UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 27, 2002
Commission File Number 001-15977
Tiger Telematics, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-4051167
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification Number)
6001 Powerline Road, Ft. Lauderdale, FL 33309
(Address of principal executive offices) (Zip Code)
(954) 351-9833
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 25, 2002, pursuant to an Asset Purchase Agreement dated June 13, 2002
between the Registrant and Comworxx, Inc., a US mobile telematics solutions
provider, the Registrant purchased all of the assets of Comworxx, Inc. for the
issuance of $4,263,266 million of Tiger Telematics stock and the assumption of
certain liabilities.
Comworxx, based in Sarasota FL, is an end-to-end telematics solution provider to
the consumer automotive aftermarket. Its Port-IT(TM) product combines global
positioning, mobile telecommunications, voice-recognition and web-based
information into one integrated system and has attracted preliminary expressions
of interest from several major United States retailers.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. It is impracticable to
provide the financial statements relative to the acquired business
described in Item 2 at the time this report on Form 8-K is filed. The
Registrant intends to file the required financial statements as soon
as possible, but no later than 60 days from the date of this filing.
(b) PRO FORMA FINANCIAL INFORMATION. It is impracticable to provide the
pro forma financial information relative to the acquired business
described in Item 2 at the time this report on Form 8-K is filed. The
Registrant intends to file the require pro forma financial information
as soon as practicable, but no later than 60 days from the date of
this filing.
(c) Exhibits.
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession.
The Asset Purchase Agreement among Tiger Telematics, Inc., Comworxx,
Inc. and the Stockholders of Comworxx, Inc. dated June 13, 2002 is
attached hereto as Exhibit 2.
(99) Other
The Press Release dated June 28, 2002 is attached hereto as Exhibit
99.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TIGER TELEMATICS, INC.
/S/ Chief Executive Officer and Director June 27, 2002
Alvin J. Nassar
/S/ Executive Vice President & Chief June 27, 2002
Michael Carrender Financial Officer (Principal Financial
and Accounting Officer)
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(2)
ASSET PURCHASE AGREEMENT
By and Among
TIGER TELEMATICS, INC.,
TT ACQUISITION CORP.,
COMWORXX, INC.,
And
CERTAIN STOCKHOLDERS OF COMWORXX, INC.
Dated June 11, 2002
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TABLE OF CONTENTS
ARTICLE I PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES............................1
1.1 Sale and Purchase of the Assets.............................................1
1.2 Excluded Assets.............................................................2
1.3 Assumed Liabilities.........................................................2
1.4 Retained Liabilities........................................................2
ARTICLE II PURCHASE PRICE; CLOSING.....................................................2
2.1 Purchase Price..............................................................2
2.2 Tax-Free Reorganization.....................................................3
2.3 Closing Time and Place......................................................3
2.4 Transfer of Title to Acquired Assets; Assumption of Liabilities.............3
2.5 Employees...................................................................3
2.6 Proration of Expenses.......................................................3
2.7 Collection of Assets........................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TARGET....................................3
3.1 Organization................................................................4
3.2 Capitalization and Ownership................................................4
3.3 Subsidiaries................................................................4
3.4 Authorization and Enforceability............................................4
3.5 No Conflict; No Violation of Laws or Agreements.............................4
3.6 Financial Statements........................................................5
3.7 No Undisclosed Liabilities..................................................5
3.8 Brokerage...................................................................6
3.9 Title to Assets; Liens......................................................6
3.10 Trade Payables..............................................................6
3.11 Accounts Receivable.........................................................6
3.12 Contracts...................................................................6
3.13 Employee Benefit Plans......................................................7
3.14 Labor Relations; Employees..................................................7
3.15 Regulatory Actions or Investigations........................................7
3.16 Copies of Documents.........................................................7
3.17 Taxes.......................................................................7
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3.18 Inventory...................................................................8
3.19 Absence of Certain Changes..................................................8
3.20 Intellectual Property......................................................10
3.21 Trade Secrets and Customer Lists...........................................10
3.22 Litigation.................................................................11
3.23 Compliance with Laws.......................................................11
3.24 Product Warranty...........................................................11
3.25 Product Liability..........................................................12
3.26 Powers of Attorney.........................................................12
3.27 Authorizations.............................................................12
3.28 Transactions with Interested Persons.......................................12
3.29 Hazardous Materials; Environmental Compliance; Disclosure of Environmental
Information................................................................12
3.30 Backlog....................................................................13
3.31 Customers, Distributors and Independent Sales Representatives..............13
3.32 Disclosure of Material Information and Potentially Adverse Developments....13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS.............................14
4.1 Organization...............................................................14
4.2 Authorization and Enforceability...........................................14
4.3 No Conflict; No Violation of Laws or Agreements............................14
4.4 Consents...................................................................14
4.5 Brokerage..................................................................15
4.6 Investment Representations and Warranties..................................15
ARTICLE V REPRESENTATION AND WARRANTIES OF BUYER AND TIGER...........................16
5.1 Organization...............................................................16
5.2 Capitalization and Ownership...............................................16
5.3 Subsidiaries...............................................................17
5.4 Authorization and Enforceability...........................................17
5.5 No Conflict; No Violation of Laws or Agreements............................17
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(continued)
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5.6 Consents...................................................................17
5.7 Financial Statements.......................................................17
5.8 No Undisclosed Liabilities.................................................18
5.9 Litigation and Claims......................................................18
5.10 Brokers....................................................................18
5.11 Truth and Accuracy of Disclosures..........................................18
ARTICLE VI PRE-CLOSING COVENANTS OF TARGET AND STOCKHOLDERS...........................18
6.1 Conduct of Business........................................................18
6.2 Authorization from Others..................................................19
6.3 Breach of Representations and Warranties...................................19
6.4 Consummation of Agreement..................................................20
6.5 Confidentiality............................................................20
6.6 No Solicitation of Other Offers............................................20
6.7 Access, Information, and Documents.........................................20
ARTICLE VII PRE-CLOSING COVENANTS OF TIGER AND BUYER...................................20
7.1 Consummation of Agreement..................................................20
7.2 Confidentiality............................................................21
7.3 Authorization from Others..................................................21
7.4 Breach of Representations and Warranties...................................21
ARTICLE VIII CONDITIONS TO CLOSING......................................................21
8.1 Conditions Precedent to Obligations of Tiger and Buyer.....................21
8.2 Conditions Precedent to the Obligations of Target..........................22
ARTICLE IX TERMINATION................................................................23
9.1 Termination of Agreement...................................................23
9.2 Effect of Termination......................................................23
ARTICLE X CERTAIN ADDITIONAL COVENANTS................................................23
10.1 Costs, Expenses, and Transfer Taxes.........................................23
10.2 ComROAD Products............................................................23
10.3 Navtech Sublicense and Filters..............................................24
10.4 Employee Matters............................................................24
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(continued)
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10.5 Conversion of Bridge Loan...................................................24
ARTICLE XI INDEMNIFICATION.............................................................24
11.1 Materiality; Survival.......................................................24
11.2 Indemnification Rights of Tiger and Buyer...................................25
11.3 Indemnification Rights of Seller and Stockholders...........................26
11.4 Indemnification Payments and Dispute Resolution.............................27
ARTICLE XII MISCELLANEOUS...............................................................27
12.1 Notices.....................................................................27
12.2 Successors and Assigns......................................................28
12.3 Construction................................................................28
12.4 Governing Law...............................................................29
12.5 Headings....................................................................29
12.6 Counterparts................................................................29
12.7 Further Assurances..........................................................29
12.8 Course of Dealing...........................................................29
12.9 Severability................................................................29
12.10 Entire Agreement............................................................29
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), is made and entered into
this 11th day of June, 2002, by and among TIGER TELEMATICS, INC., a Delaware
corporation ("Tiger"), TT Acquisition Corp., a Delaware corporation ("Buyer"),
Comworxx, Inc. a Florida corporation ("Target"), and those stockholders of
Target whose names are set forth on the Schedule of Stockholders hereto (the
"Stockholders").
BACKGROUND:
Buyer is the wholly owned subsidiary of Tiger.
Target is engaged in the business of developing, manufacturing and marketing
automotive telematics products (the "Business"). Buyer desires to purchase and
Target desires to sell, transfer and deliver to Buyer, substantially all of the
assets and liabilities of Target in exchange for shares of capital stock of
Tiger on the terms and conditions of this Agreement. In addition, ComROAD AG,
one of the Stockholders ("ComROAD"), will enter into a Manufacturing License
Agreement, a Source Code Escrow Agreement and an Exclusivity Agreement with
Target (collectively, the "Related Agreements") immediately prior to the
consummation of the transactions contemplated hereby.
All capitalized (and as noted herein, uncapitalized) words or expressions used
in this Agreement (including the Schedules and Exhibits annexed hereto) not
otherwise defined herein have the meanings specified in Exhibit A hereto (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined). This Agreement and the agreements and instruments to be executed
and delivered at Closing are referred to collectively herein as the "Transaction
Agreements" and the transactions contemplated by the Transaction Agreements are
referred to collectively herein as the "Transactions". For the avoidance of
uncertainty, the parties acknowledge and agree that: (i) on or about the date of
this Agreement, the entity referred to herein as "Tiger" is changing its name
from "Floor Decor, Inc." to "Tiger Telematics, Inc."; (ii) on or about the date
of this Agreement, the entity referred to herein as "Buyer" is changing its name
from "Tiger Telematics, Inc." to "TT Acquisition Corp."; and (iii) regardless of
the actual names of the parties identified as "Tiger" and "Buyer" herein,
"Tiger" shall refer to the Delaware corporation the stock of which is quoted on
the OTC Bulletin Board and "Buyer" shall refer to the Delaware corporation all
of the stockof which is owned by Tiger.
In consideration of the foregoing, the mutual representations, warranties and
covenants set forth in this Agreement, and for the good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Sale and Purchase of the Assets. Upon the terms and subject to the
conditions contained in this Agreement, at the Closing, Target shall sell,
transfer, assign, convey and deliver to Buyer, and Buyer shall purchase, acquire
and accept, all
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of Target's right, title and interest in and to, all of the assets of
Target set forth on the balance sheet of Target at the Closing Date (the
"Closing Balance Sheet") and any and all contracts (the "Assumed Contracts") to
which Target is a party (collectively, the "Acquired Assets"). A true, correct
and complete listing of the assets of Target as of the date of this Agreement,
that would constitute all of the Acquired Assets if the Closing Date is the same
date as the date hereof, is set forth on Schedule 1.1 hereto.
1.2 Excluded Assets. The Acquired Assets shall exclude only those assets
that are not reflected on the Closing Balance Sheet or Schedule 1.1 or that do
not consist of Assumed Contracts (collectively, the "Excluded Assets"), a true,
correct and complete listing of which as of the date of this Agreement is set
forth on Schedule 1.2 hereto.
1.3 Assumed Liabilities. Buyer shall assume and discharge of all the
liabilities of Target set forth on the Closing Balance Sheet, including without
limitation, the Employment Expenses (as defined in Section 2.5), obligations
under the bridge loans provided or arranged by Tiger for Target, and liabilities
arising in respect of the Assumed Contracts (collectively, the "Assumed
Liabilities"). For the avoidance of any doubt, the Assumed Liabilities include,
without limitation, (i) amounts owed to ComROAD AG for product shipped to Target
prior to the date hereof, (ii) the obligation to accept and pay for products
ordered by Target from ComROAD prior to the date hereof but not yet shipped to
Target, and (iii) a $100,000 payment in respect of the Navtech Sublicense
Agreement, and all such liabilities enumerated in clauses (i), (ii) and (iii)
shall be payable in accordance with the terms and provisions of Sections 9.2 and
9.3 hereof. A true, correct and complete listing of all liabilities of Target to
be assumed by Buyer, that would constitute all of the Assumed Liabilities if the
Closing Date is the same date as the date hereof, and their amounts as of the
date of this Agreement is set forth on Schedule 1.3 hereto.
1.4 Retained Liabilities. Except for the Assumed Liabilities, Buyer shall
not assume, become liable for or obligated for any of Target's obligations,
liabilities or indebtedness whatsoever, whether known or unknown, direct,
contingent or otherwise, including any liability or obligation of Target to its
Affiliates, employees, customers, creditors or brokers, or to any governmental
authority, or in respect of the Excluded Assets (all such liabilities and
obligations of Target, other than the Assumed Liabilities, the "Retained
Liabilities").
ARTICLE II
PURCHASE PRICE; CLOSING
2.1 Purchase Price. In consideration for the Acquired Assets, Tiger shall
issue to Target $4,263,266 worth of newly issued shares of Tiger's Common Stock,
based on assumed purchase price of $1.00 per share; provided, however, that if
the price per share of Tiger Common Stock sold in the next equity financing in
which Tiger raises gross proceeds of at least $3,000,000 (the "Next Equity
Financing") is less than
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$1.00 per share, then the assumed purchase price shall be reduced to the
price per share in the Next Equity Financing, and provided further, however,
that if the Next Equity Financing is not consummated by September 1, 2002 the
assumed purchase price shall be reduced to $0.35. If the assumed purchase price
is reduced to less than $1.00 per share of Tiger Common Stock, Tiger shall issue
such additional shares of Tiger Common Stock to Target (or if Target has been
dissolved, to Target's former shareholders pro rata based upon their percentage
ownership immediately prior to the Closing) as necessary so that the total
number of shares of Tiger Common Stock issued pursuant to this Section 2.1 is
equal to the quotient, rounded to the nearest whole number, of $4,263,266,
divided by the final assumed purchase price.
2.2 Tax-Free Reorganization. The parties intend that the transactions
contemplated hereby shall constitute a tax-free reorganization under Section
368(a)(2)(C) of the Code.
2.3 Closing Time and Place. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of [name and
address of the firm], as soon as practicable following the date hereof on such
date as Target and Buyer shall agree. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
2.4 Transfer of Title to Acquired Assets; Assumption of Liabilities. The
sale, assignment, conveyance, transfer, and delivery by Target of the Acquired
Assets shall be made at the Closing by appropriate bills of sale, assignments,
endorsements, and such other appropriate instruments of transfer sufficient to
vest in Buyer as of the Closing Date title to the Acquired Assets that are
owned, and a valid and assignable leasehold interest in the Acquired Assets that
are leased by Target. Such instruments of assignment, conveyance, and transfer
shall include without limitation a bill of sale transferring title to tangible
assets and an assignment transferring title to intangible assets. Risk of loss
of the Acquired Assets shall pass from Target to Buyer at Closing. Buyer will
execute and deliver to Target at the Closing an Assumption Agreement with
respect to the Assumed Liabilities and an Assignment and Assumption of Lease
Agreement with respect to each of the real property leases to be assumed.
(a) Employees. Attached hereto as Schedule 10.4 is a list of all employees
of Target that are expected to be employed by Buyer post-closing (the "Retained
Employees"). Schedule 10.4sets forth the amount of all expenses, including
without limitation accrued vacation, unpaid expense reimbursement and accrued
salary (collectively, the "Employment Expenses") currently owed to the Retained
Employees. Target shall update Schedule 10.4 at Closing to provide definitive
lists of Retained Employees and Employment Expenses.
(b) Collection of Assets. Subsequent to the Closing, Buyer shall have the
right and authority to collect all receivables and other items transferred and
assigned to it by Target hereunder and to endorse with the name of Target any
checks received on account of such receivables or other items, and Target agrees
that it will promptly transfer or deliver to Buyer from time to time, any cash
or other property that
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Target may receive with respect to any claims, contracts, licenses, leases,
commitments, sales orders, purchase orders, receivables of any character
included in the Acquired Assets or any other items included in the Acquired
Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to Tiger and Buyer, as of the date hereof
and as of the Closing Date (except as such representations and warranties may be
amended, modified or limited by any of the matters disclosed on any portion of
the Disclosure Schedule (whether specifically identified in this Article III or
not) attached hereto as Exhibit B hereto (the "Disclosure Schedule"), as
follows:
3.1 Organization. Target is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Florida. Target's Charter,
as amended to date, certified by the Secretary of State of the State of Florida
and of Target's Bylaws, as amended to date, certified by Target's Secretary, are
complete and correct and no amendments thereto have been filed or are pending.
Target is and has been at all times in compliance with its Articles and Bylaws.
Target is duly qualified or licensed to conduct business as a foreign
corporation in and is in good standing in each jurisdiction in which the nature
of business as conducted by Target or the character and nature of any of the
Acquired Assets make such qualification necessary, all of which jurisdictions
are listed on the Disclosure Schedule.
3.2 Capitalization and Ownership. The authorized capital stock of Target
consists of 50,000,000 shares of common stock, no par value, of which 8,763,266
shares of common stock are issued and outstanding, and 50,000,000 shares of
preferred stock, no par value, none of which is outstanding. All of such issued
and outstanding shares of capital stock of Target are owned beneficially and of
record by the Stockholders, have been duly authorized, validly issued, are fully
paid and nonassessable, were not issued in violation of the terms of any
agreement or other understanding binding upon Target or any other Person and
were issued in compliance with all applicable federal and state securities or
"blue-sky" laws and regulations. Except as set forth on the Disclosure Schedule,
there are no outstanding securities, options, warrants, rights, agreements,
calls, subscription commitments, demands, or understandings of any character
whatsoever, fixed or contingent, that directly or indirectly (i) call for the
issuance, sale or other disposition of any capital stock of Target and there are
no securities convertible into or exchangeable for the stock of Target or (ii)
obligate Target to grant, offer or enter into any of the foregoing or (iii)
relate to the voting or control of any capital stock of Target. No person has
any right to require Target to register any securities of Target under the
Securities Act of 1933.
3.3 Subsidiaries. Target has no interests, direct or indirect, in any other
Person.
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3.4 Authorization and Enforceability. Target has all requisite corporate
power and authority to execute and deliver the Transaction Agreements and to
perform its obligations thereunder. Target's execution and delivery of, and the
performance of its obligations under, the Transaction Agreements have been duly
and validly authorized by all necessary corporate action. This Agreement has
been, and upon their execution and delivery by Target, the other Transaction
Agreements will be, duly executed and delivered on behalf of Target and
constitutes and will constitute the legal, valid, and binding obligations of
Target, enforceable against Target in accordance with their respective terms
subject to general equitable principles and except as the enforceability of the
Transaction Agreements may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application relating
to creditors' rights.
3.5 No Conflict; No Violation of Laws or Agreements. The execution and
delivery of this Agreement do not, the execution and delivery of the other
Transaction Agreements will not, and the consummation of the Transactions and
the compliance with the terms, conditions, and provisions of the Transaction
Agreements by Target will not:
(a) contravene any provision of Target's Charter or Bylaws;
(b) conflict with, constitute or result in any breach, default or violation
of (or an event which might, with or without the passage of time or the giving
of notice or both, constitute or result in a breach, default or violation of)
(i) any of the terms, conditions, or provisions of any indenture, mortgage,
loan, credit agreement, or any other instrument, contract, agreement or
commitment to which Target is a party, or by which any Target, any of Acquired
Assets may be bound or affected, (ii) any judgment or order of any Governmental
Authority, or (iii) any law, rule or regulation;
(c) result in the creation or imposition of any Lien upon any Acquired
Assets or give to others any interests or rights therein;
(d) result in the acceleration of any liability or obligation of Target (or
give others the right to cause such acceleration); or
(e) result in the reduction of, termination of or loss of any right (or
give others the right to cause such a reduction, termination or loss) under any
Assumed Contract, except for such Assumed Contracts with respect to which
consent is required to assign such Assumed Contracts to Buyer as set forth on
the Disclosure Schedule.
Other than the consents required to assign the Assumed Contracts as set forth on
the Disclosure Schedule, no consent or waiver by, approval of, or designation,
declaration or filing with, any Person, governmental authority or entity (or any
department, agency, or political subdivision thereof) is required in connection
with the execution, delivery and performance by Target of the Transaction
Agreements.
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3.6 Financial Statements.
(a) Set forth on the Disclosure Schedule is (i) a true and correct copy of
the unaudited consolidated balance sheet of Target as of December 31, 2001 (the
"Target Financial Statement Date") and the related consolidated statements of
income and cash flows for the fiscal year then ended (collectively, the "Target
Year-End Financial Statements"), and (ii) the unaudited consolidated balance
sheet of Target and related statement of income and cash flows as of, and for
the five month period ended May 31, 2002 (the "Target Interim Statements" and,
together with the Target Year-End Financial Statements, the "Target Financial
Statements").
(b) The Target Financial Statements: (i) were prepared from and are
consistent with the Books and Records of Target, which Books and Records have
been maintained in accordance with all legal and accounting requirements and
completely and accurately reflect all financial transactions of Target, (ii)
were prepared in accordance with GAAP consistently applied (except that notes to
the financial statements are not included and no year-end adjustments were made
with respect to the Target Interim Statements; and (iii) are correct and
complete and present fairly the financial condition of Target and the results of
its operations for the periods covered by, and as at the dates of, each of the
Target Financial Statements except that the Target Interim Statements omit
footnote disclosures and do not reflect year end adjustments which will not, in
the aggregate, be material. The income statements included in the Target
Financial Statements do not contain any material items of special or
non-recurring income or other income not earned in the ordinary course of
business except as expressly specified therein.
3.7 No Undisclosed Liabilities. Except as set forth on the Disclosure
Schedule, Target does not have any material liability or obligation of any
nature, whether due or to become due, absolute, contingent, or otherwise,
whether direct or indirect, except (a) to the extent reflected as a liability on
the Target Financial Statements, or (b) material liabilities incurred in the
ordinary course of business (and not in violation of this Agreement) since the
Target Financial Statement Date and fully reflected as liabilities on the
appropriate books of account (and which will be fully reflected as liabilities
on the Closing Balance Sheet). 3.8 Brokerage. Except as set forth on the
Disclosure Schedule, neither Target nor anyone acting on behalf of Target has
engaged, retained or incurred any liability to any broker, investment banker,
finder or agent, made any agreement or taken any other action which might cause
anyone to become entitled to a broker's fee or commission or agreed to pay any
brokerage fees, commissions, finder's fees or other fees with respect to or as a
result of the Transactions.
3.9 Title to Assets; Liens.
Target has good and marketable title to the Acquired Assets that are owned and a
valid and assignable (unless otherwise disclosed on the Disclosure Schedule)
leasehold interest in the Acquired Assets that are leased. The Acquired Assets
are free and clear
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of all mortgages, liens, security interests, pledges, charges and other
encumbrances, except for liens for current taxes not yet due and payable or
being contested in good faith by appropriate proceedings, and such imperfections
of title, easements and encumbrances as do not materially detract from the value
of the properties subject thereto or affected thereby or otherwise do not
materially interfere with their present or future use in a manner consistent
with present practices or materially impair the operation of the Business. The
Acquired Assets constitute all of the material assets used to conduct the
Business.
3.10 Trade Payables. All of the trade payables have been incurred in the
ordinary course of the Business and are set forth on the Disclosure Schedule,
which also includes a complete and accurate trade payable aging report.
3.11 Accounts Receivable. A complete and accurate listing of all accounts
receivable of Target included in the Acquired Assets as of the date hereof
accurately reflecting the aging thereof is set forth on the Disclosure Schedule.
All such accounts receivable are valid and enforceable claims, are subject to no
set off or counterclaim and are fully collectible in the ordinary course of
business, unless otherwise noted on the Disclosure Schedule.
3.12 Contracts. Except for contracts, commitments or agreements that (i)
are described in the Disclosure Schedulehereto or (ii) relate exclusively to the
Excluded Assets and are not to be assigned to or assumed by Buyer, Target is not
a party to or subject to any contract, commitment or agreement that is material
to the operation of the Business. Copies of all contracts, commitments, plans,
agreements or licenses described in the Disclosure Schedule have been provided
to Buyer or its counsel prior to the execution of this Agreement and are true,
correct and complete, and have not been subject to any amendment, extension or
other modification as of the date hereof. Each contract, commitment, plan
agreement and license described in the Disclosure Schedule is binding and
enforceable in accordance with its terms and is in full force and effect without
any default (other than payment defaults as noted in the Disclosure Schedule)
thereunder by Target or, to the knowledge of Target, by any other party thereto
(a "default" being defined for purposes hereof as an actual default or any set
of facts that would, upon receipt of notice or passage of time, constitute a
default), and except as otherwise set forth in the Disclosure Schedule such
contracts, commitments and agreements are assignable by Target.
3.13 Employee Benefit Plans. All employee benefit plans, as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, ("ERISA"), currently maintained by Target or to which Target has an
obligation to contribute (the "Employee Benefit Plans") are described in the
Disclosure Schedule. No event has occurred nor has there been any omission which
would result in violation of any laws, rulings or regulations applicable to any
Employee Benefit Plan. There are no claims pending or, to the knowledge of
Target, threatened with respect to any Employee Benefit Plan, other than claims
for benefits by employees, beneficiaries or dependents arising in the normal
course of the operation of any such plan. All contributions (including all
employer contributions and employee salary reduction contributions) that are due
have been paid to each such Employee Benefit Plan.
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All premiums or other payments for all periods ending on or before the
Closing Date have been paid with respect to each such Employee Benefit Plan.
3.14 Labor Relations; Employees. Prior to April 30, 2002, Target employed
approximately 18 employees and generally enjoyed a good employer-employee
relationship with such employees, many of whom were since laid-off by Target due
to Target's severe cash restraints and Target has no liability to any employee
whose employment was terminated since April 30, 2002, except as set forth on the
Disclosure Schedule. Except as set forth on the Disclosure Schedule, Target 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 to the date hereof or amounts required to be reimbursed to such employees.
Upon termination of the employment of Target's employees, neither Target nor
Buyer will by reason of anything done prior to the Closing be liable to any of
such employees for so-called "severance pay" or any other payments. Target has
not implemented any written or oral policy that would contravene or contradict
the "employment at will" policy. Target is in compliance with all applicable
laws and regulations respecting labor, employment, fair employment practices,
terms and conditions of employment, and wages and hours.
3.15 Regulatory Actions or Investigations. Target is not now a party to,
and has not been apprised or notified of, any regulatory investigation or
proceeding contemplated, pending or initiated by any federal or state agency or
governmental unit.
3.16 Copies of Documents. Target has made available for inspection and copying
by Buyer and its counsel true and correct copies of all documents referred to in
Disclosure Schedule.
3.17 Taxes.
(a) Definitions. As used herein, "IRC" means the Internal Revenue Code of
1986, as amended and interpreted by treasury regulations; "Tax Return" means any
return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof; and "Taxes" means any federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
(b) Returns and Payments. Target has filed all Tax Returns that it was
required to file. All such Tax Returns are correct and complete in all respects.
All Taxes owed by Target (whether or not shown on any Tax Return) have been
paid. Target currently is not the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where Target does not file Tax Returns that it is or may be subject
to taxation by that jurisdiction.
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There are no liens, encumbrances, or charges against any of the assets of
Target that arose in connection with any failure (or alleged failure) to pay any
Tax.
(c) Withholding Taxes. Target has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder, or other third party.
(d) Tax Liabilities. Neither Target, nor any of Target's officers,
directors, or employees responsible for Tax matters has knowledge of any facts
that would lead them to expect any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax liability of Target either claimed or raised by any authority
in writing or as to which any of target, Stockholder or any of Target's,
officers, directors, or employees responsible for Tax matters has knowledge
based upon personal contact with any agent of such authority. The Disclosure
Schedule lists all Tax Returns filed for taxable periods ended on or after
December 31, 2000, indicates those Tax Returns that have been audited and
indicates those Tax Returns that currently are the subject of an audit. Target
has delivered to the Buyer correct and complete copies of all Tax Returns,
examination reports, closing agreements and statements of deficiencies assessed
against or agreed to by Target since December 31, 2000. Target has disclosed on
its federal income Tax Returns all positions taken therein that could give rise
to a substantial understatement of federal income Tax within the meaning of IRC
Section 6662.
(e) Statute of Limitations. Target has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(f) Affiliated Group. Except as set forth on the Disclosure Schedule, Target has
not been a member of an affiliated group filing a consolidated federal income
Tax Return (other than a group the common parent of which was Target) and has
not incurred any liability for the Taxes of any other person or entity (other
than Target) under Treasury Regulations Section 1.1502-6 (or similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise. Target is not a party to any Tax allocation or sharing agreement.
3.18 Inventory. A complete and accurate listing of the Inventory and the
pricing thereof is set forth in the Disclosure Schedule
3.19 Absence of Certain Changes. Since the Target Financial Statement Date
and except as set forth on the Disclosure Schedule there has not been:
(a) any operation of the Business out of the ordinary course of business or
any change in the financial condition, properties, assets, liabilities,
business, prospects or operations of the Business that changes, by itself or in
conjunction with all other such changes, or has been or is likely to materially
adversely affect, the Business;
15
(b) any purchase, sale, license or other disposition, or any agreement or
other arrangement for the purchase, sale, license or other disposition, of any
part of the Target's properties or assets (including any patents, trademarks and
copyrights) included in the Acquired Assets, other than purchases for and sales
from inventory in the ordinary course of business;
(c) any payment or discharge of a lien or liability of Target that is not
shown on the Target Financial Statements or incurred in the ordinary course of
business thereafter;
(d) any obligation or liability incurred by Target to any bank, to any
officer, director, employee or stockholder of Target, or, other than in the
ordinary course of business, to any other individual; or any loans or advances
made by Target to any officer, director, employee or stockholder of Target,
except for normal compensation and expense allowances payable to officers or
employees;
(e) any capital expenditure by Target in excess of $10,000 for any one item
included in the Assets;
(f) any contracts relating to the Business, other than in the ordinary
course of business of the Business, entered into by Target that obligate Target
for more than $10,000 with respect to any one contract or more than $25,000 with
respect to the aggregate of all such contracts;
(g) any change in the accounting methods or practices followed by Target or
any change in depreciation or amortization policies or rates theretofore
adopted;
(h) any change in the manner in which inventory of Target used in the
Business is marketed or any increase in inventory levels in excess of historical
levels for comparable periods;
(i) any acceleration, termination, modification or cancellation of any
agreement, contract, lease or license relating to the Business (or series of
related agreements, contracts, leases or licenses) involving more than $10,000
to which Target is a party or by which it is bound;
(j) any issuance of any evidence of indebtedness or creation, incurrance,
assumption or guaranty of any indebtedness for borrowed money or capital lease
obligations involving in excess of $10,000 singly or $25,000 in the aggregate;
(k) any delay or postponement of payment of any accounts payable or other
liabilities relating to the Business outside the ordinary course of business;
(l) any change in the employment terms or employment-related benefits for
any independent sales representative or employee employed in the Business
outside the ordinary course of business; or
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(m) any agreement or understanding, whether in writing or otherwise, for
Target to take any of the actions specified in paragraphs (a) through (l) above.
3.20 Intellectual Property.
(a) All domestic and foreign patents, patent applications, copyrighted
works, copyright applications and registrations, trade secrets, inventions,
developments, customer lists, manufacturing and secret processes, hardware
designs, programming processes, software and other information, know-how, trade
names, trademarks and service marks, registered trademarks and trademark
applications, and registered service marks and service mark applications (if
any) that are used by, owned by or licensed to Target and that relate to the
Business (collectively, the "Intellectual Property") are listed on the
Disclosure Schedule, which indicates, with respect to each, the nature of
Target's interest therein and the expiration date thereof or the date on which
the Target's interest therein terminates. Registered copyrights, patents,
trademarks and service marks that are owned by or licensed to Target and that
relate to the Business have been duly registered in, filed in or issued by, as
the case may be, the United States Patent and Trademark Office, the United
States Register of Copyrights or the corresponding offices of other countries
identified on the Disclosure Schedule, and have been properly maintained and
renewed in accordance with all applicable provisions of law and administrative
regulations in the United States and each such country. The Intellectual
Property is the only intellectual property used in or otherwise necessary to
operate the Business as currently conducted or proposed to be conducted.
(b) Except as set forth on the Disclosure Schedule, use of the Intellectual
Property and any other intellectual property used by Target in the Business does
not require the consent of any other person and the same are freely transferable
(except as otherwise provided by law) and are owned exclusively by Target, free
and clear of any attachments, liens, encumbrances or adverse claims, and neither
its present or contemplated activities or products infringe, misappropriate,
dilute, impair or constitute unfair competition with respect to any patent,
tradename, trademark, copyright or other proprietary rights of others.
(c) No other person has an interest in or right or license to use, or the
right to license others under, the Intellectual Property, other than the rights
of licensors and their licensees in the licensed intellectual property
identified on the Disclosure Schedule. There are no claims or demands of any
other person pertaining thereto and no proceedings have been instituted, are
pending or threatened that challenge the rights of Target in respect thereof and
Target does not know of any fact that could be the basis of any such claim.
There is no infringement of any of the Intellectual Property by others nor is
any of the Intellectual Property subject to any outstanding order, decree,
judgment, stipulation, settlement, lien, charge, encumbrance or attachment. No
claim or demand has been made and no proceeding has been filed or is threatened
to be filed charging Target with infringement of any patent, trade name,
trademark, service mark or copyright and Target does not know of any facts which
could be the basis of any such claims. Except as set forth on the Disclosure
Schedule, there are no royalties,
17
honoraria, fees or other payments payable by Target to any person with
respect to any of the Intellectual Property.
3.21 Trade Secrets and Customer Lists. Except as set forth on the
Disclosure Schedule, Target owns or has the right to use, free and clear of any
claims or rights of others, all trade secrets, inventions, developments,
customer lists, manufacturing and secret processes, hardware designs,
programming processes, software and other information, and know-how (if any)
required for or used in the manufacture or marketing of all products formerly or
presently sold, manufactured, licensed, under development or produced by Target
in the Business, including products licensed from others. There are no payments
that are required to be made by Target for the use of such trade secrets,
inventions, developments, customer lists, copyrighted materials, manufacturing
and secret processes and know-how. Target is not using or in any way making any
unlawful or wrongful use of any confidential information, copyrighted materials,
know-how or trade secrets of any third party, including without limitation any
former employer of any present or past employee of Target or of any of Target's
predecessors. Target is not a party to any non-competition or confidentiality
agreement related to the Business with any party other than Buyer.
3.22 Litigation. Except as set forth on the Disclosure Schedule, there are
no suits, actions or administrative, arbitration or other proceedings or
governmental investigations pending or, to the knowledge of Target, threatened
against or relating to Target, the Acquired Assets or the Business. Target is
not otherwise engaged as a party in any suit, action or administrative,
arbitration or other proceeding. Target has not entered into or been subject to
any consent decree, compliance order, or administrative order with respect to
any property owned, operated, leased, or used by Target. Target has not received
any request for information, notice, demand letter, administrative inquiry, or
formal or informal complaint or claim with respect to any property owned,
operated, leased or used by Target or any facilities or operations thereon.
Target has not been named by the U.S. Environmental Protection Agency or a state
environmental agency as a potentially responsible party (or similar designation
under applicable state law) in connection with any site at which hazardous
substances, hazardous materials, toxic substances, oil, or petroleum products
have been released or are threatened to be released. There are no existing or,
to the knowledge of Target, threatened product liability, warranty or other
similar claims, or any facts upon which a claim of such nature could be based,
against Target for services or products that are defective or fail to meet any
service or product warranties. Target is not aware of any facts providing a
basis for any matter addressed in this Section 3.22 or has any reason to believe
that any such matters will be forthcoming.
3.23 Compliance with Laws. Target is not in violation of any laws, rules or
regulations that apply to the conduct of the Business or any facilities or
property owned, leased, operated or used by Target. There has never been any
citation, fine or penalty imposed, asserted or to the knowledge of Target,
threatened against Target under any foreign, federal, state, local or other law
or regulation relating to employment, immigration, occupational safety, zoning
or environmental matters and Target is not aware of any circumstances,
occurrences, or conditions likely to result in the imposition
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or assertion of such a citation, fine or penalty, nor has Target received
any notice to the effect that it is in violation of any such laws or
regulations.
3.24 Product Warranty. Each product manufactured, sold, leased, or
delivered by Target has conformed with all applicable contractual commitments
and all express and implied warranties. Target has no liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand which may give rise to any
liability) for replacement or repair thereof or other damages in connection
therewith, subject only to the reserve for product warranty claims set forth in
the Target Financial Statements as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of Target. No
product manufactured, sold, leased, or delivered by Target is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms and
conditions of sale or lease, all of which have been provided to Buyer by Target.
3.25 Product Liability. Target has no liability (and to the knowledge of
Target there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against it giving
rise to any liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by Target ("Product Liability").
3.26 Powers of Attorney. Target has not entered into any outstanding power
of attorney.
3.27 Authorizations. Target has obtained and is in compliance with all
Authorizations and no proceeding is pending or, to the knowledge of Target,
threatened in which any Person or governmental authority is seeking to revoke or
deny the renewal of any Authorization. All Authorizations relating to the
Business are listed on the Disclosure Schedule. Each Authorization is in full
force and effect without any default thereunder by Target (a "default" being
defined for purposes hereof as an actual default or any set of facts which
would, upon receipt of notice or passage of time, constitute a default), and can
be assigned by Target to Buyer hereunder such that it will remain in full force
and effect after giving effect to the Transactions. Target has not received any
notice of any claim or charge that Target has breached any Authorization.
3.28 Transactions with Interested Persons. Except as set forth on the
Disclosure Schedule, neither any Stockholder nor any officer, supervisory
employee or director of Target nor any of their respective spouses or children,
owns, directly or indirectly, on an individual or joint basis, any material
interest in, or serves as an officer or director or in another similar capacity
of, any customer, competitor or supplier of Target, or any organization that has
a material contract or arrangement with Target, other than (i) ComROAD AG with
respect to the Related Agreements and the Distributor and Sales Agreement and
(ii) Intelliworx, Inc., the former parent company of Target, with respect to
certain amounts owed by it to Target and such other items as described on the
Disclosure Schedule.
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3.29 Hazardous Materials; Environmental Compliance; Disclosure of
Environmental Information.
(a) Target has never generated, used, stored or handled any Hazardous
Materials (as hereinafter defined) nor has it treated, stored, disposed of,
spilled or released any Hazardous Materials at any site presently or formerly
owned, leased, operated or used by target or shipped any Hazardous Materials for
treatment, storage or disposal at any other site or facilities. To the knowledge
of Target, no other person has ever generated, used, handled, stored or disposed
of any Hazardous Materials at any site presently or formerly owned, leased,
operated or used by Target, nor has there been or is there threatened any
release of any Hazardous Materials on or at any such site. Target does not
presently own or lease, nor has it previously owned or leased, any site on which
underground storage tanks are or were located. No lien has been imposed by any
governmental agency on any property, facility, machinery, or equipment owned,
operated, leased or used by Target in connection with the presence of any
Hazardous Materials. For purposes of this Section 3.29, "Hazardous Materials"
shall mean and include ethylene oxide, any hazardous waste, hazardous material,
hazardous substance, petroleum product, oil, toxic substance or pollutant as
defined in or pursuant to the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, the Hazardous Materials Transportation Act or any other
foreign, federal, state or local law, regulation, ordinance, rule or by-law,
whether existing as of the date hereof, previously enforced or subsequently
enacted pertaining to environmental or health and safety matters.
(b) To the knowledge of Target, Target has no liability under nor has it
ever violated any Environmental Law (as hereinafter defined) with respect to any
property owned, operated, leased, or used by Target and any facilities and
operations thereon. In addition, Target, any property owned, operated, leased,
or used by Target, and any facilities and operations thereon are presently in
compliance with all applicable Environmental Laws. Target has not entered into
or been subject to any consent decree, compliance order or administrative order
with respect to any environmental or health and safety matter or received any
request for information, notice, demand letter, administrative inquiry, or
formal or informal complaint or claim with respect to any environmental or
health and safety matter or any enforcement of any Environmental Law; and Target
has no reason to believe that any of the above will be forthcoming. For purposes
of this Section 3.29, "Environmental Law" shall mean any environmental or health
and safety-related law, regulation, rule, ordinance, or by-law at the federal,
foreign, state, or local level.
(c) Target has provided to the Buyer copies of all documents, records, and
information available to Target concerning any environmental or health and
safety matter relevant to Target, whether generated by Target or others,
including, without limitation, environmental audits, environmental risk
assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials (as defined above), spill control plans, and reports,
correspondence, permits, licenses, approvals, consents, or other authorizations
issued by any environmental agency.
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3.30 Backlog. As of the date hereof, Target has a backlog of firm orders
for the sale of products or services of the Business, for which revenues have
not been recognized by Target, as set forth on the Disclosure Schedule.
3.31 Customers, Distributors and Independent Sales Representatives. The
Disclosure Schedule sets forth the names and addresses of all customers to
which, and independent sales representatives and distributors through which,
Target has sold or distributed in excess of $25,000 of its products or services
in the Business during any of the last two fiscal years of Target. The
Disclosure Schedule also indicates all customers, distributors and independent
sales representatives with which Target has entered into a contract or
agreement. During such period and through the date hereof, no such customer,
distributor or independent sales representative has canceled or otherwise
terminated its relationship with Target or decreased materially its usage or
purchase of the products or services of Target, except for changes in customer
relationships that have occurred in the ordinary course of business the
aggregate value of which has not exceeded $10,000. To the knowledge of Target,
no such customer, independent sales representative or distributor has any plan
or intention to terminate, cancel or otherwise modify its relationship with
Target in a manner that would be adverse to Target.
3.32 Disclosure of Material Information and Potentially Adverse
Developments. No disclosure made to Tiger or the Stockholders contained herein,
including the Disclosure Schedule, about Target's business, operations,
financial condition, results of operations or prospects (other than any
statements relating solely to the business, operations, financial condition,
results of operations or prospects of Tiger) contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements of facts contained therein not misleading or
necessary to provide Tiger and the Stockholders with adequate and complete
information as to Target's business, operations, financial condition, results of
operations or prospects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and warrants
as to itself to Buyer, as of the date hereof and as of the Closing Date, as
follows:
4.1 Organization. Such Stockholder is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
4.2 Authorization and Enforceability. Such Stockholder has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. Such Stockholder's execution and delivery of,
and the performance of its obligations under, this Agreement have been duly and
validly authorized by all necessary corporate action. This Agreement has been
duly executed and delivered on behalf of such Stockholder and constitutes the
legal, valid, and binding
21
obligations of such Stockholder, enforceable against such Stockholder in
accordance with its terms subject to general equitable principles and except as
the enforceability of this Agreement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to creditors' rights. Solely with respect to ComROAD, all
references in this Section 4.2 to "this Agreement" shall be deemed to include
the Related Agreements.
4.3 No Conflict; No Violation of Laws or Agreements. The execution and
delivery of this Agreement does not, and the consummation of the Transactions
and the compliance with the terms, conditions and provisions of this Agreement
by Stockholder will not: (a) contravene any provision of Stockholder's Charter
or Bylaws, or (b) conflict with, or constitute, or result in any breach,
default, violation of (or an event which might, with or without the passage of
time or the giving of notice or both constitute or result in a breach, default
or violation of) (i) any of the terms, conditions, or provisions of any
indenture, mortgage, loan, credit agreement, or any other instrument, contract,
agreement or commitment to which it is a party, or by which any of its assets
may be bound or affected or (ii) any judgment or order of any Governmental
Authority, or (iii) any law, rule, or regulation. Solely with respect to
ComROAD, all references in this Section 4.2 to "this Agreement" shall be deemed
to include the Related Agreements.
4.4 Consents. No consent, approval, or authorization of, or registration or
filing with, any Person, including any Governmental Authority, is required in
connection with Stockholder's execution and delivery of this Agreement or the
consummation of the Transactions by Stockholder.
4.5 Brokerage. Neither Stockholder nor anyone acting on Stockholder's
behalf has engaged, retained or incurred any liability to any broker, investment
banker, finder or agent, made any agreement or taken any other action which
might cause anyone to become entitled to a broker's fee or commission or agreed
to pay any brokerage fees, commissions, finder's fees or other fees with respect
to or as a result of the Transactions.
4.6 Investment Representations and Warranties.
(a) The shares of Buyer Common Stock to be received by Stockholder are
being acquired for investment for Stockholder's own account and not otherwise as
a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and Stockholder [has no present intention of selling or otherwise
distributing the same. The acquisition by Stockholder of the Common Stock will
constitute confirmation of the representation by Stockholder that Stockholder
does not 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 such securities.
(b) Stockholder has received and reviewed this Agreement, including all
Schedules, Annexes and Exhibits hereto. Stockholder has reviewed all of Buyer's
filings with the Securities and Exchange Commission ("SEC"). Stockholder has
22
had an opportunity to ask questions and receive answers from Buyer
regarding Buyer's business and affairs. Stockholder understands that, in
reliance on Stockholder, the sophistication and investment experience, the level
of disclosure provided by Buyer regarding the Common Stock is less than that
which would be provided in a securities offering registered under the Securities
Act of 1933, as amended ("1933 Act").
(c) Stockholder is aware that the shares of Common Stock have not been
registered under the 1933 Act, that their offer and sale pursuant to this
Agreement are intended to be exempt from registration under the 1933 Act and the
rules promulgated thereunder by the SEC, and that the shares of Common Stock
cannot be sold, assigned, transferred, or otherwise disposed of unless they are
subsequently registered under the 1933 Act or an exemption from such
registration is available. Stockholder is also aware that the shares of Common
Stock have not been registered or qualified in any state, that sales or
transfers of the shares of Common Stock may be further restricted by state
securities laws, and that the shares of Common Stock will contain additional
restrictions on their transfer. Stockholder has no immediate need for liquidity
in connection with this investment, and does not anticipate that, if permitted,
it will be required to sell its shares of Common Stock in the foreseeable
future.
(d) Stockholder understands that an investment in the Common Stock involves
a high degree or risk.
(e) Stockholder has not and will not, directly or indirectly, offer, sell,
transfer, assign, exchange or otherwise dispose of all or any part of the Common
Stock, except in accordance with applicable federal and state securities laws,
as well as the terms of such Common Stock. Neither Stockholder nor any of its
affiliates has engaged in any activity relating to the Common Stock that would
be deemed a "general solicitation" under the provisions of Regulation D under
the 1933 Act.
(f) Stockholder has such knowledge and experience in financial or business
matters that it can fend for itself, evaluate the merits and risks of an
investment in the Common Stock, and that it has, adequately analyzed the risks
of an investment in the Common Stock and it has determined that the Common Stock
is a suitable investment for Stockholder and that Stockholder is able at this
time, and in the foreseeable future, to hold the Common Stock for an indefinite
period of time and to bear the economic risk of a total loss of its investment
in Tiger.
(g) Stockholder has not been organized for the purpose of acquiring the
Common Stock.
(h) Stockholder is an "accredited investor" within the meaning of Rule 501
of Regulation D under the 1933 Act and is purchasing the Common Stock for its
own account and not with a view toward distribution. Confirm that Intelliworx
can make this rep.]
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(i) Stockholder understands that the representations, warranties, covenants
and acknowledgements set forth in this Section constitute a material inducement
to Tiger to enter into this Agreement and to issue the Common Stock.
ARTICLE V
REPRESENTATION AND WARRANTIES OF BUYER AND TIGER
Each of Buyer and Tiger, jointly and severally, represents and warrants to
Target and each of the Stockholders, as of the date hereof and as of the Closing
Date, as follows:
5.1 Organization. Each of Buyer and Tiger is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority (a) to do
business in the jurisdictions wherein the character of the properties owned or
leased or the nature of the activities by it make such qualification necessary,
(b) to execute and deliver this Agreement, and (c) to perform its obligations
hereunder.
5.2 Capitalization and Ownership. The authorized capital stock of Tiger
consists of 100,000,000 shares of common stock, $0.001 par value per share, of
which _______ shares of common stock are issued and outstanding. All of such
issued and outstanding shares of capital stock of Tiger have been duly
authorized, validly issued, are fully paid and nonassessable, were not issued in
violation of the terms of any agreement or other understanding binding upon
Tiger or any other Person and were issued in compliance with all applicable
federal and state securities or "blue-sky" laws and regulations. Except as set
forth in the reports filed by Tiger with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, for the periods
ended March 31, 2002 and December 31, 2001 (the "Tiger SEC Reports"), there are
no outstanding securities, options, warrants, rights, agreements, calls,
subscription commitments, demands, or understandings of any character
whatsoever, fixed or contingent, that directly or indirectly (i) call for the
issuance, sale or other disposition of any capital stock of Tiger or any of its
subsidiaries and there are no securities convertible into or exchangeable for
the stock of Tiger or (ii) obligate Tiger to grant, offer or enter into any of
the foregoing or (iii) relate to the voting or control of any capital stock of
Tiger or any of its subsidiaries.
5.3 Subsidiaries. Tiger directly owns all of the outstanding shares of
capital stock of each of Buyer and Tiger Telematics Limited, and, aside from
such subsidiaries, Tiger does not have any direct or indirect interest in any
other Person except as set forth in the Tiger SEC Reports.
5.4 Authorization and Enforceability. The execution and delivery of the
Transaction Agreements, and the performance of Buyer's and Tiger's obligations
thereunder, have been duly authorized by all necessary corporate action on the
part of Buyer and Tiger. This Agreement has been, and upon their execution and
delivery by Buyer and Target each of the other Transaction Agreement to which
Buyer and Target is a party will be, duly executed and delivered by each of
Buyer and Tiger and
24
constitutes and will constitute the legal, valid and binding obligation of
Buyer and Tiger, as the case may be, enforceable against them in accordance with
their respective terms subject to general equitable principles and except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application relating
to creditors' rights.
5.5 No Conflict; No Violation of Laws or Agreements. The execution and
delivery of this Agreement do not, the execution and delivery of the other
Transaction Agreements will not, and the consummation of the Transactions and
the compliance with the terms, conditions and provisions of the Transaction
Agreement by each of Buyer and Tiger will not: (a) contravene any provision of
Buyer's or Tiger's Charter or Bylaws, or (b) conflict with, or constitute, or
result in any breach, default, violation of (or an event which might, with or
without the passage of time or the giving of notice or both constitute or result
in a breach, default or violation of) (i) any of the terms, conditions, or
provisions of any indenture, mortgage, loan, credit agreement, or any other
instrument, contract, agreement or commitment to which either of them is a
party, or by which any of their assets may be bound or affected or (ii) any
judgment or order of any Governmental Authority, or any law, rule, or regulation
applicable to Buyer, Tiger or any of its Affiliates.
5.6 Consents. No consent, approval, or authorization of, or registration or
filing with, any Person, including any Governmental Authority, is required in
connection with Buyer's or Tiger's execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement by Buyer or
Tiger.
5.7 Financial Statements.
(a) (i) A true and correct copy of the audited consolidated balance sheet
of Tiger as of December 31, 2001 (the "Tiger Financial Statement Date") and the
related consolidated statements of income and cash flows for the fiscal year
then ended (collectively, the "Tiger Year-End Financial Statements"), and (ii)
the unaudited consolidated balance sheet of Target and related statement of
income and cash flows as of, and for the three month period ended March 31, 2002
(the "Tiger Interim Statements" and, together with the Target Year-End Financial
Statements, the "Tiger Financial Statements") are set forth in the Tiger SEC
Reports.
(b) The Tiger Financial Statements: (i) were prepared from and are
consistent with the Books and Records of Tiger, which Books and Records have
been maintained in accordance with all legal and accounting requirements and
completely and accurately reflect all financial transactions of Target, (ii)
were prepared in accordance with GAAP consistently applied; and (iii) are
correct and complete and present fairly the financial condition of Tiger and the
results of its operations for the periods covered by, and as at the dates of,
each of the Tiger Financial Statements except that the Tiger Interim Statements
omit footnote disclosures and do not reflect year end adjustments which will
not, in the aggregate, be material. The income statements included in the Tiger
Financial Statements do not contain any material items
25
of special or non-recurring income or other income not earned in the
ordinary course of business except as expressly specified therein.
5.8 No Undisclosed Liabilities. Tiger does not have any material liability
or obligation of any nature, whether due or to become due, absolute, contingent,
or otherwise, whether direct or indirect, except to the extent reflected as a
liability on the Tiger Financial Statements, or material liabilities incurred in
the ordinary course of business since the Tiger Financial Statement Date and
fully reflected as liabilities on the appropriate books of account.
5.9 Litigation and Claims. There are no Claims pending or, to the knowledge
of Buyer and Tiger, threatened which seek to delay or prevent the consummation
of the Transactions or which would be reasonably likely to adversely affect or
restrict Buyer's or Tiger's ability to perform its obligations under the
Transactions
5.10 Brokers. Neither Buyer nor Tiger nor anyone acting on their behalf has
engaged, retained or incurred any liability to any broker, investment banker,
finder or agent, made any agreement or taken any other action which might cause
anyone to become entitled to a broker's fee or commission or agreed to pay any
brokerage fees, commissions, finder's fees or other fees with respect to or as a
result of the Transactions.
5.11 Truth and Accuracy of Disclosures. No disclosure made to Target about
Tiger's business, operations, financial condition, results of operations or
prospects (other than any statements relating solely to the business,
operations, financial condition, results of operations or prospects of Target)
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements of facts
contained therein not misleading or necessary to provide Target with adequate
and complete information as to Tiger's business, operations, financial
condition, results of operations or prospects.
ARTICLE VI
PRE-CLOSING COVENANTS OF TARGET AND STOCKHOLDERS
6.1 Conduct of Business. Between the date of this Agreement and the Closing
Date, Target will, and each of the Stockholders will cause Target to:
(a) conduct the Business only in the ordinary course and refrain from
changing or introducing any method of management or operations except in the
ordinary course of business and consistent with prior practices;
(b) refrain from (i) making any purchase, sale or disposition of any asset
or property included in or to be included in theAcquiring Assets other than in
the ordinary course of business, (ii) purchasing any capital asset for use in
the Business costing more than $10,000, (iii) mortgaging, pledging, subjecting
to a lien or otherwise
26
encumbering any of such assets other than in the ordinary course of
business, and (iv) including any liabilities other than in the ordinary course
of business consistent with past practices;
(c) refrain from making any change or incurring any obligation to make a
change in its Charter, Bylaws or authorized or issued capital stock;
(d) refrain from declaring, setting aside or paying any dividend, making
any other distribution in respect of its capital stock or making any direct or
indirect redemption, purchase or other acquisition of its stock;
(e) refrain from making any change in the compensation payable or to become
payable to any of its officers, employees, agents or independent contractors;
(f) refrain from prepaying any loans from its stockholders, officers or
directors (if any) or making any change in its borrowing arrangements;
(g) use its best efforts to prevent any change with respect to its
management and supervisory personnel who are employed in the Business;
(h) disburse funds advanced to it by or on behalf of Tiger in accordance
with the budget for expenditures approved by Tiger;
(i) use its best efforts to keep available its present officers and
employees employed in the Business and to preserve the goodwill of all
suppliers, customers, distributors, independent contractors and others having
business relations with the Business; and
(j) furnish Buyer with unaudited monthly balance sheets and statements of
income of Target within ten (10) days after each month end for each month ending
more than ten (10) days before the Closing, certified by the Chief Financial
Officer of Target, which financial statements shall be prepared in accordance
with GAAP applied consistently during the periods covered thereby, shall be
complete and correct and present fairly the financial condition of Target as of
the dates of such statements and the results of its operations for the periods
covered thereby.
6.2 Authorization from Others. Prior to the Closing Date, Target will use
commercially reasonable efforts to obtain all authorizations, consents and
permits of others required to permit the consummation by Target and Stockholder
of the Transactions, and shall obtain such authorizations, consent and permits
as are set forth on Schedule 6.2 (the "Required Consents")
6.3 Breach of Representations and Warranties. Neither any Stockholder shall
take any action that would result in any of the representations and warranties
contained in Articles 3 and 4 hereof being untrue in any material respect.
Promptly upon the occurrence of, or promptly upon Target or Stockholder becoming
aware of the impending or threatened occurrence of, any event that would cause
or constitute a
27
breach or default, or would have caused or constituted a breach or default
had such event occurred or been known to Target or Stockholder prior to the date
hereof, of any of the representations and warranties of the Target or any
Stockholder contained in this Agreement, Target and Stockholder shall give
detailed written notice thereof to Buyer and shall use their respective best
efforts to prevent or promptly cure the same.
6.4 Consummation of Agreement. Target and each Stockholder shall use their
respective best efforts to perform and fulfill all conditions and obligations on
their parts to be performed and fulfilled under this Agreement.
6.5 Confidentiality. Target and each Stockholder agree that (a) Target and
Stockholder and their respective officers, directors, agents and representatives
will hold in strict confidence, and will not use, any data and information
obtained in connection with this transaction or Agreement with respect to the
business of Buyer, except for the purpose of Target's and Stockholder's internal
evaluation of the Transactions; (b) if such Transactions are not consummated,
Target and Stockholder will return to Buyer all copies of such data and
information, including but not limited to worksheets, test reports, manuals,
lists, memoranda, and other documents prepared by or made available to Target
and Stockholder in connection with this transaction; and (c) they will treat the
existence of this Agreement and the transactions contemplated hereby as strictly
confidential and will not disclose them to any Person without the prior written
consent of Buyer.
6.6 No Solicitation of Other Offers. Neither Target, Stockholder, nor any
of their respective officers, directors, agents or representatives will,
directly or indirectly, (i) solicit, initiate discussions or engage in
negotiations with, any person, other than Tiger and Buyer, relating to the
possible acquisition of Target or any of the Acquired Assets (except in the
ordinary course of business of Target); (ii) provide, or cause any other person
to provide, any information to any person, other than Tiger and Buyer, relating
to the possible acquisition of Target or any of the Acquired Assets (except in
the ordinary course of business of Target); or (iii) enter into a transaction
with any Person, other than Buyer, concerning the possible acquisition of Target
or any of the Acquired Assets (except in the ordinary course of business of
Target). Target and Stockholder will notify Tiger and Buyer immediately if any
Person makes any proposal, offer, inquiry or contact with respect to any of the
foregoing.
6.7 Access, Information, and Documents. Buyer and Buyer's counsel,
accountant, and other representatives will have full access during normal
business hours to all of Target's properties, books, tax returns, contracts,
commitments, records, officers, personnel, and accountants. Target shall provide
Buyer with all such documents and copies of documents (certified to be true
copies if requested) and all information with respect to the affairs of the
Target Companies as Buyer may reasonably request.
6.8 Consent to Assignment. ComROAD hereby consent to the assignment to
Buyer, in connection with the transactions contemplated hereby, of all
agreements and contracts between ComROAD and Target.
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ARTICLE VII
PRE-CLOSING COVENANTS OF TIGER AND BUYER
7.1 Consummation of Agreement. Tiger and Buyer shall use their respective
best efforts to perform and fulfill all conditions and obligations on its part
to be performed and fulfilled under this Agreement.
7.2 Confidentiality. Tiger and Buyer agree that, unless and until the
Closing has been consummated, (a) Tiger and Buyer and their respective officers,
directors, agents and representatives will hold in strict confidence, and will
not use, any data and information obtained in connection with this transaction
or Agreement with respect to the business of Target, except for the purpose of
Tiger's and Buyer's internal evaluation of this transaction or the consummation
of the Transactions; and (b) if the Transactions are not consummated, Tiger and
Buyer will return to Target all copies of such data and information, including
but not limited to worksheets, test reports, manuals, lists, memoranda, and
other documents prepared by or made available to Tiger and Buyer in connection
with this transaction.
7.3 Authorization from Others. Prior to the Closing Date, Tiger and Buyer
will obtain all authorizations, consents and permits of other required to permit
the consummation by Tiger and Buyer of the Transactions.
7.4 Breach of Representations and Warranties. Tiger and Buyer shall not
take any action that would result in any of the representations and warranties
contained in Article 5 hereof being untrue in any material respect. Promptly
upon the occurrence of, or promptly upon Tiger and Buyer becoming aware of the
impending or threatened occurrence of, any event that would cause or constitute
a breach or default, or would have caused or constituted a breach or default had
such event occurred or been known to Tiger and Buyer prior to the date hereof,
of any of the representations and warranties of Buyer contained in or referred
to in this Agreement, Buyer shall give detailed written notice thereof to Target
shall use their best efforts to prevent or promptly cure the same.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions Precedent to Obligations of Tiger and Buyer. The obligations
of Buyer and Tiger to proceed with the Closing under this Agreement are subject
to the fulfillment prior to or at Closing of the following conditions (any one
or more of which may be waived in whole or in part by Buyer in Buyer's sole
discretion):
(a) Representations, Warranties and Covenants. The representations and
warranties of Target and each Stockholder set forth in Articles 3 and 4 that are
not qualified as to materiality shall be true and correct in all material
respects, and such the representations and warranties that are qualified as to
materiality shall be true and
29
correct in all respects, at and as of the Closing Date. Target and each
Stockholder shall have performed and complied with all of their covenants
hereunder in all material respects through the Closing.
(b) Litigation. No order of any Governmental Authority shall be in effect
which restrains or prohibits the Transactions shall not be threatened, nor shall
there be pending, any action or proceeding (i) challenging any of the
Transactions or seeking monetary relief by reason of the consummation of such
transactions, or (ii) which would likely have a Material Adverse Effect.
(c) Consents. Target shall have procured all of the Required Consents.
(d) Closing Certificate. Target shall have delivered to Buyer a certificate
to the effect that each of the conditions specified above in Subsections 7.1(a),
(b) and (c) is satisfied in all respects;
(e) Satisfactory Instruments. All instruments and documents required of
Target to effectuate and consummate the Transactions shall be in form and
substance reasonably satisfactory to Buyer and its counsel.
(f) Related Agreements. ComROAD AG and Target shall have entered into the
Related Agreements, which shall be in.substantially the form attached hereto as
Exhibit C.
(g) Target shall have delivered to Buyer updated versions of all Schedules
to this Agreement showing changes thereto through the Closing Date all of which
changes shall be in compliance with and shall not constitute a breach of the
terms and conditions of this Agreement.
8.2 Conditions Precedent to the Obligations of Target. The obligation of
Target and each Stockholder to proceed with the Closing is subject to the
fulfillment prior to or at Closing of the following conditions (any one or more
of which may be waived in whole or in part by Target in its sole discretion):
(a) Material Adverse Effect. All representations and warranties of Buyer
and Tiger contained herein shall be true, accurate, complete and correct in all
material respects as of the Closing Date.
(b) Litigation. No order of any Governmental Authority shall be in effect
which restrains or prohibits the Transactions. There shall not be threatened,
nor shall there be pending, any action or proceeding (i) challenging any of the
Transactions or seeking monetary relief by reason of the consummation of such
transactions, or (ii) which would likely have a Material Adverse Effect.
(c) Satisfactory Instruments. All instruments and documents required of
Buyer and Tiger to effectuate and consummate the Transactions contemplated
hereby
30
shall be in form and substance reasonably satisfactory to Target and the
Stockholders and their counsel.
(d) Additional Financing. Tiger shall have provided Buyer with capital at
least equal to $500,000 which shall include any amounts advanced to Target
pursuant to bridge loans from, or arranged by Tiger, prior to the Closing Date,
which bridge loans and other indebtedness are to be assumed by, and become the
obligations of, Buyer pursuant to this Agreement.
ARTICLE IX
TERMINATION
9.1 Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated at any time on or prior to the Closing
Date:
(a) Mutual Consent. By mutual written consent of Buyer and Target and the
Stockholders;
(b) Termination by Buyer. By Buyer upon notice to Target if there has been
a material misrepresentation, inaccuracy or breach by Target or any Stockholder
of any of their representations, warranties or covenants, or if any of the
conditions specified in Section 8.1 hereof shall not have been substantially
fulfilled by the time required and not have been waived by Buyer, or if the
Closing shall not have occurred on or before July 31, 2002; or
(c) Termination by Target. By Target upon notice to Buyer if there has been
a material misrepresentation, inaccuracy or breach by Buyer of any of its
representations, warranties or covenants, or if any of the conditions specified
in Section 8.2 hereof shall not have been substantially fulfilled by the time
required and not have been waived by Target, or if the Closing shall not have
occurred on or before July 31, 2002.
9.2 Effect of Termination. In the event of termination of this Agreement by
either Target or Buyer, as provided above, this Agreement shall terminate as of
the date of the written notice or consent described in Section 7.1 above, and
there will be no liability on the part of Target or Buyer or their respective
Affiliates, except for liabilities arising from a breach of this Agreement prior
to such termination.
ARTICLE X
CERTAIN ADDITIONAL COVENANTS
10.1 Costs, Expenses, and Transfer Taxes. Each party hereto will pay its
own costs and expenses, including legal and accounting fees, in connection with
the negotiation, execution, performance of and compliance with this Agreement.
31
10.2 ComROAD Products.
(a) Prior to the date hereof, Target purchased and accepted from ComROAD AG
certain telematics products, all of which are reflected on the Target Financial
Statements. Tiger shall cause Buyer to pay to ComROAD the full amount of such
trade payable no later than the next business day following the consummation of
the Next Equity Financing. Until such time as such trade payable is paid in
full, all payments received by Comworxx and Buyer from customers shall be
directed to a lockbox account designated by Comworxx, Buyer and ComROAD AG and
funds shall be disbursed from such account in accordance with the Funds Transfer
Schedule attached hereto as Schedule 10.2.
(b) In addition, Tiger shall cause Buyer to accept shipment of and pay for
those products produced by ComROAD for Target pursuant to purchase orders that
are open as of the date hereof. Payment for such products shall be made within
60 days of receipt of an invoice from ComROAD AG, so long as such products shall
have been received and accepted. Until such time as payment is made in full for
such products, all payments received by Comworxx and Buyer from customers shall
be directed to a lockbox account designated by Comworxx, Buyer and ComROAD AG
and funds shall be disbursed from such account in accordance with the Funds
Transfer Schedule attached hereto as Schedule 10.2.
10.3 Navtech Sublicense and Filters. ComROAD AG licenses certain digital
map products for Europe, the United States and Canada from Navtech. Tiger shall
cause Buyer to sublicense from ComROAD AG the non-exclusive right to use such
digital map products for the United States and Canada for the twelve month
period commencing June 1, 2002 and ending on May 31, 2003 for a one time
sublicense fee of $100,000 (payable upon receipt of consent from the licensor to
such sublicense, if required). In addition, Tiger shall cause Buyer to
sublicense from ComROAD AG the right to use and all filters necessary for the
use of the maps in the digital map products in the United States and Canada at a
price equal to ComROAD AG's license fees for such filters (payable upon receipt
of consent from the licensor to such sublicense, if required). The sublicense
fees shall be paid no later than the earlier of (i) the Next Equity Financing,
and (ii) September 1, 2002. ComROAD AG will renew the Navtech license and the
license for the filters for the period commencing June 1, 2003 and ending May
31, 2004, ComROAD AG, Buyer and Tiger shall negotiate in good faith a renewal of
the sublicense fee. All such sublicense agreements shall be royalty-free, shall
have terms and conditions (other than the fees specified herein) that are
reasonably acceptable to Tiger.
10.4 Employee Matters. Immediately prior to the consummation of the
transactions contemplated hereby, Target will terminate all of its employees,
and Tiger shall cause Buyer to offer employment to all former employees of
Target listed on Schedule 10.4 at the same place of employment and on terms no
less favorable than the terms of employment that existed at Target. In addition,
within 10 days following the Closing Date, Tiger shall cause Buyer to enter into
written employment agreements with
32
the former executives of Target on terms to be negotiated in good faith by
such executive employees and Buyer.
10.5 Conversion of Bridge Loan. From the date hereof and until the
Transactions are consummated or this Agreement is terminated, Tiger shall
forbear from exercising to convert its bridge loan into shares of common stock
of Target, so long as there shall be no breach or default by Target or any
Stockholder under this Agreement or any agreement entered into among the parties
and their respective Affiliates in connection with the bridge loan.
ARTICLE XI
INDEMNIFICATION
11.1 Materiality; Survival. All representations, warranties, agreements,
covenants and obligations herein or in any schedule, certificate or financial
statement delivered by any party incident to the Transactions are material,
shall be deemed to have been relied upon by the parties and shall survive the
Closing hereof for a period of two (2) years and shall not merge in the
performance of any obligation by any party hereto; provided, however, that all
such matters relating to Product Liability, Environmental Laws or Taxes shall
survive the Closing for the period of the statute of limitations applicable to
such matters.
11.2 Indemnification Rights of Tiger and Buyer.
(a) Seller and each Stockholder jointly and severally agrees to defend,
indemnify and hold Tiger and Buyer and their respective subsidiaries and
affiliates and the persons serving as officers, directors, partners, employees
or agents thereof (hereinafter collectively referred to as "Buyer Indemnified
Parties" or individually as a "Buyer Indemnified Party") harmless from and
against any damages, liabilities, losses, fines, penalties, clean-up costs,
study costs and expenses (including, without limitation, reasonable counsel fees
and expenses as the same are incurred) (collectively, "Losses") of any kind or
nature whatsoever that may be sustained or suffered by any of them arising out
of or based upon or in connection with any of the following matters
(notwithstanding any investigation by or knowledge of any of the Buyer
Indemnified Parties):
(i) a breach of any representation, warranty, agreement, covenant or
obligation made by the Seller or the Stockholder (but not any other Stockholder)
in this Agreement or in any exhibit, schedule, certificate or financial
statement delivered hereunder or in connection herewith or by reason of any
claim, action or proceeding asserted or instituted or growing out of any matter
or thing that constitutes or is alleged by a third party to constitute a breach
of such representations, warranties or covenants; and
33
(ii) any claims of third parties arising out of or relating the Retained
Liabilities.
Seller and each Stockholder shall have no obligation to indemnify any Buyer
Indemnified Party from and against any Losses as to which a claim for
indemnification is not made on or before the second anniversary of the
ClosingDate, except with respect to Product Liability, Environmental Laws or
Taxes, as to which any Buyer Indemnified Party can make a claim on or before the
date on which the statute of limitations period applicable to such matters
expires. The indemnification obligations of Seller and each Stockholder shall be
satisfied solely through the obligation to return to Tiger shares of Tiger
Common Stock in an amount equal to such Losses. Seller and each Stockholder
agrees that it will not dispose of any shares of Tiger Common Stock (except for
transfers among Stockholders and to entities that are Affiliates of a
Stockholder) for a period of one year after the Closing Date. For the purposes
of determining the number of shares of Tiger Common Stock to be delivered to
Tiger, the value of shares of Tiger Common Stock shall be equal to the average
of (i) if actively traded over-the-counter, the average of the closing bid
prices over the 30-day period ending three (3) business days prior to the date
on which shares are to be delivered to Tiger, or (ii) if quoted on the Nasdaq
Stock Market or another securities exchange, the average of the closing prices
over the 30-day period ending three (3) business days prior to such date.
No claims for Losses shall be brought hereunder by Buyer and Tiger until the
aggregate amount of such claims exceeds $50,000, and, if the aggregate amount of
Losses claimed hereunder exceeds $50,000 and Buyer and Tiger are entitled to
indemnification pursuant hereto, Buyer and Tiger shall be entitled to collect
all Losses from the first dollar.
(b) The Buyer Indemnified Parties shall give prompt written notice to
Target and each Stockholder from which indemnification is sought of any claim,
liability or expense to which the indemnification obligations hereunder would
apply. Such notice shall state the information then available regarding the
amount of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the claim, liability or expense is
asserted. The failure to promptly notify the Seller and Stockholder as provided
above shall not relieve the Seller and Stockholder of any liability hereunder
except to the extent that the rights of the Seller and Stockholder have been
materially and adversely prejudiced as a result of the failure to give, or the
delay in giving, such notice.
(c) If such indemnification claim, liability or expense is the subject of
litigation, the Seller and the Stockholder shall have the right to participate
at their own expense in the defense of any such litigation. The Buyer
Indemnified Parties may, in their sole discretion, authorize the Seller and
Stockholder, if they so desire, to take over the defense of such litigation so
long as such defense is expeditious and is undertaken by counsel acceptable to
the Buyer Indemnified Parties; provided, however, that the Seller and
Stockholder shall not enter into any settlement that has binding effect on the
Buyer without the prior written consent of the Buyer, which consent shall not be
unreasonably withheld. In addition, the Buyer Indemnified Party may not enter
into any
34
settlement in which an indemnifying party will be liable hereunder without
the consent of such indemnifying party.
11.3 Indemnification Rights of Seller and Stockholders.
(a) Tiger and Buyer agree to defend, indemnify and hold Seller and each
Stockholder and their respective subsidiaries and affiliates and the persons
serving as officers, directors, partners, employees or agents thereof
(hereinafter collectively referred to as "Seller Indemnified Parties" or
individually as a "Seller Indemnified Party") harmless from and against any
Losses of any kind or nature whatsoever that may be sustained or suffered by any
of them arising out of or based upon or in connection with any of the following
matters:
(i) a breach of any representation, warranty, agreement, covenant or
obligation made by Tiger and Buyer in this Agreement or in any exhibit, schedule
or certificate delivered hereunder or in connection herewith or by reason of any
claim, action or proceeding asserted or instituted growing out of any matter or
thing that constitutes or is alleged by a third party to constitute a breach of
such representations, warranties or covenants; and
(ii) any claims of third parties arising out of or relating to the
ownership or operation of the Acquired Assets or the Business by Tiger and Buyer
after the Closing Date, whether accrued, absolute, contingent or otherwise,
including the Assumed Liabilities, but not including the Retained Liabilities.
Tiger and Buyer shall have no obligation to indemnify any Seller Indemnified
Party from and against any Losses as to which a claim for indemnification is not
made on or before the second anniversary of the Closing Date. In no event shall
the indemnification obligations of the Buyer to all Seller Indemnified parties
exceed $2,000,000.
(b) The Seller Indemnified Parties shall give prompt written notice to
Tiger and Buyer of any claim, liability or expense to which the indemnification
obligations hereunder would apply. Such notice shall state the information then
available regarding the amount of such claim, liability or expense and shall
specify the provision or provisions of this Agreement under which the claim,
liability or expense is asserted. The failure to promptly notify Tiger and Buyer
as provided above shall not relieve Tiger and Buyer of any liability hereunder
except to the extent that the rights of Tiger and Buyer have been materially and
adversely prejudiced as a result of the failure to give, or the delay in giving,
such notice.
(c) If such indemnification claim, liability or expense is the subject of
litigation, Tiger and Buyer shall have the right to participate at their own
expense in the defense of any such litigation. The Seller Indemnified Parties
may, in their sole discretion, authorize Tiger and Buyer if they so desire to
take over the defense of such litigation so long as such defense is expeditious
and is undertaken by counsel acceptable to the Seller Indemnified Parties;
provided, however, that Tiger and Buyer shall not enter into any settlement
which has binding effect on Seller or a Stockholder without the prior written
consent of Seller and the Stockholder, which shall not be
35
unreasonably withheld. In addition, the Seller Indemnified Party may not
enter into any settlement in which an indemnifying party will be liable
hereunder without the consent of such indemnifying party.
11.4 Indemnification Payments and Dispute Resolution. Any indemnification
amounts due under Section 11.2 or 11.3 shall be paid within 30 days after notice
thereof is given by the party seeking indemnification unless within said 30-day
period the party providing indemnification indicates in a writing delivered to
the party seeking indemnification that it disputes the nature or amount of the
claim for indemnification in which event the dispute, upon the election of any
party hereto after said 30-day period, shall be referred to the American
Arbitration Association to be settled by arbitration in Sarasota, Florida in
accordance with the UNCITRAL rules of commercial arbitration. The fees and
expenses of the arbitrator shall be borne by that party (with Seller and
Stockholders together and Tiger and Buyer together each being considered one
party) whose last offer of settlement differed by a greater amount from the
arbitrator's award than did the last offer of settlement of the other party;
provided, however, that no offer of settlement shall be disclosed to the
arbitrator until after the arbitrator renders an award on the merits. The
determination of the arbitrator as to the amount, if any, of the indemnification
claim, liability or expense that is properly allowable shall be conclusive and
binding upon the parties hereto and payment shall be made as so determined
within five business days of the date of such award. The judgment upon the award
may be entered in any court having jurisdiction thereof. There shall be added to
the amount of any arbitration award interest at the rate of 10% per annum,
accrued daily, on the amount required to be paid pursuant to such award. This
interest will be computed from the date payment would have been paid if not
disputed to the date paid and the arbitrator shall include provisions therefor
in any award rendered.
11.5 Exclusive Remedy. In the absence of fraud, the sole and exclusive
remedy of any party for any claims relating to the subject matter of this
Agreement shall be the indemnification obligations set forth in this Article 11.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered by courier, or if mailed, when mailed by United States
first-class, certified or registered mail, postage prepaid, to the other party
at the following addresses or by telecopy, receipt confirmed (or at such other
address as shall be given in writing by any party to the other):
36
If to Tiger or Buyer, to:
Tiger Telematics, Inc.
6001 Powerline Road
Ft. Lauderdale, Florida 33309
Attention: President
With a copy to:
LeClair Ryan, a Professional Corporation
707 East Main Street - 11th Floor
Richmond, Virginia 23219
Fax: ( 804 ) 783-7615
Attention: J. Benjamin English
If to Target, to:
Comworxx, Inc.
2065 Cantu Court
Sarasota, Florida 34232
Fax: (914) 379-7690
Attention: Michael Jonas
If to a Stockholder, to the address set forth opposite the name of such
Stockholder on the Schedule of Stockholders.
12.2 Successors and Assigns. This Agreement, and all rights and powers
granted hereby, will bind and inure to the benefit of the parties hereto and
their respective successors and assigns, but neither this Agreement nor any of
the rights, interests, or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties hereto.
12.3 Construction. The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or
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covenant. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the identity of the Person or Persons
may require. All references herein to Articles, Sections (other than Sections of
the Code or any other statute) and subsections shall be deemed to be references
to Articles, Sections and subsections of this Agreement unless the context shall
otherwise require.
12.4 Governing Law. With respect to corporate governance matters concerning
a corporation of any jurisdiction, this Agreement shall be governed by and
construed in accordance with the laws of such jurisdiction. With respect to all
other matters, this Agreement shall be governed by and construed in accordance
with the laws of State of Florida, without regard to the conflicts of law
provisions thereof.
12.5 Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction, or effect.
12.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
12.7 Further Assurances. Both before and after Closing hereunder, each
party shall cooperate and take such action as may be reasonably requested by
another party in order to more fully carry out the provisions and purposes of
this Agreement and the transactions contemplated hereby.
12.8 Course of Dealing. No course of dealing and no delay on the part of
any party hereto in exercising any right, power, or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. The failure of any of the parties to this Agreement
to require the performance of a term or obligation under this Agreement or the
waiver by any of the parties to this Agreement of any breach hereunder shall not
prevent subsequent enforcement of such term or obligation or be deemed a waiver
of an subsequent breach hereunder. No single or partial exercise of any rights,
powers or remedies conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
12.9 Severability. This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be valid and enforceable, so as to effect the original intent
of the parties to the greatest extent possible.
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12.10 Entire Agreement. This Agreement and the Schedules, Exhibits and
Certificates hereto, each of which is hereby incorporated herein, set forth all
of the promises, covenants, agreements, conditions, and undertakings between the
parties hereto with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements and understandings, inducements, or conditions,
express or implied, oral or written. This Agreement may not be amended except by
an instrument in writing signed by the party sought to be charged with effect of
such amendment.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
TIGER TELEMATICS, INC.
By:____________________________________
Name:
Title:
COMWORXX, INC.
By:____________________________________
Name:
Title:
COMROAD AG
By:____________________________________
Name:
Title:
INTELLIWORXX, INC.
By:____________________________________
Name:
Title:
TOWANDA LIMITED PARTNERSHIP, L.P.
By:____________________________________
Name:
Title:
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TT ACQUISITION CORP.
By:____________________________________
Name:
Title:
41
SCHEDULE OF STOCKHOLDERS
Name Address Copies of Notices to
ComROAD AG Edissonstrasse 8 McDermott, Will &Emery
D-86716 50 Rockefeller Plaza
Unterschliesheim New York, New York 10020
Germany Attention: Thomas Weinberger
Attention: Hartmut Schwamm Fax: 212-547-5444
Fax: 011-49-89-3151-694
Intelliworxx, Inc.
Towanda Limited Partnership
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Exhibit A
DEFINITIONS
"Affiliate" means, when used with respect to any Person, (a) if such Person is a
corporation, any officer or director thereof and any Person which is, directly
or indirectly, beneficial owner (by itself or as part of any group) of more than
fifty percent (50%) of any class of any voting security thereof, (b) if such
Person is an LLC, any officer or manager thereof and any Person which is,
directly or indirectly, beneficial owner (by itself or as part of any group) of
more than fifty percent (50%) of any class of any voting interest therein, (c)
if such Person is a partnership, any general partner thereof and any Person
which is, directly or indirectly, beneficial owner (by itself or as part of any
group) of more than fifty percent (50%) of any limited partnership interest
thereof, and (d) any other Person which directly or indirectly, through one or
more intermediaries controls, is controlled by, or is under common control with,
such Person. For purposes of this definition: (i) any "beneficial owner" that is
a partnership shall be deemed to include any general or limited partner thereof,
any "beneficial owner" that is an LLC shall be deemed to include any Person
controlling, controlled by or under common control with such beneficial owner,
or any officer, manager or member of such beneficial owner or of any LLC
occupying any such control relationship, and any "beneficial owner" that is a
corporation shall be deemed to include any Person controlling, controlled by or
under common control with such beneficial owner, or any officer or director of
such beneficial owner or of any corporation occupying any such control
relationship; and (ii) "control" (including the correlative terms "controlling,"
"controlled by" and "under common control with"), with respect to any Person,
shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Books and Records" includes the original and all copies of reports, books,
manuals, financial statements, or reports, price books, confirmations,
telegrams, receipts, inventory books, contracts, printed matters, computer
printouts, teletypes, invoices, transcripts, analyses, Returns, minutes,
accounts, estimates, projections, comparisons, press releases, reviews,
opinions, studies and investigations, graphic representations of any kind
(including photographs, charts, graphs, videotape and motion pictures,
electronic and mechanical records, tapes, cassettes, discs, and recordings,
whether preserved in writing, phone record, film, tape, videotape, or computer
record).
"Authorization" means all federal, foreign, state, provincial, municipal, local
or other governmental consents, certifications, licenses, permits,
registrations, grants and other authorizations that are necessary to permit
Target to conduct the Business as present conducted or proposed to be conducted.
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"Bylaws" means the bylaws of any corporation organized under the laws of any
State of the United States of America and any equivalent document of any
corporation or entity organized under the laws of another jurisdiction, as
amended or restated through the date hereof or the Closing Date, as the case may
be.
"Charter" means the Certificate of Incorporation or Formation, Articles of
Incorporation or Organization or other organizational document of a corporation
or an LLC organized under the laws of any State of the United States of America
and any equivalent document of a corporation, LLC or other similar entity
organized under the laws of another jurisdiction, as amended or restated through
the date hereof or the Closing Date, as the case may be.
"Code" means the Internal Revenue Code of 1986 and valid interpretations
thereof, as reflected in Treasury regulations, published IRS rulings and court
decisions.
"GAAP" means United States generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, consistently applied.
"Governmental Authority" means all agencies, instrumentalities, departments,
commissions, courts, tribunals, or boards of any government, whether foreign,
federal, state, or local.
"Knowledge" all references to "knowledge" herein shall mean actual knowledge
after reasonable investigation. Knowledge of any entity shall be deemed to
include the knowledge of its directors and officers.
"Lien" means, with respect to any asset or right, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim or right whatsoever, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing except with respect to securities, restrictions on transferability
imposed by federal and state securities laws.
"Material Adverse Effect" means an occurrence or event which has or is
reasonably likely to have a material adverse impact or effect on the Business,
or
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the operations, financial conditions or prospects of the applicable
companies, taken as a whole.
"Person" means any natural person, corporation, business trust, trust, estate,
partnership, limited partnership, LLC, limited liability partnership,
association, joint venture, or other entity.
"Taxes" or "Tax" means all taxes, however, denominated, including any interest,
penalties or other additions to tax that may become payable in respect thereof,
imposed by any federal, territorial, state, local or foreign government or any
agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes (including federal income taxes and state income taxes), real property
gains taxes, payroll and employee withholding taxes, unemployment insurance
taxes, social security taxes, sales and use taxes, ad valorem taxes, excise
taxes, franchise taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes and other governmental charges,
and other obligations of the same or of a similar nature to any of the
foregoing, which any Target Company is required to pay, withhold or collect.
(99.1)
Tiger Telematics, Inc. acquires Comworxx, Inc.
June 28, 2002 Fort Lauderdale, Florida: Tiger Telematics Inc. (symbol
"TIGR") today announced that it has closed its acquisition effective June 25,
2002 of Comworxx Inc., the US mobile telematics solutions provider, for the
issuance of $4.3 million of Tiger Telematics stock and the assumption of certain
liabilities.
Comworxx, based in Sarasota FL, is an end-to-end telematics solution provider to
the consumer automotive aftermarket. Its Port-IT(TM) product combines global
positioning, mobile telecommunications, voice-recognition and web-based
information into one integrated system and has attracted preliminary expressions
of interest from several major United States retailers.
The product enables mobile users to access information and a wide assortment of
essential services, including hands-free wireless telephone; dynamic
turn-by-turn navigation, personalized information access, including driving
directions, stock quotes and weather information; emergency services and
roadside assistance.
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AJ Nassar, Chief Executive Officer of Tiger Telematics, Inc., commented: "We are
delighted to have closed this acquisition. Comworxx and Tiger Telematics have
complementary products that can be leveraged in each company's markets. We also
believe we can quickly integrate some of the features of each of the products to
enhance the full product range available to our fleet and consumer customers."
Mike Jonas, Chief Executive Officer of Comworxx, commented: "Port-IT(TM) was
developed with the US consumer in mind but we have long believed that the
product has applications in the Business to Business sector currently supported
by QUALCOMM, Incorporated Wireless Business Solutions (: QCOM) and @ROAD(SM) (:
ARDI). The combination of Tiger Telematics abilities in Business to Business
allied to our knowledge of the consumer sector is a powerful combination."
About Tiger
Tiger Telematics, Inc., provides telematics products and services in Europe and
in North America. Tigers' mission is to bridge the gap that exists between the
telecommunications, computing and automotive industries by delivering a
comprehensive telematics solution to the consumer, business and fleet markets.
Tiger provides mobile telematics services that add value to subscribers by
helping them safely connect to the wireless world.
Except for historical matters contained herein, the matters discussed in this
press release are forward-looking and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Investors
are cautioned that these forward-looking statements reflect numerous assumptions
and involve risks and uncertainties that may affect Tiger Telematics, Inc. and
its subsidiary businesses and prospects and cause actual results to differ
materially from these forward-looking statements. Among the factors that could
cause actual results to differ are Tiger Telematics, Inc.'s operating history;
competition; low barriers to entry; reliance on strategic relationships; rapid
technological changes; inability to complete transactions on favourable terms;
and those risks discussed in the Company's filings with the SEC.
-- Ends--
For further information contact:
Tiger Telematics, Inc. A.J. Nassar CEO at 954-351-9833
Tiger Telematics, Ltd. Oliver Mayes at 011-44-20-786-25326 in London
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