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EXHIBIT 10.5
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
August 31, 1999 by and between (i) The MacManus Group, Inc., a Delaware
corporation ("MacManus") and (ii) Novo MediaGroup, Inc., a California
corporation ("Novo").
RECITALS
A. MacManus is a leading provider of media advertising, marketing and
advisory services and seeks to build a close relationship with a leading
provider of Internet media services.
B. Novo is a leading provider of Internet development services and desires
to build a close relationship with a leading provider of media advertising,
marketing and advisory services.
C. In order to effectuate the above transactions, MacManus and Novo have
determined that it is in the best interests of their respective shareholders for
Novo to sell and issue to MacManus shares of its Series A Preferred Stock in
exchange for the consideration as provided herein.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE 1
PREFERRED ISSUANCE; CLOSING
1.1 THE CLOSING. Subject to the terms and conditions of this Agreement,
(a) the sale and issuance of the shares of Series A Preferred Stock (as defined
heroin), and (b) the other transactions contemplated hereby (the "Closing")
shall take place simultaneously with the execution of this Agreement by the
parties. The Closing shall take place at the offices of Britton Silberman &
Cervantez LLP, or such other place and time as the parties may otherwise agree,
and the date of the Closing is referred to herein as the "Closing Date."
1.2 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK
(a) On or prior to the Closing Date, Novo shall adopt and file with
the Secretary of State of the State of California the Amended and Restated
Articles of Incorporation in the form attached hereto as Exhibit A (the
"Restated Articles").
(b) Subject to the terms and conditions of this Agreement and the
terms and conditions of the Investors' Rights Agreement (as defined
below), MacManus agrees to purchase from Novo at the Closing and Novo
agrees to sell and issue to MacManus at the
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Closing an aggregate of Three Million Five Hundred Fifty One Thousand and
Thirty-three (3,551,033) shares of the Series A Preferred Stock of Novo at
a purchase price of $2.82 per share (the "Share Purchase Price"). The
shares of Series A Preferred Stock issued to MacManus pursuant to this
Agreement shall be hereinafter referred to as the, "Preferred Shares."
1.3 PROCEDURE AT THE CLOSING. At the Closing, the parties agree that the
following shall occur:
(a) MacManus shall have satisfied each of the applicable conditions
set forth in Article 5 and shall deliver to Novo (i) the Share Purchase
Price, by check payable to Novo or by wire transfer to Novo's bank
account, and (ii) the documents, certificates, opinions, consents, letters
and other items required by Article 5.
(b) Novo shall have satisfied each of the applicable conditions set
forth in Article 6 and shall deliver to MacManus (i) the certificates
representing all of the Preferred Shares, and (ii) the documents,
certificates, consents, letters and other items required by Article 6.
1.4 ANCILLARY AGREEMENTS. At the Closing, and as a condition to the
obligations of the parties contained herein, Novo, MacManus, Kelly Rodriques and
Anthony Westreich shall enter into an Investors' Rights Agreement substantially
in the form attached hereto as Exhibit C (the "Investors' Rights Agreement").
1.5 USE OF PROCEEDS OF SHARE PURCHASE PRICE. The parties agree that Novo
shall use the proceeds from the Share Purchase Price to provide for Novo's
expansion plans in the broad practice areas of interactive consulting and
engineering. MacManus acknowledges that Novo shall also be permitted to use a
portion of the proceeds from the Share Purchase Price to redeem shares of the
capital stock of Novo currently held by certain of Novo's shareholders having up
to an aggregate value of One Million Dollars ($1,000,000.00), as set forth in
Schedule 1.5 attached hereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Of NOVO
As a material inducement to MacManus to enter into this Agreement and to
consummate the transactions contemplated hereby, and except as set forth in
applicable schedules attached hereto which shall be deemed part of any of the
representations set forth in this Article 2, Novo makes the following
representations and warranties to MacManus:
2.1 CORPORATE STATUS. Novo is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and has
the requisite power and authority to own or lease its properties and to carry on
its business as presently conducted. There is no pending or threatened
proceeding for the dissolution, liquidation, insolvency or rehabilitation of
Novo or, except as could not reasonably be expected to have a Material Adverse
Effect on Novo.
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2.2 POWER AND AUTHORITY. Subject to the approval of the Board of Directors
of Novo as contemplated by Section 5.4, Novo has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Subject to the
approval of the Board of Directors of Novo as contemplated by Section 5.4, Novo
has taken all corporate action necessary to authorize its execution and delivery
of this Agreement and the other transactions contemplated hereby, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
Novo and constitutes its legal, valid and binding obligation enforceable against
Novo in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
2.4 CAPITALIZATION. (a) Schedule 2.4 sets forth, as of the date hereof,
with respect to Novo, (i) the number of authorized shares of each class of its
capital stock, and (ii) the number of issued and outstanding shares of each
class of its capital stock. All of the issued and outstanding shares of capital
stock (1) have been duly authorized and validly issued and are fully paid and
nonassessable, (2) were issued in compliance with all applicable state and
federal securities laws, and (3) were not issued in violation of any preemptive
rights or rights of first refusal or similar rights. No preemptive rights or
rights of first refusal or similar rights exist with respect to any shares of
capital stock of Novo and no such rights arise by virtue of or in connection
with the transactions contemplated hereby, there are no outstanding or
authorized rights, options, warrants, convertible securities, subscription
rights, conversion rights, exchange rights or other agreements or commitments of
any kind that could require Novo to issue or sell any shares of its capital
stock (or securities convertible into or exchangeable for shares of its capital
stock), there are no outstanding stock appreciation, phantom stock, profit
participation or other similar rights with respect to Novo, there are no
proxies, voting rights or other agreements or understandings with respect to the
voting or transfer of the capital stock of Novo and Novo is not obligated to
redeem or otherwise acquire any of its outstanding shares of capital stock.
(b) The shares of Series A Preferred Stock being issued by Novo pursuant to this
Agreement, and the underlying shares of Series C Common Stock, when issued,
exchanged and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, or when such Series A Preferred Stock shares are
subsequently converted into Series C Common Stock shares, will be duly and
validly issued, fully paid and nonassessable, and will be free of restrictions
on transfer other than restrictions on transfer under this Agreement or
agreements referred to in this Agreement or as applicable under Novo's charter
documents and under applicable state and federal securities laws.
2.5 NO VIOLATION. The execution and delivery of this Agreement by Novo,
the performance by Novo of its obligations hereunder and the consummation by
Novo of the transactions contemplated by this Agreement will not (a) contravene
any provision of the Articles of Incorporation or Bylaws of Novo, (b) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment, ruling or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon,
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or enforceable against Novo, (c) conflict with, result in any breach of, or
constitute a default (or an event which would, with the passage of time or the
giving of notice or both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any Contract which resulted
in earnings to Novo of over 10% of the revenues of Novo during the last 12
months measured from the date of the Closing and which is applicable to, binding
upon or enforceable against Novo, (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets of
Novo, (e) give to any individual or entity a right or claim against Novo, which
would have a Material Adverse Effect on Novo; or (f) require the consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, any court or tribunal or any other Person, except (i)
pursuant to the Securities Act, (ii) filings required under the securities or
blue sky laws of the various states, (iii) any filings or consents required to
be made or obtained by MacManus, and (iv) the consent of the Board of Directors
and Shareholders of Novo.
2.6 RECORDS OF NOVO. The copies of the Articles of Incorporation, Bylaws
and other documents and agreements of Novo which were provided to MacManus are
true, accurate, and complete and reflect all amendments made through the date of
this Agreement. The minute books and other records of corporate actions for Novo
made available to MacManus for review were correct and complete as of the date
of such review, no further entries have been made through the date of this
Agreement, such minute books and records contain the true signatures of the
persons purporting to have signed them, and such minute books and records
contain an accurate record of all actions of Novo and directors (and any
committees thereof) of Novo taken by written consent or at a meeting or
otherwise since incorporation or formation. All corporate actions by Novo have
been duly authorized or ratified. The stock ledger of Novo, as previously made
available to MacManus, contains accurate and complete records of all issuances,
transfers and cancellations of shares of the capital stock of Novo.
2.7 NO SUBSIDIARIES. Novo does not own, directly or indirectly, any
outstanding voting securities of or other interest in, or control, any other
corporation, partnership, limited liability company, joint venture or other
entity.
2.8 NOVO FINANCIAL STATEMENTS. Novo has delivered or made available to
MacManus the financial statements of Novo for the fiscal year ended December 31,
1998 and for the period ended June 30, 1999 (collectively, the "Novo Financial
Statements"). The balance sheet of Novo dated as of June 30, 1999 included in
the Novo Financial Statements is referred to herein as the "Current Novo Balance
Sheet." The Novo Financial Statements fairly present the financial position of
Novo at each of the balance sheet dates and have been prepared in accordance
with GAAP consistently applied throughout the periods indicated. There are no
material special or non-recurring items of income or expense during the periods
covered by the Novo Financial Statements, and the balance sheets included in the
Novo Financial Statements do not reflect any write-up or revaluation increasing
the book value of any assets. The Novo Financial Statements reflect all
adjustments necessary for a fair presentation of the financial information
contained therein.
2.9 CHANGES SINCE THE CURRENT NOVO BALANCE SHEET DATE. Since the date of
the Current Novo Balance Sheet included in the Novo Financial Statements, except
as expressly contemplated by the terms of this Agreement, except as expressly
contemplated by the terms of
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this Agreement, not Material Adverse Change has occurred with respect to Novo
except as set forth in Schedule 2.9 or the other Schedules to this Agreement.
2.10 LIABILITIES. Novo has no liabilities or obligations, whether accrued,
absolute, contingent or otherwise, except (a) to the extent reflected on Novo's
Current Balance Sheet and not heretofore paid or discharged, (b) liabilities
incurred in the ordinary course of business consistent with past practice since
the date of the Current Balance Sheet (none of which relates to (i) any breach
of contract or breach of warranty, or (ii) any tort, infringement or violation
of law, or which arose out of any action, suit, claim, governmental
investigation or arbitration proceeding), (c) liabilities incurred in the
ordinary course of business prior to the date of such entity's Current Balance
Sheet which, in accordance with GAAP consistently applied, were not required to
be recorded thereon and which, in the aggregate, are not material, and (d) as
set forth on Schedule 2.10 (the liabilities and obligations referenced in
clauses (a), (b), (c) and (d) above are referred to as the "Designated
Liabilities").
2.11 LITIGATION. Except as set forth in Schedule 2.11 there is no action,
suit or other legal or administrative proceeding or governmental investigation
pending, or, to the knowledge of Novo, threatened (i) against, by or affecting
any Novo or any properties or assets of the same (including the Novo Leased
Premises), or (ii) which questions the validity or enforceability of this
Agreement or the transactions contemplated hereby, and there is no basis for any
of the foregoing. There are no outstanding orders, decrees or stipulations
issued by any Governmental Authority in any proceeding to which Novo is or was a
party which have not been complied with in full or which continue to impose any
obligations on Novo.
2.12 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 2.12(a), or except where a
failure to comply would not have a Material Adverse Effect, Novo is and
has at all times been in full compliance with all Environmental Laws
governing the business, operations, properties and assets of Novo,
including, without limitation: (i) all requirements relating to the
Discharge and Handling of Hazardous Substances; (ii) all requirements
relating to notice, record keeping and reporting; (iii) all requirements
relating to obtaining and maintaining Licenses (as defined herein) for the
ownership by Novo of its properties and assets and the operation of its
business as presently conducted or the ownership and use by Novo of the
Novo Leased Premises (as defined in Section 2.13); and (iv) all applicable
writs, orders, judgments, injunctions, governmental communications,
decrees, informational requests or demands issued pursuant to, or arising
under, any Environmental Laws.
(b) Except as set forth in Schedule 2.12(b), there are no notices or
proceedings pending or, to the knowledge of Novo, threatened against or
involving Novo, its businesses, operations, properties or assets
(including the Novo Leased Premises) issued by any Governmental Authority
or third party with respect to any Environmental Laws or Licenses issued
to Novo thereunder in connection with, related to or arising out of the
ownership or use by any of Novo of its properties or assets (including the
Novo Leased Premises) or the operation of its businesses, which have not
been resolved to the satisfaction of the issuing Governmental Authority or
third party in a manner that would
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not impose any material obligation, burden or continuing liability on Novo
or MacManus in the event that the transactions contemplated by this
Agreement are consummated.
(c) For purposes of this Section, the following terms shall have the
meanings ascribed to them below:
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing, migrating or emitting, as any of such terms may
further be defined in any Environmental Law, into or through any medium
including, without limitation, ground water, surface water, land, soil or
air.
"Environmental Laws" means all federal state, regional or local
statutes, laws rules, regulations, codes, ordinances, orders, plans,
injunctions, decrees, rulings, licenses, and changes thereto, or judicial
or administrative interpretations thereof, or similar laws, whether
currently in existence, issued, or promulgated, any of which govern,
purport to govern or relate to pollution, protection of the environment,
public health and safety, air emissions, water discharges, waste disposal,
hazardous or toxic substances, solid or hazardous waste, occupational,
health and safety, as any of these terms are or may be defined in such
statutes, laws, rules, regulations, codes, orders, ordinances, plans,
injunctions, decrees, rulings, licenses, and changes thereto, or judicial
or administrative interpretations thereof.
"Hazardous Substances" shall be construed broadly to include any
toxic or hazardous substance, material or waste, and any other
contaminant, pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without limitation,
chemicals, compounds, by-products, pesticides, asbestos containing
materials, petroleum or petroleum products, and polychlorinated biphenyls,
the presence of which requires investigation or remediation under any
Environmental Laws or which are or become regulated, listed or controlled
by, under or pursuant to any Environmental Laws, or which has been or
shall be determined or interpreted at any time by any Governmental
Authority to be a hazardous or toxic substance regulated under any other
statute, law, regulation, order, code, rule, order, or decree.
"Licences" means all licenses, certificates, permits, approvals,
decrees and registrations.
2.13 REAL ESTATE.
(a) Novo owns no interest, directly or indirectly, in any real
property. Except as listed on Schedule 2.13(a), there has been no real
property (or any interest therein) owned by Novo within the past five (5)
years.
(b) Schedule 2.13(b) sets forth a list of all leases, licenses or
similar agreements to which Novo is a party, which are for the use or
occupancy of real estate owned by a third party ("Novo Leases") (copies of
which have previously been furnished to MacManus), in each case setting
forth: (i) the lessor and lessee thereof and the commencement date, term
and renewal rights under each of the Novo Leases; (ii) the street address
or legal description of each property covered thereby; and (iii) a brief
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description (including approximate size and function) of the principal
improvements and buildings thereon (the "Novo Leased Premises"). The Novo
Leases are in full force and effect and have not been amended except as
disclosed in Schedule 2.13(b), and no party thereto is in default or
breach under any such Lease. No event has occurred which, with the passage
of time or the giving of notice or both, would cause a breach of or
default under any of such Novo Leases. With respect to each such Novo
Leased Premises: (i) Novo has a valid leasehold interest in the Novo
Leased Premises, which leasehold interest is free and clear of any Liens,
covenants and easements or title defects of any nature whatsoever; (ii)
the portions of the buildings located on the Novo Leased Premises that are
used in the business of Novo are each in good repair and condition, normal
wear and tear excepted, and are in the aggregate sufficient to satisfy
Novo's current and reasonably anticipated normal business activities as
conducted thereat; (iii) each of the Novo Leased Premises is served by all
utilities in such quantity and quality as are sufficient to satisfy the
current normal business activities conducted at such parcel; and (iv) Novo
has not received notice of (A) any condemnation proceeding with respect to
any portion of the Novo Leased Premises or any access thereto and, to the
knowledge of Novo, no such proceeding is contemplated by any Governmental
Authority; or (B) any special assessment which may affect any of the Novo
Leased Premises and, to the knowledge of Novo, no such special assessment
is contemplated by any Governmental Authority.
2.14 BUSINESS; GOOD TITLE TO AND CONDITION OF ASSETS; INVENTORY.
(a) Novo owns and operates its business at the location(s) set forth on Schedule
2.13(a). Except as specifically disclosed in Schedule 2.14, Novo has good
and marketable title to, or other right or license to use, all of its owned
Assets free and clear of any Liens. For purposes of this Agreement, the term
"Assets" means all of the properties and assets of any nature owned or used
by the party to which such term is applied.
(b) The Fixed Assets currently in use or necessary for the business and
operations of Novo, are in good operating condition, normal wear and tear
excepted. For purposes of this Agreement, the term "Fixed Assets" means all
computers, machinery, equipment, supplies, leasehold improvements, furniture
and fixtures, owned, used by or located on the Premises of Novo, with
respect to Novo, set forth on the Current Balance Sheet or acquired by Novo
since the date of the Current Balance Sheet.
2.15 COMPLIANCE WITH LAWS. Except as set forth on Schedule 2.15, Novo and
its Affiliates have been in compliance with all laws, regulations and orders
applicable to Novo, its business and operations (as conducted by it now and in
the past), the Assets, the Novo Leased Premises and any other properties and
assets owned or used by it now or in the past. No Novo has been cited, fined or
otherwise notified of any asserted past or present failure to comply with any
laws, regulations or orders and no proceeding with respect to any such violation
is pending or, to the knowledge of Novo, threatened relating to or in any way
affecting Novo. Novo is not subject to any decree or injunction to which it is a
party which restricts the continued operation of any business or the expansion
thereof to other geographical areas, customers and suppliers or lines of
business. Neither Novo, nor any of its employees or agents, has made any payment
of funds in connection with Novo's business which is prohibited by law, and no
funds have been set
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aside to be used in connection with its business for any payment prohibited by
law. Novo is and at all times has been in full compliance with the terms and
provisions of the Immigration Reform and Control Act of 1986, as amended (the
"Immigration Act"), except where failure to comply would not be material. With
respect to each Employee (as defined in 8 C.F.R. 274a.l(f)) of Novo for whom
compliance with the Immigration Act is required, Novo has on file a true,
accurate and complete copy of (i) each Employee's Form 1-9 (Employment
Eligibility Verification Form) and (ii) all other records, documents or other
papers prepared, procured and/or retained pursuant to the Immigration Act. Novo
has not been cited, fined, served with a Notice of Intent to Fine or with a
Cease and Desist Order, nor has any action or administrative proceeding been
initiated or, to the knowledge of Novo, threatened against Novo, by the
Immigration and Naturalization Service by reason of any actual or alleged
failure to comply with the Immigration Act.
2.16 LABOR AND EMPLOYMENT MATTERS. Novo is not a party to or bound by any
collective bargaining agreement or any other agreement with a labor union, and
there has been no labor union prior to the date hereof organizing any employees
of Novo into one or more collective bargaining units. There is not now, and
there has not been prior to the date hereof, any actual or, to the knowledge of
Novo, threatened labor dispute, strike or work stoppage which affects or which
may affect the business of Novo, or which may interfere with its continued
operations. Neither Novo, nor any employee, agent or representative thereof, has
since the date of incorporation or formation of Novo, committed any material
unfair labor practice as defined in the National Labor Relations Act, as
amended, and there is no pending or, to the knowledge of Novo, threatened charge
or complaint against Novo by or with the National Labor Relations Board or any
representative thereof. There has been no strike, walkout or work stoppage
involving any of the employees of Novo prior to the date hereof. To the
knowledge of Novo, no executive or key employee or group of employees has any
plans to terminate his, her or their employment with Novo as a result of the
transactions contemplated hereby or otherwise. Novo has complied with applicable
laws, rules and regulations relating to employment, civil rights and equal
employment opportunities, including but not limited to, the Civil Rights Act of
1964, the Fair Labor Standards Act, and the Americans with Disabilities Act, all
as amended, except where failure to comply would not have a Material Adverse
Effect. Novo has furnished to MacManus a written schedule containing the salary
and other compensation and fringe benefits of the employees or other workers of
Novo to be employed at the Closing, which schedule is true and complete in all
material respects.
2.17 NOVO EMPLOYEE BENEFIT PLANS.
(a) Compliance with Law. With respect to each Novo Employee Benefit
Plan (i) each has been administered in all respects in compliance with its
terms and with all applicable laws, including, but not limited to, ERISA
and the Code; (ii) no actions, suits, claims or disputes are pending, or
to the knowledge of Novo, threatened; (iii) no audits, inquiries, reviews,
proceedings, claims, or demands are pending with any governmental or
regulatory agency; (iv) there are no facts which could give rise to any
liability in the event of any such investigation, claim, action, suit,
audit, review, or other proceeding; (v) all reports, returns and similar
documents required to be filed with any governmental agency or distributed
to any plan participant have been duly or timely filed or distributed; and
(vi) no "prohibited transaction" has occurred within the meaning of the
applicable
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provisions of ERISA or the Code. For purposes of this Section 2.17, "Novo
Employee Benefit Plans" is defined as each employee benefit plan or
arrangement of Novo, including but not limited to employee pension benefit
plans, as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), multiemployer plans, as
defined in Section 3(37) of ERISA, employee welfare benefit plans, as
defined in Section 3(l) of ERISA, deferred compensation plans, stock
option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans
and policies, whether or not described in Section 3(3) of ERISA, in which
employees (or their spouses or dependents) of Novo participate (true and
accurate copies of which, together with the most recent annual reports on
Form 5500 and summary plan descriptions with respect thereto, have been
furnished to MacManus).
(b) Compliance with Law. With respect to each Employee Benefit Plan
(i) each has been administered in all material respects in compliance with
its terms and with all applicable laws, including, but not limited to,
ERISA and the Code; (ii) no actions, suits, claims or disputes are
pending, or to the knowledge of MacManus, threatened; (iii) no audits,
inquiries, reviews, proceedings, claims, or demands are pending with any
governmental or regulatory agency; (iv) to the knowledge of Novo there are
no facts which could give rise to any liability in the event of any such
investigation, claim, action, suit, audit, review, or other proceeding;
(v) all reports, returns and similar documents required to be filed with
any governmental agency or distributed to any plan participant have been
duly or timely filed or distributed; and (vi) no "prohibited
transaction" has occurred within the meaning of the applicable provisions
of ERISA or the Code.
(c) Qualified Plans. Novo is not and has not been obligated with
respect to any Novo Employee Benefit Plan intended to qualify under Code
Section 401(a) or 403(a).
(d) Multiemployer Plans. Novo is not and has not been obligated with
respect to any multiemployer plan as described in Section 4001(a)(3) of
ERISA.
(e) Welfare Plans. (i) Novo is not obligated under any employee
welfare benefit plan as described in Section 3(1) of ERISA ("Welfare
Plan") to provide medical or death benefits with respect to any employee
or former employee of Novo or its predecessors after termination of
employment, other than pursuant to Section 4980B of the Code; (ii) Novo
has complied with the notice and continuation coverage requirements of
Section 4980B of the Code and the regulations thereunder with respect to
each Welfare Plan that is, or was during any taxable year for which the
statute of limitations on the assessment of federal income taxes remains
open, by consent or otherwise, a group health plan within the meaning of
Section 5000(b)(1) of the Code; and (iii) there are no reserves, assets,
surplus or prepaid premiums under any Welfare Plan which is a Novo
Employee Benefit Plan. The consummation of the transactions contemplated
by this Agreement will not entitle any individual to severance pay, and,
will not accelerate the time of payment or vesting, or increase the amount
of compensation due to any individual.
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(f) Controlled Group Liability. Neither Novo nor any entity that
would be aggregated with Novo under Code Section 414(b), (c), (m) or (o):
(i) has ever terminated or withdrawn from an employee benefit plan under
circumstances resulting (or expected to result) in liability to the
Pension Benefit Guaranty Corporation ("PBGC"), the fund by which the
employee benefit plan is funded, or any employee or beneficiary for whose
benefit the plan is or was maintained (other than routine claims for
benefits); (ii) has any assets subject to (or expected to be subject to) a
lien for unpaid contributions to any employee benefit plan; (iii) has
failed to pay premiums to the PBGC when due (iv) is subject to (or
expected to be subject) an excise tax under Code Section 4971; (v) has
engaged in any transaction which would give rise to liability under
Section 4069 or Section 4212(c) of ERISA; or (vi) has violated Code
Section 4980B or Section 601 through 608 of ERISA.
(g) Other Liabilities. (i) None of the Novo Employee Benefit Plans
obligates Novo to pay separation, severance, termination or similar
benefits solely as a result of any transaction contemplated by this
Agreement [or solely as a result of a "change of control" (as such term is
defined in Section 280G of the Code)]; (ii) all required or discretionary
(in accordance with historical practices) payments, premiums,
contributions, reimbursements, or accruals for all periods ending prior to
or as of the Closing Date shall have been made or properly accrued on the
Current Novo Balance Sheet or will be properly accrued on the books and
records of Novo as of the Closing Date; and (iii) none of the Novo
Employee Benefit Plans has any unfunded liabilities which are not
reflected on the Current Novo Balance Sheet or the books and records of
Novo.
2.18 TAX MATTERS. Except as set forth in Schedule 2.17, Novo filed or
caused to be filed, within the times and within the manner prescribed by law,
all federal, state and local tax returns and tax reports which are required to
be filed by, or with respect to, Novo. Such returns and reports reflect
accurately all liability for all federal, state and local income, sales, payroll
and withholding taxes and all other material taxes of Novo, for the period
covered thereby, and all amounts shown on such returns and reports as due and
payable have been timely paid. None of the federal, state, local or foreign tax
returns of Novo have ever been audited by the Internal Revenue Service or any
governmental body or agency, domestic or foreign. All federal, state and local
income, profits, franchise, sales, use occupancy, excise, payroll, accumulated
earnings tax and other taxes and assessments (including interest and penalties)
payable by, or due from Novo, (whether in its own right or as transferee of the
assets of, or successor to, any entity) have been fully paid or adequately
disclosed and fully provided for in the books and financial statements of Novo.
To the knowledge of Novo, no examination of any return of Novo is currently in
progress and Novo has not received notice of any proposed audit or examination.
There are no outstanding agreements or waivers extending the statutory period of
limitations applicable to any tax return of Novo.
2.19 INSURANCE. Novo is covered by valid, outstanding enforceable policies
of insurance issued to it by reputable insurers covering its properties, assets
and business against risks of the nature normally insured against by similar
entities in the same or similar lines of business in coverage amounts typically
and reasonably carried by such entities (the "Novo Insurance Policies"). Such
Novo Insurance Policies are in full force and effect, and all premiums
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due thereon have been paid through the date of this Agreement and will be paid
through the Closing Date. Novo has complied with the provisions of such Novo
Insurance Policies applicable to it, and has provided MacManus copies of all
Novo Insurance Policies and all amendments and riders thereto. There is no
pending claim under any of the Novo Insurance Policies for an amount in excess
of $5,000.00 individually or $25,000.00 in the aggregate, including any claim
for loss or damage to the properties, assets or business of Novo (including the
Novo Leased Premises). Novo has not failed to give, in a timely manner, any
notice required under any of the Novo Insurance Policies to preserve its rights
thereunder.
2.20 RECEIVABLES. All of the Receivables are valid and legally binding,
represent bona fide transactions and arose in the ordinary course of business of
Novo. All of the Receivables are good and collectible receivables, and will be
collected in accordance with past practice and the terms of such receivables
(and in any event within six months following the Closing Date), without set off
or counterclaims, subject to the allowance for doubtful accounts, if any, set
forth on the Current Balance Sheet, as reasonably adjusted since the date of the
Current Balance Sheet in the ordinary course of business, consistent with GAAP.
For purposes of this Agreement, the term "Receivables" means all receivables of
Novo, including without limitation all contracts in transit and all trade
account receivables arising from the provision of services, notes receivable,
and insurance proceeds receivable.
2.21 LICENSES AND PERMITS. Except as set forth on Schedule 2.21 Novo
possesses all licenses and required governmental or official approvals, permits
or authorizations (collectively, the "Novo Permits") for its business and
operations, including with respect to the operations of the Novo Leased
Premises, except where the failure to so possess such license would not be
material. All such Novo Permits are valid and in full force and effect, Novo is
in compliance with the respective requirements thereof, and no proceeding is
pending or, to the knowledge of Novo, threatened to revoke or amend any of them.
None of such Novo Permits is or will be impaired or in any way affected by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
2.22 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS;
AFFILIATED TRANSACTIONS. The Assets and the Leased Premises constitute, in the
aggregate, all of the assets and properties necessary for the conduct of the
business of Novo in the manner in which and to the extent to which such business
is currently being conducted. Except as set forth on Schedule 2.22, Novo has no
direct or indirect interest in any customer, supplier or competitor of Novo or
in any person from whom or to whom Novo leases real or personal property. No
Principal and no officer or director in Novo, nor any person related by blood or
marriage to any such person, nor any entity in which any such person owns any
beneficial interest, is a party to any Contract or transaction with Blue Marble
or has any interest in any property used by Novo (all such ownership, Contracts,
transactions and interests, collectively "Affiliated Transactions"), except as
set forth on Schedule 2.22.
2.23 INTELLECTUAL PROPERTY.
(a) Novo owns or possesses sufficient legal rights to all patents,
trademarks, service marks, tradenames, copyrights, trade secrets,
licenses, information and proprietary rights and processes necessary for
its business without any conflict with, or
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infringement of, the rights of others. Novo has not received any
communications alleging that Novo has violated or, by conducting its
business, would violate any of the patents,, trademarks, service marks,
tradenames, copyrights, trade secrets or other proprietary rights or
processes of any other person or entity. Novo is not aware that any
officer, director or employee is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his or her best efforts to
promote the interest of Novo, or that would conflict with Novo's business
or prevent any such officer, director or employee from assigning
inventions to Novo. Neither the execution or delivery of this Agreement,
nor the carrying on of Novo's business by the employees of Novo, nor the
conduct of Novo's business as proposed, will, to Novo's knowledge,
conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now obligated. Novo does not
believe it is or will be necessary to use any inventions of any of its
employees (or persons it currently intends to hire) made prior to their
employment by Novo.
(b) No claims have been asserted against Novo, and to the knowledge
of Novo (actual knowledge in the case of common law trademarks and
tradenames and patents) there are no claims which are reasonably likely to
be asserted against Novo or which have been asserted against others by any
person challenging Novo's use or distribution of any trademarks,
tradenames, copyrights, works of authorship, trade secrets, software,
technology, know-how or processes utilized by Novo or challenging or
questioning the validity or effectiveness of any license or agreement
relating thereto. The use of any trademarks, tradenames, copyrights, works
of authorship, software, technology, know-how or processes by Novo in its
business does not infringe on the rights of, constitute misappropriation
of, or in any way involve unfair competition with respect to, any
proprietary information or intangible property right of any third person
or entity, including, without limitation, any patent, trade secret,
copyright, trademark or tradename; provided, however, that such
representation is made only to Novo's actual knowledge with respect to
common law trademarks and tradenames, technology, patent or similar
intangible property right where infringement is possible without wrongful
taking.
(c) To the best knowledge of Novo, all designs, drawings
specifications, source code, object code, documentation, flow charts and
diagrams incorporated in any of Novo's proprietary rights constitute
original creations of and were written, developed and created solely and
exclusively by employees of Novo without the assistance of any third party
or entity, were public domain or were created by, or with the assistance
of, third parties who assigned ownership of or licensed their rights to
Novo in valid and enforceable agreements. Novo has at all times used
commercially reasonable efforts to treat its trade secrets as confidential
and has not disclosed or otherwise dealt with such items in such a manner
as to cause the loss of such trade secrets by release into the public
domain.
(d) To the best knowledge of Novo, no employee of Novo is in
violation of any term of any employment contract, patent disclosure
agreement, confidentiality
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agreement or any other contract or agreement relating to the relationship
of any such employee with Novo or, to the knowledge of Novo, any other
party because of the nature of Novo's business.
2.24 CONTRACTS. (a) Novo has made available to MacManus true, correct and
complete copies of each Material Contract (defined below). The copy of each
Material Contract furnished to MacManus is a true and complete copy of the
document it purports to represent and reflects all amendments thereto made
through the date of this Agreement, such list as set forth in schedule 2.24.
Novo has not violated any of the terms or conditions of any Material Contract or
any term or condition which would permit termination or modification of any
Material Contract; all of the covenants to be performed pursuant to any Material
Contract by any other party thereto have been fully performed; there are no
claims for breach or indemnification or notice of default or termination under
any Material Contract; and each of the Material Contracts is enforceable in
accordance with its terms. No event has occurred which constitutes, or after
notice or the passage of time, or both, would constitute, a default by Novo
under any Material Contract, and no such event has occurred which constitutes or
would constitute a default by any other party. Novo is not subject to any
liability or payment resulting from renegotiation of amounts paid under any
Material Contract.
(c) As used in this Section 2.24, "Material Contracts" shall include,
without limitation, formal or informal, all written or oral (a) loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust, conditional sale
or title retention agreements, security agreements, equipment financing
obligations or guaranties, or other sources of contingent liability in respect
of any indebtedness or obligations of Novo to any other Person, or letters of
intent or commitment letters with respect to same (other than those which
individually provide for annual payments of less than $50,000); (b) contracts
obligating Novo to provide products or services valued at over $200,000; (c)
leases of the Novo Leased Premises to or from third parties and Novo; (d) leases
of personal property by Novo (other than those which individually provide for
annual payments of less than $20,000); (e) employment agreements, management
service agreements, consulting agreements, confidentiality agreements,
non-competition agreements, employee handbooks, policy statements and any other
agreements relating to any employee, officer or director of or partner in Novo
(except for routine NDAs and noncompete provisions applicable to standard
employment agreements and initial business development introductory meetings and
discussions); (f) licenses, assignments or transfers of trademarks, tradenames,
service marks, patents, copyrights, trade secrets or know-how, or other
agreements regarding proprietary rights or intellectual property with respect to
which Novo is a party; (g) any contract relating to pending capital
expenditures by Novo; (h) any contracts obligating Novo to make payments in
excess of $50,000 over the remaining terms of such contract, and (i) all other
material Contracts or understandings outside of the ordinary course of business
with respect to which Novo is a party or pursuant to which any of its assets is
bound, irrespective of subject matter and whether or not in writing, and not
otherwise disclosed on the Schedules.
(c) Except as set forth in Schedule 2.24, all of the representations set
forth in this Section 2.24 are true and correct as of the date hereof to the
best knowledge of Novo.
2.25 ACCURACY OF INFORMATION FURNISHED. No representation, statement or
information contained in this Agreement (including, without limitation, the
various Schedules attached
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hereto) or any agreement executed in connection herewith or in any certificate
delivered pursuant hereto or thereto or made or furnished to MacManus or its
representatives by Novo, contains or shall contain any untrue statement of a
fact or omits or shall omit any fact necessary to make the information contained
therein not misleading. Novo has provided MacManus with true, accurate and
complete copies of all documents listed or described in the various Schedules
attached hereto.
2.26 NO COMMISSIONS. No Novo has incurred any obligation for any finder's
or broker's or agent's fees or commissions or similar compensation in connection
with the transactions contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF MACMANUS
As a material inducement to Novo to enter into this Agreement and to
consummate the transactions contemplated hereby, MacManus makes the following
representations and warranties to Novo:
3.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. MacManus hereby confirms, that the
Preferred Shares to be acquired by MacManus will be acquired for investment for
MacManus' own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that MacManus has no present
intention of selling, granting any participation in, or otherwise distributing
the same. MacManus further represents that MacManus does not presently have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Preferred Shares.
3.2 DISCLOSURE OF INFORMATION. MacManus has had an opportunity to discuss
Novo's business, management, financial affairs and the terms and conditions of
the offering of the Preferred Shares with Novo's management and has had an
opportunity to review Novo's facilities. MacManus understands that such
discussions, as well as the other written information delivered by Novo to
MacManus, were intended to describe the aspects of Novo's business which it
believes to be material.
3.3 RESTRICTED SECURITIES. MacManus understands that the Preferred Shares
have not been, and will not be, registered under the Securities Act, by reason
of a specific exemption from the registration provisions of the Securities Act
which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of MacManus' representations as expressed herein.
MacManus understands that the shares of Preferred Shares are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, MacManus must hold the Preferred Shares indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. MacManus acknowledges that Novo has no
obligation to register or qualify the Preferred Shares for resale except as set
forth in the Registration Rights Agreement. MacManus further acknowledges that
if an exemption from
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registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale, the
holding period for the Preferred Shares, and on requirements relating to Novo
which are outside of MacManus' control, and which Novo is under no obligation
and may not be able to satisfy.
3.4 NO PUBLIC MARKET. MacManus understands that no public market now
exists for any of the securities issued by Novo, and that Novo has made no
assurances that a public market will ever exist for the Preferred Shares.
3.5 LEGENDS. MacManus understands that the Preferred Shares and any
securities issued in respect of or exchange for the Preferred Shares, may bear
one or all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION
OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED."
(b) Any legend set forth in the Investors' Rights Agreement.
(c) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the
certificate so legended.
3.6 REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. Any legend endorsed on a
certificate pursuant to subsection 3.5(a) and the stop transfer instructions
with respect to such legended Securities shall be removed, and Novo shall issue
a certificate without such legend to the holder of such Securities if such
Securities are registered under the Securities Act and a prospectus meeting the
requirements of Section 10 of the Securities Act is available or if such holder
satisfies the requirements of Rule 144.
3.7 ACCREDITED INVESTOR. MacManus is an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.
3.8 PERMITTED TRANSFERS. MacManus may transfer the Preferred Shares
without the need of a registration statement or opinion of counsel to the effect
that no registration statement is required if the transferee is an affiliate of
MacManus and the transferee agrees in writing to be bound by the terms of this
Agreement and the Investors' Rights Agreement to the same extent as if such
Affiliate were the original purchaser of the Preferred Shares hereunder,
provided that Novo shall receive written notice of such transfer within thirty
(30) days of its completion.
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ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 FURTHER ASSURANCES. Each party shall execute, and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and, the transactions contemplated hereby.
4.2 COOPERATION. Each of the parties agrees to cooperate with the other in
the preparation and filing of all forms, notifications, reports and information,
if any, required or reasonably deemed advisable pursuant to any law, rule or
regulation in connection with the transactions contemplated by this Agreement
and to use their respective best efforts to agree jointly on a method to
overcome any objections by any Governmental Authority to any such transactions.
4.3 OTHER ACTIONS. Novo shall use its reasonable best efforts to take, or
cause to be taken, all appropriate actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein, including,
without limitation, using its reasonable best efforts to obtain all licenses,
permits, consents, approvals, authorizations, qualifications and orders of any
Governmental Authority and parties to Contracts with Novo as are necessary for
the consummation of the transactions contemplated hereby. Novo shall make on a
prompt and timely basis all governmental or regulatory notifications and filings
required to be made by it for the consummation of the transactions contemplated
hereby. The parties also agree to use reasonable best efforts, consistent with a
mutually acceptable litigation strategy, to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby. The parties will coordinate their efforts to
pursue legal remedies as contemplated above in order to consummate the
transactions contemplated by this Agreement and to obtain appropriate relief.
4.4 NOTIFICATION OF CERTAIN MATTERS. Each of the parties to this Agreement
shall give prompt notice to the other parties of the occurrence or
non-occurrence of any event which would likely cause any representation or
warranty made by such party herein to be untrue or inaccurate or any covenant,
condition or agreement contained herein not to be complied with or satisfied
(provided, however, that any such disclosure shall not in any way be deemed to
amend, modify or in any way affect the representations, warranties and covenants
made by any party in or pursuant to this Agreement).
4.5 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement, the subject matter or terms hereof or any
confidential information or other proprietary knowledge concerning the business
or affairs of any other party which it may have acquired from such party in the
course of pursuing the transactions contemplated by this Agreement without the
prior
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consent of the other parties hereto; provided, that (i) any information that is
otherwise publicly available, without breach of this provision, or has been
obtained from a third party without a breach of such third party's duties, shall
not be deemed confidential information and (ii) that either party hereto shall
be able to disclose such information to its employees and agents and to such
other third parties as necessary as part of the operation of its business,
including disclosure to potential or existing investors, lenders or acquirors or
joint-venture candidates or as required by law or court order. No press release
or other public announcement related to this Agreement or the transactions
contemplated hereby shall be issued by either party or their respective
Affiliates without the prior written consent of the other party hereto.
ARTICLE 5
CONDITIONS TO THE OBLIGATIONS OF NOVO
The obligations of Novo to effect the sale of Series A Preferred Stock and
the other transactions contemplated hereby shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions any or all of which
may be waived in whole or in part by Novo:
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of MacManus in this Agreement
shall be true and correct in all material respects at and as of the Closing
Date.
5.2 INVESTORS' RIGHTS AGREEMENT. MacManus and each of Kelly Rodriques and
Anthony Westreich shall have executed and delivered the Investors' Rights
Agreement.
5.3 RESTATED CERTIFICATE. The Restated Articles shall have been filed with
the Secretary of State of California on or prior to the Closing Date, and shall
continue to be in full force and effect as of the Closing Date.
ARTICLE 6
CONDITIONS TO THE
OBLIGATIONS OF MACMANUS
The obligations of MacManus to purchase the Series A Preferred Stock and
effect the other transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, any or
all of which may be waived in whole or in part by MacManus.
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Novo contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time. Novo shall have performed and complied with all of its obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date. Novo shall each have delivered to MacManus a certificate, dated as
of the Closing Date, and signed by an executive officer, certifying that such
representations and warranties are
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true and correct in all material respects and that all such obligations have
been performed and complied with.
6.2 NO ORDER OR INJUNCTION. There shall not be issued and in effect by or
before any court or other governmental body an injunction or other similar court
or administrative order restraining or prohibiting the transactions contemplated
hereby.
6.3 INVESTORS' RIGHTS AGREEMENT. Novo and each of Kelly Rodriques and
Anthony Westreich shall have executed and delivered the Investors' Rights
Agreement.
6.5 OPINION OF COMPANY COUNSEL. MacManus shall have received from Britton
Silberman & Cervantez LLP, counsel for the Company, an opinion, dated as of the
Closing, in form and substance acceptable to MacManus.
6.6 RESTATED CERTIFICATE. Novo shall have filed the Restated Articles with
the Secretary of State of California on or prior to the Closing Date, which
shall continue to be in full force and effect as of the Closing Date.
6.7 NOVO BOARD OF DIRECTORS. The Board of Directors of the Company at the
Closing shall be as follows: Craig Brown and Roy Bostock as the two
representatives of the Series A Preferred Stock holders; Kelly Anthony Rodriques
and Harry Walter Schlough, as the representatives of the Series A Common Stock.
There shall be one vacancy on the Board of Directors to be filled by the Board
of Directors subsequent to the Closing.
ARTICLE 7
DEFINITIONS
7.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule l2b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on
the date hereof
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment
agreement, license, instrument purchase and sales order, commitment,
undertaking, obligation, whether written or oral, express or implied.
"Environmental Costs" shall mean any and all expenses, costs,
damages, liabilities or obligations, including, without limitation, fees
and expenses of counsel, (whether arising before, on or after the Closing
Date) incurred by, under or pursuant to any Environmental Laws or related
to the Discharge, Handling, presence or clean up of Hazardous Substances
arising as a result of events occurring or facts or circumstances
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arising or existing on or prior to the Closing Date (whether or not in the
ordinary course of business and whether or not reflected on Schedule
3.13(a) or (b)).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in effect in
the United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any conditional
sale or other title retention agreement any lease in the nature thereof,
and the filing of or agreement to give any financing statement under the
Uniform Commercial Code or comparable law or any jurisdiction in
connection with such mortgage, pledge, security interest, encumbrance,
lien or charge).
"Litigation Costs" shall mean any and all expenses, costs, damages,
liabilities, or obligations, including, without limitation, fees and
expenses of counsel, (whether arising before, on or after the Closing
Date) incurred in connection with any action, suit, or other legal or
administrative proceeding or governmental investigation arising as a
result of events occurring or facts or circumstances arising or existing
on or prior to the Closing Date (whether or not in the ordinary course of
business and whether or not set forth on Schedule 3.12).
"Material Adverse Change (or Effect)" means a change (or effect), in
the financial condition, properties, assets, liabilities, rights,
obligations, operations, business or prospects which change (or effect),
in the aggregate, is materially adverse to such condition, properties,
assets, liabilities, rights, obligations, operations, business or
prospects.
"Novo Transaction Fees" means all legal, accounting, tax, consulting
and financial advisory and other fees and expenses (including any filing
fees in connection with filings by Novo) incurred, paid, or payable by
Novo in connection with the transactions contemplated hereby.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
"Principal Transaction Fees" means all legal, accounting, tax,
consulting and financial advisory and other fees and expenses (including
any transfer taxes, fees and
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expenses incurred by any of MacManus in connection with any of the
transactions contemplated hereby or the performance by any of the
foregoing of any of the covenants set forth herein and all prepayment fees
or penalties incurred by MacManus arising from or due to the transactions
contemplated hereby) incurred by MacManus in connection with the
transactions contemplated hereby.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Tax.
"Taxes" means all taxes, fees or other assessments, including, but
not limited to, income, excise, property, transfer, sales, use, franchise,
intangible, payroll, withholding, social security and unemployment taxes
imposed by any federal, state, local or foreign government agency, and any
interest or penalties related thereto.
7.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise
requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods,
where applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the
neuter and feminine, where the context so permits.
ARTICLE 8
[INTENTIONALLY DELETED]
ARTICLE 9
GENERAL PROVISIONS
9.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified or registered mail (first class postage pre-paid),
guaranteed overnight delivery or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class postage
prepaid) or guaranteed overnight delivery, to the following addresses and
telecopy numbers (or to
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such other addresses or telecopy numbers which any party shall designate in
writing to the other parties):
(a) IF TO NOVO TO:
Novo MediaGroup, Inc.
222 Sutter Street, 6th Floor
San Francisco, CA 94108
Attn: Kelly Rodriques
Telecopy: (415) 646-7001
with a copy to:
Britton Silberman & Cervantez LLP
461 Second Street, Suite 332
San Francisco, CA 94107
Attn: Thomas J. Cervantez, Esq.
Telecopy: (415) 538-9000
(b) IF TO MACMANUS TO:
The MacManus Group
1675 Broadway
New York, NY 10019
Attn: Craig Brown
Telecopy: (212)-468-3085
with a copy to:
Davis & Gilbert
1740 Broadway
New York, NY 10019
Attn: Lewis A. Rubin
Telecopy: (212)-468-4888
9.2 ENTIRE AGREEMENT. This Agreement (including the Schedules attached
hereto) and other documents delivered at the Closing pursuant hereto, contain
the entire understanding of the parties in respect of its subject matters and
supersedes all prior agreements and understanding (oral or written) between or
among the parties with respect to such subject matter. The Schedules constitute
a part hereof as though set forth in full above.
9.3 EXPENSES. MacManus shall pay the Principal Transaction Fees. Novo
shall pay the Novo Transaction Fees.
9.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled, or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power
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or privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision,
nor shall any waiver be implied from any course of dealing between the parties.
No extension of time for performance of any obligations of other acts hereunder
or under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts.
9.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned or delegated by the any party hereunder without
the prior written consent of the other party. MacManus shall have the right to
assign this Agreement to any Affiliate, provided that MacManus continues to be
secondarily liable for the performance of its obligations hereunder.
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
9.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever, the words "include," "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
9.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the state of
California applicable to contracts executed and to be wholly performed with such
state.
9.9 JURISDICTION.
(a) The parties to this Agreement agree that any suit, action or
proceeding arising out of, or with respect to, this Agreement or any
judgment entered by any court in respect thereof shall be brought in the
courts of San Francisco, California or New York, New York or in the U.S.
District Court for the Northern District of California or the Southern
District of New York, as the commencing party may elect, and all parties
hereby accept the exclusive jurisdiction of those courts for the purpose
of any suit, action or proceeding.
(b) In addition, each of the parties hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any judgment entered by
any court in respect thereof brought in San Francisco County, California
or New York County, New York or the U.S. District Court for the Northern
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District of California or the Southern District of New York, as selected
by the commencing party, and hereby further irrevocably waives any claim
that any suit, action or proceedings brought in San Francisco County,
California or New York County, New York or in such District Courts has
been brought in an inconvenient forum.
9.10 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents and
warrants to all other parties hereto that (a) before executing this Agreement,
said party has fully informed itself of the terms, contents, conditions, and
effects of this Agreement; (b) said party has relied solely and completely upon
its own judgment in executing this Agreement; (c) said party has had the
opportunity to seek and has obtained the advise of counsel before executing this
Agreement; (d) said party has acted voluntarily and of its own free will in
executing this Agreement; (e) said party is not acting under duress, whether
economic or physical, in executing this Agreement; and (f) this Agreement is the
result of arm's length negotiations conducted by and among the parties and their
respective counsel. The foregoing shall not in any way be deemed to amend,
modify or in any way affect the representations, warranties and covenants made
by any party in or pursuant to this Agreement.
The parties hereto have caused this Agreement to be duty executed and
delivered as of the day and year first above written.
COMPANY: INVESTOR:
NOVO MEDIAGROUP, INC. THE MACMANUS GROUP, INC.
By: /s/ KELLY RODRIQUES By: /s/ DAVID WINCLECHTER
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Kelly Rodriques, CEO Name: DAVID WINCLECHTER
--------------------------------
Address: Title: VP/SECRETARY
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Address:
Facsimile:
Facsimile:
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