stock of the Company (collectively, the "Company
Shares"), with the amount of Company Shares to be sold by each Seller set forth
opposite such Seller's name on EXHIBIT A hereto. The parties agree that, for the
sole purposes of United States GAAP, the Company Shares shall be deemed to be
sold with effect as of May 1, 2000, notwithstanding that the share transfer
forms with respect thereto will have been executed and the Closing will occur at
a subsequent time.
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2.2 PURCHASE PRICE.
(a) In full payment of the Company Shares, the Buyer shall pay
and deliver to the Sellers an aggregate purchase price consisting of 83,334
shares of the unregistered Series C Convertible Preferred Stock of the Buyer and
1,333,333 shares of the unregistered Common Stock of Buyer (together the "Lineo
Shares"), and Ten Thousand Dollars in currency of the United States of America
(USD $10,000) (the "Purchase Price"). The Purchase Price shall be paid to and
allocated among each of the Sellers as set forth opposite each Seller's name on
EXHIBIT A hereto.
(b) The Sellers acknowledge and agree that the Purchase Price
includes full payment to them of any amounts that may otherwise be owing to or
claimed by them as supplemental remuneration or otherwise with respect to all
patents, patent rights and other Intellectual Property owned by the Company.
(c) Delivery of Company Shares. At the Closing, each Seller,
severally and not jointly, shall sell, assign, transfer and deliver to the Buyer
the number of the Company Shares set forth opposite such Seller's name on
EXHIBIT A by delivery to the Buyer of duly executed share transfer forms
relating to such Company Shares, in form and substance satisfactory to the Buyer
and free and clear of all Encumbrances.
(d) Payment of the Purchase Price. At the Closing, the Buyer
shall pay the Purchase Price by delivery to the Sellers of duly issued
certificates representing the Lineo Shares and certified checks in accordance
with EXHIBIT A.
2.3 TIME AND PLACE OF CLOSING. The closing (the "Closing") of the Share
Purchase will be held at the office of Salans Hertzfeld & Heilbronn, 9 rue
Boissy d'Anglas, 75008 Paris, France at 4:00 p.m. on Friday, May 5, 2000 or such
other time and place as shall be agreed to by the parties.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE MAJORITY SHAREHOLDERS
The Majority Shareholders represent and warrant to the Buyer that the
statements contained in this Article 3 are true and correct, except as set forth
in the Majority Shareholders Disclosure Schedule.
3.1 ORGANIZATION AND CORPORATE POWER. The Company is a SOCIETE ANONYME
duly organized and validly existing under the laws of the Republic of France,
and is qualified to do business as a foreign company in each jurisdiction in
which the failure to be so qualified would have a Material Adverse Effect on the
Company. The Company has all required corporate power and authority to carry on
its business as presently conducted. The Company is not in violation of any term
of the Bylaws of the Company, as amended to date (i.e., its statuts, hereafter
referred to as its "Bylaws".) The execution, delivery and performance of this
Agreement and the consummation of the transactions provided for herein does not
violate the Company's By-laws or any material agreement by which it is bound.
3.2 CAPITALIZATION; SHARE OWNERSHIP. The authorized and outstanding
capital shares, options and warrants of the Company are listed in Section 3.2 of
the Majority
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Shareholders Disclosure Schedule. Other than as set forth in Section 3.2 of
the Majority Shareholders Disclosure Schedule, the Company has not issued or
agreed to issue and is not obligated to issue any warrants, options or other
rights to purchase or acquire any shares of its capital stock, or any
securities convertible into or exercisable or exchangeable for such shares or
any warrants, options or other rights to acquire any such convertible
securities. All of the outstanding shares of capital stock of the Company are
duly and validly authorized and issued, fully paid and nonassessable and,
except as set forth herein and except for the Shareholders Agreement dated
November 3, 1999 among the Sellers which the Sellers agree shall terminate
upon the Closing, not subject to any preemptive rights to purchase or
otherwise acquire shares of capital stock of the Company, are free of
restrictions on transfer.
3.3 SUBSIDIARIES; INVESTMENTS. The Company does not currently own any
capital stock or interest or participate in any corporation, joint venture,
partnership, trust, limited liability corporation or other entity.
3.4 FINANCIAL STATEMENTS. The Company has previously furnished to the
Buyer copies of its draft audited financial statements (balance sheet, statement
of operations, statement of cash flows and statement of stockholders equity,
including notes thereto) for the fiscal year at and ended December 31, 1999 (the
"Company Financial Statements"), a copy of which is included in Section 3.4 of
the Majority Shareholders Disclosure Schedule. Such financial statements were
prepared in conformity with French GAAP applied on a consistent basis; are
complete, correct and consistent in all material respects with the books and
records of the Company; and fairly and accurately present the financial position
of the Company as of the dates thereof and the results of operations and cash
flows of the Company for the periods shown therein. The Company maintains and
will continue to maintain a standard system of accounting established and
administered in accordance with French GAAP.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not have and
is not subject to any material Undisclosed Liability.
3.6 ABSENCE OF CHANGES. Since December 31, 1999 there has not been (a)
any material adverse change in the financial condition, results of operations,
assets, liabilities, or business of the Company, (b) any material asset or
property of the Company made subject to a lien of any kind, (c) any waiver of
any material right of the Company, or the cancellation of any material debt or
claim held by the Company, (d) any payment of dividends on, or other
distribution with respect to, or any direct or indirect redemption or
acquisition by the Company of, any shares of the capital stock of the Company,
or any agreement or commitment therefore, (e) any mortgage, pledge or
hypothecation of any tangible or intangible asset of the Company, except in the
ordinary course of business, (f) any sale or assignment of any tangible asset of
the Company having a book value in excess of 5,000 Euros, except in the ordinary
course of business, or of any Intellectual Property Rights (as hereafter
defined) or other intangible assets, (g) any loan by the Company to, or any loan
to the Company from, any officer, director, employee or stockholder of the
Company, or any agreement or commitment therefore (other than travel and other
advances in the ordinary course of business), (h) any damage, destruction or
loss (whether or not covered by insurance) materially and adversely affecting
the assets, property or business of the Company, (i) any repayment of any loan
owed by the Company (including, without limitation, any loan owed to any
stockholder of the Company), (j) any single capital expenditure in excess of
20,000 Euros or any capital expenditures aggregating more than 50,000 Euros, (k)
any material change in the accounting methods or practices followed by the
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Company, (l) any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects or
financial condition of the Company, (m) any material change to or termination of
a material contract or agreement by which the Company or any of its assets is
bound or subject, (n) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder of the Company,
(o) to the Majority Shareholders knowledge, any other event or condition of any
character that might materially and adversely affect the business, properties,
prospects or financial condition of the Company, (p) any resignation or
termination of employment of any officer or key employee of the Company, or (q)
any arrangement or commitment by the Company to do any of the things described
in this Section 3.6.
3.7 TITLE; CONDITION OF PROPERTY.
(a) Except as set forth in Section 3.7 of the Majority
Shareholders Disclosure Schedule, the Company has good title to all of its
property and assets, real, personal or mixed, tangible or intangible, free and
clear of all liens, security interests, charges and other encumbrances of any
kind.
(b) Without material exception, all assets used in the
Company's business are in good operating condition and repair and suitable for
use in the operation of such business, and none of such assets that (singly or
when aggregated with other assets) is material to the business of the Company is
obsolete.
3.8 CERTAIN CONTRACTS AND ARRANGEMENTS.
(a) Except as set forth in Section 3.8 of the Majority Shareholders
Disclosure Schedule (with true and correct copies delivered to the Buyer), the
Company is not a party or subject to or bound by:
(i) any plan or contract providing for collective bargaining
or the like, or any contract or agreement with any labor union;
(ii) any contract, lease or agreement creating any obligation
of the Company (contingent or otherwise) to pay to any third party 25,000 Euros
or more per year with respect to any single such contract or agreement;
(iii) any contract or agreement for the sale, license, lease
or disposition of products or services in excess of 25,000 Euros per year;
(iv) any contract containing covenants directly or explicitly
limiting the freedom of the Company to compete in any line of business or with
any person or entity;
(v) any license agreement (as licensor or licensee);
(vi) any contract or agreement for the purchase of any
leasehold improvements, equipment or fixed assets for a price in excess of
25,000 Euros per year;
(vii) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for borrowing in excess of
25,000 Euros or any pledge or security arrangement;
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(viii) any material joint venture, partnership, or
manufacturing agreement;
(ix) any endorsement or any other advertising, promotional or
marketing agreement;
(x) any employment contracts, or agreements with officers,
directors, employees or stockholders of the Company or persons or organizations
related to or affiliated with any such persons;
(xi) any pension, profit sharing, stock option, phantom stock
or other equity incentive plans;
(xii) any arrangement relating to any royalty payments to
employees, customers or independent contractors based on the sales volume of the
Company;
(xiii) any acquisition, merger or similar agreement; or
(xiv) any contract with a governmental body under which the
Company may have an obligation for renegotiation..
(b) Except as set forth in Section 3.8 of the Majority
Shareholders Disclosure Schedule, (i) each of the Company's contracts and
commitments is in full force and effect and is valid, binding and enforceable in
accordance with its terms as to the Company and, to the knowledge of the
Majority Shareholders, as to each other party thereto; (ii) there exists no
material breach or material default (or event that with notice or lapse of time
would constitute a material breach or material default) on the part of the
Company or, to the knowledge of the Majority Shareholders, on the part of any
other party under any of the Company's contracts or commitments, except to the
extent that any such breach or default would not have a Material Adverse Effect
on the Company; (iii) to the knowledge of the Majority Shareholders, the Company
has not received a written notice of termination or default under any of the
Company's contracts or commitments; and (iv) to the knowledge of the Majority
Shareholders, as of the date of this Agreement, no party to an agreement under
which the Company acquired a substantial portion of its assets has asserted any
claim for indemnification under such agreement.
(c) Except as set forth in Section 3.8 of the Majority
Shareholders Disclosure Schedule, the Company has not engaged in the past three
(3) months in any discussion (i) with any representative of any corporation or
corporations regarding the merger of the Company with or into any such
corporation or corporations, (ii) with any representative of any corporation,
partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets of
the Company or a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company would be disposed
of, or (iii) regarding any other form of liquidation, dissolution or winding up
of the Company.
3.9 INTELLECTUAL PROPERTY RIGHTS; EMPLOYEE RESTRICTIONS. Except as set
forth in Section 3.9 of the Majority Shareholders Disclosure Schedule:
(a) The Company has the right to use, sell, and license the
Intellectual Property material to the conduct of its business as presently
conducted and listed in Section 3.9 of the Majority Shareholders Disclosure
Schedule, including without limitation all rights
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to the Company name "Inup" (the "Company Rights"), free and clear of the rights
of all others.
(b) To the knowledge of the Majority Shareholders, the
business of the Company as presently conducted, the products as marketed or sold
and the provision of services by the Company do not violate and will not violate
any agreements that the Company has with any third party or infringe any patent,
trademark, service mark, copyright or trade secret or any other Intellectual
Property of any third party.
(c) To the knowledge of the Majority Shareholders, no claim is
pending or threatened against the Company nor has the Company received any
notice or claim from any person asserting that any of the Company's present or
contemplated activities infringe or may infringe any Intellectual Property of
such person, and the Majority Shareholders are not aware of any infringement by
any other person of any of the Company Rights.
(d) Each current and former employee of the Company, and each
of the Company's consultants and independent contractors involved in development
of any of the Company Rights, has executed an agreement regarding
confidentiality, proprietary information and assignment of inventions and
copyrights to the Company, as described in Section 3.9 of the Majority
Shareholders Disclosure Schedule, and to the knowledge of the Majority
Shareholders, none of such employees, consultants or independent contractors is
in violation of any agreement or in breach of any agreement or arrangement with
former or present employers relating to proprietary information or assignment of
inventions. The Company has taken all reasonable steps to protect all data,
information, ideas, concepts, know-how and materials that the Company treats as
trade secrets, and all other confidential information and Intellectual Property
of the Company, which are not part of the public domain or knowledge, nor, to
the knowledge of the Majority Shareholders, have they been used, divulged or
appropriated for the benefit of any person other than the Company or otherwise
to the detriment of the Company.
(e) No royalties or other amounts are payable by the Company
to persons by reason of the ownership or use of the Intellectual Property of the
Company.
(f) No third party has claimed to the Company or, to the best
of the Majority Shareholders knowledge, has reason to claim that any person
employed by or affiliated with the Company has (a) violated or may be violating
any of the terms or conditions of his or her employment, non-competition,
non-disclosure, non-solicitation or inventions agreement with such third party,
(b) disclosed or may be disclosing or utilized or may be utilizing any
Intellectual Property, trade secret or proprietary information or documentation
of such third party, or (c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees.
3.10 LITIGATION. There is no litigation or governmental proceeding or
investigation pending or threatened against the Company or affecting any of its
properties or assets or against any officer, director or key employee of the
Company in his or her capacity as an officer, director or employee of the
Company, which litigation, proceeding or investigation is reasonably likely to
have a Material Adverse Effect on the Company, or which may call into question
the validity or hinder the enforceability of this Agreement or any other
agreements or transactions contemplated hereby; nor to the Majority
Shareholder's knowledge, has there occurred any event nor does there exist any
condition on the basis of which any such
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litigation, proceeding or investigation might be properly instituted or
commenced. The Company is not a party or to the Majority Shareholder's
knowledge, is subject to the provisions of any order, writ, injunction, judgment
or decree of any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Company currently pending or
which the Company intends to initiate.
3.11 TAX MATTERS. As of the date hereof (i) the Company has filed on a
timely basis all returns and reports in respect of Taxes for which the Company
may be liable; (ii) all Taxes required to be paid by the Company that were due
and payable prior to the date hereof have been paid; (iii) there are no pending
audits or investigations or pending or, to the best knowledge of the Majority
Shareholders, threatened claims relating to Taxes for which the Company may
become liable; and (iv) no deficiencies for any Taxes have been assessed against
the Company which remain unpaid.
3.12 EMPLOYEE BENEFITS. Except as set forth on Section 3.12 of the
Majority Shareholders Disclosure Schedule, as of the date hereof there are no
plans, policies or arrangements, whether written or oral, providing for
insurance coverage, disability benefits, vacation benefits, severance benefits,
retirement benefits, deferred compensation, profit sharing, bonus or other
incentives, stock options or other forms of other employee or post-retirement
benefits ("Employee Benefit Plans") covering directors or employees or former
directors or employees of the Companies which provide for any individual or
collective terms and conditions of employment that are more favorable than the
applicable CONVENTION COLLECTIVE or the applicable requirements of law in any
material respect. The terms and operation of each Employee Benefit Plan comply
in all material respects with all applicable laws and regulations relating to
such Employee Benefit Plan. There are no unfunded obligations of the Company
under any retirement, pension, profit-sharing, deferred compensation plan or
similar program. The Company is not required to make any payments or
contributions to any Employee Benefit Plan other than pursuant to applicable law
and the applicable collective bargaining agreement.
3.13 LABOR LAWS. The Company employs approximately seven (7) employees
and generally enjoys good employer-employee relationships. The Company is not
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
it as of the date hereof or amounts required to be reimbursed to such employees.
The Company is in compliance in all material respects with all applicable laws
and regulations respecting labor, employment, fair employment practices, terms
and conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices or strikes, slowdowns,
stoppages of work or any other concerted interference with normal operations
existing, pending or, to the knowledge of the Majority Shareholders, threatened
against or involving the Company. There are no other material controversies
pending or, to the knowledge of the Majority Shareholders, threatened, between
the Company and any of its respective employees.
3.14 EMPLOYEES. Section 3.14 of the Majority Shareholders Disclosure
Schedule contains a list of all managers, employees and consultants of the
Company who, individually, have received compensation from the Company for the
fiscal year of the Company ended December 31, 1999 in excess of 100,000 Euros.
In each case, Section 3.14 of the Majority Shareholders Disclosure Schedule
includes the current job title, years of service with the
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Company and aggregate annual compensation and benefits of each such individual.
To the knowledge of the Majority Shareholders, no key employee of the Company
has any plan or intention to terminate his or her employment with the Company.
The Company has complied in all material respects with the immigration laws of
France with respect to the hiring, employment and engagement of all of its
employees and consultants who are not French citizens, and, to the knowledge of
the Majority Shareholders, except as set forth in Section 3.14 of the Majority
Shareholders Disclosure Schedule, the immigration or residency status of each of
such employees and consultants is sufficient to allow such employees and
consultants to remain lawfully employed or engaged by the Company. The Company
is not a party to or bound by any currently effective employment contract other
than those relating to employees listed in Section 3.14 of the Majority
Shareholders Disclosure Schedule.
3.15 HAZARDOUS WASTE, ETC. No hazardous wastes, substances or materials
or oil or petroleum products have been generated, transported, used, disposed,
stored or treated by the Company, and, to the Majority Shareholders' knowledge,
no hazardous wastes, substances or materials or oil or petroleum products have
been released, discharged, disposed, transported, placed or otherwise caused to
enter the soil or water in, under or upon any real property owned, leased or
operated by the Company.
3.16 BUSINESS; COMPLIANCE WITH LAWS. The Company has all necessary
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its property and to conduct its business as it is presently or
contemplated to be conducted and is not in default in any material respect under
any of such franchises, permits, licenses and other similar rights and
privileges. The Company is currently and has heretofore been in compliance in
all material respects with all federal, state, local and foreign laws and
regulations applicable to it.
3.17 INVESTMENT BANKING; BROKERAGE. Except as set forth in Section 3.17
of the Majority Shareholders Disclosure Schedule, there are no claims for
investment banking fees, brokerage commissions, finder's fees or similar
compensation (exclusive of professional fees to lawyers and accountants) in
connection with the transaction contemplated by this Agreement payable by the
Company or based on any arrangement or agreement made by or on behalf of the
Company or any of the Majority Shareholders.
3.18 INSURANCE. The Company has the insurance policies listed in
Section 3.18 of the Majority Shareholders Disclosure Schedule, sufficient in
amount to allow it to replace any of its material properties which might be
damaged or destroyed or sufficient to cover liabilities to which the Company may
reasonably become subject, and such types and amounts of other insurance with
respect to its business and properties, on both a per occurrence and an
aggregate basis, as are customarily carried by persons engaged in the same or
similar business as the Company. To the Majority Shareholders' knowledge, there
is no default or event which could give rise to a default under any such policy.
3.19 TRANSACTIONS WITH AFFILIATES. There are no loans, leases,
contracts or other transactions (directly or indirectly) between the Company and
any Affiliate of the Company any Family Member or Associate of any such
Affiliate, and there have been no such transactions within the past twelve (12)
months except as set forth in Section 3.19 of the Majority Shareholders
Disclosure Schedule. To the best of the Majority Shareholders' knowledge, except
as set forth in Section 3.19 of the Majority Shareholders Disclosure Schedule,
none of such persons has any direct or indirect ownership interest in any firm
or
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corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company, except that employees, officers or directors of the Company and members
of their families may own stock in publicly traded companies that may compete
with the Company.
3.20 SUPPLIERS. Section 3.20 of the Majority Shareholders Disclosure
Schedule sets forth each supplier of the Company who supplied more than five
percent (5%) of the Company's supplies or materials for the fiscal year ended
December 31, 1999 and each supplier who the Company believes may supply for more
than five percent (5%) of the Company's supplies or materials for the fiscal
year ended December 31, 2000 (each a "Supplier" and collectively the
"Suppliers"). To the Majority Shareholders' knowledge, the relationships of the
Company with its Suppliers are good commercial working relationships. No
Supplier of the Company has canceled or otherwise terminated its relationship
with the Company, or has during the last 12 months decreased materially its
services, supplies or materials to the Company. No Supplier has, to the Majority
Shareholders' knowledge, any plan or intention to terminate, cancel or otherwise
materially and adversely modify its relationship with the Company or to decrease
materially or limit its services, supplies or materials to the Company.
3.21 CERTAIN EVENTS.
(a) During the past ten (10) years, neither the Company nor to
the Majority Shareholders' knowledge, any of the members of senior management or
directors of the Company has had a petition under the French insolvency law of
January 25, 1985, filed by or against any of them which has not as of the date
of this Agreement been dismissed.
(b) During the past ten (10) years, neither the Company nor to
the Majority Shareholders' knowledge, any of the members of senior management or
directors of the Company has been convicted in a criminal proceeding or is a
named subject of a criminal proceeding which is presently pending (excluding
traffic violations and other minor offenses).
(c) During the past ten (10) years, neither the Company nor to
the Majority Shareholders' knowledge, any of the members of senior management or
directors of the Company has been, or is, the subject of any order, judgment or
decree, whether or not subsequently reversed, suspended or vacated, of any court
or any administrative agency, requiring the payment of money damages in excess
of 100,000 Euros or permanently or temporarily enjoining any of them from, or
otherwise limiting any of their abilities to engage in, any type of business
practice.
3.22 REGISTRATION RIGHTS. The Company has not granted or agreed to
grant any registration rights, including piggyback rights, to any person or
entity.
3.23 DISCLOSURE. The representations and warranties made or contained
in this Section, the exhibits hereto and the certificates and statements
executed or delivered in connection herewith, and the information concerning the
business of the Company delivered to the Buyer in connection with or pursuant to
this Agreement, when taken together, do not and shall not contain any untrue
statement of a material fact and do not and shall not omit to state a material
fact required to be stated therein or necessary in order to make such
representations, warranties or other material not misleading in light of the
circumstances in
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which they were made or delivered. There have been no events or transactions or
information which has come to the attention of the management of the Company
having a direct impact on the Company or its assets, liabilities, financial
condition, business, results of operations or prospects which, in the reasonable
judgment of such management, could be expected to have a Material Adverse Effect
on the Company.
3.24 CORPORATE DOCUMENTS. The Bylaws of the Company have been made
available to the Buyer. The minute books of the Company containing minutes of
all meetings of directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since the date of
incorporation have been made available to the Buyer and reflect accurately in
all material respects all actions by the directors (and any committee of
directors) and stockholders with respect to all transactions referred to in such
minutes. The stock transfer ledgers and other similar records of the Company as
made available to the Buyer prior to the execution of this Agreement accurately
reflect all record transfers prior to the execution of this Agreement in the
capital stock of the Company.
3.25 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement.
3.26 CASH BALANCES. The Company has cash on deposit in the form of
SICAV DE TRESORIE with the BNP as of the date hereof in an amount of not less
than FRF 3,082,250 (the "Cash Balance").
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally and not jointly, represents and
warrants to the Buyer that the statements contained in Sections 4.1 to 4.8 of
this Agreement are true and correct, except as set forth in the Seller
Disclosure Schedule.
4.1 CAPACITY; EXECUTION; VALIDITY; BINDING EFFECT. Such Seller has the
full power and capacity necessary to enter into and perform its obligations
under this Agreement and to consummate the transactions contemplated herein.
This Agreement has been duly executed and delivered by such Seller and, assuming
due execution and delivery by the other parties, constitutes the legal, valid
and binding obligation of such Seller, enforceable against such Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other laws affecting creditors'
rights and remedies generally.
4.2 SHARE OWNERSHIP. Except as set forth on Section 4.2 of the Seller
Disclosure Schedule, there is no existing subscription, option, warrant, call,
right, commitment or other agreement (whether preemptive or contractual) to
which such Seller is a party requiring, and there are no convertible securities
of the Company owned or held by such Seller which upon conversion would require,
directly or indirectly, the issuance of any additional capital shares of the
Company or other securities convertible into or exercisable or exchangeable for
capital shares of the Company or any other equity security of the Company, and
there are no obligations (contingent or otherwise) of such Seller to purchase or
otherwise acquire any outstanding capital shares of the Company. The Company
Shares to be sold by such Seller
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pursuant to this Agreement will be delivered to the Buyer free and clear of all
Encumbrances (except Encumbrances arising out of, under or in connection with
this Agreement), and such delivery will not be in violation of any preemptive
rights. Such Seller is the sole beneficial owner of the Company Shares listed
beside such Seller's name on Exhibit A, and has the full legal right and power
to sell, convey, transfer, and assign such Company Shares to the Buyer pursuant
to this Agreement. Except for the Shareholders Agreement dated November 3, 1999
among the Sellers which the Sellers agree shall be deemed to terminate upon
Closing, such Seller is not a party to any shareholder agreement, voting
agreement, voting trust, proxy or other agreement with respect to the voting or
transfer of the Company Shares.
4.3 NO OTHER RIGHTS. No Person (other than the Buyer as provided in
this Agreement) has any agreement or option or any right or privilege (whether
preemptive or contractual) capable of becoming an agreement or option for the
purchase from such Seller of any of the Company Shares being transferred by such
Seller to the Buyer pursuant to this Agreement.
4.4 NO CONFLICTING AGREEMENTS. The execution and delivery of this
Agreement, the compliance with and performance of the terms and provisions of
this Agreement, and the consummation of the transactions contemplated herein by
such Seller will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a violation or breach of default
(or an event which, with notice, lapse of time, or both, would constitute a
default) under, (iii) result in any violation of, (iv) require the obtaining of
any consent or approval of, the taking of any action of, the making of any
filing with, or the giving of any notice to, any Person (except such consents,
approvals, actions, filings and notices that will have been obtained, taken,
made, given, or effectively waived prior to the Closing, a true, accurate and
complete list of which is set forth in Section 4.4 of the Seller Disclosure
Schedule) as a result of or under the terms of, (v) result in or give to any
Persons any right of termination, cancellation, acceleration, modification, or
increased or accelerated rights, entitlements or payments under, or (vi) result
in the creation or imposition of any Encumbrance upon such Seller under: (A) any
provision of any Contract relating to the Shares to which such Seller is a party
or by which it or any of the Shares are bound, or (B) any order, decree,
license, permit, statute, law, rule or regulation to which such Seller is
subject.
4.5 CONSENTS, APPROVALS, LICENSES, ETC. Except for any consent,
approval, authorization, license, order or Permit that is also required to be
obtained by the Company, the Buyer or any other Seller, no consent, approval,
authorization, license, order or Permit of, or declaration, filing or
registration with, or notification to, any Authority is required to be made or
obtained by such Seller in connection with the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby.
4.6 LITIGATION. There is no action, suit, proceeding or investigation
in progress or pending to the Knowledge of such Seller which affects this
Agreement or the Company Shares or any action taken or to be taken or documents
executed or to be executed by such Seller pursuant to or in connection with the
provisions of this Agreement, or that would otherwise prevent the consummation
of the transactions by such Seller contemplated by this Agreement. There is no
present state of facts or circumstances of which such Seller has Knowledge which
might reasonably be expected to result in any such action, suit, proceeding or
investigation.
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4.7 NO BROKERS. Except as set forth in Section 3.17, no broker, agent,
finder, consultant or other Person has been retained by, or has acted on behalf
of such Seller (other than legal and accounting advisors) or is entitled to be
paid based upon any agreements or understandings made by such parties in
connection with the transactions contemplated by this Agreement, and except as
set forth in Section 3.17, neither the Buyer nor the Company shall have any
liability for any broker's fee, finder's fee, consultant's fee or similar third
party remuneration payable by reason of any action of such Seller.
4.8 NO U.S. PERSONS. Except as set forth in Section 4.8 of the Seller
Disclosure, such Seller is not a U.S. Person.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Sellers that the
Statements contained in this Article 5 are true and correct, except as set forth
in the Buyer Disclosure Schedule:
5.1 ORGANIZATION AND CORPORATE POWER. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, USA, and is qualified to do business as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect on the Buyer. The Buyer has all required corporate power and
authority to carry on its business as presently conducted, to enter into and
perform this Agreement and all other agreements contemplated hereby to which it
is a party and to carry out the transactions contemplated hereby and thereby,
including the issuance (or reservation for issuance), sale, delivery and
conversion of Lineo Shares. The Buyer is not in violation of any term of the
Certificate of Incorporation and Bylaws of the Buyer, as amended to date (the
"Certificate of Incorporation" and the "Bylaws," respectively.)
5.2 AUTHORIZATION AND NON-CONTRAVENTION. The execution, delivery and
performance by the Buyer of this Agreement and all other agreements, documents
and instruments to be executed and delivered by the Buyer as contemplated hereby
and the issuance and delivery of the Lineo Shares have been duly authorized by
all necessary corporate and other action of the Buyer. This Agreement and each
such other agreement, document and instrument constitute valid and binding
obligations of the Buyer, enforceable in accordance with their respective terms.
The execution and delivery by the Buyer of this Agreement and each other
agreement, document and instrument to be executed and delivered by the Buyer
pursuant hereto or as contemplated hereby and the performance by the Buyer of
the transactions contemplated hereby and thereby, including, without limitation,
the issuance and delivery of the Lineo Shares do not and will not (whether after
the giving of notice, lapse of time or both): (a) violate, conflict with or
result in a default under any instrument, judgment, order, writ, decree,
contract, statute, rule, regulation or obligation to which the Buyer is subject
to or by which it or its assets are bound, or any provision of the Certificate
of Incorporation or Bylaws of the Buyer, and a violation of which would have a
material adverse effect on the business, condition, financial or otherwise, or
operations of the Buyer, or (b) result in any such violation, or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any such provision, instrument, judgment, order, writ,
decree or contract or an event that results in the creation of any lien, charge
or encumbrance upon any assets of the Buyer or the suspension, revocation,
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impairment, forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to the Buyer, its business or operations or
any of its assets or properties.
5.3 CAPITALIZATION. The authorized capital stock of the Buyer consists
of 100,000,000 shares of Common Stock, par value $.001 per share, of which
20,148,724 shares are issued and outstanding, and 30,000,000 shares of Preferred
Stock, par value $.001 per share, of which (a) 7,500,000 shares are designated
as Series A Preferred Stock, of which (i) 5,000,000 shares are designated as
Series A Class 1 Preferred Stock, all of which are issued and outstanding, and
(ii) 2,500,000 shares are designated as Series A Class 2 Preferred Stock, all of
which are issued and outstanding, (b) 4,850,000 shares are designated as Series
B Preferred Stock, of which 4,833,331 shares are issued and outstanding, and (c)
3,000,000 shares are designated as Series C Preferred Stock. In addition, the
Buyer has authorized and reserved for issuance upon conversion of the Series A
Preferred Stock up to 7,500,000 shares of Common Stock (subject to adjustment
for stock splits, stock dividends and the like), has authorized and reserved for
issuance upon conversion of the Series B Preferred Stock up to 4,850,000 shares
of Common Stock (subject to adjustment for stock splits, stock dividends and the
like), has authorized and reserved for issuance upon conversion of the Series C
Preferred Stock up to 3,000,000 shares of Common Stock (subject to adjustment
for stock splits, stock dividends and the like) and has reserved for issuance
upon exercise of options under the Buyer's stock option plan (the "Plan")
5,000,000 shares of Common Stock (subject to adjustment for stock splits, stock
dividends and the like). Other than as described above, the Buyer has not issued
or agreed to issue and is not obligated to issue any warrants, options or other
rights to purchase or acquire any shares of its capital stock, or any securities
convertible into or exercisable or exchangeable for such shares or any warrants,
options or other rights to acquire any such convertible securities. All of the
outstanding shares of capital stock of the Buyer are duly and validly authorized
and issued, fully paid and nonassessable and, except as set forth herein, not
subject to any preemptive rights to purchase or otherwise acquire shares of
capital stock of the Buyer, are free of restrictions on transfer, other than
restrictions on transfer under applicable state and federal securities laws, and
have been offered, issued, sold and delivered in compliance with applicable
federal and state securities laws. When issued in accordance with Article 2, the
Lineo Shares will be duly and validly authorized and issued, fully paid and
nonassessable and, except as set forth herein, not subject to any preemptive
rights to purchase or otherwise acquire shares of capital stock of the Buyer,
will be free of restrictions on transfer, other than restrictions on transfer
under applicable state and federal securities laws, and will have been offered,
issued, sold and delivered in compliance with applicable federal and state
securities laws.
5.4 SUBSIDIARIES; INVESTMENTS. Except as set forth in Section 5.4 of
the Buyer Disclosure Schedule and other than 1,250,000 shares of Common Stock of
Caldera Systems, Inc., a representative office located in Taiwan and a wholly
owned subsidiary located in the United Kingdom, the Buyer does not currently own
any capital stock or interest or participate in any corporation, joint venture,
partnership, trust, limited liability Buyer or other entity.
5.5 FINANCIAL STATEMENTS. The Buyer has previously furnished to the
Sellers copies of its draft audited financial statements (balance sheet,
statement of operations, statement of cash flows and statement of stockholders
equity, including notes thereto) for the fiscal year at and ended October 31,
1999 (the "Buyer Financial Statements"). Such financial statements were prepared
in conformity with U.S. GAAP applied on a consistent basis; are complete,
correct and consistent in all material respects with the books and records of
the Buyer; and fairly and accurately present the financial position of the Buyer
as of the dates thereof and the
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results of operations and cash flows of the Buyer for the periods shown therein.
The Buyer maintains and will continue to maintain a standard system of
accounting established and administered in accordance with United States GAAP.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. The Buyer does not have and is
not subject to any material undisclosed liability.
5.7 ABSENCE OF CHANGES. Except as set forth in Section 5.7 of the Buyer
Disclosure Schedule, since October 31, 1999 there has not been (a) any material
adverse change in the financial condition, results of operations, assets,
liabilities, or business of the Buyer, (b) any material asset or property of the
Buyer made subject to a lien of any kind, (c) any waiver of any material right
of the Buyer, or the cancellation of any material debt or claim held by the
Buyer, (d) any payment of dividends on, or other distribution with respect to,
or any direct or indirect redemption or acquisition of, any shares of the
capital stock of the Buyer, or any agreement or commitment therefore, (e) any
mortgage, pledge or hypothecation of any tangible or intangible asset of the
Buyer, except in the ordinary course of business, (f) any sale or assignment of
any tangible asset of the Buyer having a book value in excess of USD $5,000,
except in the ordinary course of business, or of any Intellectual Property
Rights (as hereafter defined) or other intangible assets, (g) any loan by the
Buyer to, or any loan to the Buyer from, any officer, director, employee or
stockholder of the Buyer, or any agreement or commitment therefore (other than
travel and other advances in the ordinary course of business), (h) any damage,
destruction or loss (whether or not covered by insurance) materially and
adversely affecting the assets, property or business of the Buyer, (i) any
repayment of any loan owed by the Buyer (including, without limitation, any loan
owed to any stockholder of the Buyer), (j) any single capital expenditure in
excess of USD $50,000 or any capital expenditures aggregating more than USD
$250,000, (k) any material change in the accounting methods or practices
followed by the Buyer, (l) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Buyer, except in the ordinary
course of business and that is not material to the business, properties,
prospects or financial condition of the Buyer, (m) any material change to a
material contract or agreement by which the Buyer or any of its assets is bound
or subject, (n) any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder of the Buyer, (o) to the
Buyer's knowledge, any other event or condition of any character that might
materially and adversely affect the business, properties, prospects or financial
condition of the Buyer , (p) any resignation or termination of employment of any
officer or key employee of the Buyer, or (q) any arrangement or commitment by
the Buyer to do any of the things described in this Section 5.7.
5.8 TITLE; CONDITION OF PROPERTY.
(a) Except as set forth in Section 5.8 of the Buyer Disclosure
Schedule, the Buyer has good title to all of its property and assets, real,
personal or mixed, tangible or intangible, free and clear of all liens, security
interests, charges and other encumbrances of any kind.
(b) Without material exception, all assets used in the Buyer
business are in good operating condition and repair and suitable for use in the
operation of such business, and none of such assets that (singly or when
aggregated with other assets) is material to the business of the Buyer is
obsolete.
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5.9 CERTAIN CONTRACTS AND ARRANGEMENTS.
(a) Except as set forth in Section 5.9 of the Buyer Disclosure
Schedule (with true and correct copies delivered to the Seller), the Buyer is
not a party or subject to or bound by:
(i) any plan or contract providing for collective bargaining
or the like, or any contract or agreement with any labor union;
(ii) any contract, lease or agreement creating any obligation
of the Buyer (contingent or otherwise) to pay to any third party USD $100,000 or
more with respect to any single such contract or agreement;
(iii) any contract or agreement for the sale, license, lease
or disposition of products or services in excess of USD $100,000;
(iv) any contract containing covenants directly or explicitly
limiting the freedom of the Buyer to compete in any line of business or with any
person or entity;
(v) any license agreement (as licensor or licensee);
(vi) any contract or agreement for the purchase of any
leasehold improvements, equipment or fixed assets for a price in excess of USD
$100,000;
(vii) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for borrowing in excess of
USD $100,000 or any pledge or security arrangement;
(viii) any material joint venture, partnership, or
manufacturing agreement;
(ix) any endorsement or any other advertising, promotional or
marketing agreement;
(x) any employment contracts, or agreements with officers,
directors, employees or stockholders of the Buyer or persons or organizations
related to or affiliated with any such persons;
(xi) any pension, profit sharing, retirement (other than the
Buyer's 401(k) plan), stock option, phantom stock or other equity incentive
plans;
(xii) any arrangement relating to any royalty payments to
employees, customers or independent contractors based on the sales volume of the
Buyer;
(xiii) any acquisition, merger or similar agreement; or
(xiv) any contract with a governmental body under which the
Buyer may have an obligation for renegotiation.
(b) Except as set forth in Section 5.9 of the Buyer Disclosure
Schedule, (i) each of the Buyer's contracts and commitments is in full force and
effect and is valid, binding and enforceable in accordance with its terms as to
the Buyer and, to the knowledge of the Buyer, as to each other party thereto;
(ii) there exists no material breach or material default
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(or event that with notice or lapse of time would constitute a material breach
or material default) on the part of the Buyer or, to the knowledge of the Buyer,
on the part of any other party under any of the Buyer's contracts or
commitments, except to the extent that any such breach or default would not have
a Material Adverse Effect on the Buyer; (iii) the Buyer has not received a
written notice of termination or default under any of the Buyer's contracts or
commitments; and (iv) as of the date of this Agreement, no party to an agreement
under which the Buyer acquired a substantial portion of its assets has asserted
any claim for indemnification under such agreement.
(c) The Buyer has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the merger of the Buyer with or into any such corporation or
corporation, (ii) with any representative of any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the Buyer
or a transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Buyer would be disposed of, or (iii)
regarding any other form of liquidation, dissolution or winding up of the Buyer.
5.10 INTELLECTUAL PROPERTY RIGHTS; EMPLOYEE RESTRICTIONS. Except as set
forth in Section 5.10 of the Buyer Disclosure Schedule:
(a) The Buyer has the right to use, sell, and license the
Intellectual Property material to the conduct of its business as presently
conducted, including without limitation all rights to the Buyer name "Lineo" and
to the trademarks and the product name "Embedix" (the "Buyer Rights"), free and
clear of the rights of all others.
(b) The business of the Buyer as presently conducted, the
products as marketed or sold and the provision of services by the Buyer do not
violate and will not violate any agreements that the Buyer has with any third
party or infringe any patent, trademark, service mark, copyright or trade secret
or any other Intellectual Property of any third party.
(c) No claim is pending or threatened against the Buyer nor
has the Buyer received any notice or claim from any person asserting that any of
the Buyer's present or contemplated activities infringe or may infringe any
Intellectual Property of such person, and the Buyer is not aware of any
infringement by any other person of any of the Buyer Rights.
(d) Each current and former employee of the Buyer, and each of
the Buyer's consultants and independent contractors involved in development of
any of the Buyer Rights, has executed an agreement regarding confidentiality,
proprietary information and assignment of inventions and copyrights to the
Buyer, and none of such employees, consultants or independent contractors is in
violation of any agreement or in breach of any agreement or arrangement with
former or present employers relating to proprietary information or assignment of
inventions. The Buyer has taken all reasonable steps to protect all data,
information, ideas, concepts, know-how and materials that the Buyer treats as
trade secrets, and all other confidential information and Intellectual Property
of the Buyer, which are not part of the public domain or knowledge, nor, to the
best knowledge of the Buyer, have they been used, divulged or appropriated for
the benefit of any person other than the Buyer or otherwise to the detriment of
the Buyer.
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(e) No royalties or other amounts are payable by the Buyer to
persons by reason of the ownership or use of the Intellectual Property of the
Buyer.
(f) No third party has claimed or, to the best of the Buyer's
knowledge, has reason to claim that any person employed by or affiliated with
the Buyer has (a) violated or may be violating any of the terms or conditions of
his or her employment, non-competition, non-disclosure, non-solicitation or
inventions agreement with such third party, (b) disclosed or may be disclosing
or utilized or may be utilizing any Intellectual Property, trade secret or
proprietary information or documentation of such third party, or (c) interfered
or may be interfering in the employment relationship between such third party
and any of its present or former employees.
5.11 LITIGATION. There is no litigation or governmental proceeding or
investigation pending or threatened against the Buyer or affecting any of its
properties or assets or against any officer, director or key employee of the
Buyer in his or her capacity as an officer, director or employee of the Buyer,
which litigation, proceeding or investigation is reasonably likely to have a
Material Adverse Effect on the Buyer, or which may call into question the
validity or hinder the enforceability of this Agreement or any other agreements
or transactions contemplated hereby; nor has there occurred any event nor does
there exist any condition on the basis of which any such litigation, proceeding
or investigation might be properly instituted or commenced. Neither the Buyer
nor any of its subsidiaries is a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Buyer or any of its subsidiaries currently pending or which the Buyer or any of
its subsidiaries intends to initiate.
5.12 TAX MATTERS. The Buyer has filed all federal, state, local and
foreign income, excise and franchise tax returns, real estate and personal
property tax returns, sales and use tax returns and other tax returns required
to be filed by it where the failure to file such returns would have a Material
Adverse Effect on the Buyer, and has paid all taxes owing by it, except taxes
which have not yet accrued or otherwise become due, for which adequate provision
has been made in the pertinent financial statements referred to in Section 5.5
above or which will not have a Material Adverse Effect on the Buyer. The filed
tax returns and reports are true and correct in all material respects. All taxes
and other assessments and levies which the Buyer is required to withhold or
collect have been withheld and collected and have been paid over to the proper
governmental authorities except where the failure to withhold or collect and pay
over would not have a Material Adverse Effect on the Buyer. With regard to the
federal income tax returns of the Buyer, the Buyer has never received notice of
any audit or of any proposed deficiencies from the Internal Revenue Service.
There are in effect no waivers of applicable statutes of limitations with
respect to any taxing owed by the Buyer for any year. Neither the Internal
Revenue Service nor any other taxing authority is now asserting or, to the
knowledge of the Buyer, threatening to assert against the Buyer any deficiency
or claim for additional taxes or interest thereon or penalties in connection
therewith.
5.13 EMPLOYEE BENEFIT PLANS. The Buyer does not maintain or contribute
to any to any employee benefit plan, stock option, bonus or incentive plan,
pension plan, severance pay policy or agreement, deferred compensation agreement
or any similar plan or agreement (an "Employee Benefit Plan") other than the
Employee Benefit Plans identified and described in Section 5.13 of the Buyer
Disclosure Schedule. The terms and operation of each Employee
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Benefit Plan comply in all material respects with all applicable laws and
regulations relating to such Employee Benefit Plan. There are no unfunded
obligations of the Buyer under any retirement, pension, profit-sharing, deferred
compensation plan or similar program. The Buyer is not required to make any
payments or contributions to any Employee Benefit Plan pursuant to any
collective bargaining agreement, and all Employee Benefit Plans are terminable
at the discretion of the Buyer without material liability to the Buyer upon or
following such termination. The Buyer has never maintained or contributed to any
Employee Benefit Plan providing or promising any health or other welfare
benefits (within the meaning of Section 3(3) of ERISA) to terminated employees,
except for benefits mandated by applicable law, including, but not limited to,
Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of
Subtitle B of Title I of ERISA.
5.14 LABOR LAWS. The Buyer employs approximately 105 employees and
generally enjoys good employer-employee relationships. The Buyer is not
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
it as of the date hereof or amounts required to be reimbursed to such employees.
The Buyer is in compliance in all material respects with all applicable laws and
regulations respecting labor, employment, fair employment practices, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices or strikes, slowdowns,
stoppages of work or any other concerted interference with normal operations
existing, pending or, to the knowledge of the Buyer, threatened against or
involving the Buyer.
5.15 EMPLOYEES. Section 5.15 of the Buyer Disclosure Schedule contains
a list of all managers, employees and consultants of the Buyer who,
individually, have received compensation from the Buyer for the fiscal year of
the Buyer ended October 31, 1999, in excess of $100,000. In each case, Section
5.15 of the Buyer Disclosure Schedule includes the current job title, years of
service with the Buyer and aggregate annual compensation and benefits of each
such individual. To the knowledge of the Buyer, no key employee of the Buyer has
any plan or intention to terminate his or her employment with the Buyer. The
Buyer has complied in all material respects with the immigration laws of the
United States with respect to the hiring, employment and engagement of all of
its employees and consultants who are not United States citizens, and, to the
knowledge of the Buyer, the immigration or residency status of each of such
employees and consultants is sufficient to allow such employees and consultants
to remain lawfully employed or engaged by the Buyer. The employment of each
officer and employee of the Buyer is terminable at the will of the Buyer. The
Buyer is not a party to or bound by any currently effective employment contract.
5.16 HAZARDOUS WASTE, ETC. No hazardous wastes, substances or materials
or oil or petroleum products have been generated, transported, used, disposed,
stored or treated by the Buyer, and no hazardous wastes, substances or materials
or oil or petroleum products have been released, discharged, disposed,
transported, placed or otherwise caused to enter the soil or water in, under or
upon any real property owned, leased or operated by the Buyer.
5.17 BUSINESS; COMPLIANCE WITH LAWS. The Buyer has all necessary
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its property and to conduct its business as it is presently or
contemplated to be conducted and is not in default in any material respect under
any of such franchises, permits, licenses and other similar rights and
privileges. The Buyer is currently and has heretofore been in compliance in all
material respects with all federal, state, local and foreign laws and
regulations.
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5.18 INVESTMENT BANKING; BROKERAGE. There are no claims for investment
banking fees, brokerage commissions, finder's fees or similar compensation
(exclusive of professional fees to lawyers and accountants) in connection with
the transaction contemplated by this Agreement payable by the Buyer or based on
any arrangement or agreement made by or on behalf of the Buyer or any of the
stockholders.
5.19 INSURANCE. The Buyer has fire, casualty, product liability,
workers' compensation and business interruption and other insurance policies,
with extended coverage, sufficient in amount to allow it to replace any of its
material properties which might be damaged or destroyed or sufficient to cover
liabilities to which the Buyer may reasonably become subject, and such types and
amounts of other insurance with respect to its business and properties, on both
a per occurrence and an aggregate basis, as are customarily carried by persons
engaged in the same or similar business as the Buyer. There is no default or
event which could give rise to a default under any such policy.
5.20 TRANSACTIONS WITH AFFILIATES. There are no loans, leases,
contracts or other transactions (directly or indirectly) between the Buyer and
any Affiliate of the Buyer or any Family Member or Associate of any such
Affiliate, and there have been no such transactions within the past twelve (12)
months except as set forth in Section 5.20 of the Buyer Disclosure Schedule. To
the best of the Buyer's knowledge, none of such persons has any direct or
indirect ownership interest in any firm or corporation with which the Buyer is
affiliated or with which the Buyer has a business relationship, or any firm or
corporation that competes with the Buyer, except that employees, officers or
directors of the Buyer and members of their families may own stock in publicly
traded companies that may compete with the Buyer.
5.21 SUPPLIERS. Section 5.21 of the Buyer Disclosure Schedule sets
forth each supplier of the Buyer who supplied more than five percent (5%) of the
Buyer's supplies or materials for the fiscal year ended October 31, 1999 and
each supplier who the Buyer believes may supply for more than five percent (5%)
of the Buyer's supplies or materials for the fiscal year ended October 31, 2000
(each a "Supplier" and collectively the "Suppliers"). The relationships of the
Buyer with its Suppliers are good commercial working relationships. No Supplier
of the Buyer has canceled or otherwise terminated its relationship with the
Buyer, or has during the last 12 months decreased materially its services,
supplies or materials to the Buyer. No Supplier has, to the knowledge of the
Buyer, any plan or intention to terminate, cancel or otherwise materially and
adversely modify its relationship with the Buyer or to decrease materially or
limit its services, supplies or materials to the Buyer.
5.22 CERTAIN EVENTS.
(a) During the past ten (10) years, neither the Buyer nor any
of the officers or directors of the Buyer has had a petition under the
Bankruptcy Reform Act of 1978, as amended, or any state insolvency law, filed by
or against any of them which has not as of the date of this Agreement been
dismissed.
(b) During the past ten (10) years, neither the Buyer nor the
officers or directors of the Buyer has been convicted in a criminal proceeding
or is a named subject of a criminal proceeding which is presently pending
(excluding traffic violations and other minor offenses).
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(c) During the past ten (10) years, neither the Buyer nor the
officers or directors of the Buyer has been, or is, the subject of any order,
judgment or decree, whether or not subsequently reversed, suspended or vacated,
of any court or any administrative agency, requiring the payment of money
damages in excess of USD $100,000 or permanently or temporarily enjoining any of
them from, or otherwise limiting any of their abilities to engage in, any type
of business practice.
5.23 REGISTRATION RIGHTS. Except as disclosed in Section 5.23 of the
Buyer Disclosure Schedule, the Buyer has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
5.24 DISCLOSURE. The representations and warranties made or contained
in this Agreement, the exhibits hereto and the certificates and statements
executed or delivered in connection herewith, and the information concerning the
business of the Buyer delivered to the Sellers in connection with or pursuant to
this Agreement, when taken together, do not and shall not contain any untrue
statement of a material fact and do not and shall not omit to state a material
fact required to be stated therein or necessary in order to make such
representations, warranties or other material not misleading in light of the
circumstances in which they were made or delivered. There have been no events or
transactions or information which has come to the attention of the management of
the Buyer having a direct impact on the Buyer or its assets, liabilities,
financial condition, business, results of operations or prospects which, in the
reasonable judgment of such management, could be expected to have a Material
Adverse Effect on the Buyer.
5.25 CORPORATE DOCUMENTS. The Certificate of Incorporation and Bylaws
of the Buyer have been made available to the Sellers. The minute books of the
Buyer containing minutes of all meetings of directors and stockholders and all
actions by written consent without a meeting by the directors and stockholders
since the date of incorporation have been made available to the Sellers and
reflect accurately in all material respects all actions by the directors (and
any committee of directors) and stockholders with respect to all transactions
referred to in such minutes. The stock transfer ledgers and other similar
records of the Buyer as made available to the Sellers prior to the execution of
this Agreement accurately reflect all record transfers prior to the execution of
this Agreement in the capital stock of the Buyer.
5.26 OFFERING. Subject in part to the truth and accuracy of the Sellers
representations and warranties set forth in this Agreement, the offer, sale and
issuance of the Securities as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act and any applicable state
securities laws, and neither the Buyer nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption.
5.27 INVESTMENT COMPANY. The Buyer is not and shall not become an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
In the event the Buyer breaches the foregoing, the Buyer shall forthwith notify
the Sellers and shall take immediate corrective action to remedy such breach.
5.28 SUPPLEMENTAL REMUNERATION. The Buyer has not and shall not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of supplemental or additional interest, fee or otherwise to any investor or
other stockholder of the Buyer as
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consideration for or as an inducement to entering into by any investor or other
stockholder of the Buyer of any waiver or amendment of any of the terms and
provisions of the agreements or the Certificate of Incorporation which affects
any such party's rights as an investor or stockholder, unless such remuneration
is concurrently paid, on the same terms, ratably to all investors or
stockholders whether or not such investors or stockholders grant such waiver or
agree to such amendment.
5.29 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Buyer is required in connection with the consummation of the transactions
contemplated by this Agreement other than as may be required to secure an
exemption from qualification of the offer and sale of the Lineo Shares under the
Securities Act and applicable state securities laws.
ARTICLE 6.
COVENANTS OF SELLERS AND BUYER
6.1 INVESTIGATION OF BUSINESS; ACCESS TO PROPERTIES AND RECORDS. Prior
to the Closing or termination of this Agreement, the Sellers shall cause the
Company to give to the Buyer and its legal counsel, accountants, lenders and
other representatives reasonable access during normal business hours to all of
the Company's and the Subsidiaries' properties (including books, contracts,
commitments and records) for inspection (including financial, legal and
environmental), and shall permit them to consult with each Seller and with
management employees of the Company and the Subsidiaries to allow the Buyer full
opportunity to make such investigations as are necessary to review the affairs
of the Company and the Subsidiaries. If, prior to Closing, the Buyer discovers
any breach by any Seller or the Company of any representation or warranty
contained in this Agreement or any circumstances or condition that would
constitute such a breach, the Buyer will notify the Sellers promptly of such
facts known to the Buyer and the nature of the breach.
6.2 REGULATORY AND OTHER AUTHORIZATIONS.
(a) Subject to the limitations set forth in this Section 6.2,
each of the Sellers and the Buyer shall take all reasonable actions to obtain
all Permits of all Authorities that may be or become necessary for the execution
and delivery of this Agreement and the performance of their respective
obligations pursuant to this Agreement (which actions shall include, without
limitation, furnishing all information and obtaining all approvals required) and
will cooperate fully with one another in promptly seeking to obtain all such
Permits. Each party to this Agreement agrees to provide information requested by
any Authority or the other party in connection with obtaining such Permits, and
agrees not to take any action that will have the effect of delaying, impairing
or impeding the receipt of any required Permits.
(b) Notwithstanding anything in Section 6.2(a) to the
contrary, the Sellers shall cause the Company to coordinate on behalf of all
parties the obtaining of all such Permits. The Buyer and the Sellers in
association with the Company, to the extent permitted by applicable law and
subject to the Company's best corporate interest, shall by mutual agreement
determine the substance of all communications and filings made by the parties
with any Authority regarding the transactions contemplated by this Agreement,
including without limitation:
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(i) the extent to which it may be necessary to resolve or
settle any concerns on the part of any Authority regarding the legality under
any law of the transactions contemplated by this Agreement by entering into
negotiations, providing information, making proposals, entering into and
performing agreements or submitting to judicial or administrative orders,
agreeing to any restrictions on the conduct of business after Closing by the
Buyer or the Company or any Subsidiary, or selling or otherwise disposing of, or
holding separate (through the establishment of a trust or otherwise), particular
assets or categories of assets or businesses of the Buyer, including, after the
Closing, the Company or any Subsidiary;
(ii) contesting the entry in a judicial or administrative
proceeding brought under any local law by any Authority or any other Person of
any permanent or preliminary injunction or other order that would make
consummation of the transactions contemplated by this Agreement unlawful or
would prevent or delay the transactions, including, without limitation, taking
the steps contemplated by Section 6.2(b)(i);
(iii)if such an injunction or order has been issued in such a
proceeding, taking any and all steps, including, without limitation, appeal
thereof, the posting of a bond or the steps contemplated by Section 6.2(b)(i),
necessary to vacate, modify or suspend such injunction or order so as to permit
the consummation of the transaction on the schedule contemplated by this
Agreement;
(iv) responding to and complying with any request or subpoena
for additional information by any Authority; and
(v) determining any other appropriate response or initiative
to avoid or eliminate impediments under any law that may be asserted by any
Authority or any other Person to the consummation of the transactions
contemplated by this Agreement.
6.3 REASONABLE EFFORTS; CONSENTS AND NOTIFICATIONS. Subject to the
terms and conditions provided in this Agreement, each Seller and the Buyer each
will use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and to cooperate with one another in connection
with the foregoing, including using all reasonable efforts:
(i) to obtain all necessary waivers, consents, releases and
approvals from other parties to loan agreements, Leases, guarantees and other
Contracts;
(ii) to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to this Agreement to
consummate the transactions contemplated by this Agreement; and to fulfill all
conditions to this Agreement.
6.4 FURTHER ASSURANCES. The Sellers and the Buyer agree that, from time
to time, at or after the Closing Date, each of them will execute and deliver
such further instruments of conveyance and transfer and take such other action
as may be reasonably necessary to carry out the purposes of this Agreement.
6.5 CONDUCT OF BUSINESS OF THE COMPANY. From the date of this Agreement
through the Closing, except as otherwise provided by this Agreement or consented
to or approved by the Buyer in writing:
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(i) the Company shall operate its businesses in the ordinary
and usual course in all material respects in accordance with past practices;
(ii) the Company (and the Sellers acting with respect to the
shares of the Company) shall not issue, purchase or agree to purchase, sell or
agree to issue or sell:
(A) any of its capital shares; or
(B) any securities convertible into or evidencing the
right to purchase, or options
with respect to, or rights to subscribe for, any of its capital shares;
(iii) the Company shall not (and the Sellers acting with
respect to the capital shares of the Company shall not) amend its Articles of
Incorporation or Bylaws ( or other governance documents) or declare or pay any
dividend (whether in cash or property) or declare or effect any stock split,
reclassification or other change in capital structure;
(iv) the Company shall maintain its respective books and
records in the usual, regular and ordinary manner consistent with past practice;
(v) the Company shall comply in all material respects with all
applicable laws; and
(vi) the Company shall not:
(A) enter into or consummate any joint venture,
partnership or other similar arrangement or form any other new arrangement for
the conduct of its business or acquire or enter into any agreement or letter of
intent to acquire, by merger, consolidation, or purchase of stock or assets, any
business, entity or Person;
(B) purchase any material assets or securities of any
Person, except for asset purchases in the ordinary course of its business for
individual amounts not in excess of Twenty Five Thousand Dollars (USD $25,000);
(C) enter into any transactions, commitments or
obligations outside the ordinary course of business or incur any indebtedness,
including notes payable, current maturities of long-term debt or capital lease
obligations, except for trade payables and other normal items accrued as current
liabilities;
(D) take or agree to take any action prohibited by this
Section 6.5 or that would be reasonably likely to cause any representation or
warranty made by any Seller in this Agreement to be untrue or inaccurate in
any material respect at the Closing Date;
(E) take any action to amend or terminate any Employee
Benefit Plan or to adopt any other plan, program, arrangement or practice
providing benefits for or compensation to or on behalf of its employees or
former employees before the Closing Date, except as required by applicable law
or by the applicable collective bargaining agreement ;
(F) increase the base compensation or bonus, incentive,
severance or other benefit plan of any employee, consultant or agent, except for
increases in base annual salaries in the ordinary course of business; or
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(G) grant any Encumbrance on any asset, except for
Permitted Encumbrances.
Notwithstanding the foregoing, the parties acknowledge that the Majority
Shareholders have resigned from the Company's Board of Directors with effect as
of May 3, 2000, and that S. You Huang has been appointed by the Board of
Directors as President-Directeur-General. Buyer agrees that S. You Huang shall
execute the Employment Agreements in the form attached hereto as Exhibit D on
behalf of the Company at the Closing, and that Buyer shall thereafter convene a
meeting of the shareholders of the Company in order to appoint such new
directors as Buyer shall see fit.
6.6 PRESERVATION OF BUSINESS.
(a) Subject to the terms and conditions of this Agreement and
except as otherwise provided by this Agreement, the Company shall use reasonable
efforts to:
(i) preserve the business of the Company and keep generally
available to the Company the services of the employees, officers, consultants,
contractors and agents of the Company;
(ii) preserve generally the goodwill of customers, suppliers,
creditors and others having business relations with the Company; and
(iii) continue performance in the ordinary course of their
respective obligations under all Contracts to which the Company is a party or
which binds it or its assets.
(b) In connection with the operation of the Business between
the date of this Agreement and the Closing, to the extent permitted by
applicable law and subject to the Company's best corporate interest, the Sellers
shall cause the Company to confer in good faith on a regular basis with one or
more designated representatives of the Buyer (which representatives shall have
been designated by the Buyer to the Sellers and to the Company in writing) with
respect to material matters affecting or impacting the operations of the Company
or any Subsidiaries and shall consult in general with respect to the ongoing
operations of the Company and the Subsidiaries. The Sellers shall cooperate with
the Buyer in its efforts to communicate with the employees, consultants,
professionals, agents and others having business relationships with the Company
regarding the transition of the Company's business to ownership by the Buyer.
6.7 ANNOUNCEMENTS. Neither the Sellers, the Company, or the Buyer, nor
any agent or any Affiliate of any of the foregoing, shall make any public
statements, including, without limitation, any press releases or other public
disclosure, with respect to this Agreement and the transactions contemplated by
this Agreement without the prior consent of the other party and the Company
(which consent may not be unreasonably withheld or delayed), except as may be
required by law or advisable under the rules of any securities exchange to which
the Buyer is subject.
6.8 NO SOLICITATION. From the date of this Agreement to the earlier of
(i) the Closing Date or (ii) the termination of this Agreement in accordance
with its terms, the Sellers agree that (A) they will not, and (B) they will not
authorize or permit any officer, director or
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employee of the Company, or any investment banker, attorney, financial advisor,
accountant or other Person retained by any Seller or the Company, directly or
indirectly (including by way of furnishing any information) to: (1) solicit,
initiate, assist, encourage or accept any Takeover Proposal or any inquiries
relating to a Takeover Proposal or to make any proposals which could reasonably
be expected to lead to any Takeover Proposal relating to the Company Subsidiary;
(2) engage in any negotiations with respect to, or otherwise attempt to
consummate, a Takeover Proposal; (3) provide any public or nonpublic information
concerning the Company to any Person in connection with any Takeover Proposal or
to any Person whom any Seller or the Company knows or has reason to believe is
in the process of planning or considering a Takeover Proposal; or (4) reach any
agreement or understanding for or with respect to any Takeover Proposal.
6.9 RIGHT TO UPDATE AND CURE.
(a) From time to time prior to the Closing, the Buyer and the
Sellers shall update or amend their respective disclosure of any matter set
forth or required to be set forth in their respective Disclosure Schedules to
reflect any changes in (or any inaccuracies in) such Disclosure Schedule. For
purposes of Section 7.1 or Section 8.1, any material change in a disclosure,
representation or warranty made by the Majority Shareholders or any Seller
following the execution and delivery of this Agreement and prior to the Closing
shall entitle the Buyer to terminate this Agreement, and any material change in
a disclosure, representation or warranty made by the Buyer following the
execution and delivery of this Agreement and prior to the Closing shall entitle
the Sellers to terminate this Agreement, in each case by written notice to the
other given within 15 days of its receipt of written notice of such change and
in any event prior to the Closing. Notwithstanding anything in this Agreement to
the contrary, any party that receives notice of a material change in the
disclosures may defer the Closing Date for up to five Business Days after
receipt of such change, provided that the Closing Date shall not under any
circumstances be deferred beyond the deadline specified in Section 10.1 hereof.
(b) Prior to the Closing, each of the parties to this
Agreement agrees to notify the other parties promptly in writing of, and
contemporaneously will provide the other parties with true and complete copies
of, any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before Closing, any event, transaction
or circumstance occurring after the date of this Agreement that causes or will
cause any covenant or agreement under this Agreement to be breached or that
renders or will render untrue any representation or warranty contained in this
Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. Each of the parties to this Agreement also agrees
to notify the other parties promptly in writing of, and will use all
commercially reasonable efforts to cure, before the Closing, any violation or
breach of any representation, warranty, covenant or agreement made in this
Agreement, whether occurring or arising before, on or after the date of this
Agreement.
6.10 MARKET STAND-OFF AGREEMENT. In connection with a public offering
by the Buyer, the Sellers if requested in good faith by the Buyer and the
managing underwriter of the public offering, shall agree not to sell or
otherwise transfer or dispose of any securities of the Buyer held by them
(except for any securities sold pursuant to such registration statement) for a
period following the effective date of the applicable registration statement
that in no event shall exceed 180 days or, if shorter, the amount of time
applicable to Lineo's officers and directors generally for such purpose. In
order to enforce the foregoing, the
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Buyer may impose stop-transfer instructions with respect to the Lineo Shares
held by such Seller (and the shares of securities of every other person subject
to the foregoing restriction) until the end of such period.
6.11 SECURITIES LAW COMPLIANCE.
(a) Sellers agree that all offers and sales of the Lineo
Shares prior to one year after the Closing shall be made only in accordance with
the provisions of Rule 903 or Rule 904 under the Securities Act, pursuant to
registration of the Lineo Shares under the Securities Act; or pursuant to an
available exemption from the registration requirements of the Securities Act;
and not to engage in hedging transactions with regard to the Lineo Shares prior
to one year after the Closing unless in compliance with the Securities Act.
(b) Sellers acknowledge that the Lineo Shares have not been
registered under the Securities Act and may not be offered or sold in the United
States or to U.S. Persons (other than distributors) unless the Lineo Shares are
registered under the Securities Act, or an Exemption from the registration
provisions of the Securities Act is available, and that the Lineo Shares may not
be sold outside the United States except in compliance with all other applicable
securities laws. Sellers further acknowledge that hedging transactions involving
the Lineo Shares may not be conducted unless in compliance with the Securities
Act.
(c) Each Seller represents to the Company that such Seller has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment contemplated by
this Agreement and making an informed investment decision with respect thereto.
Each Seller who is a U.S Person represents that such Seller is an "accredited
investor" as such term is defined in Rule 501 under the Securities Act. Each
Seller represents and understands that such Seller is responsible for its own
due diligence investigation and satisfying its own due diligence requirements
and shall not be entitled to rely on the due diligence investigation of any
other person or entity. Each Seller represents to the Buyer that it is acquiring
the Lineo Shares for such Seller's own account, for investment only and not with
a view to, or any present intention of, effecting a distribution of such
securities or any part thereof except pursuant to a registration or an available
exemption under applicable law. Each Seller acknowledges that such Seller's
Lineo Shares have not been registered under the Securities Act or the securities
laws of any state or other jurisdiction and cannot be disposed of unless they
are subsequently registered under the Securities Act and any applicable state
laws or exemption from such registration is available.
6.12 TAX FILING CODE SECTION 338(g) ELECTION. The Buyer has indicated
to the Sellers that it will prepare and File an election under Section 338(g) of
the Code to treat this transaction as an asset purchase. In this respect, upon
demand of the Buyer, the Sellers shall reasonably cooperate with the Buyer
provided that the Sellers shall incur no costs or other liability now or in the
future in this respect.
6.13 COVENANT NOT TO COMPETE/NONSOLICITATION.
(a) Covenant. Each of the Majority Shareholders agrees not to
directly or indirectly compete (as defined in sub-section 6.13(b) below) with
the Company in the noncompetition area (as defined in sub-section 6.13( c)
below) for a period of two (2) years from the Closing Date (the "Non-Compete
Period").
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(b) Direct and Indirect Competition. Each of the Majority Shareholders
agrees that the phrase "directly or indirectly compete" shall include:
(i) owning, managing, operating, or controlling, or
participating in the ownership, management, operation, or control of, or being
connected with or having any interest in, as a stockholder, director, officer,
employee, agent, consultant, assistant, advisor, sole proprietor, partner, or
otherwise, any business (other than the Company's) that is involved in the
development, marketing, and/or sale of Linux-based embedded software components
and applications (including, but not limited to, traditional embedded devices,
handheld devices, personal digital assistants, thin clients, and thin servers),
provided, however, that this prohibition shall not apply to the ownership of
less than five percent (5%) of the voting stock in companies whose stock is
traded on a national securities exchange or in the over-the-counter market;
(ii) soliciting, causing to be solicited, contracting with, or
otherwise engaging in business with any person or business entity, whom or which
at the time is a current client of the Company, and whom or which is known to
such Majority Shareholder and with whom or which such Majority Shareholder has
dealt, directly or indirectly, during the final 12 months of the Non-Compete
Period, for the purpose of the development, marketing, and/or sale of
Linux-based embedded software components or applications;
(iii) soliciting, persuading, inducing, or otherwise causing
employees of the Company to leave the Company's employ; or
(iv) soliciting or engaging in any employment or other
activity that is the same or similar to any business in which the Company is
now, or has plans to become, engaged.
(c) Noncompetition Area. Each of the Majority Shareholders agrees that
the phrase "noncompetition area" means any national market in which the Buyer or
its Subsidiaries, within twelve (12) months prior to the commencement of any
direct or indirect competitive action(s) by Majority Shareholder, (i) has
developed, marketed, or sold Linux-based embedded software components or
applications, or (ii) has made material commitments to do so.
ARTICLE 7.
CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
The Buyer's obligation to consummate the Share Purchase shall
be subject to the satisfaction on or prior to the Closing Date of all of the
following conditions (any of which may be waived in writing by the Buyer in its
sole discretion):
7.1 REPRESENTATIONS; WARRANTIES AND COVENANTS OF THE MAJORITY
SHAREHOLDERS AND THE SELLERS. Subject to the second sentence of this Section
7.1, the representations and warranties of the Majority Shareholders and the
Sellers in this Agreement shall be true and correct on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date, except for representations and warranties that
speak as of a specific date or time other than the Closing Date (which need only
be true
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and correct as of such date or time). The Closing condition contained in this
Section 7.1, as it relates to representations and warranties, shall be satisfied
unless the inaccuracies in and breaches of such representations and warranties,
without reference to materiality qualifiers, have or are likely to have an
adverse effect on the Company, taken as a whole, or on the Buyer's ownership of
the Company Shares, of Fifty Thousand Dollars (USD$50,000) or more. The
covenants and agreements of the Sellers to be performed on or before the Closing
Date in accordance with this Agreement shall have been performed in all material
respects.
7.2 FILINGS; CONSENTS; WAITING PERIODS. All registrations, filings,
applications, notices, consent, approvals, waivers, authorizations,
qualifications and orders to be filed, made or obtained by the Sellers in order
to consummate the transactions contemplated by this Agreement (including,
without limitation, any filings or actions required) shall have been filed, made
or obtained.
7.3 NO INJUNCTION. There shall be no injunction, restraining order or
decree of any nature of any Authority or other Person that is in effect and that
(i) restrains, prohibits or makes illegal the consummation of the Share
Purchase, or (ii) imposes conditions on the consummation of the Share Purchase
not otherwise provided for in this Agreement.
7.4 CLOSING DELIVERIES. The Sellers or the Majority Shareholders, as
appropriate, shall have delivered or caused to be delivered to the Buyer the
following:
(i) True and correct copies of the Bylaws of the Company as in
effect on the day prior to Closing;
(ii) A certificate of the Majority Shareholders and each of
the Sellers, if requested by the Buyer, attesting to the matters set forth in
Section 7.1;
(iii)The documents to be delivered by the Sellers as described
in Section 2.2(c);
(iv) The Company Financial Statements;
(v) Evidence reasonably satisfactory to the Buyer of the
existence of the Cash Balance as at Closing; and
(vi) Copies of the Liquidity Agreement, the Stock Option
Undertaking, and the Employment Agreements in the form attached as Exhibit A, B
and C, respectively, duly signed by the Majority Shareholders.
7.5 ABSENCE OF LITIGATION. No claim, action, suit, arbitration,
investigation, inquiry or other proceeding by any Authority or other Person with
respect to this Agreement or the transactions contemplated hereby shall be
threatened or pending on the Closing Date and, up to the Closing, no party to
this Agreement shall have been advised by any Authority (which advisory has not
been officially withdrawn by such Authority on or prior to the Closing Date)
that such Authority is reviewing this Agreement or the transactions contemplated
hereby to determine whether to file or commence any litigation with respect to
any aspect of this Agreement or the transactions contemplated hereby.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There shall
not have been made or threatened by any Person any claim asserting that such
Person (a) is the holder
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or the beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any stock of, or any other voting, equity, or ownership interest
in the Company, or (b) is entitled to all or any portion of the Purchase Price
payable for the Company Shares.
7.7 NO MATERIAL ADVERSE EFFECT. Before the Closing Date, there shall
have been no material change in the assets or liabilities, the business or
condition (financial or otherwise), the results of operations or prospects of
the Company or any Subsidiary, whether as a result of any legislative or
regulatory change, revocation of any license or right to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God or other public force or otherwise, that results in a
Material Adverse Effect.
ARTICLE 8.
CONDITIONS TO SELLERS' OBLIGATIONS TO CLOSE
Each Seller's obligation to consummate the Share Purchase is
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions (any of which may be waived in writing by such Seller, in
its sole discretion):
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER. The
representations and warranties of the Buyer in this Agreement shall be true and
correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct as of such date, or
time), and the covenants and agreements of the Buyer to be performed on or
before the Closing Date in accordance with this Agreement shall have been
performed in all material respects.
8.2 FILINGS; CONSENTS; WAITING PERIODS. All registrations, filings,
applications, notices, consents, approvals, waivers, authorizations,
qualifications and orders to be filed, made or obtained by the Buyer, the
Company or any Seller in order to consummate the transactions contemplated by
this Agreement shall have been filed, made or obtained. The Buyer shall have
obtained the consents identified in Section 5.3 of the Buyer Disclosure
Schedule, which consents shall be in form and substance reasonably satisfactory
to the Majority Shareholders.
8.3 NO INJUNCTION. The condition set forth in Section 7.3 shall have
been satisfied.
8.4 CLOSING DELIVERIES. The Buyer shall have delivered or caused to be
delivered to the Sellers' legal counsel (in the case of clauses (i), (ii) and
(iii) below), to each Seller (in the case of clause (iv) below), and to the
Majority Shareholders (in the case of clause (v) below) the following:
(i) A certificate of the Secretary of the Buyer attesting to
the incumbency of the officers of the Buyer executing this Agreement and any
other certificates or agreements delivered by the Buyer to the Sellers at or
prior to the Closing;
(ii) A certificate of the Chairman of the Board or President
of the Buyer attesting on behalf of the Buyer to the matters set forth in
Section 8.1;
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(iii) A resolution of the Board of Directors of the Buyer
authorizing the execution, delivery and performance by the Buyer of this
Agreement and the consummation of the transactions contemplated herein,
certified by the Secretary of the Buyer;
(iv) The Purchase Price payable in accordance with Section 2.2
to each Seller (as specified in Section 2.2) pursuant to this Agreement; and
(v) Duly executed copies of the Liquidity Agreement and Stock
Option Undertaking in the forms attached hereto as Exhibit B and C respectively
and the Employment Agreements in the form attached as Exhibit C (duly signed by
the Company).
8.5 SERIES C CONVERTIBLE PREFERRED STOCK OF THE BUYER. The Buyer shall
have consummated the issuance of at least 3,000,000 shares of its Series C
Convertible Preferred Stock.
8.6 ABSENCE OF LITIGATION. No claim, action, suit, arbitration,
investigation, inquiry or other proceeding by any Authority or other Person with
respect to this Agreement or the transactions contemplated hereby shall be
threatened or pending on the Closing Date and, up to the Closing, no party to
this Agreement shall have been advised by any Authority (which advisory has not
been officially withdrawn by such Authority on or prior to the Closing Date)
that such Authority is reviewing this Agreement or the transactions contemplated
hereby to determine whether to file or commence any litigation with respect to
any aspect of this Agreement or the transactions contemplated hereby.
8.7 NO MATERIAL ADVERSE EFFECT. Before the Closing Date, there shall
have been no material change in the assets or liabilities, the business or
condition (financial or otherwise), the results of operations or prospects of
the Buyer or any of its Subsidiaries, whether as a result of any legislative or
regulatory change, revocation of any license or right to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation or act of God or other public force or otherwise, that results in a
Material Adverse Effect.
ARTICLE 9.
SURVIVAL; INDEMNIFICATION
9.1 INDEMNIFICATION .
(a) If the Closing occurs, and subject to the limitations set
forth in this Article 9, the Majority Shareholders, severally and not jointly
(according to their pro-rata ownership of the Company shares as set forth in
EXHIBIT A) shall indemnify and hold harmless the Buyer and its Affiliates
(collectively, the "Buyer Indemnitees") from and against and in respect of any
and all loss, damage, diminution in value, liability, cost and expense,
including reasonable attorneys' fees and amounts paid in settlement
(collectively, the "Indemnified Losses"), suffered or incurred by any one or
more of the Buyer Indemnitees by reason of, or arising out of:
(i) any misrepresentation or breach of representation or
warranty of the Majority Shareholders contained in this Agreement, the Majority
Shareholders Disclosure Schedule, or any certificate, instrument, agreement or
other writing delivered by or on behalf of the Majority Shareholders pursuant to
this Agreement or in connection with the
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transactions contemplated herein, or the breach of any covenant or agreement of
the Majority Shareholders contained in this Agreement, the Majority Shareholders
Disclosure Schedule, or any certificate, instrument, agreement or other writing
delivered to the Buyer by or on behalf of the Majority Shareholders pursuant to
this Agreement or in connection with the transactions contemplated herein; and
(ii) any and all actions, orders, assessments, fees and
expenses incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnification.
(b) Each Seller, severally and not jointly, shall indemnify
and hold harmless the Buyer Indemnitees from and against any Indemnified Losses
caused by a breach of that Seller's representations, warranties or agreements
set forth in this Agreement. For avoidance of doubt, no Seller shall have
responsibility for a breach by any other Seller.
(c) If the Closing occurs, and subject to the limitations set
forth in this Article 9, the Buyer shall indemnify and hold harmless the Sellers
and their Affiliates (collectively, the "Seller Indemnitees") from and against
and in respect of any and all Indemnified Losses suffered or incurred by any one
or more of the Seller Indemnitees by reason of, or arising out of:
(i) any misrepresentation or breach of representation or
warranty of the Buyer contained in this Agreement, the Buyer Disclosure
Schedule, or any certificate, instrument, agreement or other writing delivered
by or on behalf of the Buyer pursuant to this Agreement or in connection with
the transactions contemplated herein, or the breach of any covenant or agreement
of the Buyer contained in this Agreement, the Buyer Disclosure Schedule, or any
certificate, instrument, agreement or other writing delivered to the Sellers by
or on behalf of the Buyer pursuant to this Agreement or in connection with the
transactions contemplated herein; and
(ii) any and all actions, orders, assessments, fees and
expenses incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnification.
(d) The party or parties entitled to indemnification under any
provision of this Article 9 are sometimes collectively referred to herein as the
"Indemnitees" and the party or parties obligated to indemnify under any
provision of this Article 9 are sometimes collectively referred to herein as the
"Indemnifying Parties". The Indemnifying Parties shall reimburse Indemnitees on
demand for any Indemnified Losses suffered by the Indemnitees, based on the
judgment of any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement of claims, demands or actions in respect of any
Indemnified Losses, provided however that no third party claim may be settled
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. The Indemnifying Parties shall have the
opportunity to defend at their expense any claim, action or demand for which the
Indemnitees claim indemnity against the Indemnifying Parties, provided that: (i)
the defense is conducted by reputable counsel approved by the Indemnitees, which
approval shall not be unreasonably withheld or delayed; (ii) the defense is
expressly assumed in writing within 15 days after written notice of the claim,
action or demand is given to the Indemnifying Parties; and (iii) counsel for the
Indemnitees may
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participate at all times and in all proceedings (formal and informal) relating
to the defense, compromise and settlement of the claim, action or demand at the
expense of the Indemnitees.
(e) No claim shall be brought by any Indemnitee under this
Article 9 for Indemnified Losses, and none of them shall be entitled to receive
any payment with respect thereto, unless and until the aggregate amount of such
claim(s) equals or exceeds USD$150,000, in which case the Indemnitees will be
entitled to reimbursement hereunder for Indemnified Losses from the first dollar
of loss. Anything to the contrary notwithstanding, (A) with respect to the
representations and warranties set forth in Article 3, (i) each Majority
Shareholder will be liable to the Buyer Indemnitees for the pro rata portion of
such Indemnified Losses in accordance with the percentages set forth opposite
that Majority Shareholder's name on Exhibit A; (ii) no Majority Shareholder
shall be liable to the Buyer Indemnitees for Indemnified Losses in excess of the
percentages set forth opposite that Majority Shareholder's name on Exhibit A;
and (iii) the Majority Shareholders shall not be liable to the Buyer Indemnitees
under this Article 9 to reimburse Indemnified Losses, if any, in excess in the
aggregate of the product of the number of Lineo shares received by him times
USD$6.00; provided, however, that such limitation shall not apply to any loss
suffered by the Buyer Indemnitees attributable to fraudulent misrepresentations;
and (B) with respect to the representations and warranties set forth in Article
4, (x) no Seller shall be liable for Indemnified Losses in excess in the
aggregate of the product of the number of Lineo shares received by him times
USD$6.00, provided, however, that such limitation shall not apply to any loss
suffered by the Buyer Indemnitees attributable to fraudulent misrepresentations
or to breaches of the representations set forth in Sections 4.1, 4.2, 4.3 and
4.4, and (y) no Seller shall be liable with respect to the breach of any
representation or warranty of any other Seller.
(f) Any Seller (including any Majority Shareholder) may
satisfy any obligation for indemnification under this Article 9 by delivering to
the applicable Buyer Indemnitees Lineo Shares having a fair market value
(determined in accordance with the following sentence) equal to the Indemnified
Losses or other amounts for which such Seller is liable hereunder. For purposes
of this Section 9.1(f), "fair market value" shall mean the greater of $6.00 per
share (adjusted for any stock splits, stock dividends, recapitalizations and
other similar events occurring after the date hereof) and the average of the
closing prices (last sale) of the Lineo Shares on the principal U.S. national
securities exchange or market system on which they are traded for the ten
trading days immediately prior to the payment.
(g) The Company shall not have any liability, obligation or
indebtedness to any Seller as a result of any misrepresentation or breach of
representation or warranty by any Seller contained in this Agreement, the
Majority Shareholders Disclosure Schedule, the Seller Disclosure Schedule or any
certificate, instrument, agreement or other writing delivered by or on behalf of
any Seller pursuant to this Agreement, or in connection with the transactions
contemplated herein, or the breach of any covenant or agreement of any Seller
contained in this Agreement, the Majority Shareholders Disclosure Schedule or
the Seller Disclosure Schedule, or any certificate, instrument, agreement or
other writing by or on behalf of any Seller pursuant to the provisions of this
Agreement or in connection with the transactions contemplated herein.
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9.2 LIMITATIONS ON INDEMNIFICATION.
(a) The representations and warranties of Buyer and each
Seller (including without limitation each Majority Shareholder) contained in
this Agreement, the Buyer Disclosure Schedule, the Majority Shareholders
Disclosure Schedule, the Seller Disclosure Schedule or in any certificate,
instrument, agreement or other writing delivered by or on behalf of Buyer or any
Seller pursuant to this Agreement or in connection with the transactions
contemplated herein shall survive any investigation heretofore or hereafter made
by or on behalf of the Buyer or the Seller, as applicable (subject to the
provisions of this Article 9), and the consummation of the transactions
contemplated herein, and all such representations and warranties shall be of no
further force and effect after two years from the date of the Closing, except
for matters set forth in Sections 3.11, 3.12, 3.13, 3.14, 3.15, 4.1, 4.2, 4.3,
4.4, 5.2, 5.3, 5.12, 5.13, 5.14, 5.15 and 5.16, for which the survival period
shall extend until the expiration of the applicable statutory limitations period
(as applicable, the "Survival Period"). Anything to the contrary
notwithstanding, a claim for indemnification which is made in writing but not
resolved prior to the expiration of the Survival Period may be pursued and
resolved after such expiration.
(b) An Indemnitee shall be obligated to prosecute diligently
and in good faith any claim for Indemnified Losses with any applicable insurer
prior to collecting any indemnification payment hereunder, provided that an
Indemnitee shall be entitled to collect an indemnification payment otherwise due
to it hereunder if such Indemnitee has not received reimbursement from the
applicable insurer(s) within twelve (12) months after it has given such
insurer(s) appropriate written notice of its claim.
(c) In the case where an Indemnitee recovers from third
parties all or any part of any amount previously paid to it by any Seller
hereunder, such Indemnitee shall promptly pay over to such Seller the amount so
recovered (net of any expenses actually incurred by it in procuring such
recovery), but not in excess of any amount previously so paid by the
Indemnifying Party. No amount shall become payable by an Indemnifying Party to
an Indemnity in respect of any third party claim unless and to the extent that
the Indemnity shall have become required to pay after exhausting all available
remedies, and shall actually have paid, the relevant Indemnified Losses to the
relevant third party.
(d) The amount of any claim made hereunder shall be reduced by
taking into account (i) any amount payable to the Buyer or the Company by any
insurer or other third party in respect of the relevant Indemnified Losses, and
(ii) any offsetting benefit (including any tax reduction) to the relevant
Company or to any Affiliate thereof, either in the year in which the Indemnified
Losses are sustained or in any other year.
(e) For purposes of computing the amount of any Indemnified
Losses, only the loss actually sustained shall be taken into account, to the
exclusion of any price/earnings or similar multiplier implicit in the Purchase
Price, and in no event shall any Indemnifying Party be liable for unforeseen or
consequential damages.
(f) The Indemnitees shall not be entitled to any
indemnification payments if they have not timely notified the Indemnifying
Parties and otherwise complied in all material respects with all the other
provisions of this Article 9.
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(g) The Indemnitees shall not be entitled to any
indemnification in connection with Indemnified Losses resulting from facts of
which the Indemnitees were aware at the time of executing this Agreement.
(h) Sellers shall have no liability under any provision of
this Agreement for Indemnified Losses which arise as a result of (i) actions
taken by the Buyer or the Company after the Closing Date, or (ii) the passing
of, or any change in, after the date hereof, any law or administrative practice
of any government, governmental department, agency or regulatory body in any
such case not actually in force at the date of this Agreement.
(i) The Indemnitees shall use their best efforts, and the
Buyer Indemnitees shall cause the Company to use its best efforts, to mitigate
any Indemnified Losses which any of them may suffer as a result of any matters
giving rise to a claim for indemnification hereunder.
(j) The provisions of this Article 9 shall constitute the sole
remedy of all of the parties hereto for any misrepresentation or breach of
representation or warranty contained in this Agreement, any Disclosure Schedule,
or any certificate, instrument, agreement or other writing delivered by or on
behalf of any such party pursuant to this Agreement or in connection with the
transactions contemplated herein
ARTICLE 10.
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing by:
(a) the mutual consent of the Buyer and the holders of a
majority in interest of the common shares of the Company;
(b) the Buyer or the holders of a majority in interest of the
common shares of the Company if the Closing has not occurred by the close of
business on the date which is 30 calendar days following the date of this
Agreement, so long as the failure to consummate the transaction on or before
such date did not result from a breach of this Agreement by the party seeking
termination of this Agreement;
(c) at any time before the Closing, by any Seller or the
Buyer, (A) in the event of a material breach of this Agreement hereof by any
non-terminating party if such non-terminating party fails to cure such breach
within five Business Days following notification by any one or more of the
terminating parties, or (B) upon notification to the non-terminating parties by
the terminating party that the satisfaction of any condition to the terminating
party's obligations under this Agreement has become impossible or impracticable
with the use of best efforts unless the failure of such condition to be
satisfied is caused by a breach of this Agreement by the terminating party or
the non-terminating parties waive such condition within five Business Days of
receipt of such notification (and, for purposes of (ii) and (iii) only, a breach
or material breach by any Seller shall constitute a breach or material breach,
as the case may be, by all of the Sellers); and
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if such termination is required pursuant to any final and nonappealable judgment
or order entered in any judicial or administrative proceeding initiated by an
Authority.
10.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of termination
of this Agreement pursuant to Section 10.1, written notice of such termination
shall promptly be given by the terminating party to the other parties, and this
Agreement shall upon that notice terminate and become void and have no effect,
and the transactions contemplated by this The parties shall abandon agreement
without further action, except that the provisions of Section 11.5 shall survive
the termination of this Agreement; provided, however, that such termination
shall not relieve any party of any liability for any breach by it of this
Agreement.
ARTICLE 11.
MISCELLANEOUS
11.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall be considered one and the same agreement. The Agreement and
signatures on this Agreement, may be transmitted by facsimile, and such shall
deem such a transmission a delivery of this Agreement signing party.
11.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to a contract
executed and performed in such state without reference to the choice of law
principles of such state.
11.3 NO THIRD PARTY BENEFICIARIES. Except as provided in Section 6.10
above, nothing in this Agreement is intended, nor shall it be construed, to
confer any rights or benefits upon any Person that is not a party to this
Agreement, and no other Person not a party to this Agreement shall have any
rights or remedies under this Agreement.
11.4 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter of this Agreement, and
this Agreement supersedes all prior drafts of such agreement, and all prior and
contemporaneous agreements, representations, negotiations, discussions,
correspondence, communications, term sheets and understandings of the parties,
except for the Confidentiality Agreement, which agreement is ratified and
remains in full force and effect. There are no agreements, understandings,
representations and warranties between the parties other than those set forth or
referred to in this Agreement.
11.5 EXPENSES. Except as set forth in this Agreement, whether the Share
Purchase is or is not consummated, all costs and expenses, including but not
limited to fees and expenses of attorneys, advisers, agents, and accountants,
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such costs and expenses,
whether such costs and expenses were incurred prior to or are incurred after the
date hereof, and in particular, all such costs and expenses incurred by or on
behalf of the Sellers shall be borne by the Sellers and not charged to the
Company. Notwithstanding the foregoing, the audit contemplated by Section 2.2(b)
shall be at the Buyer's sole expense.
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11.6 NOTICES. All notices under this Agreement shall be sufficiently
given for all purposes under this Agreement if in writing (a) when delivered
personally; (b) in the case of domestic deliveries within the United States,
three Business Days after deposited for first class mailing by the United States
Postal Service; (c) in the case of domestic deliveries within the United States,
one day after deposited for delivery by a nationally recognized overnight
delivery service; (d) in the case of foreign deliveries, two days after
deposited for delivery by a reputable foreign or overseas air courier; or (e)
when receipt is confirmed, by telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to the
Sellers shall be addressed to each Seller at the address noted in Exhibit A
hereto or at such other address and to the attention of such other Person as
each Seller may designate by written notice to the Buyer.
Notices to the Buyer shall be addressed to:
Lineo, Inc.
1505 Westlake Avenue North, Suite 400
Seattle, Washington 98109
Attention: Matthew Harris, Vice President & General Counsel
Telecopy: (206) 281-9882
or to such other address and to the attention of such other Person as the Buyer
may designate by written notice to the Sellers.
11.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. No party to this Agreement shall have the
right to assign its rights or interests in or delegate its obligations under
this Agreement without the express prior written consent of all other parties to
this Agreement; provided, however, the Buyer may assign its rights or interests
under this Agreement to any direct or indirect wholly owned subsidiary of the
Buyer, in which event the Buyer shall remain liable under this Agreement; and
provided further that any Seller may, by notice to the Buyer, direct that no
Seller may direct any or all of his share of the Closing Purchase Price be paid
to any other Person. No such assignment shall release the Buyer from its
obligations hereunder without the Sellers' written consent.
11.8 HEADINGS; DEFINITIONS. The Section and article headings contained
in this Agreement are inserted for convenience and reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or Articles contained in this Agreement mean Sections or Articles of
this Agreement unless otherwise stated. All capitalized terms defined in this
Agreement are equally applicable to both the singular and plural forms of such
terms. As the context requires, the singular form of any term includes the
plural and vice versa, and all pronouns used herein shall be deemed to refer to
the masculine, feminine or neuter gender.
11.9 AMENDMENTS AND WAIVERS. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Any
party to this Agreement may, only by an instrument in writing, waive compliance
by any other party to this Agreement with any term or provision of this
Agreement. The waiver by any parties to this Agreement of a breach of any term
or provision of this Agreement shall not be construed as a waiver of any
subsequent breach.
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11.10 ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled by binding arbitration in accordance with the
International Arbitration Rules of the American Arbitration Association ("Rules
of AAA"), and the procedures set forth below. In the event of any inconsistency
between the Rules of AAA and the procedures set forth below, the procedures set
forth below shall control. Judgment upon the award rendered by the arbitrator
may be enforced in any court having jurisdiction thereof.
(a) Location and Language. The location of the arbitration
shall be New York, New York, United States of America. The language of the
arbitration shall be English.
(b) Selection of Arbitrator. Unless the parties subsequently
agree otherwise, the arbitration shall be conducted by three arbitrators, one of
whom shall be appointed by the Majority Shareholders and/or the Sellers (or any
of them as are parties to the arbitration), one of whom shall be appointed by
the Buyer, and the third of whom, who shall be the presiding arbitrator, shall
be appointed by the two party-appointed arbitrators, or, in the event of their
failure to agree within a reasonable time on such third arbitrator, by the AAA.
If the AAA appoints the presiding arbitrator, it shall endeavor to appoint as
such presiding arbitrator an attorney having at least fifteen (15) year's
experience in corporate and securities issues and who has previously acted as an
arbitrator in an international arbitration. Notwithstanding the foregoing, in
the event that the Majority Shareholders or the Sellers cannot agree on the
appointment of their arbitrator, all of the arbitrators shall be appointed by
the AAA.
(c) Discovery. Unless the parties mutually agree in writing to
some additional and specific pre-hearing discovery, the only pre-hearing
discovery shall be (a) reasonably limited production of relevant, non-privileged
and specifically identifiable documents, and (b) the identification of witnesses
to be called at the hearing, which identification shall give the witness's name,
general qualifications and position, and a brief statement as to the general
scope of the testimony to be given by the witness. The arbitrators shall decide
any disputes over and shall control the process concerning these pre-hearing
discovery matters.
(d) Case Management. Prompt resolution of any dispute is
important to all of the parties; and the parties agree that the arbitration of
any dispute shall be conducted expeditiously. The arbitrators are instructed and
directed to assume case management initiative and control over the arbitration
process (including scheduling of exchanges of submissions, pre-hearing
discovery, and the conduct of the hearing), in order to complete the arbitration
as expeditiously as is reasonably practical for obtaining a just resolution of
the dispute.
(e) Remedies. In reaching their decision, the arbitrators
shall follow and apply applicable law and the provisions of this Agreement. The
decision of the arbitrators shall be binding upon the parties.
(f) Expenses. The expenses of the arbitration, including the
fees of the arbitrators and the AAA, any expert witness fees, and the attorneys'
fees incurred by the parties to the arbitration, may be awarded to the
prevailing party, in the discretion of the arbitrator, or may be apportioned
between the parties in any manner deemed appropriate by the arbitrator.
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(g) Confidentiality. Except as set forth below, the parties
shall keep confidential the fact of the arbitration, the dispute being
arbitrated, and the decision of the arbitrators. Notwithstanding the foregoing,
the parties may disclose information about the arbitration to persons who have a
need to know, such as directors, trustees, management employees, witnesses,
experts, investors, attorneys, lenders, insurers, and others who may be directly
affected. Additionally, each party may make such disclosures as are required by
applicable securities laws or other applicable law or regulation. Further, if a
party is expressly asked by a third party about the dispute or the arbitration,
the party may disclose and acknowledge in general and limited terms that there
is a dispute with the other party which is being (or has been) arbitrated. Once
the arbitration award has become final, if the arbitration award is not promptly
satisfied, then these confidentiality provisions shall no longer be applicable.
11.11 ATTORNEYS' FEES. In the event that any dispute between any two or
more of the parties to this Agreement should result in litigation or
arbitration, the prevailing party in such dispute (if any) shall be entitled to
recover from the other party all reasonable fees, costs and expenses of
enforcing any right of the prevailing party, including without limitation,
reasonable attorneys' fees, arbitration fees and other expenses, all of which
shall be deemed to have accrued upon the commencement of such action and shall
be paid whether or not such action is prosecuted to judgment or arbitration
award. Any judgment, order or arbitration award entered in such action shall
contain a specific provision providing for the recovery of attorney fees and
costs incurred in enforcing such judgment or award and an award of prejudgment
interest from the date of the breach at the maximum rate of interest allowed by
law. For the purposes of this Section 11.11: (a) attorney's fees shall include,
without limitation, fees incurred in the following: (1) post-judgment motions;
(2) contempt proceedings; (3) garnishment, levy, and debtor and third party
examinations; (4) discovery; and (5) bankruptcy litigation and (b) prevailing
party shall mean the party who is determined by the trier of fact in the
proceeding to have prevailed as to a substantial preponderance of the issues or
who prevails by dismissal, default or otherwise.
11.12 SEVERABILITY OF PROVISIONS; JEOPARDY.
(a) If any provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated by this Agreement is not affected in any manner adverse to any
party. Upon a determination that such an adverse affect will occur, the parties
to this Agreement shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated to this Agreement
are fulfilled to the greatest extent possible.
(b) Notwithstanding anything to the contrary contained in this
Agreement, in the event that it is determined prior to the Closing that the
performance by any party hereto of any term, covenant, condition or provision of
this Agreement should be in violation of any statute, ordinance, or be otherwise
deemed illegal, the parties shall immediately attempt to negotiate an amendment
to this Agreement to eliminate such jeopardy. In the event that such an
amendment is not practicable or cannot be agreed upon within fifteen (15) days
of notice of the need thereof, either party may, at its option, terminate this
Agreement forthwith.
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IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties effective as of the date first above written.
SELLERS:
- ----------------------- -----------------------
Hugo Delchni Laurent Rousseau
- ----------------------- -----------------------
Thomas Louis Eric Sauzedde
- ----------------------- -----------------------
Eric Pinon Yves Cognet
- ----------------------- -----------------------
Thierry Freyche Jean Joya
- ----------------------- -----------------------
Francis Maunoury Frederic Vasseur
- ----------------------- -----------------------
Thierry Letrilliart Gerard Delon
- ----------------------- -----------------------
Alain Bankier Francois Chateau
- ----------------------- -----------------------
Andre Taliercio Isabelle Pesquie-Geday
TECHNOCOM VENTURES TECHNOVENTURES
By: _______________________ By: _______________________
Name: Name:
Title: Title:
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
PAGE 1 OF 48
AXEL INV FUND NOTOIR SA
By: _______________________ By: _______________________
Name: Name:
Title: Title
SOFIGIP SA
By: _______________________
Name:
Title:
BUYER:
LINEO, INC., a Delaware corporation
By: _______________________________
Its: ______________________________
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
PAGE 2 OF 48