Exhibit 2(b)
AGREEMENT AND PLAN OF MERGER
AMONG
WORLDBRIDGE BROADBAND SERVICES, INC.,
X-XXX.XXX SERVICES ACQUISITION CORP.
AND
X-XXX.XXX CORP.
January 19, 2000
TABLE OF CONTENTS
PAGE
1. Definitions..............................................................1
2. Basic Transaction........................................................5
(a) The Merger............................................................5
(b) The Closing...........................................................5
(c) Actions at the Closing................................................5
(d) Effect of Merger......................................................5
(i) General............................................................5
(ii) Certificate of Incorporation.......................................6
(iii) Bylaws.............................................................6
(iv) Directors and Officers.............................................6
(v) Conversion of Target Shares........................................6
(vi) Target Treasury Shares.............................................6
(vii) Conversion of Shares of Merger Sub Common Stock....................6
(e) Procedure for Payment.................................................6
(f) Closing of Transfer Records...........................................7
(g) Employee Stock Options................................................7
(h) Dissenting Target Stockholder Rights..................................8
3. Representations and Warranties of Target 3...............................8
(a) Organization, Qualification, and Corporate Power......................8
(b) Capitalization........................................................8
(c) Noncontravention......................................................9
(d) Brokers' Fees.........................................................9
(e) Title to Tangible Assets..............................................9
(f) Subsidiaries.........................................................10
(g) Financial Statements.................................................10
(h) Events Subsequent to Most Recent Fiscal Month End....................10
(i) No Violation of Law..................................................11
(j) Income Tax Matters...................................................11
(k) Real Property........................................................12
(l) Intellectual Property................................................12
(m) Contracts............................................................13
(n) Litigation...........................................................13
(o) Employee Benefits....................................................13
(p) Authorization of Transaction.........................................15
(q) Continuity of Business Enterprise....................................15
(r) Environment, Health, and Safety......................................15
(s) Disclosure...........................................................16
(t) Pooling and Tax Deferred Reorganization Matters......................16
(u) Employees............................................................17
(v) Notice of Meeting....................................................17
(w) Labor Matters; Labor Controversies...................................17
(x) Target Stockholders' Approval........................................18
(y) No Excess Parachute Payments.........................................18
(z) Insurance............................................................18
(aa) Guaranties...........................................................19
(bb) Suppliers and Customers..............................................19
(cc) Powers of Attorney...................................................19
(dd) Disclosure...........................................................19
(ee) Affiliates...........................................................19
(ff) Transactions with Related Parties....................................19
(gg) Bank Accounts........................................................19
(hh) Business Relations...................................................19
(ii) Potential Conflicts of Interest......................................20
(jj) Minute Books.........................................................20
(kk) Indebtedness.........................................................20
(ll) Absence of Undisclosed Liabilities...................................20
(mm) Option Agreements....................................................20
(nn) Capital Investments..................................................20
4. Representations and Warranties of Parent and Merger Sub.................20
(a) Organization.........................................................21
(b) Capitalization.......................................................21
(c) Authorization of Transaction.........................................21
(d) Noncontravention.....................................................22
(e) Brokers' Fees........................................................22
(f) Filings with the SEC.................................................22
(g) Parent Financial Statements..........................................22
(h) Events Subsequent to October 24, 1999................................23
(i) Continuity of Business Enterprise....................................23
(j) Disclosure...........................................................23
(k) Accounting as "Pooling of Interests".................................23
(l) Investment...........................................................24
5. Covenants...............................................................24
(a) General..............................................................24
(b) Notices and Consents.................................................24
(c) Regulatory Matters and Approvals.....................................24
(d) Authorization for Shares.............................................25
(e) Operation of Business................................................25
(f) Full Access..........................................................25
(g) Notice of Developments...............................................25
(h) Insurance and Indemnification........................................26
(i) Continuity of Business Enterprise....................................26
(j) General..............................................................26
(k) Litigation Support...................................................27
(l) Exclusivity..........................................................27
(m) Employment Matters...................................................28
(n) Conduct of Target's Business Pending Closing.........................28
(o) Prohibited Actions Pending Closing...................................29
(p) Information Statement................................................30
(q) XXX 000 Xxxxxxxxxx...................................................00
(x) Nasdaq Listing.......................................................30
(s) Mandatory Registration...............................................30
(t) Parent Shares........................................................32
(u) No Additional Representations or Warranties............................33
6. Conditions to Obligation to Close.......................................34
(a) Conditions to Obligation of Merger Sub and Parent....................34
(b) Conditions to Obligation of Target...................................35
7. Termination.............................................................36
(a) Termination of Agreement.............................................36
(b) Effect of Termination................................................37
8. Remedies for Breach of Target Representations and Warranties............37
(a) Survival of Representations and Warranties...........................37
(b) Indemnification Provisions for Benefit of Merger Sub
and Parent..........................................................38
(c) Exclusive Remedy.....................................................38
(d) Dispute Resolution...................................................38
9. Miscellaneous...........................................................38
(a) Survival.............................................................38
(b) Press Releases and Public Announcements..............................38
(c) No Third Party Beneficiaries.........................................39
(d) Entire Agreement.....................................................39
(e) Succession and Assignment............................................39
(f) Counterparts.........................................................39
(g) Headings.............................................................39
(h) Notices..............................................................39
(i) Governing Law........................................................40
(j) Amendments and Waivers...............................................40
(k) Severability.........................................................40
(l) Expenses.............................................................40
(m) Construction.........................................................40
(n) Incorporation of Exhibits............................................41
EXHIBITS
Exhibit A--Target Stockholders and Target Option Holders
Exhibit B--Delaware Certificate of Merger
Exhibit C--Letter of Transmittal
Exhibit D--Permitted Investments
Exhibit E--Disclosure Schedule
Exhibit F--Financial Statements
Exhibit G--ASR 135 Agreement
Exhibit H--Escrow Agreement
Exhibit I--Investor Questionnaire
Exhibit J--Parent Disclosure Schedule
Exhibit K--List of Target Managers Subject to Employment/Non-Compete Agreements
Exhibit L--Items To Be Covered In Legal Opinions
Exhibit M--List of Documents With Respect to Section 5(u)
Exhibit N--List of Non-Employee Holders of Target Options
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into as of
January 19, 2000, by and among X-XXX.xxx Services Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of X-XXX.xxx Corp. ("Merger Sub"),
Worldbridge Broadband Services, Inc., a Delaware corporation ("Target") and
X-XXX.xxx Corp., a Pennsylvania corporation ("Parent"). Merger Sub, Target and
Parent are referred to individually as a "Party" and collectively as the
"Parties."
This Agreement contemplates a tax-free merger of Merger Sub with and into
Target in a reorganization pursuant to Code Section368(a). Target Stockholders
will receive capital stock in Parent in exchange for their capital stock in
Target. The Parties expect that the Merger will further certain of their
business objectives (including, without limitation, the ability to maximize the
efficiency of their respective resources). The Parties also intend that, for
financial accounting purposes, the Merger will be accounted for as a "pooling of
interests" under Accounting Principles Board Opinion Xx. 00 ("XXX 00").
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1 Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group of corporations within the
meaning of Code Section1504.
"APB 16" has the meaning given in the recitals.
"Certificate of Merger" has the meaning set forth in Section2(c) below.
"Closing" has the meaning set forth in Section2(b) below.
"Closing Date" has the meaning set forth in Section2(b) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the businesses
and affairs of Target or Parent that is not already generally available to the
public.
"Delaware General Corporation Law" means the General Corporation Law of the
State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in Section3 below.
"Dissenting Share" means any Target Share held by any stockholder who or
which has exercised his, her or its appraisal rights under the Delaware General
Corporation Law holds of record.
"Effective Time" has the meaning set forth in Section2(d)(i) below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), (d) Employee Welfare Benefit Plan, (e) profit-sharing,
bonus, incentive compensation, stock purchase, stock option, consulting,
retainer, severance, or deferred compensation plan, agreement or arrangement
(including such arrangement contained within an individual employment or
consulting agreement) which is not otherwise disclosed as an Employee Pension or
Welfare Benefit Plan, or (f) plan, agreement or arrangement not otherwise
disclosed as an Employee Welfare Benefit Plan providing for material "fringe
benefits" or perquisites to employees, officers, directors or agents, including,
without limitation, company automobiles, clubs, vacation policies, child care,
parenting, sabbatical, sick leave, flexible benefits arrangements, tuition
reimbursements, medical, dental, hospitalization, life insurance and other types
of insurance.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended as of the Closing Date, together with all other
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) in effect as of the Closing
Date of federal, state, local, and foreign governments (and all agencies
thereof) concerning pollution or protection of the environment, public health
and safety, or employee health and safety, including laws in effect as of the
Closing Date relating to emissions, discharges, releases, or threatened releases
of pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Subsidiary or trade or business that is a
member of a "controlled group" of which Target is a member or under "common
control" with Target (within the meaning of Code Section 414(b) and (c)) or is
part of an "affiliated service group" with Target (within the meaning of Code
Section 414(m)).
"Escrow Agent" means First Union National Bank or such other party as the
Parties may agree.
"Escrow Agreement" means the Escrow Agreement dated as of the date of this
Agreement among Parent, Merger Sub, Target, Target Stockholders and the Escrow
Agent in the form attached hereto as Exhibit H.
"Escrow Securities" has the meaning given in Section1 of the Escrow
Agreement.
"Exchange Agent" has the meaning set forth in Section2(e) below.
"Exchange Ratio" has the meaning given in Section2(d)(v) below.
"Financial Statements" has the meaning set forth in Section3(g) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Income Tax" means any federal, state, local or foreign tax, charge, fee,
levy or other assessment measured by income, however denominated and whether
computed on a separate, consolidated, unitary, combined or any other basis, and
such term shall include any interest, fines, penalties or additional amounts and
any interest in respect of any additions, fines or penalties attributable or
imposed or with respect to any such tax, charge, fee, levy or other assessment.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Information Statement" means the information statement prepared by Parent
and Merger Sub in a form reasonably acceptable to Target and containing such
information as is customarily included in a private placement memorandum.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable inquiry of the
referenced person or, if an entity, the executive officers of the referenced
entity.
"Litigation Costs" means all costs, charges and expenses, including,
without limitation, bonds, expenses of investigation, fees of experts, travel,
lodging, attorneys' fees and expenses, incurred or contracted for or in
connection with the investigation, defense or prosecution of or other
involvement in any Proceeding and any appeal therefrom, and all costs of appeal,
attachment and similar bonds.
"Merger" has the meaning set forth in Section2(a) below.
"Merger Sub" has the meaning set forth in the preface above.
"Most Recent Financial Statements" has the meaning set forth in Section3(g)
below.
"Most Recent Fiscal Month End" has the meaning set forth in Section3(g)
below.
"Multiemployer Plan" has the meaning set forth in ERISA Section3(37).
"NMS market" means the Nasdaq National Market System.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including, without limitation, with
respect to quantity and frequency).
"Parent Disclosure Schedule" has the meaning set forth in Section4 below.
"Parent Material Adverse Effect" means a material adverse effect on the
results of operations, assets, business or financial condition of Parent or on
the ability to consummate the transactions contemplated by this Agreement.
"Parent Share" means any share of the Common Stock, $.05 par value per
share, and the related preferred share purchase rights, of Parent.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Proceeding" means any threatened, pending or completed action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, and whether formal or informal.
"Providing Party" has the meaning set forth in Section5(f) below.
"Public Report" has the meaning set forth in Section4(f) below.
"Requisite Target Stockholder Approval" means the affirmative vote of
Target Stockholders in favor of this Agreement and the Merger.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Special Target Meeting" has the meaning set forth in Section5(c)(ii)
below.
"Subsidiary" means any corporation or other entity with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or other equity interests, or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors or other persons
performing similar functions with respect to such entity.
"Surviving Corporation" has the meaning set forth in Section2(a) below.
"Systems" means systems comprised of software, hardware, databases, or
embedded control systems (microprocessor controlled, robotic or other device).
"Target" has the meaning set forth in the preface above.
"Target Material Adverse Effect" has the meaning set forth in Section3(a)
below.
"Target Option" means an option to purchase Target Shares.
"Target Option Plan" means Target's 1998 Stock Option/Stock Issuance Plan.
"Target Preferred Share" means any share of the Series B Convertible
Preferred Stock, par value $.01 per share, of Target.
"Target Share" means any share of the Common Stock, par value $.01 per
share, of Target.
"Target Stockholders" means each of the holders of Target Shares and Target
Preferred Shares set forth on Exhibit A attached to this Agreement.
"Target Treasury Shares" means any Target Shares and Target Preferred
Shares that are held in the treasury of Target immediately prior to the
Effective Time.
"Year 2000 Compliant" means (i) is designed (or has been modified) to be
used prior to and after January 1, 2000, (ii) will operate without error arising
from the creation, recognition, acceptance, calculation, display, reporting,
storage, retrieval, accessing, comparison, sorting, manipulation, processing or
other use of dates, or date-based, date-dependent or date-related data,
including but not limited to century recognition, day-of-the-week recognition,
leap years, date values and interfaces of date functionalities, and (iii) will
not be adversely affected by the advent of the year 2000 or subsequent years,
the advent of the twenty-first century or the transition from the twentieth
century through the year 2000 and into the twenty-first century.
2 Basic Transaction.
(a) The Merger. On the terms and subject to the conditions of
this Agreement, Merger Sub will merge with and into Target (the "Merger") at the
Effective Time. Target shall be the corporation surviving the Merger (the
"Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Target's
counsel in Denver, Colorado, commencing at 9:00 a.m. local time on the second
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated by this
Agreement (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Parties may mutually
determine (the "Closing Date"); provided, however, that the Closing Date shall
be no later than March 30, 2000.
(c) Actions at the Closing. At the Closing, (i) Target and
Target Stockholders will deliver to Merger Sub and Parent the various
certificates, instruments, and documents referred to in Section6(a) below, (ii)
Merger Sub and Parent will deliver to Target and Target Stockholders the various
certificates, instruments, and documents referred to in Section6(b) below, (iii)
Merger Sub and Target will file with the Secretary of State of the State of
Delaware a Certificate of Merger in the form attached hereto as Exhibit B (the
"Delaware Certificate of Merger"), (iv) Parent will comply with Section2(e)(i)
below, and (v) Parent will deposit with the Escrow Agent certificate(s)
representing 160,358 Parent Shares on the terms and subject to the conditions of
the Escrow Agreement, provided that the number of Parent Shares deposited into
escrow shall be appropriately increased in the event any Target Options are
exercised between the date of this Agreement and the Closing Date.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time
(the "Effective Time") Merger Sub and Target file the Certificate
of Merger with the Secretary of State of the State of Delaware.
The Merger shall have the effect set forth in the Delaware
General Corporation Law. The Surviving Corporation may, at any
time after the Effective Time, take any action (including
executing and delivering any document) in the name and on behalf
of either Merger Sub or Target in order to carry out and
effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of Merger Sub in effect at and as of the Effective
Time will be the Certificate of Incorporation of the Surviving
Corporation without any modification or amendment in the Merger,
except as to the name of the Surviving Corporation which shall be
"Worldbridge Broadband Services, Inc."
(iii) Bylaws. The Bylaws of Merger Sub in effect at and as
of the Effective Time will be the Bylaws of the Surviving
Corporation without any modification or amendment in the Merger,
except as to the name of the Surviving Corporation which shall be
"Worldbridge Broadband Services, Inc."
(iv) Directors and Officers. The Parent Disclosure Schedule
lists the directors and officers of Merger Sub, and all such
directors and officers shall be in office at and as of the
Effective Time. The directors and officers of Merger Sub will be
the directors and officers of the Surviving Corporation
(retaining their respective positions and terms of office).
(v) Conversion of Target Shares. At and as of the Effective
Time, each Target Share (other than Dissenting Shares and Target
Treasury Shares) shall be converted into the right to receive (A)
.197249 Parent Shares rounded to the nearest whole number of
Parent Shares, and (B) a pro rata portion of the Escrow
Securities rounded to the nearest whole number of Parent Shares.
The ratio of .197249 Parent Shares to one Target Share is
referred to herein as the "Exchange Ratio." No Target Share shall
be deemed to be outstanding or to have any rights other than
those set forth in this Section2(d)(v) after the Effective Time.
If prior to the Effective Time, the number of outstanding Parent
Shares is increased or decreased by a permitted stock split,
stock dividend, combination, reclassification, or other similar
event, then the number of Parent Shares (A) to be issued in
respect of the Target Shares pursuant to the Merger, (B) to be
deposited into escrow pursuant to Section2(c), and (C) to be
issued (as well as the exercise price therefor) upon the exercise
of the Target Options after the Effective Time shall be adjusted
equitably to reflect such stock split, stock dividend,
combination, reclassification or other similar event. In such
event, Parent shall notify the Exchange Agent of such change on
or before the Effective Time.
(vi) Target Treasury Shares. All Target Treasury Shares
shall be cancelled and shall cease to exist from and after the
Effective Time and no Merger Consideration shall be payable with
respect thereto.
(vii) Conversion of Shares of Merger Sub Common Stock. At
and as of the Effective Time, each share of Merger Sub's issued
and outstanding common stock shall be converted into the right to
receive one share of common stock of the Surviving Corporation.
(e) Procedure for Payment.
(i) At Closing, (A) Parent will furnish to American Stock
Transfer & Trust Company (the "Exchange Agent") stock
certificates representing the Parent Shares referred to in
Section2(d)(v) (issued in the name of the respective Target
Stockholders) representing that number of Parent Shares equal to
the product of (a) the Exchange Ratio times (b) the number of
outstanding Target Shares (other than any Dissenting Shares and
Target Treasury Shares), and (B) provided that Target has, at
least two business days before the Effective Time, provided
Parent with a list of the names and addresses of the Target
Stockholders, Parent will cause the Exchange Agent to mail a
letter of transmittal (with instructions for its use) in the form
attached hereto as Exhibit C to each record holder of outstanding
Target Shares (other than Dissenting Shares) for the holder to
use in surrendering the certificates which represented his or its
Target Shares in exchange for a certificate representing the
number of Parent Shares to which he, she or it is entitled
(exclusive of the Parent Shares deposited with the Escrow Agent
pursuant to the Escrow Agreement).
(ii) Parent will not pay any dividend or make any
distribution on Parent Shares (with a record date at or after the
Effective Time) to any record holder of outstanding Target Shares
until the holder surrenders for exchange his or its certificates
that represented Target. Parent instead will pay the dividend or
make the distribution to the Exchange Agent in trust for the
benefit of the holder pending surrender and exchange. Parent may
cause the Exchange Agent to invest any cash the Exchange Agent
receives from Parent as a dividend or distribution in one or more
of the permitted investments set forth on Exhibit D attached
hereto; provided, however, that the terms and conditions of the
investments shall be such as to permit the Exchange Agent to make
prompt payments of cash to the holders of outstanding Target
Shares as necessary. Parent may cause the Exchange Agent to pay
over to Parent any net earnings with respect to the investments,
and Parent will replace promptly any cash which the Exchange
Agent loses through investments. In no event, however, will any
holder of outstanding Target Shares be entitled to any interest
or earnings on the dividend or distribution pending receipt.
(iii) Parent may cause the Exchange Agent to return any
Parent Shares and dividends and distributions thereon remaining
unclaimed 360 days after the Effective Time, and thereafter each
remaining record holder of outstanding Target Shares shall be
entitled to look to Parent (subject to abandoned property,
escheat, and other similar laws) as a general creditor thereof
with respect to Parent Shares and dividends and distributions
thereon to which he, she or it is entitled upon surrender of his
or its certificates.
(iv) Parent shall pay all charges and expenses of the
Exchange Agent.
(v) Parent shall furnish to the Escrow Agent stock
certificate(s) (issued in the name of the Escrow Agent)
representing 160,358 Parent Shares, which shall be distributed
from escrow on the terms and subject to the conditions of the
Escrow Agreement.
(f) Closing of Transfer Records. After the close of business
on the Closing Date, transfers of Target Shares or Target Preferred Shares
outstanding prior to the Effective Time shall not be made on the stock transfer
books of the Surviving Corporation.
(g) Employee Stock Options. At the Effective Time, the Target
Option Plan shall be assumed by Parent and each outstanding Target Option shall
without any further action by Parent, Target or the holder of any Target Option
be converted into an option to purchase the number of shares of Parent Shares
determined by multiplying the number of shares of Target Shares subject to such
Target Option at the Effective Time by .219166, rounded to the nearest whole
share, and the exercise price per share for each such Option will equal the
exercise price of the Target Option at the Effective Time divided by .219166.
Other than as provided in this Section2(g), the term, exercisability, vesting
schedule and all other terms of the Target Options shall otherwise be unchanged,
including that (i) all Target Options shall be fully vested and the repurchase
rights of Target provided in the Target Option Plan shall entirely lapse in
accordance with the terms of the Option Agreements entered into in connection
with the Target Option Plan and (ii) the cashless exercise features of the
Target Option Plan (or, in the case of Xxx Xxxxxx, Xxxx Xxxxxxxx and Xxxxxxx X.
Xxxxx, the relevant option agreement) shall be available with respect to the
Target Options after the Effective Time. Any option designated as an "incentive
stock option" under Code Section422 ("ISO") shall retain such designation, and
the Parties intend that, subject at all times to the actions of holders thereof,
all Target Options bearing such designation shall continue to qualify as ISOs
under the Code notwithstanding any other provision of this Agreement. Parent
will cause Parent Shares issuable upon exercise of the assumed Target Options to
be registered on Form S-8 with the SEC within 30 days (or such later date if
required to comply with the federal securities laws relating to the disclosure
of financial statements) after the Effective Time, will use its reasonable best
efforts to maintain the effectiveness of such registration statement for so long
as such assumed Target Options remain outstanding and will reserve a sufficient
number of shares of Parent Shares for issuance upon exercise thereof. Parent
will administer the Target Option Plan assumed pursuant to this Section2(g) in a
manner that complies with Rule 16b-3 promulgated by the SEC under the Exchange
Act.
(h) Dissenting Target Stockholder Rights. Notwithstanding any
provision of this Agreement to the contrary, if required by the Delaware General
Corporation Law but only to the extent required thereby, Target Shares which are
issued and outstanding immediately prior to the Effective Time and which are
held by holders of such Target Shares who have properly exercised appraisal
rights with respect thereto in accordance with Section 262 of the Delaware
General Corporation Law will not be converted as provided in Section2(d)(v), and
holders of such Dissenting Shares will be entitled to receive payment of the
appraised value of such Target Shares in accordance with the provisions of such
Section 262 unless and until such holders fail to perfect or effectively
withdraw or lose their rights to appraisal and payment under the Delaware
General Corporation Law. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses such right, such Target Shares will
thereupon be treated as if they had been converted, at the Effective Time, as
provided in Section2(d)(v), without any interest thereon. Target will give
Merger Sub prompt notice of any demands received by Target for appraisals of
Target Shares. Target shall not, except with the prior written consent of Merger
Sub, make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands unless such payment is ordered by a court of
competent jurisdiction which order is final and non-appealable.
3 Representations and Warranties of Target. Target represents and
warrants to Merger Sub and Parent that the statements contained in this Section
3 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 3), except as set forth in the Disclosure Schedule attached hereto as
Exhibit E and incorporated in this Agreement by this reference (the "Disclosure
Schedule"). For the convenience of the parties, each exception noted in the
various sections of the Disclosure Schedule shall be designated to correspond to
the applicable section of this Agreement to which it refers, but disclosure of
facts in the Disclosure Schedule in connection with one section shall be deemed
to have been disclosed for all purposes of the Disclosure Schedule provided that
such disclosure reasonably sets forth the nature of the facts disclosed in light
of the circumstances under which the disclosure is made.
(a) Organization, Qualification, and Corporate Power. Target
is a corporation validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Target is duly authorized to conduct Target's
business as currently conducted and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the results of
operations, assets, business or financial condition of Target or on the ability
to consummate the transactions contemplated by this Agreement (a "Target
Material Adverse Effect"). Target has the corporate power and authority to carry
on the businesses in which it is engaged and to own and use the properties owned
and used by it. The Disclosure Schedule lists the directors and executive
officers of Target.
(b) Capitalization.
(i) The entire authorized capital stock of Target consists
of 37,000,000 shares, of which 25,000,000 are Target Shares,
2,000,000 are Target Preferred Shares and 10,000,000 are shares
of undesignated preferred stock, par value $.01 per share. There
are 4,692,330 Target Shares and 43,500 Target Preferred Shares
issued and outstanding, which Target Preferred Shares are
convertible into 2,624,434 Target Shares, and 112,570 Target
Treasury Shares. All of the issued and outstanding Target Shares
and Target Preferred Shares have been duly authorized and are
validly issued, fully paid, and nonassessable and are held of
record by Target Stockholders. There are no outstanding or
authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or
commitments that could require Target to issue, sell, or
otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with
respect to Target, or Target Shares or Target Preferred Shares.
Exhibit A lists the names and addresses of all Target
Stockholders and all holders of Target Options. The Disclosure
Schedule lists the respective number of Target Shares or Target
Options held by each Target Stockholder or holder of Target
Options.
(ii) There are no voting trusts, proxies or other agreements
or understandings to which Target is a party or is bound with
respect to the voting of any shares of capital stock of Target
and there are no such trusts, proxies, agreements or
understandings by, between or among any Target Stockholder with
respect to Target Shares or Target Preferred Shares.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated by this
Agreement, will violate any provision of the Certificate of Incorporation or
bylaws of Target. Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated by this Agreement, will (i)
violate any valid constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Target is subject, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument
or other arrangement to which Target is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets) except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to give
notice, or Security Interest would not have a Target Material Adverse Effect.
The Board of Directors of Target has approved this Agreement. To the Knowledge
of Target, and other than in connection with the provisions of the
Xxxx-Xxxxx-Xxxxxx Act, the Delaware General Corporation Law, the Securities
Exchange Act, the Securities Act, and applicable state securities laws, Target
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not be a Target Material Adverse
Effect.
(d) Brokers' Fees. Target has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement which is or will become the
liability or obligation of Merger Sub, except with respect to Xxxxxxx &
Associates, L.P. ("Xxxxxxx"). Target has provided to Parent a true and correct
copy of the agreement between Target and Xxxxxxx.
(e) Title to Tangible Assets. The Disclosure Schedule lists,
and Target has good title to, or a valid leasehold interest in, the material
tangible assets it uses regularly in the conduct of its business, and such
material tangible assets are not subject to any Security Interests.
(f) Subsidiaries. Target has no Subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit F are the
following financial statements (collectively the "Financial Statements"): (i)
audited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended November 30, 1996,
December 31, 1997, and December 31, 1998 for Target; and (ii) unaudited balance
sheets and statements of income, changes in stockholders' equity, and cash flow
(the "Most Recent Financial Statements") as of and for the eleven months ended
November 30, 1999 (the "Most Recent Fiscal Month End") for Target. The Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby and
present fairly the financial condition of Target as of such dates and the
results of operations of Target for such periods; provided, however, that the
Most Recent Financial Statements are subject to normal year-end adjustments and
lack footnotes and other presentation items as permitted in accordance with GAAP
as to interim statements.
(h) Events Subsequent to Most Recent Fiscal Month End. Since
the Most Recent Fiscal Month End:
(i) Target has not sold, leased, transferred or assigned any
of its assets, tangible or intangible, other than for a fair
consideration either involving more than $10,000 or outside the
Ordinary Course of Business;
(ii) Target has not entered into any agreement, contract,
lease or license (or series of related agreements, contracts,
leases and licenses) outside the Ordinary Course of Business;
(iii) no party (including Target) has accelerated,
terminated, modified or canceled any agreement, contract, lease
or license (or series of related agreements, contracts, leases
and licenses) outside the Ordinary Course of Business to which
Target is a party or by which it is bound;
(iv) Target has not made any capital expenditure (or series
of related capital expenditures) either involving more than
$250,000 or outside the Ordinary Course of Business;
(v) Target has not issued any note, bond or other debt
security or created, incurred, assumed or guaranteed any
indebtedness for borrowed money or capitalized lease obligations
outside the Ordinary Course of Business;
(vi) Target has not canceled, compromised, waived or
released any right or claim (or series of related rights and
claims) involving more than $25,000;
(vii) There has been no change made or authorized in the
Certificate of Incorporation or bylaws of Target;
(viii) Target has not issued (other than upon the exercise
of Target Options), sold or otherwise disposed of any of its
capital stock, or granted any options, warrants or other rights
to purchase or obtain (including upon conversion, exchange or
exercise) any of its capital stock;
(ix) Target has not declared, set aside or paid any dividend
or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased or otherwise
acquired any of its capital stock;
(x) Target has not experienced any damage, destruction or
loss (whether or not covered by insurance) to its property
involving more than $250,000;
(xi) Target has not made any loan to, or entered into any
other transaction with, any of its directors, officers or
employees outside the Ordinary Course of Business;
(xii) Target has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified in
any material respect the terms of any existing such contract or
agreement;
(xiii) Target has not granted any bonuses or a greater than
five percent (5%) increase in the base compensation of any of its
directors, officers or employees;
(xiv) Target has not made any other change in employment
terms for any of its directors, officers and employees outside
the Ordinary Course of Business;
(xv) Target has not made or pledged to make any charitable
or other capital contribution outside the Ordinary Course of
Business;
(xvi) there has been no notice received by Target from any
supplier, customer or other entity with which Target has a
material contractual relationship or whose non-performance of any
obligation or duty to Target would have a Target Material Adverse
Effect, indicating that such relationship or contract would
likely be modified or terminated as a result of any failure of
Target or any of its Systems to be Year 2000 Compliant in any
respect; and
(xvii) there has not been any occurrence that constitutes a
Target Material Adverse Effect.
(i) No Violation of Law. Target is not in violation of or has
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a Target Material Adverse Effect. To
the Knowledge of Target, as of the date of this Agreement, no investigation or
review by any governmental or regulatory body or authority is pending, or
threatened, nor has any governmental or regulatory body or authority indicated
to Target an intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, will not have a Target
Material Adverse Effect. Target has all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct its businesses as presently conducted
(collectively, the "Target Permits"), except for permits, licenses, franchises,
variances, exemptions, orders, authorizations, consents and approvals the
absence of which, alone or in the aggregate, would not have a Target Material
Adverse Effect. Target is not in violation of the terms of any Target Permit, or
any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
or mediator, except for delays in filing reports or violations which, alone or
in the aggregate, would not have a Target Material Adverse Effect.
(j) Income Tax Matters.
(i) Target has filed all Income Tax Returns that it was
required to file, and has paid all Income Taxes shown thereon as
owing, except where the failure to file Income Tax Returns or to
pay Income Taxes would not have a Target Material Adverse Effect,
and such Income Tax Returns are true, correct and complete in all
material respects.
(ii) Target has duly paid in full or has established
reserves, which when taken as a whole, are adequate for the
payment of all Income Taxes for all periods ending at or prior to
the Effective Time (whether or not shown on any Income Tax
Return), except where the failure to pay or make reserves for
such Income Taxes would not have a Target Material Adverse
Effect, and there are no material liens for Income Taxes upon any
property or asset of Target or any subsidiary thereof, except for
liens for Income Taxes not yet due. There are no unresolved
issues of law or fact arising out of a notice of deficiency,
proposed deficiency or assessment from the IRS or any other
governmental taxing authority with respect to Income Taxes of
Target which, if decided adversely, singly or in the aggregate,
would have a Target Material Adverse Effect.
(iii) The Disclosure Schedule lists all Income Tax Returns
filed with respect to Target for taxable periods ended on or
after December 31, 1993, indicates those Income Tax Returns that
have been audited, and indicates those Income Tax Returns that
currently are the subject of audit. Target has delivered to
Merger Sub correct and complete copies of all federal Income Tax
Returns, examination reports, and statements of deficiencies
assessed against or agreed to by Target since December 31, 1993.
(iv) Target has not waived any statute of limitations in
respect of Income Taxes or agreed to any extension of time with
respect to an Income Tax assessment or deficiency.
(v) Target is not a party or subject to any Income Tax
allocation or sharing agreement.
(vi) Since Target was formed, Target has not been a member
of an Affiliated Group filing a consolidated federal Income Tax
Return.
(vii) Target has no liability for the Income Taxes of any
Person other than Target under Reg. Section1.1502-6 (or any
similar provision of state, local, or foreign law).
(viii) Target has not, with regard to any assets or property
held, acquired or to be acquired, filed a consent to the
application of Code Section 341(f). Target is not and has not
been a United States real property holding corporation within the
meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii). Target has not agreed
to make any adjustment under Code Section 481(a) by reason of a
change in accounting method or otherwise.
(k) Real Property. Target owns no real property. The
Disclosure Schedule lists all real property leased or subleased by Target.
Target has delivered to Merger Sub correct and complete copies of the leases and
subleases listed in the Disclosure Schedule (as amended to date). Target is not
in material breach of any lease or sublease listed in the Disclosure Schedule
and to the Knowledge of Target, each lease and sublease listed in the Disclosure
Schedule is legal, valid, binding, enforceable in accordance with its terms, and
in full force and effect, except where the illegality, invalidity, non-binding
nature, unenforceability, or ineffectiveness would not have a Target Material
Adverse Effect.
(l) Intellectual Property. The Disclosure Schedule identifies each
patent or trademark registration which has been issued to Target with respect to
any of its intellectual property, identifies each pending patent application or
application for trademark registration which Target has made with respect to any
of its intellectual property, and, to the Knowledge of Target, identifies each
material license, agreement, or other permission which Target has granted to any
third party with respect to any of its intellectual property. To the Knowledge
of Target, Target has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with or violated any intellectual property rights
of third parties, and Target has not received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that Target must license or
refrain from using any of Target's intellectual property). To the Knowledge of
Target, no third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with or violated any intellectual property rights
of Target.
(m) Contracts. The Disclosure Schedule sets forth an accurate and
complete list of all material written contracts, agreements, options, leases
(other than leases referred to in Section3(k)), commitments and instruments
involving average annual payment or receipt by Target of value equal to or
greater than $100,000 (the "Contracts") entered into by Target. Target has
provided Parent with complete and correct copies of the Contracts. The Contracts
have not been modified, pledged, assigned or amended in any material respect,
are legally valid, binding and enforceable against Target, and to the Knowledge
of Target against the other parties thereto in accordance with their respective
terms, and are in full force and effect with respect to Target, and to the
Knowledge of Target with respect to the other parties thereto, except where the
illegality, invalidity, non-binding nature, unenforceability, or ineffectiveness
would not have a Target Material Adverse Effect. There are no defaults under any
of the Contracts by Target and, to Target's Knowledge, by any other party to the
Contracts, except for defaults which would not have a Target Material Adverse
Effect. Target has not received notice of any default, offset, counterclaim or
defense under any Contract, except for defaults, offsets, counterclaims or
defenses which would not have a Target Material Adverse Effect. To Target's
Knowledge, no condition or event has occurred which with the passage of time or
the giving of notice or both would constitute a default or breach by the Target
of the terms of any Contract, except for any consents required to consummate the
transactions contemplated by this Agreement, and except for defaults which would
not have a Target Material Adverse Effect. None of the Contracts is subject to
termination from and after the Closing Date and prior to the expiration of its
stated term by any party to such Contract, except as stated in each such
Contract. Target is not in breach of its Articles of Incorporation or bylaws.
Target has provided Parent with complete and correct copies of any written
notices Target has received concerning whether any of its or its suppliers' or
customers' Systems are Year 2000 Compliant.
(n) Litigation. The Disclosure Schedule sets forth each instance in
which Target (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction,
except where the injunction, judgment, order, decree, ruling, action, suit,
proceeding, hearing, or investigation would not reasonably be expected to have a
Target Material Adverse Effect.
(o) Employee Benefits.
(i) The Disclosure Schedule lists each Employee Benefit Plan
that Target maintains or to which Target contributes. Neither
Target nor any ERISA Affiliate maintains or contributes to any
Employee Benefit Plans other than those listed in the Disclosure
Schedule.
(ii) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all material respects with the requirements of
ERISA, and the Code and other applicable laws.
(iii) None of the Employee Benefits Plans is (A) a plan
subject to Title IV of ERISA or (B) a "multiemployer plan"
(within the meaning of Section3 (37) of ERISA.) Neither Target
nor any current or former ERISA Affiliate of Target has ever
contributed to or had an obligation to contribute to a
multiemployer plan or a Title IV plan. No Employee Welfare
Benefit Plan or other welfare benefit plan or arrangement is
funded by means of a "voluntary employees beneficiary
association" trust (within the meaning of Code Section501(c)(9)).
(iv) To the Knowledge of Target, all material contributions
(including all employer contributions and employee salary
reduction contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension Benefit
Plan, and all material contributions for any period ending on or
before the Closing Date which are not yet due have been paid to
each such Employee Benefit Pension Plan or accrued in accordance
with the past customs and practice of Target. To the Knowledge of
Target, all such contributions and other payments have been made
in accordance with all applicable laws including, without
limitation, laws governing the timing of such payments. All
premiums or other material payments for all periods ending on or
before the Closing Date have been paid with respect to each
Employee Benefit Plan that is an employee welfare benefit plan.
(v) To the Knowledge of Target, each such Employee Benefit
Plan which is an Employee Pension Benefit Plan has received a
determination letter from the Internal Revenue Service to the
effect that it meets the requirements of Code Section401(a). To
the Knowledge of Target, no event has occurred that will or could
give rise to disqualification or loss of tax-exempt status of any
such Employee Pension Benefit Plan or trust under Code
Section401(a) or Section501(a). To the Knowledge of Target, no
"prohibited transaction" (within the meaning of Code Section4975
or SectionSection406 or 408 of ERISA) has occurred with respect
to any such Employee Pension Benefit Plan. To the Knowledge of
Target, no fiduciary has any liability for material breach of
fiduciary duty or any other material failure to act or comply in
connection with the administration or investment of the assets of
any Employee Benefit Plan.
(vi) As of the last day of the most recent prior plan year,
the market value of assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan equaled or exceeded the
present value of liabilities thereunder (determined in accordance
with then current funding assumptions).
(vii) All reports and descriptions required by ERISA, the
Code or other applicable laws, including Forms 5500, the summary
annual report and summary plan descriptions, have been (a) filed
on a timely basis with the appropriate governmental entity, or
(b) distributed to participants and beneficiaries appropriately
with respect to each Employee Benefit Plan, as applicable, except
where the failure to file or distribute would not have a Target
Material Adverse Effect.
(viii) The Disclosure Schedule identifies each person who is
currently receiving or entitled to elect to receive continuing
benefits as a qualified beneficiary pursuant to SectionSection
601 et seq. of ERISA and/or Code Section 4980B ("COBRA coverage")
under any health or other welfare benefit plan maintained by
Target or any ERISA Affiliate. The requirements of Section601 et
seq. of ERISA and Code Section4980B have, in all material
respects, been met with respect to each Employee Benefit Plan of
Target or an ERISA Affiliate (to the extent such requirements
apply to such Plans). Except with respect to COBRA coverage,
neither Target nor any ERISA Affiliate has any current obligation
to provide health or welfare benefits to any current or former
employee following such employee's retirement or other
termination from service.
(ix) Other than routine claims for benefits submitted by
plan participants and/or beneficiaries, no claim against or legal
proceeding involving any Employee Benefit Plan is pending or, to
Target's Knowledge, threatened.
(x) No employee of Target will become entitled to any
retirement, severance or similar benefit or enhanced or
accelerated benefits solely as the result of the transactions
contemplated by this Agreement to the extent Merger Sub complies
with its obligations hereunder.
(xi) There is no negotiation, demand or proposal that is
pending or has been made which concerns matters now covered, or
that would be covered by any Employee Benefit Plan.
(xii) Target has delivered to Merger Sub correct and
complete copies of the plan documents and summary plan
descriptions (or summary descriptions with respect to any plan,
agreement not otherwise in writing), the most recent
determination letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding or
administrative or record-keeping services agreements which
implement each such Employee Benefit Plan.
(p) Authorization of Transaction. Target has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder; provided, however, that Target cannot consummate the
Merger unless and until it receives the Requisite Target Stockholder Approval.
This Agreement constitutes the valid and legally binding obligation of Target,
enforceable in accordance with its terms and conditions.
(q) Continuity of Business Enterprise. Target operates at least one
significant historic business line, or owns at least a significant portion of
its historic business assets, in each case within the meaning of Treas. Reg.
Section1.368-1(d).
(r) Environment, Health, and Safety.
(i) To the Knowledge of Target, Target (A) has complied with
the Environmental, Health, and Safety Laws in all material
respects (and, to the Knowledge of Target no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them
alleging any such failure to comply), (B) has obtained and been
in substantial compliance with all of the terms and conditions of
all material permits, licenses, and other authorizations which
are required under the Environmental, Health, and Safety Laws,
and (C) has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in the Environmental, Health, and Safety Laws.
(ii) To the Knowledge of Target, Target has no material
liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or
to become due), and Target has not handled or disposed of any
substance, arranged for the disposal of any substance, exposed
any employee or other individual to any substance or condition,
or owned or operated any property or facility in any manner that
could give rise to any material liability, for damage to any
site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual
under any Environmental, Health, and Safety Law.
(s) Disclosure. The Information Statement as it relates to Target
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they will be made, not misleading;
provided, however, that Target makes no representation or warranty with respect
to any information that Parent and Merger Sub will supply specifically for use
in the Information Statement. None of the information that Target will supply
specifically for use in the Information Statement will contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they will be made, not misleading.
(t) Pooling and Tax Deferred Reorganization Matters.
(i) Target has not, during the two years preceding the
earlier of the date of this Agreement or the date the plan of
combination was initiated, been a Subsidiary or division of
another corporation or a part of an acquisition which was later
rescinded and, within the past two years, there has not been any
sale or spin-off of a significant amount of assets of Target or
any affiliate of Target. Target does not own any capital stock of
Parent or Merger Sub. Target has not acquired any of its own
capital stock during the past two years. Except for Target
Preferred Shares, which are expected to be converted to Target
Shares, Target has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of the shares of its
own common stock or any interest therein or to pay any dividend
or make any distribution in respect thereof. Neither the voting
capital structure of Target nor the relative ownership of shares
among any of the holders of capital stock or other securities of
Target has been altered or changed within the last two years in
contemplation of the transactions contemplated by this Agreement.
No shares of capital stock or other securities of Target were
issued and are outstanding pursuant to awards, grants or bonuses
under the terms of any plan which was adopted less than two years
prior to the date the combination was initiated. Prior to the
Closing or the earlier termination of this Agreement pursuant to
the terms thereof, neither Target nor its affiliates have
purchased nor will they purchase or otherwise acquire directly or
indirectly any Parent Shares other than as provided in this
Agreement. Any indebtedness owed or incurred by Target to any of
Target Stockholders has been incurred and repaid on commercially
reasonable and customary terms. There are no related businesses
or business assets owned or controlled by Target Stockholders
which are integral to this business and thus should be included
as a part of this transaction pursuant to the pooling-of-interest
rules. There have not been any dividends to Target Stockholders
during the two years prior to the date the Merger was initiated,
or up to the Effective Time, except for the distribution of
shares of Open Access Broadband Network, Inc. ("OAB") distributed
to Target Stockholders on August 12, 1999.
(ii) There is no plan or intention by any Target Stockholder
to engage in a sale, exchange, redemption, pledge, or other
transaction with Parent or with a person related (within the
meaning of Treas. Reg. Section1.368-1(e)(3), hereinafter "Parent
Related Person") to Parent in which such Target Stockholder would
dispose of a number of Parent Shares received in the Merger that,
in the aggregate (taking into account all such sales, exchanges,
redemptions, pledges and other transactions with Parent or a
Parent Related Person to which Target Stockholders are parties
but disregarding transactions between Target Stockholders and
other persons), would reduce the ownership of shares of Parent
Shares by the stockholders of Target to a number of such Parent
Shares having a value, as of the Effective Time, of less than 50%
of the aggregate value of all of the outstanding shares of Target
as of the Effective Time. For purposes of this representation,
shares of Target held by stockholders of Target that, during the
two-year period prior to the Merger, (i) have been redeemed or
sold, exchanged or otherwise transferred to Target for
consideration other than shares of Target, (ii) with respect to
which an extraordinary distribution (within the meaning of Treas.
Reg. Section1.368-1T(e)(1)(ii)(A)) has been made, including the
distribution of shares of OAB referred to in Section3(t)(i),
(iii) have been sold, exchanged, or otherwise transferred to a
person related to Target (within the meaning of Treas. Reg.
Section1.368-1(e)(3) but without regard to Treas. Reg.
Section1.368-1(e)(3)(i)(A)) for consideration other than shares
of Target or Parent Shares, and (iv) have been sold, exchanged,
or otherwise transferred to Parent or a Parent Related Person for
consideration other than shares of Target or Parent Shares have
been treated, and taken into account, as outstanding shares of
Target as of the Effective Time.
(iii) Immediately following the Merger, Target will hold at
least 90 percent of the fair market value of its net assets and
at least 70 percent of the fair market value of its gross assets
held as of the Effective Time. For purposes of this
representation, amounts paid by Target to shareholders (including
shareholders invoking dissenting rights), amounts used by Target
to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by
Target after the commencement of negotiations by the parties to
this Agreement will be included and treated as assets held by
Target as of the Effective Time.
(iv) As of the Effective Time, Target will not have
outstanding any warrants, options, convertible securities, or any
other type of right pursuant to which any person could acquire
stock in Target that, if exercised or converted, would affect
Parent's acquisition or retention of "control" of the Surviving
Corporation, as defined in Code Section368(c).
(v) Target is not an "investment company" as defined in Code
Section368(a)(2)(F)(iii) and (iv) and is not under the
jurisdiction of a court in a title 11 or similar case within the
meaning of Code Section368(a)(3)(A).
(vi) As of the Effective Time, the fair market value of the
assets of Target will exceed the sum of its liabilities, plus the
amount of liabilities, if any, to which the assets are subject.
(u) Employees. The Disclosure Schedule sets forth each employment
agreement, including those that provide for the receipt of certain consideration
by an employee for his or her securities of Target in the event of a merger and
each employment agreement that provides for any other special rights which shall
inure to an employee in the event of a merger;
(v) Notice of Meeting. None of the information supplied or to be
supplied by Target for inclusion in the notice of meeting (other than
information about Parent and Merger Sub supplied by Parent and Merger Sub),
written consent and/or proxy statement to be distributed in connection with the
approval and adoption by the Target Stockholders of this Agreement and the
transactions contemplated hereby (the "Notice of Meeting") or any amendments
thereof or supplements thereto will, at the time of the mailing of the Notice of
Meeting and any amendments thereof or supplements thereto, and at the time of
the meeting of the Target Stockholders to be held in connection with the
transactions contemplated by this Agreement, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(w) Labor Matters; Labor Controversies.
(i) The Disclosure Schedule sets forth all written
employment agreements to which Target is a party.
(ii) There are no material controversies pending, or to the
Knowledge of Target threatened, between Target and any of its
employees.
(iii) There are no material organizational efforts presently
being made involving any of the presently unorganized employees
of Target.
(iv) Target has complied in all material respects with all
laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, employee
benefits, hours, equal employment opportunity/non-discrimination,
occupational safety and health and the payment of social security
and similar taxes, except for non-compliance that would not have
a Target Material Adverse Effect.
(v) No person has asserted that Target is liable in any
material amount for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.
(vi) To the Knowledge of Target, (A) no executive or group
of employees have given notice to terminate employment with
Target, Target is not a party to or bound by any collective
bargaining agreement, nor has Target experienced any strikes,
grievances, claims of unfair labor practices, except for purposes
of clauses (i)-(v) such controversies, organizational efforts,
non-compliance and liabilities which, singly or in the aggregate,
could not reasonably be expected to cause a Target Material
Adverse Effect and (B) there is no unfair labor practice charge
or complaint against Target pending or, to the Knowledge of
Target, threatened before the National Labor Relations Board or
any similar state agency and there are no complaints pending or,
to the Knowledge of Target, threatened in any forum by or on
behalf of any present or former employee of Target alleging
breach of any express or implied contract of employment, any law
or regulation governing employment or the termination thereof or
other discriminatory, wrongful or tortuous conduct in connection
with the employment relationship.
(x) Target Stockholders' Approval. The affirmative vote of
stockholders of Target required for approval and adoption of this Agreement, the
Merger and the transactions contemplated thereby is a majority of the
outstanding Target Shares and Target Preferred Shares voting as a single class.
(y) No Excess Parachute Payments. Target has no contracts,
arrangements or understandings pursuant to which any person may receive any
amount or entitlement from Target (including cash or property or the vesting of
property) that may be characterized as an "excess parachute payment" (as such
term is defined in Code Section280G(b)(1)) (any such amount being an "Excess
Parachute Payment") as a result of any of the transactions contemplated by this
Agreement. No person is entitled to receive any additional payment from Target
or any other person (a "Parachute Gross-up Payment") in the event that the 20%
parachute excise tax of Code Section4999(a) is imposed on such person. The board
of directors of Target has not during the six months prior to the date of this
Agreement granted to any officer, director or employee of Target any right to
receive any Parachute Gross-Up Payment.
(z) Insurance. The Disclosure Schedule contains a list of all
insurance policies maintained by Target, copies of which have been provided to
Parent. All of Target's insurance policies and other forms of insurance, surety
bonds and umbrella policies, insuring Target and their directors, officers,
employees, independent contractors, properties, products, assets and business,
are valid and in full force and effect and without any premium past due or
pending notice of cancellation, except for any invalidity or lack of
effectiveness that would not have a Target Material Adverse Effect, and there
are no claims, singly or in the aggregate, under such policies in excess of
$200,000, which, in any event, are not in excess of the limitations of coverage
set forth in such policies. Target has no Knowledge of any fact, other than
facts that affect businesses engaged in business similar to that of Target or
businesses generally, indicating that such policies will not continue to be
available to Target upon substantially similar terms subsequent to the Effective
Time. Target has no Knowledge that, with respect to its insurance policies, any
notice of actual or proposed cancellation of or reduction in coverage of, or of
any material increase in premium under, or of any exclusion of or intent to
exclude coverage of actual or potential claims by or against Target, or its
officers, directors or employees, arising from or relating to any failure of
Target or any System of Target to be Year 2000 Compliant has been received. The
Disclosure Schedule describes Target's standard procedures with respect to
insurance matters relating to Target's subcontractors.
(aa) Guaranties. Target is not a guarantor or otherwise liable for
any liability or obligation (including indebtedness) of any other person in an
amount in excess of $10,000, other than endorsements of financial instruments in
the Ordinary Course of Business.
(bb) Suppliers and Customers. The Disclosure Schedule sets forth
the five largest suppliers and the ten largest customers of Target as of the
date of this Agreement. Target has not received any written notice that any such
supplier or customer of Target intends to cancel or otherwise substantially
modify its relationship with Target or to decrease materially or limit its sale
or purchase of services, supplies, or materials.
(cc) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of Target, except for tax or litigation powers of
attorney.
(dd) Disclosure. No representations and warranties by Target
contained in this Agreement, and no statement made by Target in this Agreement
or any certificate furnished to Parent at or prior to Closing pursuant hereto,
contains or will contain on the Closing Date any untrue statements of a material
fact or omits or will omit on the Closing Date to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances in which they were made.
(ee) Affiliates. Set forth in the Disclosure Schedule is a list
identifying all persons who may be deemed affiliates of Target under Rule 145 of
the Securities Act ("Rule 145"), including, without limitation, all directors
and executive officers of Target.
(ff) Transactions with Related Parties (ff) Transactions with
Related Parties . There have been no transactions by Target with any officer or
director of Target, any beneficial owner of more than 5% of the Target Shares or
Target Preferred Shares or their affiliates ("Related Parties") since December
31, 1998, and (b) there are no agreements or understandings now in effect
between Target and any Related Parties except for employment agreements or
understandings with Related Parties who are employees of Target and agreements
or understandings with Related Parties who are shareholders of Target relating
to their rights as shareholders of Target, copies of which have been delivered
to Parent.
(gg) Bank Accounts (gg) Bank Accounts . The Disclosure Schedule
sets forth all banks or other financial institutions with which Target has an
account or maintains a safe deposit box, showing the type and account number of
each such account and safe deposit box and the names of the persons authorized
as signatories thereon or to act or deal in connection therewith.
(hh) Business Relations (hh) Business Relations . Target has no
Knowledge that any customer or supplier of Target will cease to do business with
Target after the consummation of the transactions contemplated hereby, except
where such loss of a customer or supplier would not have a Target Material
Adverse Effect or is in the Ordinary Course of Business.
(ii) Potential Conflicts of Interest(ii) Potential Conflicts of
Interest . To Target's Knowledge, no current officer or director of Target (a)
owns, directly or indirectly, any interest (other than not more than 1% stock
holdings for investment purposes in securities of publicly held and traded
companies) in, or is an officer, director, employee, or consultant of, any
person or entity that is a competitor, lessor, lessee, customer, or supplier of
Target; (b) owns, directly or indirectly, in whole or in part, any tangible or
intangible property that Target is using or the use of which is necessary for
the business of Target; or (c) has any cause of action or other claim whatsoever
against, or owes any amount to, Target, except for claims in the ordinary course
of business, such as for accrued vacation pay, accrued benefits under employee
benefit plans, and similar matters and agreements, except for those causes of
action or claims that would not have a Target Material Adverse Effect.
(jj) Minute Books(jj) Minute Books . The copies of the minute books
of Target made available to Parent for inspection accurately record all material
action taken by Target's Board of Directors and stockholders.
(kk) Indebtedness. Target does not have any indebtedness for
borrowed money, including any capital lease or conditional sale or title
retention agreement outstanding.
(ll) Absence of Undisclosed Liabilities. As of December 31, 1998,
the Target had not incurred, and has not incurred since December 31, 1998, any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature, except: (a) liabilities, obligations or contingencies (i) which
are accrued or reserved against in the Financial Statements or reflected in the
notes thereto, or (ii) which were incurred in the Ordinary Course of Business
and consistent with past practices; (b) liabilities, obligations or
contingencies which (i) would not, in the aggregate, have a Target Material
Adverse Effect, or (ii) have been discharged or paid in full prior to the date
of this Agreement; or (c) liabilities and obligations which are of a nature not
required to be reflected or reserved against in the Financial Statements
prepared in accordance with generally accepted accounting principles
consistently applied and which were incurred in the Ordinary Course of Business.
(mm) Option Agreements. True and correct copies of the Option
Agreements between Target and each of Xxx Xxxxxx, Xxxx Xxxxxxxx and Xxxxxxx X.
Xxxxx, and the form of Option Agreement between Target and each other holder of
Target Options are attached to the Disclosure Schedule. Other than with respect
to the issuance of Target Shares upon the exercise of Target Options, Target has
not issued any Target Shares pursuant to the 1998 Stock Option/Issuance Plan.
(nn) Capital Investments. Since December 31, 1998, Target has not
made any capital investment in, any loan to or any acquisition of the securities
or assets of, any other Person.
4. Representations and Warranties of Parent and Merger Sub. Parent and
Merger Sub, jointly and severally, represent and warrant to Target that the
statements contained in this Section4 are correct and complete as of the date of
this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section4), except as set forth in the Parent
Disclosure Schedule attached hereto as Exhibit J and incorporated herein by
reference (the "Parent Disclosure Schedule"). For the convenience of the
parties, each exception noted in the various sections of the Parent Disclosure
Schedule shall be designated to correspond to the applicable section of this
Agreement to which it refers, but disclosure of facts in the Parent Disclosure
Schedule in connection with one section shall be deemed to have been disclosed
for all purposes of the Parent Disclosure Schedule provided that such disclosure
reasonably sets forth the nature of the facts disclosed in light of the
circumstances under which the disclosure is made.
(a) Organization. Parent and Merger Sub are each a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Capitalization. As of January 18, 2000, the authorized capital
stock of Parent consists of (i) 100,000,000 Parent Shares, of which 32,029,477
shares were outstanding, and (ii) 2,000,000 shares of preferred stock, no par
value, none of which is outstanding. As of the date of this Agreement, there are
issued and outstanding options to acquire 3,821,818 Parent Shares. As of the
date of this Agreement, there are outstanding warrants to acquire 604,100 Parent
Shares. To the extent that the representations and warranties set forth in the
first three sentences of this Section4(b) are made as of the Closing Date, such
representations and warranties will not take into account changes in the number
of shares, options and warrants outstanding due to the exercise of options and
warrants after the date hereof but prior to the Closing Date. The failure to
take such exercises into account shall not be a breach of the representations
and warranties set forth in the first three sentences of this Section4(b).
Except as disclosed in the Public Reports (as defined in Section4(f)), as of the
date hereof there are (i) no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion of exchange under any outstanding
security, instrument or other agreement, obligating Parent or any Subsidiary of
Parent to issue, deliver or sell, or cause to be issued, delivered or sold or
otherwise to become outstanding, additional shares of the capital stock of
Parent or obligating Parent or any Subsidiary of Parent to grant, extend or
enter into any such agreement or commitment, and (ii) no voting trusts, proxies
or other agreements or understandings to which Parent and any Subsidiary of
Parent is a party or is bound with respect to the voting of any shares of
capital stock of Parent or any Subsidiary and there are no such trusts, proxies,
agreements or understandings by, between or among any of Parent's shareholders
with respect to Parent Shares. There are no outstanding or authorized stock
appreciation rights, phantom stock, profit participation stock purchase rights
or similar rights to acquire Parent Shares with respect to Parent. All of Parent
Shares to be issued to Target Stockholders have been and are duly authorized
and, upon consummation of the transactions contemplated hereby, will be validly
issued, fully paid, and nonassessable. Parent Shares to be issued to Target
Stockholders, at the time of issuance, will be free and clear of any
restrictions on transfer (other than restrictions on transfer imposed by Rule
145(d) promulgated under the Securities Act and imposed in order to cause the
Merger to qualify as a pooling of interests), taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities, claims,
preemptive rights and demands. There are not any stockholder agreements, voting
trusts or other agreements or understandings to which Parent is a party or by
which it is bound relating to the voting of any of Parent Shares. The authorized
capital stock of Merger Sub consists of 100 shares of Common Stock, par value
$.01 per share, all of which are duly authorized, validly issued, fully paid,
non-assessable, and are owned of record and beneficially only by Parent.
(c) Authorization of Transaction. Parent and Merger Sub each has
the corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of Parent and Merger Sub, enforceable in accordance
with its terms and conditions.
(d) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated by this
Agreement, will violate any provision of the articles of incorporation,
Certificate of Incorporation, or bylaws of Parent or Merger Sub. Neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated by this Agreement, will (i) violate any valid
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which Parent or Merger Sub is subject or (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument or other
arrangement to which Parent or Merger Sub is a party or by which either of them
is bound or to which any of their assets is subject (or result in the imposition
of any Security Interest upon any of its assets) except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have a
Parent Material Adverse Effect. The Board of Directors of each of Parent and
Merger Sub has approved this Agreement. To the Knowledge of Parent and Merger
Sub, and other than in connection with the provisions of the Xxxx-Xxxxx-Xxxxxx
Act, the Securities Exchange Act, the Securities Act, and applicable state
securities laws, neither Parent nor Merger Sub needs to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
be a Parent Material Adverse Effect.
(e) Brokers' Fees. Neither Parent nor Merger Sub has any liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement which is or
which could become the liability or obligation of Target prior to the Effective
Time, including, but not limited to any fees or commissions payable to CIBC.
(f) Filings with the SEC. Parent has made all filings with the SEC
that it has been required to make since June 26, 1996 under the Securities Act
and the Securities Exchange Act (collectively with any voluntary filings, the
"Public Reports") in a timely manner. Each of the Public Reports has complied
with the Securities Act and the Securities Exchange Act in all material
respects. None of the Public Reports, as of their (i) respective dates with
respect to filings under the Exchange Act, (ii) effective dates with respect to
registration statements and post-effective amendments thereto filed under the
Securities Act, and (iii) their respective dates as to any definitive prospectus
or prospectus supplement filed pursuant to Rule 424(b) promulgated under the
Securities Act, as the case may be, contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Public Reports (together with true and correct copies
of all exhibits and schedules thereto as amended to date) are available on XXXXX
in the form filed by Parent, and Parent has not omitted to file any Public
Report on XXXXX.
(g) Parent Financial Statements. Each of the consolidated financial
statements (including the notes thereto) contained in the Public Reports has
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby and present fairly the financial condition of Parent
and its consolidated subsidiaries as of such dates and the results of operations
of Parent and its subsidiaries for such periods; provided, however, that the
unaudited consolidated balance sheets and statements of operations, cash flows
changes in stockholders' equity, and cash flow as of and for any interim period
reported upon for Parent and its consolidated subsidiaries are subject to normal
year-end adjustments and lack footnotes and other presentation items as
permitted in accordance with GAAP as to interim statements.
(h) Events Subsequent to October 24, 1999. Except as disclosed in
the Public Reports, since October 24, 1999, there has not been any (i) material
adverse change in the financial condition of Parent and its consolidated
subsidiaries taken as a whole; (ii) amendment to the articles of incorporation
of Parent; (iii) payment of dividends or changes in the capital structure of
Parent; or (iv) other transactions material to Parent and its consolidated
subsidiaries taken as a whole. Since October 24, 1999, Parent has conducted its,
and has caused its consolidated subsidiaries to conduct their, business and
affairs only in the Ordinary Course of Business.
(i) Continuity of Business Enterprise. It is the present intention
of Merger Sub to continue at least one significant historic business line of
Target, or to use at least a significant portion of Target's historic business
assets in a business, in each case within the meaning of Treas. Reg.
Section1.368-1(d) and applicable law.
(j) Disclosure. The Information Statement will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they will be made, not misleading; provided, however, that Parent
and Merger Sub make no representation or warranty with respect to any
information that Target will supply specifically for use in the Information
Statement. Assuming the accuracy of the information provided to Parent by the
Target Stockholders in the Investor Questionnaires, the offer and sale by Parent
of the Parent Shares pursuant to this Agreement will be exempt from registration
under the Securities Act and applicable state securities laws, or, if not exempt
under applicable state securities laws, Parent will take such steps as are
required to register such shares in compliance with applicable state securities
laws.
(k) Accounting as "Pooling of Interests".
(i) As of the date hereof, to the Knowledge of Merger Sub
and Parent, none of Merger Sub, Parent or any of their Affiliates
has taken or agreed to take any action that would prevent Parent
from accounting for the business combination to be effected by
the Merger as a "pooling of interests" or prevent the Merger and
the other transactions contemplated by this Agreement from
qualifying as a "reorganization" within the meaning of Code
Section 368(a). None of Merger Sub, Parent, or any of their
Affiliates has, during the two years preceding the earlier of the
date of this Agreement or the date the plan of combination was
initiated, been a Subsidiary (other than Merger Sub being a
Subsidiary of Parent) or division of another corporation or a
part of an acquisition which was later rescinded and, within the
past two years, there has not been any sale or spin-off of a
significant amount of assets of Parent or any affiliate of
Parent. Parent has not acquired any of its own capital stock
during the past two years. Parent has no obligation (contingent
or otherwise) to purchase, redeem or otherwise acquire any of the
shares of its own common stock or any interest therein or to pay
any dividend or make any distribution in respect thereof. Neither
the voting capital structure of Parent nor the relative ownership
of shares among any of the holders of capital stock or other
securities of Parent has been altered or changed within the last
two years in contemplation of the transactions contemplated
hereby. No shares of capital stock or other securities of Parent
were issued and are outstanding pursuant to awards, grants or
bonuses under the terms of any plan which was adopted less than
two years prior to the date the combination was initiated. Prior
to the Closing or the earlier termination of this Agreement
pursuant to the terms thereof, neither Parent nor its affiliates
have purchased nor will they purchase or otherwise acquire
directly or indirectly any Target Shares other than as provided
in this Agreement. Any indebtedness owed or incurred by Parent to
any of Parent Stockholders has been incurred and repaid on
commercially reasonable and customary terms. There are no related
businesses or business assets owned or controlled by the
stockholders of Parent that are integral to this business and
thus should be included as a part of this transaction pursuant to
the pooling-of-interest rules. There have not been any dividends
to Parent Stockholders during the two years prior to the date the
Merger was initiated, or up to the Effective Time.
(ii) Merger Sub and Parent have provided to Parent's
independent accountants and Target's independent accountants all
information concerning actions taken or agreed to be taken by
Merger Sub and Parent or any of their Affiliates on or before the
date of this Agreement that could reasonably be expected to
adversely affect the ability of Parent to account for the
business combination to be effected by the Merger as a pooling of
interests.
(l) Investment. Parent is not acquiring the Target Shares with the
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
(m) No Violation of Law. Parent is not in violation of or has not
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a Parent Material Adverse Effect. To
the Knowledge of Parent, as of the date of this Agreement, no investigation or
review by any governmental or regulatory body or authority is pending, or
threatened, nor has any governmental or regulatory body or authority indicated
to Parent an intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, will not have a Parent
Material Adverse Effect. Parent has all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct its businesses as presently conducted
(collectively, the "Parent Permits"), except for permits, licenses, franchises,
variances, exemptions, orders, authorizations, consents and approvals the
absence of which, alone or in the aggregate, would not have a Parent Material
Adverse Effect. Parent is not in violation of the terms of any Parent Permit, or
any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
or mediator, except for delays in filing reports or violations which, alone or
in the aggregate, would not have a Parent Material Adverse Effect.
5. Covenants. The Parties agree as follows with respect to the period from
and after the execution of this Agreement:
(a) General. Subject, in the case of Target, to the exercise of the
fiduciary duties of the Board of Directors of Target, each of the Parties will
use its best efforts to take all action and to do all things necessary in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section6 below).
(b) Notices and Consents. Each of the Parties will give any notices
(and will cause each of its Subsidiaries to give any notices) to third parties,
and will use its commercially reasonable efforts to obtain (and will cause each
of its Subsidiaries to use its reasonable efforts to obtain) any third party
consents, that another Party reasonably may request in connection with the
matters referred to in Section3(c) and Section4(d) above.
(c) Regulatory Matters and Approvals. Each of the Parties will (and
will cause each of its Subsidiaries to) give any notices to, make any filings
with, and use its commercially reasonable efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Section3(c) and Section4(d) above. Without
limiting the generality of the foregoing:
(i) Target will provide Parent with such information as
Parent reasonably may request in connection with the Information
Statement. Parent will take or cause to be taken all actions that
may be necessary under state securities laws in connection with
the offering and issuance of Parent Shares to Target
Stockholders.
(ii) Unless this Agreement has been terminated pursuant to
Section7, Target will call a special meeting of its stockholders
(the "Target Special Meeting") as soon as reasonably practicable
after the date hereof in order that the stockholders may consider
and vote upon the adoption of this Agreement and the approval of
the Merger in accordance with the corporation laws of its state
of incorporation. Unless this Agreement has been terminated
pursuant to Section7, Target will mail the Information Statement
and the Notice of Meeting to its stockholders as soon as
reasonably practicable. The Notice of Meeting will contain the
affirmative recommendation of the board of directors of Target in
favor of the adoption of this Agreement, the approval of the
Merger, and the election of a stockholder representative for
purposes of the Escrow Agreement; provided, however, that no
director or officer of Target shall be required to violate any
fiduciary duty or other requirement imposed by law in connection
therewith.
(iii) Each of the Parties will file (and will cause each of
its Subsidiaries to file) any notification and report forms and
related material that it may be required to file with the Federal
Trade Commission and the Antitrust Division of the United States
Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will use
its reasonable efforts to obtain (and will cause each of its
Subsidiaries to use its reasonable efforts to obtain) an early
termination of the applicable waiting period, and will make (and
will cause each of its Subsidiaries to make) any further filings
pursuant thereto that may be necessary.
(d) Authorization for Shares. Prior to the Closing, Parent shall
have taken all action necessary to permit it to issue the number of Parent
Shares required to be issued to Target Stockholders and holders of Target
Options pursuant to this Agreement.
(e) Operation of Business. Each Party will not (and will not cause
or permit any of its Subsidiaries to), without the prior written consent of the
other Party,engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business, provided, however, that
Parent shall be permitted to make cash acquisitions or investments that are in
furtherance of the current business of Parent in an aggregate amount not to
exceed $10,000,000.
(f) Full Access. Each Party (a "Providing Party") will (and will
cause each of its Subsidiaries to) permit representatives of another Party (a
"Receiving Party") to have reasonable access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of the
Providing Party and its Subsidiaries, to all premises, properties, personnel,
books, records (including tax records), contracts, and documents of or
pertaining to each of the Providing Party and its Subsidiaries as the Receiving
Party may reasonably request from time to time. The Receiving Party will treat
and hold as such any Confidential Information it receives from any Providing
Party or its Subsidiaries in the course of the reviews contemplated by this
Section5(f), will not use any of the Confidential Information except in
connection with this Agreement, and, if this Agreement is terminated for any
reason whatsoever, agrees to return to the Providing Party all tangible
embodiments (and all copies) thereof which are in its possession.
(g) Notice of Developments.
(i) Target may elect at any time prior to the Effective Time
to notify Merger Sub of any development occurring after the date
of this Agreement causing a breach of any of the representations
and warranties in Section3 above. Unless Merger Sub has the right
to terminate this Agreement pursuant to Section7(a)(ii) below by
reason of the development and exercises that right within the
period of ten (10) business days referred to in Section7(a)(ii)
below, the written notice pursuant to this Section5(g)(i) will be
deemed to have amended the Disclosure Schedule, to have qualified
the representations and warranties contained in Section3 above,
and to have cured any misrepresentation or breach of warranty
that otherwise might have existed hereunder by reason of the
development.
(ii) Each Party will give prompt written notice to the other
of any material adverse development causing a breach of any of
its own representations and warranties in Section3 and Section4
above. Except as provided in Section7(a)(ii), no disclosure by
any Party pursuant to this Section5(g) (excluding matters
disclosed pursuant to Section5(g)(i)), however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation, breach of warranty, or breach of
covenant.
(h) Insurance and Indemnification.
(i) Parent will provide, and will cause the Surviving
Corporation and its Subsidiaries to provide, each individual who
served as a director or officer of Target at any time prior to
the Effective Time with liability insurance for a period of 36
months after the Effective Time no less favorable in coverage and
amount than any applicable insurance in effect on the date of
this Agreement.
(ii) Parent will observe, and will cause the Surviving
Corporation and its Subsidiaries to observe, any
indemnification provisions now existing in the certificate
of incorporation or bylaws of Target for the benefit of any
individual who served as a director, officer, employee or
agent of Target at any time prior to the Effective Time.
(iii) Parent will, and will cause the Surviving
Corporation and its Subsidiaries to, indemnify to the
fullest extent permitted by applicable law each individual
who served as a director, officer, employee or agent of
Target at any time prior to the Effective Time from and
against any and all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses,
and fees, including without limitation all Litigation Costs,
resulting from, arising out of, relating to, in the nature
of, or caused by (A) this Agreement or any of the
transactions contemplated herein, or (B) reason of the fact
that such individual is or was a director, officer, employee
or agent of Target, or is or was serving at the request of
Target as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise.
(iv) Parent will advance or reimburse, and will cause
the Surviving Corporation and its Subsidiaries to advance or
reimburse, each indemnified party for all Litigation Costs
incurred by such party in connection with investigating or
defending any of the matters described in Section5(i) (i),
(ii) or (iii) above, as such Litigation Costs are or may be
incurred from time to time. In addition, each indemnified
individual or entity, at its election, may control, and
select counsel to assume, the defense of any Proceeding.
(i) Continuity of Business Enterprise. After the Closing, Parent
will continue, or will cause the Surviving Corporation to continue at least one
significant historic business line of Target, or use at least a significant
portion of Target's historic business assets in a business, in each case within
the meaning of Treas. Reg. Section1.368-1(d) and applicable law.
(j) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting Party.
(k) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Target, the other Party shall cooperate with it
and its counsel in the defense or contest, make available its personnel, and
provide such testimony and access to its books and records as shall be necessary
in connection with the defense or contest, all at the sole cost and expense of
the contesting or defending Party.
(l) Exclusivity.
(i) Target shall not (whether directly or indirectly
through advisors, agents or other intermediaries), and
Target shall not authorize or permit any of its officers,
directors, agents, representatives, or advisors to (i)
solicit, initiate, or encourage the making of, or negotiate
with respect to any offer or proposal to acquire control of
Target or to acquire any of Target's business and properties
or capital stock whether by merger, purchase of stock or
assets, tender offer or otherwise (each an "Acquisition
Proposal"); (ii) disclose any information not customarily
disclosed to any person concerning Target's business and
properties or afford to any person or entity access to its
properties, books or records; (iii) respond to inquiries or
assist or cooperate with any person to make any proposal to
consummate an Acquisition Proposal; or (iv) disclose the
existence or content of the discussions between Parent and
Target or the existence of this Agreement; provided, however
that the foregoing shall not prohibit Target (either
directly or indirectly through any of its officers,
directors, agents, representatives (including attorneys),
shareholders or affiliates) from (A) furnishing information
pursuant to an appropriate confidentiality letter concerning
Target and its businesses, properties or assets to a third
party (other than Parent, Merger Sub or any of their
respective affiliates) who has made or is seeking to
initiate discussions with respect to a bona fide Acquisition
Proposal, (B) engaging in discussions or negotiations with
such a third party who has made a bona fide Acquisition
Proposal, and/or (C) following receipt of a bona fide
Acquisition Proposal, making disclosure to Target's
stockholders, where the failure to take or permit the taking
of any action specified in the foregoing clauses (A) through
(C) would be a breach of the fiduciary duties of the Board
of Directors of Target. Except to the extent it would be a
breach of the fiduciary duties of the Target's Board of
Directors to do so, in the event that Target or any of its
officers, directors, agents, representatives (including
attorneys), shareholders or affiliates shall receive any
offer or proposal, directly or indirectly, of the type
referred to in clause (i) or (iii) above, or any request for
disclosure or access pursuant to clause (ii) above, Target
shall promptly inform Parent of the receipt of any such
Acquisition Proposal including the identity of the Person or
group making such Acquisition Proposal and the material
terms and conditions of such Acquisition Proposal. Except to
the extent it would be a breach of the fiduciary duties of
the Target's Board of Directors not to do so, in no event
shall Target enter into a definitive agreement in connection
with the Acquisition Proposal less than three business days
after Target's notification to Parent of an inquiry or
proposal relating to an Acquisition Proposal. Within the
three-business-day period referred to above, Parent may
propose an improved transaction.
(ii) If this Agreement is terminated pursuant to
Section7(a)(v), or if the Board of Directors of Target fails
to recommend approval of the Merger to the Target
Stockholders or withdraws such recommendation, Target agrees
to promptly pay to Parent $3,500,000 payable upon the
earlier of (i) 90 days after termination of this Agreement,
and (ii) the execution of an agreement with respect to an
Acquisition Proposal. If this Agreement is terminated
because Target has terminated this Agreement pursuant to
Section7(a)(v), Merger Sub and Parent agree that, in the
absence of fraud, such payment shall be Merger Sub and
Parent's exclusive remedy for any termination of this
Agreement pursuant to Section7(a)(v). This Section 5(l)(ii)
shall survive any termination of this Agreement.
(iii) Target and Parent each (A) acknowledge that a
breach of any of its covenants contained in this Section5(1)
will result in irreparable harm to the other party which
will not be compensable in money damages, and (B) agree that
such covenant shall be specifically enforceable and that
specific performance and injunctive relief shall be a remedy
properly available to the other party for a breach of such
covenant and it shall not be a defense thereof that a party
had an adequate remedy at law for such breach.
(m) Employment Matters.
(i) From and after the Effective Time, unless Surviving
Corporation and an officer, director or employee of Target
otherwise agree, Parent, Surviving Corporation and their
respective Subsidiaries will honor and assume, in accordance
with their terms, all existing employment, compensation and
severance agreements between Target and any officer,
director, or employee of Target and all benefits or other
amounts earned or accrued to the extent vested or which
become vested in the ordinary course under all employee
benefit plans of Target, except that to the extent that
Parent employs any employee of Target, such employment shall
be at will unless otherwise provided in an agreement to
which Parent or Merger Sub is a party.
(ii) Merger Sub or Parent shall cause all employees of
Target as of the Effective Time to be eligible to
participate in the "employee welfare benefit plans" and
"employee pension plans" (within the meaning of Section 3(1)
and Section 3(2) of ERISA, respectively) of Merger Sub or
Parent in which similarly situated employees of Merger Sub
or Parent are generally eligible to participate (or,
alternatively, may choose in their discretion to continue
certain or all of the benefit plans currently provided by
Target to its employees or otherwise to provide benefits
comparable to some or all of such plans); provided that
nothing herein shall prevent Merger Sub or Parent from
terminating the employment of any such employee or modifying
or terminating such plans from time to time. For purposes of
any length of service requirements, waiting periods, vesting
periods or differential benefits based on length of service
in any such plan for which an employee may be eligible after
the Effective Time, Merger Sub or Parent shall ensure that
service by such employee with Target shall be deemed to have
been service with Merger Sub or Parent, as applicable.
(iii) From and after the Effective Time, Parent shall
provide or cause to be provided (a) salary and benefits
(subject to (ii) above) to their employees of Target, which
will, in the aggregate, be comparable to those currently
provided by Target to its employees, and (b) participation
in Parent's Stock Option Plan on the same basis as that
provided to Parent's current employees.
(n) Conduct of Target's Business Pending Closing. From the date of
this Agreement until the Closing, Target shall:
(i) maintain its existence in good standing, maintain
the general character of its business and properties and
conduct its business consistent with past practices, except
as expressly permitted by this Agreement, maintain business
and accounting records consistent with past practices, and
use its reasonable best efforts to preserve the goodwill of
its suppliers, customers and others having business
relations with Target;
(ii) confer on a reasonable basis with one or more
representatives of Parent to report operational matters of
materiality and the general status of ongoing operations;
and
(iii) maintain the insurance coverage for its assets
and its businesses in such amounts and against such risks
and losses as it has in the Ordinary Course of Business.
(o) Prohibited Actions Pending Closing. Unless otherwise provided
for herein or approved by Merger Sub in writing, from the date hereof until the
Closing, Target shall not:
(i) amend or otherwise change its Certificate of
Incorporation or By-laws;
(ii) issue or sell or authorize for issuance or sale or
grant any options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other
contracts or commitments that could require Target to issue,
sell, or otherwise cause to become outstanding any of its
capital stock (other than any issuance of Target Shares upon
the conversion of Target Preferred Shares or upon the
exercise of any outstanding Option which Option was issued
prior to the date hereof in accordance with the terms of the
relevant stock option agreement) any capital stock of
Target;
(iii) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or
otherwise with respect to Target Shares or Target Preferred
Shares;
(iv) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any
Target Shares or Target Preferred Shares;
(v) acquire any corporation, partnership, other
business organization or any division thereof or any
material amount of assets;
(vi) incur any indebtedness for borrowed money or issue
any debt securities or make any loans or advances, except in
the Ordinary Course of Business, consistent with past
practice;
(vii) enter into any contract or agreement resulting in
obligations to Target outside the Ordinary Course of
Business;
(viii) authorize any capital commitment which is in
excess of $250,000 or capital expenditures which are, in the
aggregate, in excess of $250,000, except for commitments and
capital expenditures in the Ordinary Course of Business;
(ix) mortgage, pledge or subject to a Security
Interest, any of its assets or properties except for (a)
liens for taxes, assessments, or similar charges, incurred
in the Ordinary Course of Business that are not yet due and
payable or are being contested in good faith; (b) pledges or
deposits made in the Ordinary Course of Business; (c) liens
of mechanics, materialmen, warehousemen or other similar
liens securing obligations incurred in the Ordinary Course
of Business that are not yet due and payable or are being
contested in good faith; or (d) similar liens and
encumbrances which are incurred in the Ordinary Course of
Business and which do not in the aggregate materially
detract from the value of such assets or properties or
materially impair the use thereof;
(x) assume, guarantee or otherwise become responsible
for the obligations of any other Person or agree to so do,
except with respect to endorsements of negotiable
instruments under $10,000 in the Ordinary Course of
Business;
(xi) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than (i) the payment,
discharge or satisfaction, in the Ordinary Course of
Business, of liabilities reflected or reserved against in
the Financial Statements or subsequently incurred in the
Ordinary Course of Business and consistent with past
practice or (ii) as contemplated by this Agreement;
(xii) take or omit to take any other action that could
disqualify the Merger as a "pooling of interests" for
financial reporting purposes;
(xiii) enter into or amend any employment (including
any changes to salaries in excess of five percent),
severance, special pay arrangement with respect to
termination of employment or other similar arrangements or
agreements with any directors, officers or key employees,
except in the Ordinary Course of Business;
(xiv) adopt, enter into or amend any bonus, profit
sharing, compensation, stock option, pension, retirement,
deferred compensation, health care, employment or other
employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee or retiree,
including any organized labor or collective bargaining
agreement, except as required to comply with changes in
applicable law;
(xv) enter into an agreement with a supplier that is
outside the Ordinary Course of Business; or
(xvi) announce an intention, commit or agree to do any
of the foregoing.
(p) Information Statement. Parent will prepare the Information
Statement, provide Target copies of drafts of the Information Statement, and
consult with Target concerning the form and substance of the Information
Statement. Parent will provide Target with a final Information Statement at
least ten days prior to the date set for the Special Target Meeting.
(q) ASR 135 Agreements. The Disclosure Schedule lists all persons
who may be deemed "affiliates" of Target (as that term is used under Rule 145 of
the Securities Act), including, without limitation, all directors and executive
officers of Target. Target has advised the persons identified of the resale
restrictions imposed by applicable securities laws, including Accounting Series
Release Xx. 000 ("XXX 000") and obtained from such persons a written agreement
dated the date hereof and substantially in the form of Exhibit G (each an "ASR
135 Agreement"). Target shall use best efforts to obtain as soon as practicable,
but prior to Closing, from any other person who may be deemed to have become an
affiliate of Target after the date of this Agreement, a written XXX 000
Xxxxxxxxx.
(x) Nasdaq Listing. Parent shall use its reasonable best efforts to
effect, at or before the Effective Time, authorization for listing on The Nasdaq
National Market, upon official notice of issuance, that number of the shares of
Parent Shares to be issued pursuant to the Merger and the shares of Parent
Shares to be reserved for issuance upon exercise of Target Options.
(s) Mandatory Registration.
(i) Within 30 days following the Effective Time, Parent
shall prepare and file with the SEC a registration statement
and such other documents, including a prospectus, as may be
necessary in order to comply with the provisions of the
Securities Act so as to permit (a) the issuance of Parent
Shares upon the exercise of Target Options by the
non-employee holders of Target Options listed on Exhibit N
to this Agreement, where such issuance is not already
covered by the registration statement on Form S-8 that
Parent is required to file and maintain the effectiveness of
pursuant to Section2(g); provided, however, that in the
event that a Target Option which is not covered by the
Registration Statement on Form S-8 is exercised (each an
"Exercised Target Option") prior to the effectiveness of the
registration statement required to be filed pursuant to this
Section 5(s)(i), then Parent shall be obligated to register
the resale, as opposed to the issuance, of the Parent Shares
issuable upon exercise of such Exercised Target Option, and
(b) the resale of the Parent Shares issued to the Target
Stockholders pursuant to this Agreement by the holders
thereof ("Holders") for a consecutive period of two years,
and Parent shall use its best efforts to have such
registration statement declared effective by the SEC as soon
as practicable after filing, provided that, for not more
than 30 consecutive trading days (or not more than 60
consecutive trading days if the event giving rise thereto is
an acquisition required to be reported in a Current Report
on Form 8-K) or for a total of not more than 90 trading days
in any 12 month period, Parent may delay the disclosure of
material non-public information concerning Parent (as well
as prospectus or registration statement updating) the
disclosure of which at the time is not, in the good faith
opinion of Parent, in the best interests of Parent (an
"Allowed Delay"); provided, further, that Parent shall
promptly (i) notify the Holders in writing of the existence
of (but in no event, without the prior written consent of
the Holders, shall Parent disclose to Holders any of the
facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay and (ii) advise
the Holders, in writing to cease all sales under such
registration statement until the end of the Allowed Delay.
(ii) In connection with any registration under this
Section5(s), Parent covenants and agrees as follows:
(A) Parent shall furnish each Holder desiring to sell
its securities such number of prospectuses and copies of the
registration statement as shall reasonably be requested.
(B) Parent shall pay all costs (excluding fees and
expenses of Holder(s)' counsel and any underwriting or
selling commissions or other charges of any broker-dealer
acting on behalf of Holder(s)), fees and expenses in
connection with all registration statements filed pursuant
to this Section5(s) including, without limitation, Parent's
legal and accounting fees, printing expenses and blue sky
fees and expenses and shall use commercially reasonable
efforts to cooperate with the Holders and any underwriters
selected by them to effect the sale and disposition of all
Parent Shares registered.
(C) Parent will take all necessary action which may be
required in qualifying or registering the securities
included in the registration statement for resale under the
securities or blue sky laws of such states as are set forth
in the list referred to in Section2(e)(i)(B), provided that
Parent shall not be obligated to qualify as a foreign
corporation to do business under the laws of any such
jurisdiction.
(D) Parent hereby agrees that it will indemnify the
Holders of the securities to be sold pursuant to any
registration statement referred to in clause (i) above and
each person, if any, who controls such Holders within the
meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, against all loss, claim, damage,
expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become
subject under the Securities Act, the Exchange Act or any
other statute, common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement
of a material fact contained (x) in such registration
statement (as from time to time amended and supplemented);
(y) in any post-effective amendment or amendments; or (z) in
any application or other document or written communication
(in this Section5(s) collectively called an "application")
executed by Parent or based upon written information
furnished by Parent filed in any jurisdiction in order to
qualify the above-referenced securities under the securities
laws thereof or filed with the SEC, any state securities
commission or agency, the American Stock Exchange, the
National Association of Securities Dealers, Inc., The Nasdaq
Stock Market or any securities exchange, or the omission or
alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements contained
therein not misleading in light of the circumstances in
which they were made, unless such statement of omission was
made in reliance upon and in conformity with written
information furnished to Parent by Target, any Holder or any
placement agent on behalf of the Holders expressly for use
in such registration statement, any amendment or supplement
thereto or any application, as the case may be. The
indemnity provided in this Section5(s) is subject to the
condition that if any action is brought against any Holder
or any controlling person of such Holder in respect of which
indemnity may be sought against Parent pursuant to this
Section5(s), (i) such Holder or such controlling person
shall as soon as practicable and in no event more than 20
days after the receipt thereby of a summons or complaint
notify Parent in writing of the institution of such action
and Parent shall assume the defense of such action,
including the employment and payment of reasonable fees and
expenses of counsel (which counsel shall be reasonably
satisfactory to such Holder or controlling person), and (ii)
the Holder or controlling person seeking such indemnity
shall have delivered or caused to have been delivered or
otherwise taken action that constituted delivery under the
applicable rules of any exchange or stock market on which
Parent Shares were then traded any prospectus that such
person shall have been required to deliver in connection
with the sale that is the subject of the claim for
indemnification. Such Holder or controlling person shall
have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall
be at the expense of such Holder or controlling person
unless the employment of such counsel shall have been
authorized in writing by Parent in connection with the
defense of such action, Parent shall not have employed
counsel to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are
different from or additional to those available to Parent
(in which case Parent shall not have the right to direct the
defense of such action on behalf of the indemnified party or
parties), in any of which events the fees and expenses of
not more than one additional firm of attorneys for such
Holder and/or controlling person shall be borne by Parent.
Except as expressly provided in the previous sentence, in
the event that Parent shall not previously have assumed the
defense of any such action or claim, Parent shall not
thereafter be liable to such Holder or controlling person in
investigating, preparing or defending any such action or
claim. Parent hereby agrees promptly to notify all Holders
of the commencement of any litigation or proceedings against
Parent or any of its officers, directors or controlling
persons in connection with the offering and sale of the
securities referred to above or in connection with such
registration statement. Parent, in the defense of any such
action or claim will not, except with the consent of such
Holder being indemnified, consent to entry of any judgment
or enter into any settlement which does not include as an
unconditional term thereof, the giving by the claimant or
plaintiff to such Holder being indemnified of a full and
complete release from all liability in respect of such claim
or litigation in form and substance reasonably satisfactory
to such Holder being indemnified.
(t) Parent Shares.
(i) Each certificate representing Parent Shares
received by a Target Stockholder, pursuant to this Agreement
will be imprinted with a legend substantially in the
following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"). The securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective registration
statement for the securities under the Securities Act, or an opinion of
counsel, in form, substance and scope reasonably acceptable to X-XXX.xxx
Corp., that registration is not required under the Securities Act. This
certificate and the shares represented hereby have been issued pursuant to
a transaction governed by Rule 145 ("Rule 145") promulgated under the
Securities Act, and may not be sold or otherwise disposed of unless
registered under the Securities Act pursuant to a Registration Statement in
effect at the time or unless the proposed sale or disposition can be made
in compliance with Rule 145 or without registration in reliance on another
exemption therefrom.
(ii) In addition to the legends set forth in paragraph (i)
of this Section5(t), each certificate representing shares of
Parent Shares issued to the persons listed on Schedule 5(t) shall
have the following legend:
The transfer of such shares is subject to certain
restrictions set forth in a letter agreement dated as of January
19, 2000 by and between the issuer of such shares and the holder
of this certificate. The issuer of such shares will furnish a
copy of these provisions to the holder hereof without charge upon
written request.
(u) No Additional Representations or Warranties. Parent
acknowledges that neither Target nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding Target, except as expressly set forth
in this Agreement or the Disclosure Schedule, and Parent further agrees that
neither Target nor any other Person will have or be subject to any liability to
Parent, Merger Sub or any other Person resulting from the distribution to
Parent, or Parent's use of, any such information, including, without limitation,
the Descriptive Memorandum prepared by Xxxxxxx, any information, document or
material made available to Parent in a "data room" or otherwise, management
presentations or any other form in expectation of the transactions contemplated
by this Agreement. Except for the representations and warranties expressly set
forth in Section3, neither Target nor any other Person makes any representation
or warranty, express or implied, at law or in equity, in respect of Target or
any of the assets, liabilities or operations of Target, including, without
limitation, any implied representation or warranty as to the condition,
merchantability, suitability or fitness for a particular purpose, and Target
expressly disclaims any such representation or warranty. Target has provided
Parent with true and complete copies of the documents listed on Exhibit M.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of Merger Sub and Parent. The
obligation of Merger Sub and Parent to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
(i) this Agreement and the Merger shall have received the
Requisite Target Stockholder Approval;
(ii) the representations and warranties set forth in
Section3 above shall be true and correct in all material respects
at and as of the Closing Date;
(iii) Target shall have performed and complied with all of
its covenants hereunder in all material respects through the
Closing;
(iv) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement; and no
action shall have been taken, and no statute, rule or regulation
shall have been enacted, by any state or federal government or
governmental agency in the United States which would prohibit the
consummation of the Merger on the terms contemplated by this
Agreement or make the consummation of the Merger on the terms
contemplated by this Agreement illegal;
(v) all governmental waivers, consents, orders and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be
in effect at the Effective Time;
(vi) Target shall have delivered to Merger Sub a certificate
to the effect that each of the conditions specified above in
Section6(a)(i)-(iv) is satisfied in all respects and that Target
has performed and complied with all of its covenants under this
Agreement in all material respects;
(vii) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals referred to in
Section3(c) and Section4(d) above;
(viii) all actions to be taken by Target in connection with
consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Merger Sub;
(ix) Parent shall have received, in a form reasonably
satisfactory to Parent, and Target shall have received, in a form
reasonably satisfactory to Target, from Parent's or Targets
accountants, as the case may be, a favorable letter, dated the
Closing Date, regarding the appropriateness of
"pooling-of-interests" accounting treatment for the Merger;
(x) The ASR 135 Agreements described in Section5(q) shall
have been executed by the appropriate parties and delivered to
Parent;
(xi) Prior to the Effective Time, all Target Preferred
Shares shall have been converted to Target Shares in a manner
consistent with APB 16 requirements for treatment as a pooling of
interests and except for the Target Shares as set forth on the
Disclosure Schedule, there shall be no shares of preferred stock
or other capital stock or rights to acquire capital stock of
Target issued or outstanding or owned by Target; and no Target
Preferred Shares shall be outstanding;
(xii) Parent shall have received the written resignations,
effective as of Closing, of each director and officer of Target;
(xiii) Each of the Target Stockholders and any person who
becomes a Target Stockholder after execution of this Agreement
(other than holders of Dissenting Shares) shall have executed an
investor questionnaire and representation agreement in
substantially in the form of Exhibit I and the information
provided to Parent in connection with such documents shall
indicate, in the opinion of counsel to Parent, that the issuance
of Parent Shares as Merger Consideration will comply with state
and federal securities laws;
(xiv) Target, Parent, a stockholder representative and the
Escrow Agent shall have executed the Escrow Agreement;
(xv) Parent and Merger Sub shall have received (A) a
certification from Target, dated no more than thirty (30) days
prior to the Closing Date and signed by a responsible corporate
officer of Target, that Target is not, and has not been at any
time during the five years preceding the date of such
certification, a United States real property holding company, as
defined in Code Section 897(c)(2), and (b) proof reasonably
satisfactory to Parent and Merger Sub that Target has provided
notice of such certification to the IRS in accordance with the
provisions of Treasury regulations Section1.897-2(h)(2.);
(xvi) Parent shall have received an opinion from Bartlit
Xxxx Xxxxxx Xxxxxxxxx & Xxxxx, counsel to Target, effective as of
the Closing Date, covering the matters listed in Exhibit L and in
form reasonably satisfactory to Parent; and
(xvii) Prior to the Effective Time, Parent shall have
entered into satisfactory employment or non-compete agreements
with the senior managers of Target listed in Exhibit K.
Merger Sub may waive any condition specified in this
Section6(a) if it executes a writing so stating at or prior to
the Closing.
(b) Conditions to Obligation of Target. The obligation of Target to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section4
above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) Merger Sub shall have performed and complied with all
of its covenants hereunder in all material respects through the
Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(iv) Merger Sub and Parent shall have delivered to Target a
certificate to the effect that each of the conditions specified
above in Section6(b)(i)-(vi) is satisfied in all respects and
that Merger Sub and Parent have performed and complied with all
of its covenants under this Agreement in all material respects;
(v) this Agreement and the Merger shall have received the
Requisite Target Stockholder Approval;
(vi) all applicable waiting periods (and any extensions
thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals agencies referred
to in Section3(c) and Section4(d) above;
(vii) Target shall have received an opinion from Xxxxxxx
Xxxxx Xxxxxxx & Ingersoll, LLP, counsel to Parent, effective as
of the Closing Date, covering the matters listed in Exhibit L and
in form reasonably satisfactory to Target; and
(viii) all actions to be taken by Merger Sub in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Target.
Target may waive any condition specified in this Section6(b)
if it executes a writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. Each of the Parties may terminate
this Agreement with the prior authorization of its board of directors (whether
before or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Effective Time;
(ii) Merger Sub and Parent may terminate this Agreement by
giving written notice to Target at any time prior to the Closing
in the event (A) Target has within the then previous ten (10)
business days given Merger Sub any notice pursuant to
Section5(g)(i) above and (B) the development that is the subject
of the notice (X) has had a Target Material Adverse Effect or (Y)
materially and adversely affects the consummation of the
transaction contemplated by this Agreement;
(iii) Merger Sub and Parent may terminate this Agreement by
giving written notice to Target at any time prior to the
Effective Time (A) in the event Target has breached any
representation, warranty, or covenant contained in this Agreement
in any, Merger Sub has notified Target of the breach, and the
breach has continued without cure for a period of thirty (30)
days after the notice of breach or (B) if the Closing shall not
have occurred on or before March 30, 2000, by reason of the
failure of any condition precedent under Section6(a) hereof
(unless the failure results primarily from Merger Sub breaching
any representation, warranty, or covenant contained in this
Agreement);
(iv) Target may terminate this Agreement by giving written
notice to Merger Sub and Parent at any time prior to the
Effective Time (A) in the event Merger Sub or Parent has breached
any material representation, warranty, or covenant contained in
this Agreement in any material respect, Target has notified
Merger Sub and Parent of the breach, and the breach has continued
without cure for a period of thirty (30) days after the notice of
breach or (B) if the Closing shall not have occurred on or before
March 30, 2000, by reason of the failure of any condition
precedent under Section6(b) hereof (unless the failure results
primarily from Target breaching any representation, warranty, or
covenant contained in this Agreement);
(v) Target may terminate this Agreement by giving written
notice to Merger Sub and Parent at any time prior to the
Effective Time in the event Target's board of directors concludes
that Target has received a bona fide Acquisition Proposal that is
superior, from an economic point of view, to the terms of this
Agreement, provided that Target has not breached Section5(l) of
this Agreement;
(vi) Target may terminate this Agreement by giving written
notice to Merger Sub and Parent at any time prior to the
Effective Time if events have occurred that have resulted in or
constitute a Parent Material Adverse Effect;
(vii) Any Party may terminate this Agreement if the Merger
is enjoined by a final, unappealable court order; and
(viii) Either Parent or Merger Sub, on the one hand, or
Target, on the other hand, may terminate this Agreement if the
other Party fails to perform this Agreement at the Closing after
all conditions to that Party's performance have been satisfied or
waived.
(b) Effect of Termination.
(i) Except for a termination pursuant to Section7(a)(viii),
if any Party terminates this Agreement pursuant to Section7(a)
above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided,
however, that the provisions contained in Section5(f),
Section5(1) and Section7(b) shall survive any such termination.
(ii) If any Party terminates this Agreement pursuant to
Section7(a)(viii), all rights and obligations of the Parties
exercising the right to terminate hereunder shall terminate
without any liability of to the that Party, and the other Party
shall be liable to the terminating Party for liquidated damages
in the amount of $3,500,000 as an exclusive remedy for damages
suffered as a result of the failure to perform at Closing. By
agreeing to these liquidated damages, the Parties acknowledge
that (X) such liquidated damages are an integral part of the
transactions contemplated by this Agreement and constitute
liquidated damages and not a penalty, and (Y) such liquidated
damages are necessary because actual damages arising from the
loss of opportunity would be not be determinable with any degree
of certainty. If a Party fails to promptly pay to the liquidated
damages due under this Section7(b)(ii), the defaulting Party
shall pay the costs and expenses (including legal fees and
expenses) in connection with any action, including the filing of
any lawsuit or other legal action, taken to collect payment,
together with interest on the amount of any unpaid fee at the
publicly announced prime rate of Citibank, N.A. from the date
such fee was required to be paid.
8. Remedies for Breach of Target Representations and Warranties.
(a) Survival of Representations and Warranties. All of the
representations and warranties of Target contained in Section3 above and in the
certificate referred to in Section6(a)(vi) above shall survive the Closing
(unless Merger Sub or Parent knew of any misrepresentation or breach of warranty
at the time of Closing or the matter was fairly disclosed in the Disclosure
Schedule, in which case, the subject matter of any such misrepresentation or
breach shall be deemed to have been disclosed) and continue in full force and
effect for a period of twelve months after the Effective Time (the "Survival
Period"). Recourse for any action for any misrepresentation or breach of
warranty during such period shall be limited to recovery as provided in the
Escrow Agreement and the ASR 135 Agreements.
(b) Indemnification Provisions for Benefit of Merger Sub and
Parent. In the event Target breaches any of its representations and warranties
contained in this Agreement or the certificates referred to in Section6(a)(vi),
and, if there is an applicable Survival Period pursuant to Section8(a) above,
provided that Merger Sub and Parent make a written claim for indemnification
against Target on the terms and subject to the conditions of the Escrow
Agreement within such Survival Period, then Merger Sub and Parent shall be
entitled to receive from escrow the certificates representing the number of
Parent Shares designated pursuant to the Escrow Agreement; provided, however,
that Target shall not have any obligation to indemnify Merger Sub or Parent from
and against any Adverse Consequences caused by the breach of any representation
or warranty of Target contained in Section3 above: (A) until Merger Sub and
Parent have suffered Adverse Consequences by reason of all such breaches in
excess of an aggregate of $1,000,000 (after which point Target will be obligated
only to indemnify Merger Sub or Parent from and against further such Adverse
Consequences); or (B) to the extent the Adverse Consequences Merger Sub or
Parent has suffered by reason of all such breaches exceeds an aggregate ceiling
of the Fair Market Value of the Escrow Securities (as defined in the Escrow
Agreement) on the Closing Date (after which point Target will have no obligation
to indemnify Merger Sub or Parent from and against further such Adverse
Consequences). In the event there is an asserted but unresolved Claim (as
defined in the Escrow Agreement) in existence prior to the end of the Survival
Period, then, at Parent's option, Parent's entitlement to such certificates with
respect to the Adverse Consequences attributable to such Claim shall continue
until the Claim is resolved as provided in the Escrow Agreement.
(c) Exclusive Remedy. The Parties acknowledge and agree that the
foregoing indemnification provisions in this Section8 shall be the exclusive
remedy of Merger Sub and Parent with respect to the breach of the
representations and warranties of Target contained in Section3 and in the
certificates referred to in Section6(a)(vi).
(d) Dispute Resolution. In the event of any controversy or claim
arising out of or relating to Section8 of this Agreement or the Escrow
Agreement, or any breach thereof, the Party asserting such claim or breach shall
give written notice (the "Dispute Notice") to each other Party setting forth in
reasonable detail the nature of such claim or alleged breach. Such dispute if
not otherwise resolved by the Parties shall be settled by arbitration before a
single arbitrator selected by the Parties in accordance with the rules of the
American Arbitration Association. If the Parties fail to agree upon an
arbitrator within 15 days after the date of the Dispute Notice, then each of (a)
Target (if the Merger shall not have occurred) or the Target Stockholders (if
the Merger shall have occurred), and (b) the Merger Sub or Parent, shall select
an arbitrator within the following 10 days, the two arbitrators selected by the
parties shall select a third arbitrator within 20 days, and all three
arbitrators shall arbitrate the controversy or claim. The results of the
arbitration shall be final and binding and not subject to appeal.
9. Miscellaneous.
(a) Survival. None of the representations, warranties, and
covenants of the Parties will survive the Effective Time except (i) as provided
in Section8(a) and Section9(c) of this Agreement, and (ii) as to covenants which
by their terms require action to be taken or omitted after the Effective Time.
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of the
other Parties; provided, however, that any Party or any affiliate of such Party
may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the Party which intends, or which has
an affiliate that intends, to issue such press release or make such public
announcement will advise the other Parties prior to making the disclosure and
provide the other Parties a reasonable opportunity to comment upon the release
or announcement).
(c) No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that (i) the
provisions in Section2 above concerning issuance of Parent Shares, the
provisions in Section5(i) above concerning certain requirements for a tax-free
reorganization, and the provisions in Section5(s) above concerning registration
rights, are intended for the benefit of Target Stockholders, (ii) the provisions
in Section5(h) above concerning insurance and indemnification, the provisions in
Section5(j) above concerning general matters, the provisions in Section5(k)
above concerning litigation support, the provisions of Section5(m) and the
provisions of this Section9(c) are intended for the benefit of the individuals
and entities specified therein and their respective legal representatives. All
of the provisions referenced in the foregoing sentence shall survive the
Effective Time and the consummation of the transactions contemplated by this
Agreement and shall be enforceable by the persons and entities intended to be
the beneficiaries of such provisions.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then three
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Target: Worldbridge Broadband Services, Inc.
000 Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxxxxxx X. Xxxxx
Copies to: Xxxxx X. Xxxxx
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attention: Stockholder Representative
Xxxxx X. Xxxxxxxxx
Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Tel: 000-000-0000
Fax: 000-000-0000
If to Parent or Merger Sub: X-XXX.xxx Corp.
00 Xxxxxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
Fax: 000-000-0000
Copy to: Xxxxxx X. Xxxxxxx
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx, LLP
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Fax: 000-000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
(j) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Delaware General Corporation Law or other
applicable corporate law. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by the Parties. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(m) Construction. 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 otherwise requires. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits. The Exhibits and any annexes and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
X-XXX.XXX CORP., a Pennsylvania corporation
By: /s/Xxxxxxx X. Xxxxxxxx
Title: Vice President
X-XXX.XXX SERVICES ACQUISITION CORP., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
Title: Vice President
WORLDBRIDGE BROADBAND SERVICES, INC., a Delaware
corporation
By: /s/ Xxxxxxx Xxxxx
Title: Vice President, Secretary, Chief Financial Officer
