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EXHIBIT 6.10
MERGER AGREEMENT BY AND AMONG
OMICRON TECHNOLOGIES, INC., INTERACTIVE RADIO CORPORATION,
VIASPACE RADIO, INC., VIASPACE TECHNOLOGIES LLC,
XXXX XXXXXX AND RADIO SATELLITE CORPORATION
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EXHIBIT 6.10
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MERGER AGREEMENT
by and among
OMICRON TECHNOLOGIES, INC.,
INTERACTIVE RADIO CORPORATION
VIASPACE RADIO, INC.,
VIASPACE TECHNOLOGIES LLC,
XXXX XXXXXX
and
RADIO SATELLITE CORPORATION
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September 8, 1999
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MERGER AGREEMENT
This MERGER AGREEMENT dated as of September 8, 1999 (the "Agreement"),
is by and among OMICRON TECHNOLOGIES, INC., a Florida corporation ("Parent") and
INTERACTIVE RADIO CORPORATION, a Nevada corporation and wholly owned subsidiary
of Parent ("Merger Sub"), on the one hand, and VIASPACE RADIO, INC., a
California corporation (the "Company"), VIASPACE TECHNOLOGIES LLC, a Delaware
limited liability company ("ViaSpace"), XXXX XXXXXX ("Xxxxxx") and RADIO
SATELLITE CORPORATION, a California corporation ("RSC") on the other hand
(collectively ViaSpace, Xxxxxx and RSC are all of the shareholders of the
Company and are collectively referred to as the "Shareholders").
WITNESSETH
WHEREAS, the Company owns certain patents (numbers US5303393,
US5455823 and US5689245) to the Digital Audio Broadcasting technology (the
"INTERACTIVE RADIO Technology");
WHEREAS, Parent is willing to provide $6,000,000 in funding to the
Company to develop and commercially produce the INTERACTIVE RADIO Technology;
WHEREAS, each of the Boards of Directors of Parent, Merger Sub and the
Company has determined that the merger of Company with and into the Merger Sub,
with the Company continuing as the surviving corporation (the "Surviving
Corporation"), upon the terms and subject to the conditions set forth in this
Agreement (the "Merger"), is fair to and in the best interests of its
shareholders, and has approved and adopted this Agreement and the transactions
contemplated hereby;
WHEREAS, pursuant to the Merger, among other things, and subject to the
terms and conditions of this Agreement all of the issued and outstanding shares
of capital stock of the Company shall be converted into the right to receive
shares of the common stock of Parent ("Parent Common Stock");
WHEREAS, as an inducement to Parent and Merger Sub to enter into this
Agreement, certain Shareholders of the Company have agreed to vote the shares of
Company Capital Stock owned by them in favor of the Merger. "Company Capital
Stock" shall include all shares of the Company's common stock ("Company Common
Stock"), no par value, and each share of each series of preferred stock (the
"Company Preferred Stock") of the Company;
WHEREAS, Parent, Merger Sub, the Company and the Shareholders intend
that the Merger shall constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, and in furtherance thereof intend that this
Agreement shall be a "Plan of
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Reorganization" within the meaning of Sections 354(a) and 361(a) of the
Internal Revenue Code; and
WHEREAS, Parent, Merger Sub, the Company and the Shareholders desire to
make certain representations, warranties, covenants and agreements in connection
with the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time and subject to and upon the terms
and conditions of this Agreement and the applicable provisions of the Delaware
General Corporation Law (the "Delaware Code") and the California Corporations
Code (the "California Code"), Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease, and the
Company shall continue as the surviving corporation and wholly-owned subsidiary
of Parent.
1.2 Effective Time. Unless this Agreement is earlier terminated
pursuant to Section 7.1, the closing of the Merger (the "Closing") will take
place as promptly as practicable, but no later than five (5) Business Days
following satisfaction or waiver of the conditions set forth in Article 6, at
the offices of Brand Xxxxxx & Xxxxxxx LLP, Los Angeles, California, unless
another place or time is agreed to by Parent and the Company. The date upon
which the Closing actually occurs is herein referred to as the "Closing Date."
On the Closing Date, the parties hereto shall cause the Merger to be consummated
by filing a Certificate of Merger or like instrument (the "Merger Certificate"),
with each of the Secretary of State of the State of Delaware and the Secretary
of State of the State of California, in accordance with the relevant provisions
of applicable law (the time of acceptance by the Secretary of State of the State
of California of such filing, or such later time agreed to by the parties and
set forth in this Agreement, being referred to herein as the "Effective Time").
1.3 Effect of the Merger on Constituent Corporations. At the Effective
Time, the effect of the Merger shall be as provided in the applicable provisions
of the California Code. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of Merger Sub and the Company shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation and By-Laws of Surviving Corporation.
(a) At the Effective Time, the articles of incorporation of
the Company, as in effect immediately prior to the Effective Time,
shall be the articles of incorporation of the
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Surviving Corporation until thereafter amended as provided by law and
such articles of incorporation and by-laws of the Surviving
Corporation.
(b) The by-laws of the Company, as in effect immediately prior
to the Effective Time, shall be the by-laws of the Surviving
Corporation until thereafter amended as provided by such by-laws, the
articles of incorporation and applicable law.
1.5 Directors and Officers of Surviving Corporation. The directors of
Merger Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation, each to hold office in accordance with the articles of
incorporation and by-laws of the Surviving Corporation. The officers of Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, each to hold office in accordance with the by-laws of the Surviving
Corporation.
1.6 MAXIMUM NUMBER OF SHARES OF PARENT COMMON STOCK TO BE ISSUED;
EFFECT ON OUTSTANDING SECURITIES OF THE COMPANY. The maximum number of shares of
Parent Common Stock to be issued in exchange for the acquisition by Parent of
all outstanding shares of Company Capital Stock shall be the Aggregate Share
Number, as defined below. On the terms and subject to the conditions of this
Agreement, as of the Effective Time, by virtue of the Merger and without any
action on the part of Parent or Merger Sub, the Company or the holder of any
shares of the Company Capital Stock the following shall occur:
(a) Conversion of Company Capital Stock. At the Effective
Time, each share of Company Capital Stock issued and outstanding
immediately prior to the Effective Time as set forth on Schedule 2.4,
(other than any shares of Company Capital Stock to be canceled pursuant
to Section 1.6(b) and any Dissenting Shares (as provided in Section
1.7)) will be canceled and extinguished and be converted automatically
into the right to receive that number of shares of Parent Common Stock
equal to the Common Stock Exchange Ratio, as defined below, as the case
may be, rounded down to the nearest whole share of Parent Common Stock.
For purposes of this Agreement:
(i) "Aggregate Common Number" means the aggregate
number of shares of Company Common Stock outstanding
immediately prior to the Effective Time (assuming the
conversion immediately prior to the Effective Time of all
outstanding shares of Company Preferred Stock).
(ii) "Aggregate Share Number" means Five Million
(5,000,000) shares of Parent Common Stock (as appropriately
adjusted to reflect the effect of any stock split, stock
dividend, stock combination, reorganization, reclassification
or similar change occurring after the date of this Agreement
and prior to the Effective Time).
(iii) "Common Stock Exchange Ratio" means the
quotient obtained by dividing (x) the Aggregate Share Number
by (y) the Aggregate Common Number.
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(b) Cancellation of Parent-Owned and Company-Owned Stock. Each
share of Company Capital Stock owned by Parent or the Company or any
Subsidiary of Parent or the Company immediately prior to the Effective
Time shall be automatically canceled and extinguished without any
conversion thereof and without any further action on the part of
Parent, Merger Sub or the Company.
(c) Adjustments to Common Stock Exchange Ratio. The Common
Stock Exchange Ratio shall be equitably adjusted to reflect fully the
effect of any stock split, reverse split, stock combination, stock
dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Capital Stock),
reorganization, reclassification, recapitalization or other like change
with respect to Parent Common Stock or Company Capital Stock occurring
after the date hereof and prior to the Effective Time. "Subsidiary"
means any Person in which the Company or Parent, as the context
requires, directly or indirectly through Subsidiaries or otherwise,
beneficially owns at least 50% of either the equity interest in, or the
voting control of, such Person, whether or not existing on the date
hereof.
(d) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued in the Merger, but in lieu thereof, each holder of
shares of Company Capital Stock who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after aggregating all
fractional shares of Parent Common Stock to be received by such holder)
shall be entitled to receive from Parent an amount of cash (rounded to
the nearest whole cent) equal to the product of (a) such fraction,
multiplied by (b) the Closing Price. "Closing Price" shall mean the
average of the Parent's closing price on the OTC Bulletin Board (or
other national securities exchange on which Parent's Common Stock is
listed) for the 30-day period preceding the Closing.
(e) Capital Stock of Merger Sub. Each share of common stock of
Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock of the Surviving
Corporation. From and after the Effective Time, each share certificate
of Merger Sub theretofore evidencing ownership of any such shares shall
evidence ownership of such shares of capital stock of the Surviving
Corporation.
1.7 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Capital Stock held by a holder who has
demanded and perfected dissenters' rights for such shares in accordance
with the California Code and who, as of the Effective Time, has not
effectively withdrawn or lost such dissenters' rights ("Dissenting
Shares") shall not be converted into or represent a right to receive
Parent Common Stock pursuant to Section 1.6, but the holder thereof
shall only be entitled to such rights as are granted by the California
Code.
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(b) Notwithstanding the provisions of Section 1.7(a) above, if
any holder of shares of Company Capital Stock, who demands purchase of
such shares under the California Code, shall effectively withdraw or
lose (through failure to perfect or otherwise) such holder's
dissenters' rights, then, as of the later of (i) the Effective Time or
(ii) the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive
Parent Common Stock as provided in Section 1.6, without interest
thereon, upon surrender to the Company of the certificate representing
such shares in accordance with Section 1.8 of this Agreement.
(c) The Company shall give Parent (i) prompt notice of its
receipt of any written demands for purchase of any shares of Company
Capital Stock, withdrawals of such demands, and any other instruments
relating to the Merger served pursuant to the California Code and
received by the Company and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands for purchase of
any shares of Company Capital Stock under the California Code. The
Company shall not, except with the prior written consent of Parent or
as may be required under applicable law, voluntarily make any payment
with respect to any demands for purchase of Company Capital Stock or
offer to settle or settle any such demands.
1.8 EXCHANGE PROCEDURES.
(a) Parent Common Stock. On the Closing Date, Parent shall
deposit with the Parent's transfer agent (the "Exchange Agent") for
exchange in accordance with this Article 1, the Aggregate Share Number
of shares of Parent Common Stock issuable in exchange for outstanding
shares of Company Capital Stock and cash in an amount sufficient to
permit the payment of cash in lieu of fractional shares pursuant to
Section 1.6(d).
(b) Exchange Procedures. At or as soon as practicable after
the Effective Time, each Shareholder shall tender to the Parent any
certificate ("Certificate") representing the Company Capital Stock held
by the record shareholder of the Company (each a "Shareholder"),
accompanied by duly executed letters of transmittal or stock powers, as
required by the Parent. As soon as practicable after the surrender of
such Certificates, the Parent shall cause the Exchange Agent to deliver
to the Shareholder surrendering such Certificate a certificate
representing the number of Shares of Parent Common Stock to which such
Shareholder is entitled pursuant to Section 1.6 and a check payable to
such Shareholder representing the cash to which such Shareholder is to
receive in lieu of fractional shares, if any, and any Certificate so
surrendered shall be cancelled. Until surrendered, each outstanding
Certificate that, prior to the Effective Time, represented shares of
Company Capital Stock will be deemed from and after the Effective Time,
for all corporate purposes, other than the payment of dividends, to
evidence the ownership of the number of full shares of Parent Common
Stock into which such shares
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of Company Capital Stock shall have been so converted and cash in lieu
of fractional shares.
(c) Distributions With Respect to Unexchanged Shares of
Company Capital Stock. No dividends or other distributions with respect
to Parent Common Stock declared or made after the Effective Time and
with a record date after the Effective Time will be paid to the holder
of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby until the holder of record of such
Certificate shall surrender such Certificate. Subject to applicable
law, following surrender of any such Certificate, there shall be paid
to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, at
the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore
payable (but for the provisions of this Section 1.8(c)) with respect to
such whole shares of Parent Common Stock.
(d) Transfers of Ownership. If any certificate for shares of
Parent Common Stock is to be issued pursuant to the Merger in a name
other than that in which the Certificate surrendered in exchange
therefor is registered, it will be a condition of the issuance thereof
that the Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the person requesting
such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a
certificate for shares of Parent Common Stock in any name other than
that of the registered holder of the Certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it
that such tax has been paid or is not payable.
1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY CAPITAL STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of Company
Capital Stock in accordance with the terms hereof (including any cash in lieu of
fractional shares) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Capital Stock, and there shall
be no further registration of transfers on the records of the Company of shares
of Company Capital Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article 1.
1.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue certificates representing such shares of Parent Common Stock and cash in
lieu of fractional shares in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof; provided, however, that Parent or the Exchange Agent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to provide an indemnity or
deliver a bond in such sum as it may reasonably direct as
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indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
1.11 EXEMPTION FROM REGISTRATION; CALIFORNIA PERMIT. The shares of
Parent Common Stock to be issued pursuant to Section 1.6 in connection with the
Merger will be issued in a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), by reason of Section
4(2) of the Securities Act. Subject to the provisions of Section 5.1(c), the
shares of Parent Common Stock to be issued pursuant to Section 1.6 in connection
with the Merger will be exempt or qualified under the California Code, pursuant
to Section 25103(h).
1.12 FURTHER ACTION. If, at any time after the Effective Time, any such
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company, the officers and directors of the Surviving Corporation are fully
authorized to take, and will take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
2.1 ORGANIZATION, STANDING AND POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has all requisite corporate power and authority to own, lease and
operate its Assets and Properties, as defined below, and to carry on its
business as now being conducted. The Company is duly qualified and in good
standing to conduct business in each jurisdiction in which the business it is
conducting makes such qualification necessary.
(a) "Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether
real, personal or mixed, whether tangible or intangible, whether
absolute, accrued, contingent, fixed or otherwise and wherever
situated), including the goodwill related thereto, operated, owned,
licensed or leased by such Person, including cash, cash equivalents,
Investment Assets, accounts and notes receivable, chattel paper,
documents, instruments, general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.
2.2 AUTHORITY AND ENFORCEABILITY. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform fully its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and have
been duly authorized and approved by all necessary corporate action on the part
of the Company. This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes the valid and binding
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agreement of the other parties hereto, this Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
2.3 SUBSIDIARIES. The Company does not, directly or indirectly, (a) own
or hold beneficially or of record any shares of capital stock, equity interest
or any other security of any other entity or (b) have any other investment in
any other entity.
2.4 CAPITAL STRUCTURE. The authorized Company Capital Stock consists
solely of [5,500,000] authorized shares consisting of (i) [5,000,000] shares of
Common Stock, and (ii) [500,000] shares of 1999 Series A Preferred Stock. As of
the date hereof, there are issued and outstanding [4,500,000] shares of Common
Stock, and [500,000] shares of 1999 Series A Preferred Stock. No other shares of
capital stock of the Company are issued and outstanding. Schedule 2.4 sets forth
a true, correct and complete list, as of the date hereof, of the names of all of
the Shareholders and the respective types and numbers of Company Capital Stock
held by each Shareholder. All outstanding shares of Company Capital Stock have
been validly authorized and issued and are fully paid, non-assessable and free
of preemptive or similar rights.
2.5 TITLE TO INTERACTIVE RADIO TECHNOLOGY.
(a) Title. Except as set forth on Schedule 2.11 (i) the
Company owns beneficially and of record, and has good and marketable
title to, the Interactive Radio Technology, free and clear of any
Encumbrances (as defined below) and (ii) upon consummation of the
transactions contemplated at the Closing, the Company will still have
good and marketable title to the Interactive Radio Technology, free and
clear of any Encumbrance.
(b) Definition of Encumbrance. For purposes of this Agreement,
the term "Encumbrance" shall mean and include any mortgage, pledge,
claim, charge, lien, encumbrance, interest, option, right of first
refusal, restriction, condition, violation, security interest or
assessment of any nature affecting in any way the assets or property
involved; provided that the term "Encumbrance" shall not include any
restrictions imposed pursuant to the express provisions of any statute
or governmental regulation.
2.6 NO VIOLATIONS RESULTING FROM TRANSACTIONS. Except as set forth in
Schedule 2.6 attached hereto, the execution and delivery by the Company of this
Agreement, and the consummation of the transactions contemplated hereby and
thereby by the Company will not (a) conflict with or violate any provision of
the certificate of incorporation or bylaws, or other similar document, of the
Company, as amended through the date hereof, (b) require any consent, waiver,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity (as defined below), (c) result in or constitute a Default
(as defined in Section 2.13(b)), or
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require any consent or approval of or notice to any Person, or result in the
creation of Encumbrance, under or pursuant to any material agreement to which
the Company is a party or by which it or any of its Assets may be bound, or (d)
violate any Law (as defined below) applicable to the Company or the Shareholders
by which any of them may be bound. For purposes of this Agreement, (i) the term
"Governmental Entity" shall mean any federal or state governmental authority,
court, administrative agency or commission or other governmental or regulatory
body or entity, and (ii) the term "Law" shall mean any statute, law, ordinance,
rule, regulation or administrative ruling or any governmental permit, franchise
or license or any injunction, judgment, order or consent or similar decree or
agreement, whether federal, state, local or foreign.
2.7 COMPLIANCE WITH LAWS. The Company is, and at all times has been, in
material compliance with all Laws applicable to the Company, or to the conduct
of the business or operations of the Company, the use of their properties and
assets, and (b) the Company has not received, and does not know of the issuance
or threatened issuance by any Governmental Entity, of any notices of violation
or alleged violation of any Law applicable to the Company, provided that the
representations and warranties set forth in this sentence with respect to
compliance with foreign laws are being made to the knowledge of the Company.
2.8 LITIGATION. There is no action, suit, claim, investigation or
proceedings whether at law or in equity (each, a "Legal Proceeding"), pending
or, to the knowledge of the Company, threatened that questions the validity of
this Agreement or any action taken or to be taken by the Company or in
connection with the consummation of the transactions contemplated hereby.
2.9 TAXES.
(a) Payment of Taxes; Tax Returns. All Taxes, as defined
below, with respect to any periods ending on or before the Closing Date
which are due and payable (whether or not shown on any Tax Return, as
defined below) by the Company have been paid in full and no such Taxes
remain outstanding.
(b) Defined Terms. For purposes of this Agreement, (i) "Code"
shall mean both the Internal Revenue Code of 1986, as amended and any
successor internal revenue law and the rules and regulations
promulgated thereunder, and any reference to a specific provision of
the Code shall include any predecessor of such provision; (ii) "Taxes"
shall mean (A) all taxes, charges, fees, levies, or other similar
assessments, including without limitation, income, gross receipts, ad
valorem, premium, excise, real property, personal property, windfall
profit, sales, use, transfer, licensing, withholding, employment,
payroll, estimated and franchise taxes imposed by the United States,
any state, local, or foreign government, or any subdivision, agency, or
other similar entity of the United States, or any such government, and
any interest, fines, penalties, assessments, or additions to tax
resulting from, attributable to, or incurred in connection with any
such tax or any contest or dispute thereof, and (B) any Taxes (as
defined in clause (A)) for
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which the Company is liable as a transferee, indemnitor, guarantor,
surety or in a similar capacity under any contract, arrangement,
understanding or commitment, whether oral or written, or by reason of
having been a member of any affiliated, consolidated, combined or
unitary group; (iii) "Tax Returns" shall mean any report, return,
statement, or other information required to be supplied to a federal,
state, local or foreign taxing authority in connection with Taxes; and
(iv) any reference to the Company shall include any corporation which
merged with or into or was liquidated into the Company or a subsidiary
of the Company or otherwise is a predecessor of the Company or such
subsidiary.
2.10 NO UNDISCLOSED LIABILITIES. Except as set forth on Schedule 2.10
attached hereto, the Company has not had any indebtedness, obligations or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due or asserted or unasserted), and, to the knowledge
of the Company, there was no basis for the assertion of any claim or liability
of any nature against the Company.
2.11 INTELLECTUAL PROPERTY
(a) List of Intellectual Property; Sufficiency. Schedule 2.11
sets forth a true, correct and complete list of all Intellectual
Property (as defined below in paragraph (d)) which is either owned by
the Company, licensed by the Company or otherwise used in its business
and indicates, with respect to each item of Intellectual Property
listed thereon, the owner thereof and, if applicable, the name of the
licensor and licensee thereof and the date(s) of any licenses or other
agreements or contracts with respect thereto.
(b) Title; Validity. Except as set forth in Schedule 2.11:
(i) The Company has full legal and beneficial
ownership (free and clear of any and all Encumbrances) of, or
a valid right to use (free of any material restriction not
entered into in the ordinary course of business), all
Intellectual Property necessary for the conduct of its
business, and the Company has not received any notice or claim
(whether written, oral or otherwise) challenging the Company's
ownership or rights in such Intellectual Property or
suggesting that any other Person (except, under certain
circumstances, the licensor thereof) has any claim of legal or
beneficial ownership with respect thereto. A "Person" means
any natural person, corporation, general partnership, limited
partnership, limited liability company or partnership,
proprietorship, other business organization, trust, union,
association or governmental or regulatory authority; and
(ii) All Intellectual Property of the Company is
legally valid and enforceable without any material
qualification, limitation or restriction on its use, and the
Company has not, directly or indirectly through any of its
Affiliates, as defined in Section 2.11(e) below, or
representatives, received any notice or claim
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(whether written, oral or otherwise) challenging the validity
or enforceability of any such Intellectual Property, provided
that, with respect to any patents, such representation is being
made only to the knowledge of the Company.
(c) The Company has not conducted its business, and has not
used or enforced (or failed to use or enforce) any Intellectual
Property, in a manner that would result in the abandonment,
cancellation or unenforceability of any item of the Intellectual
Property listed in Schedule 2.11, and the Company has not taken or
failed to take any action that would result in the forfeiture or
relinquishment of any Intellectual Property used in the conduct of its
business as now conducted.
(d) Definition of "Intellectual Property". For purposes of
this Agreement, the term "Intellectual Property" means any patent,
copyright, trademark, trade name, service xxxx, logo, Internet domain
name or industrial design, any registrations thereof and pending
applications therefor (to the extent applicable), any other
intellectual property right (including, without limitation, any
invention, know-how, trade secret, formula, algorithm, process,
confidential or proprietary report or information, customer list or
membership list, any computer program, software, source code, object
code, database or data right, and any system, user, programmer,
maintenance, installation or other form of documentation or other
material related thereto), any license or other contract relating to
any of the foregoing, and any goodwill associated with any business
owning, holding or using any of the foregoing.
(e) "Affiliate" means, as applied to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under
common control with, that Person, (b) any other Person that owns or
controls (i) 10% or more of any class of equity securities of that
Person or any of its Affiliates or (ii) 10% or more of any class of
equity securities (including any equity securities issuable upon the
exercise of any option or convertible security) of that Person or any
of its Affiliates, or (c) any director, partner, officer, manager,
agent, employee or relative of such Person. For the purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of that Person, whether through ownership of voting securities
or by contract or otherwise.
2.12 REAL PROPERTY. The Company does not own or have the right to
acquire, pursuant to any agreement, arrangement or understanding, any real
property.
2.13 MATERIAL CONTRACTS
(a) List of Material Contracts. Schedule 2.13 attached hereto
sets forth a true, correct and complete list (including the title, the
date, the parties and a list of any amendments, modifications or
supplements thereto) of all material agreements and other
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contracts to which the Company is a party or by which it or its Assets
may be bound ("Contracts").
(b) Enforceability; Defaults; Consents; Impending
Terminations; Etc. Except as set forth in Schedule 2.13:
(i) No Default, as defined below, exists under any
Contract either by the Company or, to the knowledge of the
Company, by any other party thereto;
(ii) The Company is not aware of the assertion by any
third party of any claim of Default or breach under any
Contract.
For purposes of this Agreement, the term "Default" means, with respect
to any Contract, (x) any material breach of or default under such Contract, (y)
any event which could (either with or without notice or lapse of time or both)
give rise to any right of termination, cancellation or acceleration or any
obligation to repay with respect to such Contract, or (z) any event which could
result in either a material increase in the obligations or liabilities of, or a
loss of any material benefit to which, the party in question or any of its
affiliates may be entitled or subject to under such Contract.
2.14 NO MISREPRESENTATION. Neither this Agreement (including the
Schedules hereto) or any information supplied to Parent by or on behalf of the
Company in connection with this Agreement or the transactions contemplated
hereby 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 contained
herein or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE SHAREHOLDERS
3.1 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The
Shareholders hereby severally but not jointly represent and warrant as to
himself, herself or itself to, and covenant and agree with, Parent and Merger
Sub as follows:
(a) Each Shareholder has all requisite legal right, power and
authority to enter into this Agreement and all other agreements
required of them as a result of the terms and conditions of this
agreement (the "Related Agreements") to which he, she or it is a party
and to agree to the transactions contemplated hereby and thereby, and
to perform all of his, her or its obligations hereunder and thereunder.
(b) This Agreement has been duly executed and delivered by
such Shareholder and, assuming this Agreement constitutes the valid and
binding agreement of the other parties hereto, this Agreement
constitutes the legal, valid and binding
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obligations of such Shareholder, enforceable against such Shareholder
in accordance with its respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and
remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(c) The execution and delivery by each Shareholder of this
Agreement and the consummation of the transactions contemplated hereby
by such Shareholder, will not (i) require any consent, waiver,
approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, as defined in Section 2.6, (ii) result in
or constitute a Default, as defined in Section 2.13(b), or require any
consent or approval of or notice to any Person, or result in the
creation of an Encumbrance, under or pursuant to any other material
contract or agreement to which such Shareholder is a party or by which
it or any of its assets may be bound, or (iii) violate any Law
applicable to such Shareholder or by which any of its may be bound.
(d) Each Shareholder owns beneficially and of record, and has
good and marketable title to, the number of shares of Company Capital
Stock set forth opposite the name of such Shareholder in Schedule 2.4,
free and clear of any Encumbrance, as defined in Section 2.5(b). During
the period commencing on the date hereof and ending on the Closing
Date, such Shareholder shall retain both record and beneficial
ownership of all such shares of Company Capital Stock held by him, her
or it, free and clear of any Encumbrance, and will not transfer any of
such shares of Company Capital Stock to any party or other Person or
otherwise grant any Encumbrance with respect to such shares of Company
Capital Stock; provided, however, that any Shareholder shall be
entitled to freely transfer any shares of Company Capital Stock owned
by it to any of its shareholders, members or affiliates if the
transferee agrees to be bound by the terms of this Agreement.
(e) The shares of Parent Common Stock to be acquired by each
Shareholder in the Merger are being acquired for such Shareholder's own
account for investment purposes and not with a view to, or for resale
in connection with, any distribution of such shares meaning of the
Securities Act or any applicable state securities or "blue sky" laws.
(f) Each Shareholder understands that the shares of Parent
Common Stock to be issued to such Shareholder in the Merger will not be
registered under the Securities Act or qualified under any state
securities or "blue sky" laws, and such shares may not be sold or
otherwise disposed of except in compliance with the Securities Act or
in reliance upon an exemption therefrom; provided, however, that
subject to the foregoing, any Shareholder shall be entitled to freely
transfer any shares of Parent Common Stock owned by it to any of its
shareholders, members or affiliates.
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(g) Each Shareholder understands that Parent is relying to a
substantial extent on the representations warranties and covenants of
such Shareholder as provided in this Agreement and authorizes Parent to
act as it may see fit in full reliance thereon, including, without
limitation, placing the following or a similar legend on and stop order
against the shares of Parent Common Stock to be acquired by such
Shareholder in the Merger:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS AND MAY BE OFFERED AND SOLD
ONLY IF REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION IS AVAILABLE THEREFROM.
(h) Each Shareholder has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of the prospective investment in the shares of Parent
Common Stock, and is able to bear the economic consequences thereof for
an indefinite period of time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT
Merger Sub and Parent hereby jointly and severally represent and
warrant to the Company and the Shareholders as follows:
4.1 ORGANIZATION, STANDING AND POWER. Each of Merger Sub and Parent is
duly organized, validly existing and in good standing under the laws of its
state of incorporation or organization and has all requisite corporate power and
authority to own, lease and operate its Assets and Properties, as defined in
Section 2.1(a), and to carry on its business as now being conducted. Each of
Merger Sub and Parent is duly qualified and in good standing to conduct business
in each jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification necessary.
4.2 Authority. Each of Merger Sub and Parent has all requisite power
and authority to execute and deliver this Agreement and to perform fully its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of each of Merger Sub
and Parent. This Agreement has been duly executed and delivered by each of
Merger Sub and Parent and, assuming this Agreement constitutes the valid and
binding agreement of the other parties hereto and thereto, this Agreement
constitutes the legal, valid and binding obligations of each of Merger Sub and
Parent, enforceable against each of Merger Sub and Parent in accordance with its
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors'
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rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
4.3 CAPITAL STRUCTURE. As of the date hereof, the authorized capital
stock of Parent consists of (a) 50,000,000 shares of Parent Common Stock (of
which 24,170,000 shares were issued and outstanding and 25,830,000 shares were
held in treasury, and (b) There are no shares of preferred stock issued or
outstanding. All outstanding shares of Parent Common Stock are validly issued,
fully paid and non-assessable and are not subject to preemptive or other similar
rights.
4.4 ISSUANCE OF SHARES BY PARENT. Prior to the Closing, Parent and
Merger Sub will have taken all necessary action to permit Parent to issue the
number of shares of Parent Common Stock required to be issued by it pursuant to
Section 1.6 and to those Shareholders on Schedule 2.4. All shares of Parent
Common Stock to be issued by Parent pursuant to Schedule 1.7 will, at the time
of issuance, be validly issued, fully paid and nonassessable, and no Person will
have any preemptive right of subscription or purchase in respect thereof; in
addition, such shares will be issued free and clear of any Encumbrances (except
pursuant to applicable securities or "blue sky" laws).
4.5 NO VIOLATIONS RESULTING FROM TRANSACTIONS. The execution and
delivery by Merger Sub and Parent of this Agreement and the consummation of the
transactions contemplated hereby by each of Merger Sub and Parent will not (a)
conflict with or violate any provision of the articles of incorporation or
bylaws of Parent or the articles of incorporation or bylaws of Merger Sub, (b)
require any consent, waiver, approval, authorization or permit of, or filing
with or notification to, any Governmental Entity, (c) result in or constitute a
Default, or require any consent or approval of or notice to any Person, or
result in the creation of an Encumbrance, under or pursuant to any material
agreement to which Merger Sub or Parent is a party or by which any of their
respective assets are bound, or (d) violate any Law applicable to Merger Sub or
Parent or by which any of their respective assets are bound.
4.6 LITIGATION. There is no suit, claim, action, proceeding or
investigation (collectively, "Claims") pending or, to the knowledge of the
Merger Sub or Parent, threatened against Merger Sub or Parent or any of their
properties, including without limitation, any Claim which, individually or in
the aggregate, questions the validity of this Agreement or any action to be
taken by Merger Sub or Parent in connection with the consummation of the
transactions contemplated hereby or could otherwise prevent or delay the
consummation of the transactions contemplated by this Agreement.
4.7 NO PRIOR ACTIVITIES. Except for obligations incurred in connection
with its incorporation or organization or the negotiation of this Agreement or
the consummation of the transactions contemplated hereby, Merger Sub has neither
incurred any obligation or liability nor engaged in any business or activity of
any type or kind whatsoever or entered into any agreement or arrangement with
any Person.
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4.8 INVESTMENT ADVISORS. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or similar fee or commission in connection with this Agreement and the
transactions contemplated hereby based on arrangements made by or on behalf of
Parent.
4.9 TAX-FREE ORGANIZATION
(a) Prior to the Closing, all of the shares of capital stock
of the Merger Sub are owned by the Parent.
(b) Except as provided herein, Parent has no current plan or
intention to (i) reacquire any of the Parent Common Stock issued in
connection with the transactions contemplated by this Agreement; (ii)
liquidate the Surviving Corporation; (iii) merge the Surviving
Corporation with or into another entity; (iv) sell or otherwise dispose
of its assets following the Close, except in the ordinary course of
business; or (vi) cause the Surviving Corporation to issue any
additional stock or securities.
(c) Parent has never owned any Company Capital Stock.
(d) Neither Parent nor Merger Sub is an investment company
subject to regulation under the Investment Company Act of 1940.
4.10 DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement contained in any schedule or in any certificate,
list or other writing furnished to the Company or any Shareholder pursuant to
any provision of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
herein or therein, in the light of the circumstances under which they were made,
not misleading.
ARTICLE V
COVENANTS OF PARENT AND MERGER SUB
5.1 ADDITIONAL AGREEMENTS. Each of the parties agrees to use its
respective best efforts to (a) take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, (b) obtain all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Entities and parties to contracts with the Company as are necessary
for consummation of the transactions contemplated by this Agreement, and (c)
fulfill all conditions precedent applicable to such party or its representatives
pursuant to this Agreement. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each party shall use its respective commercially reasonable efforts to take or
cause to be taken all such necessary action.
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5.2 PUBLICITY. On or prior to the Closing Date, Parent, Merger Sub, the
Company and the Shareholders will consult with each other and will mutually
agree upon any press release or public announcement pertaining to this Agreement
and shall not issue any such press release or make any such public announcement
prior to such consultation and agreement.
5.3 NOTIFICATION OF CERTAIN MATTERS. Parent and the Merger Sub, shall
give prompt notice to the Company of (a) any notice or other communication from
any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement, or
(b) any material Legal Proceeding, a defined in Section 2.8, commenced by or
against Parent or Merger Sub or any Legal Proceeding commenced or threatened
against Parent or Merger Sub relating to the transactions contemplated by this
Agreement.
5.4 DIRECTORS' AND OFFICERS' INDEMNIFICATION
(a) Parent agrees that all indemnification now existing in
favor of the directors and officers of the Company as of the date
hereof as provided in the charter and bylaws of the Company and in any
indemnification agreements existing between any such director or
officer and the Company on the date hereof shall continue in full force
and effect to the extent provided in such organizational or other
document, provided that Parent shall not be obligated to indemnify such
directors or officers for any actions taken or decisions made in
violation or contravention of this Agreement or in connection with any
matter or circumstance the existence or occurrence of which constitutes
a breach of the representations, warranties, covenants or agreements of
the Company or the Shareholders in this Agreement.
5.5 SEC REGISTRATION. No later than January 31, 2000, Parent agrees to
cause a registration statement under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), with respect to the Parent Common Stock to be declared
effective by the SEC. With a view to making available to the Shareholders the
benefits of Rule 144 promulgated under the Securities Act ("SEC Rule 144") and
any other rule or regulation of the Securities and Exchange Commission or its
successor (the "SEC") that may at any time permit a Shareholder to sell Parent
Common Stock to the public without registration, commencing with such 1934 Act
registration, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934
Act; and
(c) furnish to any Shareholder, so long as the Shareholder
owns any Parent Common Stock, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting
requirements of SEC Rule 144 (at any time after ninety (90)
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days after the effective date of the first registration statement filed
by the Company), the Securities Act and the 1934 Act and (ii) such
other information as may be reasonably requested in availing any
Shareholder of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
5.6 REGISTRATION OF PARENT COMMON STOCK. If Parent shall fail to comply
with the provisions of Section 5.5, any Shareholder shall have the right to
require Parent to prepare and file with the SEC within 30 days following a
request by such Shareholder, a registration statement on Form S-1 (or any
successor form or, in Parent's sole discretion, on any other appropriate form
under the Securities Act, as may then be available to Parent which allows for
the continuous offering of securities) (such registration statement, the
"Registration Statement") relating to the resale of the Registrable Shares (as
defined below), (y) Parent shall cause the Registration Statement to be declared
effective by the SEC as soon as reasonably practicable after the filing of such
Registration Statement, and (z) Parent shall maintain the effectiveness of such
Registration Statement (and maintain the current status of the prospectus or
prospectuses contained therein) until all of the Parent Common Shares held by
such Shareholder shall have been sold. Parent shall pay all registration,
qualification and filing fees, all fees and expenses of legal counsel,
accountants and other persons retained by Parent, and all other expenses
incurred by Parent in connection with Parent's performance of or compliance with
the provisions of this Section (excluding, without limitation, underwriting
discounts, selling commissions and transfer taxes applicable to the sale of
Registrable Shares but including the cost of any separate legal counsel or other
advisors retained by any Shareholder). The term "Registrable Shares" shall mean,
collectively, the shares of Parent Common Stock issued to the Shareholders of
Company Shares in the Merger pursuant to Section 1.6; provided that such term
shall not include any shares of Parent Common Stock that (x) have been
registered under the Securities Act, (y) have been sold or otherwise transferred
by any Holder or (z) have ceased to be outstanding.
5.7 PIGGYBACK REGISTRATION RIGHTS. If Parent grants piggyback
registration rights with respect to any Parent Common Stock to
any stockholder of Parent at any time during the two (2) year
period following the Closing Date, Parent shall grant
piggyback registration rights to the Shareholders on a pari
passu basis.
5.8 PUBLIC TRADING OF THE SURVIVING CORPORATION'S SHARES. No later
than October 1st 2001, Parent agrees to consummate the sale of
the Surviving Corporation's common stock in a bona fide
underwriting pursuant to a registration statement on Form S-1
or SB-2 under the Securities Act, which results in gross
proceeds to the Surviving Corporation of at least $6,000,000
and a simultaneous registration of the Surviving Corporation's
common stock with the SEC under the 1934 Act and listing of
the Surviving Corporation's common stock on a national
securities exchange (such registrations and listings referred
to as the "IPO"). In the event Parent does not complete such
IPO within such time period, the Shareholders holding greater
than 50% of the original Aggregate Share Number shall be
entitled to require Parent to distribute to all the
Shareholders shares of the
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Surviving Corporation representing 100% of the issued and
outstanding shares of Surviving Corporation in the manner set
forth in Section 5.8 above.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The respective
obligations of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions.
(a) Governmental Approvals. All authorizations, consents,
orders or approvals of, or declarations or filings with, or expirations
of waiting periods imposed by, any Governmental Entity, requisite to
the transactions contemplated hereby, shall have been filed, occurred
or been obtained, as the case may be.
(b) Contractual Consents. The Company shall have given all
notices to, and obtained all consents, approvals or authorizations of
or from, any Person which may be necessary to permit the consummation
of the transactions contemplated hereby (including, without limitation,
any consents required under contracts and agreements to which the
Company or any Shareholder is a party or by which the Company, any
Shareholder or any of their assets may be bound, or which may be
required to permit the change of ownership of the Company).
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this
Agreement shall be in effect; provided that prior to invoking this
condition, each party shall use all commercially reasonable efforts to
have any such order, injunction, legal restraint or prohibition
vacated.
6.2 CONDITIONS OF OBLIGATIONS OF MERGER SUB AND PARENT. The respective
obligations of Merger Sub and Parent to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of the following conditions
(which are for the exclusive benefit of Merger Sub and Parent), any or all of
which may be waived in whole or in part by Merger Sub or Parent in its sole
discretion:
(a) Representations and Warranties. The representations and
warranties of the Company and the Shareholders set forth in this
Agreement shall be true and correct in all material respects as of the
date of this Agreement, and shall be true and correct in all material
respects at and as of the Effective Time, as though made at and as of
the Effective Time, and the Company shall produce at or prior to the
Effective Time a certificate, signed by the president of the Company,
certifying to such effect.
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(b) Performance of Obligations. Each of the Company and the
Shareholders shall have performed in all material respects at or prior
to the Effective Time all obligations required to be performed by each
such party at or prior to the Effective Time, and the Parent shall have
received at or prior to Closing a certificate, signed by the president
of the Company, certifying to such effect.
(c) No Material Adverse Change. Since the date of this
Agreement, there shall have been no event, change, occurrence or
circumstance having, or which could reasonably be expected to have,
individually or in the aggregate, Material Adverse Effect, and the
Company shall have produced a certificate, signed by the president of
the Company, certifying to such effect. A "Material Adverse Change" is
an event, change, occurrence or circumstance having, or which could
reasonably be expected to have, individually or in the aggregate, a
material adverse change in, or material adverse effect on, the
business, assets, prospects, results of operations or financial or
other condition of the Company or (ii) any event or circumstance that
is or would reasonably be likely to prevent, hinder or materially delay
the consummation of any of the transactions contemplated by this
Agreement.
(d) Other Documents. The Company shall have delivered such
other documents as Parent and Merger Sub may reasonably request.
6.3 CONDITIONS OF OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS. The
respective obligations of the Company and the Shareholders to effect the Merger
are subject to the satisfaction at or prior to the Effective Time of the
following conditions (which are for the exclusive benefit of the Company and the
Shareholder), any or all of which may be waived in whole or in part by the
Company and the Shareholders:
(a) Representations and Warranties. The representations and
warranties of Parent and the Merger Sub, as set forth in this Agreement
shall be true and correct in all material respects as of the date of
this Agreement, and shall be true and correct in all material respects
at and as of the Effective Time, as though made at and as of the
Effective Time, and the Company shall have received at or prior to the
Effective Time a certificate, signed by a senior executive officer of
Parent and the Merger Sub, each certifying to such effect.
(b) Performance of Obligations. Parent and the Merger Sub
shall have performed in all material respects at or prior to the
Effective Time all obligations required to be performed by each such
party at or prior to the Effective Time, and the Company shall have
received at or prior to Closing a certificate of Parent and the Merger
Sub, signed by a senior executive officer of Parent and Merger Sub,
certifying to such effect.
(c) No Change in Parent and the Merger Sub. Except as
otherwise expressly contemplated or permitted by this Agreement or
authorized in writing by the Company
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and the Shareholders prior thereto, neither Parent nor Merger Sub shall
have taken any of the following actions or none of the following shall
have occurred:
(i) conduct the business of Parent or Merger in a
manner inconsistent with past practice;
(ii) (x) declare, authorize, set aside, pay or
distribute any dividend or other distribution, nor grant any
option, warrant, call or right (including preemptive rights),
(y) issue, transfer, dispose, sell, purchase, redeem or
otherwise acquire any shares of capital stock of either Parent
or Merger Sub or any of their securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe
for, any shares of capital stock or other securities of, or
other ownership interests in, the Parent or Merger Sub,
provided that the Parent may purchase shares of Parent Common
Stock upon the termination of an employee if the Parent is
expressly authorized to do so pursuant to a prior written
agreement, or (z) enter into any agreement of any character
requiring the Parent to take any of the actions in (x) and (y)
above;
(iii) effect any recapitalization, reclassification
or similar change in the capitalization of the Company;
(iv) amend their respective articles of incorporation
or bylaws;
(v) fail to comply with all Laws and to comply with
all contractual and other obligations applicable to Parent or
Merger Sub;
(vi) incur any indebtedness for borrowed money, not
issue any bond, debenture or promissory note and, except for
trade payables and any other liabilities or obligations
incurred in the ordinary course of business (consistent with
past practice), not create, incur, acquire, assume, guarantee
or become subject to, or agree to incur or become subject to,
any other obligation or liability (contingent or otherwise);
(vii) acquire any material properties or assets and
not sell, assign, transfer, convey, lease or otherwise dispose
of any of the material properties or assets (except for fair
consideration in the ordinary course of business consistent
with past practice) of Parent, Merger Sub or the Company;
(viii) fail to do, or agree to do anything prohibited
by, Articles V or VI of this Agreement or anything which would
make any of the representations and warranties made to the
Company or the Shareholders in this Agreement untrue or
incorrect in any material respect;
(ix) any other Material Adverse Change in Parent or
Merger Sub; and
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(x) agree to take any action which would be
prohibited by this Section.
(d) Release. Parent shall have signed a release agreement in a
form acceptable to ViaSpace, releasing ViaSpace from any obligation
under, and from any and all liability as a result of that Memorandum of
Understanding signed by and between ViaSpace and Parent, dated August
7, 1998, and as amended.
(e) Private Placement. The Shareholders shall be reasonably
satisfied that the shares of Parent Common Stock to be issued in
connection with the Merger pursuant to Section 1.6(a) are issuable
without registration pursuant to Section 4(2) of the Securities Act.
(f) Tax-Free Reorganization. The Merger will constitute a
tax-free reorganization within the meaning of Section 368(a) of the
Code.
(g) Employment Agreements. Each of Xxxx Xxxxxxxx, Xxxx Xxxxxx,
and Xxxxx Xxxxxxxx shall have entered into employment agreements from
the Surviving Corporation and shall have been granted such number of
qualified incentive stock options to purchase Parent Common Stock in
each case satisfactory to each of them in their sole discretion.
(h) Other Documents. Parent and Merger Sub shall have
delivered such other documents as the Company or the Shareholders may
reasonably request.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of the Company, on behalf of
itself and the Shareholders, and Parent, on behalf of itself and Merger
Sub;
(b) by (i) either (A) the Company, if there has been a
material breach of any representation, warranty, covenant or agreement
on the part of Parent or Merger Sub, which breach has not been cured
within two (2) business days following receipt by Parent of written
notice of such breach, or (B) Parent, if there has been a material
breach of any representation, warranty, covenant or agreement on the
part of the Company or any Shareholder, as the case may be, which
breach has not been cured within two (2) business days following
receipt by the breaching party of written notice of such breach, or
(ii) either the Company or Parent, if any permanent injunction or other
order of a court or other competent authority preventing the
consummation of the transactions contemplated by this Agreement shall
have become final and non-appealable; or
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(c) by either the Company or Parent, if the Closing shall not
have occurred on or before September 13th 1999; provided that the right
to terminate this Agreement under this Section 7.1(c) shall not be
available to (A) Parent, if such party has breached any of its
representations, warranties or covenants hereunder in any material
respect and such breach has been the cause of or resulted in the
failure of the Closing to occur on or before such date or (B) the
Company, if either the Company or any Shareholder has breached any of
his, her or its respective representations, warranties or covenants
hereunder in any material respect and such breach has been the cause of
or resulted in the failure of the Closing to occur on or before such
date.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party or any of their respective Affiliates,
officers, directors, shareholders or representatives, except (a) with respect to
Section 9.8, and (b) to the extent that such termination results from any
intentional or knowing breach by any party of any of its representations or
warranties, or of any of its covenants or agreements, in each case as set forth
in this Agreement.
7.3 AMENDMENT. Subject to applicable Law, this Agreement may be
amended, modified or supplemented only by written agreement signed by the
Company, on behalf of itself and the Shareholders, and Parent, on behalf of
itself and Merger Sub, at any time prior to the Closing Date with respect to any
of the terms contained herein, and each party agrees to be bound by any such
amendment, modification or supplement.
7.4 EXTENSION; WAIVER. At any time prior to the Closing Date, the
Company (on behalf of itself and the Shareholders), on the one hand, and Parent
(on behalf of itself and Merger Sub), on the other hand, may: (a) extend the
time for the performance of any of the obligations or other acts of the other
parties; (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto; and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement to any such extension or waiver shall be valid only if set forth in a
written instrument signed by the Company (on behalf of itself and the
Shareholders), or by Parent (on behalf of itself and Merger Sub), as the case
may be. The failure of any party to assert any of its rights hereunder shall not
constitute a waiver of such rights.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 GENERAL SURVIVAL. The parties agree that, regardless of any
investigation made by the parties, (a) the representations and warranties of the
parties contained in this Agreement shall survive the execution and delivery of
this Agreement for a period beginning on the date hereof and ending on the
second anniversary of the Closing Date and (b) each covenant and agreement set
forth in this Agreement which, by its terms, is to be performed after the
Closing
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Date shall survive the execution and delivery of this Agreement and shall
continue until the expiration of the applicable statute of limitations period,
unless otherwise expressly provided for herein (all of the time periods set
forth above, collectively referred to as the "Survival Period"). Notwithstanding
anything to the contrary contained herein, (i) no claim, suit or proceeding for
breach of any representation or warranty of any party set forth in this
Agreement may be brought by any party unless written notice of such claim shall
have been given on or prior to the last day of the applicable Survival Period
(in which event each such representation or warranty shall, with respect to the
specific claim made, survive the applicable Survival Period until such claim is
finally resolved and all obligations with respect thereto are fully satisfied)
and (ii) nothing contained in this Agreement or otherwise shall in any way limit
any claim, suit, cause or action or remedy that may be available to Parent or
any other Indemnitee (as defined below) based on fraud.
8.2 INDEMNIFICATION.
(a) Indemnification by Parent and Merger Sub. Subject to the
provisions of Section 8.1, the Parent and Merger Sub shall jointly and
severally indemnify and hold harmless the Company, the Shareholders and
each their respective Affiliates, officers, directors, stockholders,
representatives and agents (collectively, the "Company Indemnitees")
from and against and in respect of any and all Losses (as defined
below) incurred by, resulting from, arising out of, relating to,
imposed upon or incurred by the Shareholders or any other Company
Indemnitee by reason of:
(i) any inaccuracy in or breach of any of the
Parent's or Merger Sub's representations, warranties,
covenants or agreements contained in this Agreement;
(ii) any misrepresentation contained in any statement
or certificate furnished to the Company, Shareholders or any
other Indemnitee by or on behalf of the Parent in connection
with the transactions contemplated by this Agreement;
(iii) any liability or other obligation of Parent or
Merger Sub; or
(iv) any violation or alleged violation by Parent of
any applicable laws, including without limitation, applicable
securities laws.
(b) Indemnification by the Company and the Shareholders.
Subject to the provisions of Section 8.1, the Company and the
Shareholders, severally but not jointly, shall indemnify and hold
harmless Parent and the Merger Sub and each their respective
Affiliates, officers, directors, stockholders, representatives and
agents (collectively, the "Parent Indemnitees") from and against and in
respect of any and all Losses (as defined below) incurred by, resulting
from, arising out of, relating to, imposed upon or incurred by the
Parent Indemnitee by reason of:
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(i) any inaccuracy in or breach of any of the Company
or such Shareholder's representations, warranties, covenants
or agreements contained in this Agreement; or
(ii) any misrepresentation contained in any statement
or certificate furnished by the Company or such Shareholder to
the Parent in connection with the transactions contemplated by
this Agreement;
provided, however, that with respect to any Shareholder, the maximum
liability of any Shareholder hereunder shall be limited to, and the
Parent Indemnitees shall only have recourse against, the actual number
of shares of Parent Common Stock received by such Shareholder in the
Merger.
For purposes of this Agreement, the term, "Losses" means any and all
deficiencies, judgments, settlements, demands, claims, suits, actions or causes
of action, assessments, liabilities, losses, damages (whether direct, indirect,
incidental or consequential), interest, fines, penalties, costs and expenses
(including, without limitation, reasonable legal, accounting and other costs and
expenses incurred in connection with investigating, defending, settling or
satisfying any and all demands, claims, actions, causes of action, suits,
proceedings, assessments, judgments or appeals, and in seeking indemnification
therefor).
(c) Insurance Proceeds, Etc. All Losses shall be reduced by
(i) the amount of any insurance proceeds (minus all reasonably
allocable costs, charges and expenses incurred by the indemnified party
in obtaining such recovery) actually recovered in respect thereof and
(ii) any tax-related benefits if and when actually realized or received
(but only after taking into account the tax benefits to which the
indemnified party would be entitled without regard to such item). Any
insurance recovery or tax-related benefits referred to in the previous
sentence shall be promptly repaid by the indemnified party to the
indemnifying party following the time at which such amounts are
actually recovered or realized or received; provided that in the event
that any such insurance recovery or tax-related benefit is set aside or
disallowed and the indemnified party had paid any amounts to the
indemnifying party in respect thereof (or the amount by which the
indemnified party was indemnified was reduced in respect thereof), then
the obligation of the indemnifying party to indemnify with respect to
such amounts shall be reinstated immediately and such amounts shall be
paid promptly to the indemnified party in accordance with the
provisions of this Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally or telecopied or
sent by overnight courier, or by certified or registered mail, postage prepaid,
and shall be deemed to have been given, dated and received when so delivered
personally or by courier or telecopied, or, if mailed, five business
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days after the date of mailing to the following address or telecopy number, or
to such other address or addresses as such person may subsequently designate by
notice given hereunder:
(a) if to Parent or Merger Sub, to: with copies to
Omicron Technologies, Inc. Xxxxxxx X. Xxx III, Esq.
000 X. Xxxxxxxx Xxxxxx 0000 Xxxxxx Xxx Xxx Xxxxx
Xxxxx 000-000 Xxxxx 000
Xxxxxxxxxx, XX 00000 Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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(b) If to the Company or ViaSpace, to: with copies to:
ViaSpace Radio, Inc. Brand Xxxxxx & Xxxxxxx LLP
0000 Xxxxxxx Xxxxxx 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000 Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Chief Executive Officer Attention: Xxxx X. Xxxx, Esq.
(c) If to Xxxxxx to: with copies to:
Fax: (000) 000-0000 Xxxxxxxx X. Xxxxxx Phone (000) 000-0000
Xxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx Fax: (000) 000-0000
000 Xxxxxxxxx Xxxx 0000 Xxxxxxxx Xxx., Xxxxx 000
Xx Xxxxxx Xxxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone (000) 000-0000
(d) If to RSC to: with copies to:
Xxxx Xxxxxx Xxxxxxxx X. Xxxxxx
Radio Satellite Corporation Xxxxxxxxxx Xxxxxxxx
000 Xxxxxxxxx Xxxx 0000 Xxxxxxxx Xxx., Xxxxx 000
Xx Xxxxxx Xxxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Telephone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
9.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original and all of which
shall be considered one and the same agreement and shall become effective when
two or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
9.3 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement,
together with the Exhibits and Schedules, constitutes the entire agreement of
the parties with respect to
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the subject matter hereof, and supersedes all prior oral and written (including,
without limitation, the Memorandum of Understanding dated as of August 7, 1998
by and between Parent and ViaSpace, and all contemporaneous oral, agreements and
understandings among the parties with respect to the subject matter hereof. This
Agreement is not intended to confer upon any Person, other than the parties, any
rights or remedies hereunder.
9.4 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of California, without giving effect to
the principles of conflicts of law thereof.
9.5 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. In the event that the enforceability of any noncompetition
or similar covenants contained herein is called into question as the result of
time, geographical or other applicable limitations specified in such covenants,
such time, geographical or other applicable limitations shall be deemed modified
to the minimum extent necessary to render the applicable provisions of such
covenants enforceable.
9.6 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties.
9.7 SPECIFIC PERFORMANCE. The parties acknowledge that irreparable
damage would result if this Agreement were not specifically enforced, and they
therefore consent that the rights and obligations of the parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction. Such remedy shall, however, not be exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
9.8 FEES AND EXPENSES. All costs and expenses, including all fees and
expenses of attorneys, investment bankers, lenders, financial advisers and
accountants, in connection with the negotiation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
thereby, shall be paid by the party incurring such costs and expenses, provided,
however, that ViaSpace and the Company may use all advances received from Parent
in its sole discretion, in whole or in part to pay for any and all costs
associated in the formation of the Company and the preparation of this Agreement
and consummation of the transaction contemplated hereby.
9.9 CONSTRUCTION: INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Article, Schedule, schedule,
exhibit, recital and party references are to this Agreement unless otherwise
stated. No party, nor its counsel, shall be deemed the drafter of this Agreement
for purposes of construing the provisions of this Agreement, and all provisions
of this
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Agreement shall be construed in accordance with their fair meaning, and not
strictly for or against any party.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by or on behalf of each of the parties as of the date first above written.
OMICRON TECHNOLOGIES, INC., a
Florida corporation
By: /s/ XXXXXXX E.G. XXXXXXX By: /s/ XXXX X. XXXXXX
------------------------------- -------------------------------
Xxxxxxx E.G. Xxxxxxx, President Xxxx X. Xxxxxx
VIASPACE RADIO, INC., a California VIASPACE TECHNOLOGIES LLC,
corporation a Delaware limited liability
company
By: /s/ XXXX XXXXXXXX By: /s/ XXXX XXXXXXXX
------------------------------- -------------------------------
Xx. Xxxx Xxxxxxxx, President Xx. Xxxx Xxxxxxxx, President
INTERACTIVE RADIO RADIO SATELLITE CORPORATION,
CORPORATION, a Neveda corporation a California corporation
By: /s/ SAK XXXXXX By: /s/ XXXX X. XXXXXX
------------------------------- -------------------------------
Sak Xxxxxx, President Xxxx X. Xxxxxx, Chairman & CEO
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