AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is entered into this
27th day of February, 2002 by and between (a) JVWeb, Inc., a Delaware
corporation ("JVWeb"), and IQB Acquisition Corporation, a wholly-owned Delaware
subsidiary of JVWeb (the "Subsidiary"), on the one hand, and (b) IQ Biometrix
California, Inc., a California corporation ("IQB"), and Xxxxxx Xxxx, Xxxxxx
Xxxxxxxxx and Xxxx XxXxxx, each a shareholder of IQB (referred to hereinafter
singly as a "Shareholder" and collectively as the "Shareholders"), on the other
hand.
RECITALS:
WHEREAS, the parties desire to merge IQB with and into the Subsidiary
(with the Subsidiary being the surviving corporation), upon the terms and
subject to the conditions set forth in this Agreement;
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties set forth herein and other valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. In accordance with the provisions of this Agreement, at
the Effective Time (as hereinafter defined), IQB shall be merged with and into
the Subsidiary (the "Merger"), which shall be the surviving corporation and
shall continue its corporate existence under the laws of the State of Delaware
under the name "I.Q. Biometrix Operations, Inc." (the "Surviving Corporation")
unimpaired and unaffected by the Merger. The separate corporate existence of IQB
shall cease at the Effective Time. IQB and the Subsidiary are sometimes
hereinafter collectively referred to as the "Constituent Corporations."
1.2 Effective Time. The Merger shall become effective at the time of
(a) the filing of a Certificate of Merger with the Secretary of State of
Delaware in accordance with the provisions of the Delaware General Corporation
Law (the "DGCL"), and (b) the filing of a Certificate of Merger with the
Secretary of State of California in accordance with the provisions of the
California Corporation Code (the "CCC"). IQB and the Subsidiary agree to file
the aforementioned Certificates of Merger at the time of the Closing, as
hereinafter defined. The date and time when the Merger shall become effective is
referred to herein as the "Effective Time."
1.3 Effect of the Merger.
(a) The Surviving Corporation shall, without transfer, thereupon and
thereafter possess all assets and property of every description, and every
interest therein, wherever located, and the rights privileges, immunities,
powers, franchises and authority, of a public as well as of a private nature,
and be subject to all of the restrictions, disabilities, and duties of each of
the Constituent Corporations, and all obligations of or belonging to or due to
either of the Constituent Corporations, shall be vested in the Surviving
Corporation without further act or deed; all assets and property of every
description, and every interest therein, wherever located, and the rights
privileges, immunities, powers, franchises, and authority shall thereafter be
the property of the Surviving Corporation as effectively as when they were the
property of the Constituent Corporations, and the title to any real estate or
any interest therein vested in either of the Constituent Corporations shall not
revert or in any way be impaired by reason of the Merger; all rights of
creditors and all liens upon any property of the Constituent Corporations
existing as of the Effective Time shall be preserved unimpaired; and all debts,
liabilities, and duties of the Constituent Corporations shall thenceforth attach
to the Surviving Corporation and may be enforced against it to the same extent
as if such debts, liabilities, and duties had been incurred for or by it; and
any action or proceeding, whether civil, criminal, or administrative, pending by
or against either Constituent Corporation shall be prosecuted as if the Merger
had not taken place, or the Surviving Corporation may be substituted in any such
action or proceeding.
(b) All corporate acts, plans, policies, contracts, approvals, and
authorizations of IQB and its shareholders, Board of Directors, committees
elected or appointed by its Board of Directors, officers, and agents that were
valid and effective immediately prior to the Effective Time shall be taken for
all purposes as the acts, plans, policies, contracts, approvals, and
authorizations of the Surviving Corporation and shall be effective and binding
thereon as the same were with respect to IQB. Any employees of IQB at the
Effective Time shall become employees of the Surviving Corporation.
1.4 Closing. The Closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of JVWeb at 10:00 a.m.
local time, on March 29, 2002, or at such other place and on such other date as
JVWeb, the Subsidiary and IQB may mutually agree in writing (the "Closing
Date").
1.5 Certificate of Incorporation, Bylaws, and Directors and Officers.
(a) The Certificate of Incorporation attached hereto as Exhibit A shall
be the Certificate of Incorporation of the Surviving Corporation until amended
as provided by law.
(b) The Bylaws attached hereto as Exhibit B shall be the Bylaws of the
Surviving Corporation until amended as provided by law.
(c) The following persons shall be the directors of the Surviving
Corporation, each to his seat in accordance with the Certificate of
Incorporation and Bylaws of the
Surviving Corporation until their respective successors shall have been elected
and qualified:
Xxxxxx Xxxx
Xxxx Xxxxx
Xxxx XxXxxx
(d) The following persons shall be the officers of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until their respective
successors shall have been elected and qualified:
Name of Officer Offices
Xxxxxx Xxxx Chairman of the Board and
Chief Executive Officer
Xxxx XxXxxx Vice Chairman of the Board
Xxxx Xxxxx Executive Vice President and
Chief Financial Officer
Xxxxxx Xxxxxxxxx Executive Vice President -
Marketing
Xxxxxxx Xxxxxxxx Executive Vice President -
Chief Operations Officer
Case Xxxxxxxx Executive Vice President-
General Counsel
Xxxx Xxxxxxxxx Controller
1.6 Shareholder and Director Approvals.
(a) IQB and the Subsidiary shall submit, for consideration, approval
and adoption at Special Meetings of Shareholders convened as soon after the date
hereof as is possible (or if feasible, by means of written consent in lieu of a
Special Meeting), the Merger and all other actions contemplated by this
Agreement that require approval and adoption by their respective shareholders.
(b) In submitting the Merger to its shareholders, IQB agrees to furnish
its shareholders with copies of JVWeb's Annual Report on Form 10-KSB for its
fiscal year ended June 30, 2001 and copies of all of JVWeb's other filings with
the U.S. Securities and Exchange Commission made thereafter. IQB agrees to use
reasonable and its best efforts to procure from each of its shareholders such
information and documentation (in form acceptable to JVWeb) as JVWeb may request
to confirm that the issuance of JVWeb securities in connection with the Merger
pursuant to ARTICLE 2 below will be exempt from all applicable Federal and state
securities offering registration requirements.
(c) The Subsidiary shall submit, for consideration, approval and
adoption at a Special Meeting of Directors convened as soon prior to the Closing
as is possible after the date here, the Merger and all other actions
contemplated by this Agreement that require approval and adoption by the Board
of Directors of the Subsidiary.
ARTICLE 2
CONVERSION OF SHARES
2.1 Conversion. At the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof:
(a) Each share of the common stock of the Subsidiary issued and
outstanding immediately prior to the Effective Time shall remain outstanding
after the Merger.
(b) All shares of the common stock of IQB issued and outstanding
immediately prior to the Effective Time ("IQB Common Stock") (except for shares
of IQB Common Stock held as treasury shares of IQB, all of which shall be
retired and cancelled) shall automatically be converted by reason of the Merger
and without any action by the holders thereof into and become shares of the
common stock of JVWeb ("JVWeb Common Stock"). The total number of shares of
JVWeb Common Stock to be issued in connection with the Merger with respect to
the IQB Common Stock (the "Total Shares") shall be 13,054,196 shares. The shares
of IQB Common Stock so converted shall cease to exist as such at the Effective
Time and shall exist only as shares of JVWeb Common Stock.
(c) Each warrant or option to purchase a share of IQB Common Stock
outstanding immediately prior to the Effective Time shall continue outstanding
as a warrant or option to purchase, in lieu of the right to purchase a share of
IQB Common Stock, upon the same terms and conditions as applicable immediately
prior to the Effective Time under the relevant warrant or option, the same
number of shares of JVWeb Common Stock into which each share of IQB Common Stock
outstanding immediately prior to the Effective Time was converted at the
Effective Time.
(d) JVWeb shall not issue fractional shares of JVWeb Common Stock
pursuant to the provisions of subsections (b) or (c) immediately above, but, in
lieu thereof, shall make a cash payment equal to the product of the closing sale
price of the JVWeb Common Stock on the last trading day prior to the Effective
Date (in the case of subsections (b)) or prior to the date of the exercise of
the warrant or option (in the case of subsections (c)), multiplied by the
fraction of a whole share represented by the fractional share.
2.2 Exchange of Certificates. (a) If the Merger is approved by the
shareholders of both IQB and the Subsidiary and the Board of Directors of JVWeb,
after the Effective Time, each holder of an outstanding certificate or
certificates representing shares of IQB Common Stock may, but is not required
to, surrender such certificate or certificates to IQB along with such other
documents as may be deemed necessary by IQB, the Surviving Corporation or JVWeb
effectively to surrender and exchange such certificate or certificates. From and
after the Effective Time and until certificates representing shares of IQB
Common Stock are surrendered for exchange or registration of transfer, all
certificates that prior to the Effective Time of the Merger represented shares
of IQB Common Stock shall be deemed for all purposes to represent and evidence
the number of shares of JVWeb Common Stock into which they were so converted
under the terms of Section 2.1(b) of this Agreement.
(b) After the Effective Time, whenever certificates that formerly
represented IQB Common Stock are presented for exchange or registration of
transfer, JVWeb shall cause to be issued in respect thereof certificates
representing the number of shares of JVWeb Common Stock into which the
surrendered shares of IQB Common Stock were so converted under the terms of
Section 2.1(b) of this Agreement. If certificates for JVWeb Common Stock are to
be delivered to or in the name of a person other than the person in whose name a
surrendered certificate is registered, the surrendered certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting the transfer shall pay to JVWeb all transfer or other taxes required
by reason of the change in ownership or establish to JVWeb's satisfaction that
such taxes have been or are not required to be paid.
(c) If any certificate formerly representing shares of IQB Common Stock
shall have been lost, stolen, or destroyed, upon the making of an affidavit in
form and substance satisfactory to JVWeb of that fact by the person claiming the
certificate to be lost, stolen or destroyed and subject to such other conditions
as JVWeb may reasonably impose, JVWeb shall issue in exchange for the lost,
stolen or destroyed certificate a certificate representing the number of shares
of JVWeb Common Stock into which the shares of IQB Common Stock represented by
the lost, stolen, or destroyed certificate were so converted under the terms of
Section 2.1(b) of this Agreement. When authorizing the issuance of the shares of
JVWeb Common Stock in exchange therefor, JVWeb may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such a
certificate to give JVWeb a bond or other indemnity in any amount reasonably
satisfactory to JVWeb against any claim arising against JVWeb with respect to
the stolen or destroyed certificate.
(d) All shares of JVWeb Common Stock into which IQB Common Stock shall
have been converted pursuant to this Article 2 shall be deemed to have been
issued in full satisfaction of all rights pertaining to such converted shares
and shall, when issued pursuant to the provisions hereof, be validly issued,
fully paid, and nonassessable.
ARTICLE 3
DISSENTING SHAREHOLDERS
3.1 Notwithstanding any provision of this Agreement to the contrary,
any shares of IQB Common Stock held by a holder who has demanded and perfected
appraisal or dissenters' rights for such shares in accordance with California
Law and who, as of the Effective Time, has not effectively withdrawn or lost
such appraisal or dissenters' rights ("Dissenting Shares"), shall not be
converted into or represent a right to receive JVWeb Common Stock pursuant to
Article 2, but the holder thereof shall only be entitled to such rights as are
granted by California Law.
3.2 Notwithstanding the provisions of Section 3.1, if any holder of
shares of IQB Common Stock who demands appraisal of such shares under California
Law shall effectively withdraw or lose (through failure to perfect or otherwise)
the right to appraisal, then, as of the later of the Effective Time and the
occurrence of such event, such holder's shares shall automatically be converted
into and represent only the right to receive JVWeb Common Stock and fractional
shares as provided in Article 2, without interest thereon, upon surrender of the
certificate representing such shares.
3.3 IQB shall give JVWeb prompt notice of any written demands for
appraisal of any shares of IQB Common Stock, withdrawals of such demands, and
any other instruments served pursuant to California Law and received by IQB.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder hereby represents, warrants and agrees, jointly and
severally, to and with JVWeb and the Subsidiary that (except as otherwise set
forth on a Schedule of Exceptions attached hereto):
4.1 Organization and Standing of IQB. IQB is a corporation duly
organized, validly existing, and in good standing under the laws of the state of
California. IQB has full requisite corporate power and authority to carry on its
business as it is now being conducted, and to own, operate, and lease the
properties now owned, operated, or leased by it. IQB is duly authorized and
qualified to carry on its business in the manner as now conducted in each state
in which authorization and qualification is required. IQB has made available to
JVWeb and its representatives as requested true, correct and complete copies of
the contents of IQB's minute book, which are accurate in all respects and set
forth fully and fairly all of the IQB's transactions.
4.2 Capitalization of IQB. The authorized capital stock of IQB (the
"Capital Stock") consists of fifty million (50,000,000) shares of IQB Common
Stock, 16,000,000 of which were issued and outstanding prior to the consummation
of the Merger. The shares of Capital Stock issued and outstanding prior to the
consummation of the Merger are duly and validly authorized and issued and are
fully paid and non-assessable, and were not issued in violation of the
pre-emptive rights of any current or former shareholder. The shares of Capital
Stock issued and outstanding prior to the consummation of the Merger were
issued, and all secondary transfers of such shares permitted by IQB were made,
in compliance with all applicable law (including, without limitation, available
exemptions from the securities offering registration requirements of federal and
state law). No option, warrant, call, subscription, convertible security, or
commitment of any kind obligating IQB to issue any Capital Stock exists. There
is not any compensation plan applicable to any of the officers, directors, or
employees of IQB under which compensation accrued or payable is determined, in
whole or in part, by reference to Capital Stock. There are no agreements or
commitments obligating IQB to repurchase or otherwise acquire any Capital Stock.
4.3 Subsidiaries and Other Ventures. IQB has no subsidiaries or
affiliated corporations, and owns no capital stock, bond, or other security of,
or has any equity or proprietary interest in, any corporation, partnership,
joint venture, trust, or unincorporated association.
4.4 Ownership of Stock. All Capital Stock is owned free and clear of
any mortgage, lien, security interest, claim, charge, pledge, encumbrance and
any restriction on the transfer thereof of any nature whatsoever. None of the
outstanding shares of Capital Stock is subject to any voting trust, voting
agreement, or other agreement or understanding with respect to the voting
thereof, nor is any proxy in existence with respect to any such shares.
4.5 Capacity to Enter into Agreement. IQB and each Shareholder has full
right, power and authority to execute and deliver this Agreement and all other
agreements, documents and instruments to be executed in connection herewith and
perform such its or his obligations hereunder and thereunder. The execution and
delivery by IQB of this Agreement and all other agreements, documents and
instruments to be executed by IQB in connection herewith have been authorized by
all necessary corporate action by IQB, other than for the approval of the
shareholders of IQB, which will be sought pursuant to this Agreement. When this
Agreement and all other agreements, documents and instruments to be executed by
IQB or a Shareholder in connection herewith have been executed by IQB or such
Shareholder (as the case may be) and delivered to JVWeb and the Subsidiary, this
Agreement and such other agreements, documents and instruments will constitute
the valid and binding agreements of IQB or such Shareholder (as the case may
be), enforceable against IQB or such Shareholder (as the case may be) in
accordance with their respective terms.
4.6 Conflicts. Exc The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
IQB or any Shareholder is a party or by which IQB or any Shareholder is bound or
by which any of the assets of IQB or any Shareholder is bound or affected, (b)
violate any judgment against, or binding upon, IQB or any Shareholder or upon
the assets of IQB or any Shareholder, (c) result in the creation of any lien,
charge or encumbrance upon any assets of IQB or any Shareholder pursuant to the
terms of any such contract, or (d) violate any provision in the charter
documents, bylaws or any other agreement affecting the governance and control of
IQB.
4.7 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by IQB
or any Shareholder, other than for the approval of the shareholders of IQB,
which will be sought pursuant to this Agreement.
4.8 Financial Statements. IQB has delivered to JVWeb or its
representatives copies of the following financial statements (hereinafter
collectively referred to as the "Financial Statements"): a balance sheet of the
Company as of December 31, 2001 and a balance sheet of CISystems, Inc., a
Delaware corporation ("CIS") as of December 31, 2001 (such two balance sheets
are referred to hereinafter collectively as the "Balance Sheets"), and a
statement of operation for the Company for the period beginning on the date of
its incorporation and ending December 31, 2001 and a statement of operation for
CIS for the period beginning on January 1, 2001 and ending December 31, 2001.
(a) The Financial Statements are complete and correct, present
fairly the financial condition of IQB as at the respective
dates thereof, and the results of operations for the
respective periods covered thereby, and have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis;
(b) There is no basis for the assertion of any liabilities or
obligations, either accrued, absolute, contingent, or
otherwise, which might adversely affect the value, use,
operation or enjoyment of the assets or business of IQB, which
liabilities or obligations are not expressly set forth on the
Balance Sheets; and
(c) IQB is not a party to or bound either absolutely or on a
contingent basis by any agreement of guarantee,
indemnification, assumption or endorsement or any like
commitment of the obligations, liabilities or indebtedness of
any other person (whether accrued, absolute, contingent or
otherwise).
4.9 Absence of Certain Changes and Events. Since the date of the
Balance Sheets, there has not been:
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(a) Any adverse change in the financial condition,
operations, business prospects, employee relations,
customer relations, assets, liabilities (accrued,
absolute, contingent, or otherwise) or income of IQB,
or the business of IQB, from that shown on the
Financial Statements;
(b) Any declaration, setting aside, or payment of any
distribution in respect of the equity interests
in IQB, or any direct or
indirect redemption, purchase, or any other
acquisition of any such interests;
(c) Any borrowing of, or agreement to borrow any funds or
any debt, obligation, or liability (absolute or
contingent) incurred by IQB (whether or not presently
outstanding) except current liabilities incurred, and
obligations under agreements entered into in the
ordinary course of business;
(d) Any mortgage, pledge, lien, security interest,
charge, claim or other encumbrance created on or in
any of IQB's properties or assets, except liens for
current taxes not yet due and payable;
(e) Any sale, assignment, or transfer of IQB's assets,
except in the ordinary course of business, any
cancellation of any debts or claims owed to IQB, any
capital expenditures or commitments therefor
exceeding in the aggregate $5,000, any damage,
destruction or casualty loss exceeding in the
aggregate $5,000 (whether or not covered by
insurance), or any charitable contributions or
pledges;
(f) Any amendment or termination of any contract,
agreement, license, or arrangement to which IQB is or
was a party or to which any assets of IQB are or were
subject, which amendment or termination has had, or
may be reasonably expected to have, an adverse effect
on the financial condition, properties, assets,
liabilities (accrued, absolute, contingent, or
otherwise), income or business of IQB; or
(g) Any other material transaction by IQB outside the
ordinary course of business or any other event or
condition pertaining to, and adversely affecting the
operations, assets, liabilities (accrued, absolute,
contingent, or otherwise), income or business of IQB.
4.10 Assets.
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(a) IQB has good and indefeasible title to all of its properties,
interests in properties, and assets, real and personal, free
and clear of all mortgages, liens, pledges, charges, or
encumbrances of any nature whatsoever, except liens for
current taxes not yet due and payable;
(b) All of IQB's machinery, equipment, appliances, motor vehicles
and fixtures is in good operating condition and repair,
subject only to ordinary wear and tear;
(c) All of the inventories of IQB (including, without limitation,
raw materials, spare parts and supplies, work-in-process,
finished goods) consist of items of a quality, condition and
quantity useable and saleable in the normal course of
business; and
(d) All of the accounts receivable of IQB are valid, subsisting,
and genuine, arose out of bona fide transactions and are
current and collectible, subject to reserves reflected on the
Balance Sheets.
4.11 Contracts.
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(a) All leases, contracts, agreements, arrangement or commitments
to which IQB is a party are in good standing, valid, and
effective; and
(b) There is not, under any such lease, contract, agreement,
arrangement or commitment, any existing or prospective default
or event of default by IQB or event which with notice or lapse
of time, or both would constitute a default and in respect to
which IQB has not taken adequate steps to prevent a default
from occurring; and, to the knowledge of any of the
Shareholders, no other party to any such lease, contract,
agreement, arrangement or commitment, is in default or breach
thereof nor has any event occurred which with notice or lapse
of time would constitute a breach or default of any of such
lease, contract, agreement, arrangement or commitment.
4.12 Permits.
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(a) IQB holds all licenses, permits and authorizations
required to carry on its business, and all such licenses,
permits and authorizations are in good standing;
(b) IQB is in full compliance with and not in default or
violation with respect to any term or provision of any of its
licenses, permits and authorizations;
(c) No notice of pending, threatened, or possible violation or
investigation in connection with, or loss of, any license,
permit, or authorization of IQB, has been received by IQB;
(d) None of the Shareholders has any knowledge that the issuance
of such a notice is being considered or of any facts or
circumstances which form the basis for the issuance of such a
notice; and
(e) No license, permit, or authorization of IQB is affected
by the transactions provided for herein or contemplated
hereby.
4.13 Intellectual Property.
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(a) IQB possesses all patents, trademarks, service marks, trade
names, business names, copyrights, and registered designs, and
applications and registrations thereof, trade secrets,
confidential know-how and other intellectual property,
including, but not limited to, product formulations, drawings,
technical specifications, manufacturing data, and test and
development data (the foregoing intellectual property is
collectively referred to hereinafter as the "Intellectual
Property") necessary to the conduct of its businesses, and the
loss or expiration of any Intellectual Property or group of
Intellectual Property would not have an adverse effect on the
conduct of its businesses;
(b) No such loss or expiration is threatened, pending or
reasonably foreseeable;
(c) IQB owns all right, title, and interest in and to all of the
Intellectual Property;
(d) There have been no claims made against IQB for the assertion
of the invalidity, abuse, misuse, or unenforceability of any
of such rights, and there are no grounds for the same;
(e) IQB has not received a notice of conflict with the asserted
rights of others; and
(f) The conduct of IQB's business has not infringed any
Intellectual Property of others and, to the best of the
knowledge of any of the Shareholders, the Intellectual
Property of IQB has not been infringed by other persons.
4.14 Employees.
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(a) IQB is not a party as an employer to any employment contract,
agreement or understanding which is not terminable at will
without any penalty, liquidated damages or other required
payment;
(b) IQB has satisfied all salaries, wages, unemployment insurance
premiums, worker compensation payments, income tax, FICA and
other deductions and any like payments required by law; and
(c) IQB's employees are not unionized, and to the knowledge of any
of the Shareholders, there have not been attempts to
unionize them.
4.15 Employee Benefit Plans.
----------------------
(a) Neither IQB nor any of its ERISA Affiliates sponsors or has
ever sponsored, maintained, contributed to, or incurred an
obligation to contribute to, any Employee Pension Benefit
Plan;
(b) No individual shall accrue or receive additional benefits,
service or accelerated rights to payments of benefits under
any Employee Benefit Plan including the right to receive any
parachute payment, as defined in Section 280G of the Code, or
become entitled to severance, termination allowance or similar
payments as a direct result of the transactions contemplated
by this Agreement;
(c) No Employee Benefit Plan has participated in, engaged in or
been a party to any non-exempt Prohibited Transaction, and
neither IQB nor any of its ERISA Affiliates has had asserted
against it any claim for taxes under Chapter 43 of Subtitle D
of the Code and Sections 4971 et. seq. of the Code, or for
penalties under ERISA Section 502(c), (i) or (1) with respect
to any Employee Benefit Plan nor, to the knowledge of any of
the Shareholders, is there a basis for any such claim. No
officer, director or employee of IQB has committed a breach of
any material responsibility or obligation imposed upon
fiduciaries by Title I of ERISA with respect to any Employee
Benefit Plan;
(d) Other than routine claims for benefits, there is no claim
pending or to the knowledge of any of the Shareholders
threatened, involving any Employee Benefit Plan by any person
against such plan or IQB or any ERISA Affiliate. There is no
pending or to the knowledge of any of the Shareholders
threatened proceeding involving any Employee Benefit Plan
before the Internal Revenue Service, the U.S. Department of
Labor or any other governmental authority;
(e) There is no material violation of any reporting or disclosure
requirement imposed by ERISA or the Code with respect to any
Employee Benefit Plan;
(f) Each Employee Benefit Plan has at all times prior hereto been
maintained in all material respects, by its terms and in
operation, in accordance with ERISA and the Code. IQB and its
ERISA Affiliates have made full and timely payment of all
amounts required to be contributed under the terms of each
Employee Benefit Plan and applicable law or required to be
paid as expenses under such Employee Benefit Plan. Each
Employer Benefit Plan intended to be qualified under Code
Section 401(a) has received a determination letter to that
effect from the Internal Revenue Service and no event has
occurred and no amendment has been made that would adversely
affect such qualified status;
(g) With respect to any group health plans maintained by IQB or
its ERISA Affiliates, whether or not for the benefit of IQB's
employees, IQB and its ERISA Affiliate have complied in all
material respects with the provisions of Part 6 of Title I of
ERISA and 4980B of the Code. IQB is not obligated to provide
health care benefits of any kind to its retired employees
pursuant to any Employee Benefit Plan, including without
limitation any group health plan, or pursuant to any agreement
or understanding; and
(h) IQB has made available to JVWeb a copy of the three (3) most
recently filed federal Form 5500 series and accountant's
opinion, if applicable, for each Employee Benefit Plan and all
applicable Internal Revenue Service determination letters.
For purposes of this Section 4.15, the following definitions shall
apply:
(t) "COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, as set forth in Section 4980B of the
Code and Part 6 of Title I of ERISA.
(u) "Code" means the Internal Revenue Code of 1986, as amended.
(v) "Employee Benefit Plan means any employee benefit plan, as
defined in Section 3(3) of ERISA, that is sponsored or
contributed to by IQB or any ERISA Affiliate covering
employees or former employees of IQB.
(w) "Employee Pension Benefit Plan" means any employee pension
benefit plan, as defined in Section 3(2) of ERISA, that is
subject to Title IV of ERISA.
(x) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(y) "ERISA Affiliate" of any person means any other person that,
together with such person as of the relevant measuring date
under ERISA, was or is required to be treated as a single
employer under Section 414 of the Code.
(z) "Prohibited Transaction" means a transaction that is
prohibited under Section 4975 of the Code or Section 406 of
ERISA and not exempt under Section 4975 of the Code or Section
408 of ERISA, respectively.
4.16 Litigation.
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(a) There is no pending suit, action, or legal, administrative,
arbitration, or other proceeding or governmental investigation
to which IQB is a party or which adversely affects or might
adversely affect IQB;
(b) IQB is not in default with respect to any judgment, order,
writ, injunction, decree, or award applicable to it of any
court or other governmental instrumentality or arbitrator; and
(c) There is no action, suit, proceeding, or claim pending or, to
the knowledge of any of the Shareholders, threatened against
IQB by persons not a party to this Agreement wherein an
unfavorable decision, ruling, or finding would render unlawful
or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
4.17 Compliance with Law.
-------------------
(a) IQB is not in violation of, or in default with respect to, or
in alleged violation of or alleged default with respect to,
any applicable law, rule, regulation, permit, or any writ or
decree of any court or any governmental commission, board,
bureau, agency, or instrumentality, including without
limitation, any laws, ordinances, rules, regulations, permits,
or orders relating to the business of IQB, or the business
operations and practices, health and safety, and employment
practices of IQB;
(b) IQB is not delinquent with respect to any report required to
be filed with any governmental commission, board, bureau,
agency, or instrumentality, or with any trade association or
certification organization that has in the past certified or
endorsed the business of IQB; and
(c) IQB is not delinquent with respect to any reports required by
private covenants or agreements to which it is a party.
4.18 Taxes. IQB has delivered to JVWeb or its representatives as
requested true, correct and complete copies of all federal,
state, and other appropriate jurisdictional tax returns,
reports, and estimates regarding IQB collectively, the
"Returns").
(a) Each of the Returns is complete, proper and accurate and has
been timely filed with appropriate governmental agencies by
IQB for each period for which such Return was due;
(b) All taxes shown by the Returns to be due and payable have been
timely paid;
(c) The tax provision and accruals reflected in the Balance Sheets
are adequate to cover the liability at the date thereof for
all taxes based on income, sales, business, or assets, as well
as any other taxes;
(d) IQB has not given or been requested to give, or executed, any
extension of time or waiver of any statute of limitations with
respect to federal, state, or other political subdivision
income or other tax for any period;
(e) IQB has not received any notice of deficiency or assessment
issued or proposed deficiency or assessment by
the Internal Revenue Service or any other taxing authority;
and
(f) There is no pending audit or inquiry of IQB, nor has IQB
received any oral or written notice of any proposed audit or
inquiry by any taxing authority or jurisdiction.
4.19 Insurance.
---------
(a) All insurance policies either maintained by IQB or maintained
by any other person which relates to IQB or its assets in any
manner as of the date hereof (collectively, the "Insurance
Policies") are still in full force and effect, and all
premiums due thereon have been paid;
(b) IQB has complied in all material respects with the provisions
of all Insurance Policies;
(c) No claim is pending under any of the Insurance Policies;
(d) There are no outstanding requirements or recommendations by
any insurance company that issued any of the Insurance
policies or by any Board of Fire Underwriters or other similar
body exercising similar functions or by any governmental
authority exercising similar functions which requires or
recommends any changes in the conduct of the business of, or
any repairs or other work to be done on or with respect to any
of the properties or assets of, IQB; and
(e) IQB has not received any notice or other communication from
any such insurance company within the three (3) years
preceding the date hereof canceling or materially amending or
materially increasing the annual or other premiums payable
under any of the Insurance Policies, and (to any of the
Shareholders's knowledge) no such cancellation, amendment or
increase of premiums is threatened.
4.20 Environmental Matters.
---------------------
(a) IQB is in compliance with all applicable federal, state and
local laws and regulations relating to pollution control and
environmental contamination including, but not limited to, all
laws and regulations governing the generation, use,
collection, treatment, storage, transportation, recovery,
removal, discharge or disposal of Hazardous Materials (as
defined below) and all laws and regulations with regard to
record keeping, notification and reporting requirements
respecting Hazardous Materials;
(b) IQB has not received any notice from any governmental agency
with respect to any alleged violation by it of any applicable
federal, state or local environmental or health and safety
statutes and regulations in connection with IQB's operations,
nor does any of the Shareholders know of any basis for any
investigation or proceeding against it by any federal, state
or local environmental or health and safety enforcement agency
in connection with the operation of the business;
(c) IQB has not been alleged to be in violation of, or has been
subject to any administrative or judicial proceeding pursuant
to, such laws and regulations, either now or at any time
during the past five years, and so far as any of the
Shareholders is aware, there are no such threatened or
proposed violations with respect to such locations;
(d) There are no permits, licenses, consents, filings or other
approvals necessary or required to be obtained or made by laws
and regulations relating to Hazardous Material, pollution
controls and environmental contamination in connection with
IQB's business;
(e) IQB is not a party to any contract or other agreement relating
to the storage, transportation, treatment or disposal of
Hazardous Materials;
(f) There are no claims or facts or circumstances that any of the
Shareholders reasonably believes could form the basis for
the assertion of any claim relating to environmental matters
involving IQB, including, but not limited to, any claim
arising from past or present practices of the business of IQB,
or with respect to properties now or previously owned or
leased, as asserted under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 X.X.xx.
ss.9601-9657 and any amendments thereto ("CERLA"), or the
Resource Conservation and Recovery Act, 42 U.S..ss.ss.6901-
6987 and any amendments thereto ("RCRA"), any other federal,
state or local environmental statute, or the generation, use,
treatment, disposal, discharge, ownership, operation,
transportation, storage of Hazardous Materials, or any other
related act or omission of IQB;
(g) IQB is not subject to any remedial obligation under applicable
law or administrative order or decree pertaining to
environmental, health or safety statutes or regulations,
including, without limitation, CERLA, RCRA or any similar
state statute;
(h) IQB has determined that no Hazardous Material or other
substances known or suspected to pose a threat to health or
the environmental have been disposed of or otherwise released
on or near any real property or improvements of IQB, and there
are no off-site locations where Hazardous Materials associated
in any way with IQB have been generated, used, collected,
treated, stored, transported, recycled, discharged or disposed
of; and
(i) To the best of any of the Shareholders's knowledge and belief,
after diligent investigation and inquiry, no real property is
owned or leased by IQB that is on any federal or state
"Superfund" list or subject to any environmentally related
liens, and no claim has been made or threatened alleging
damages arising from any Hazardous Materials or other
substances known or suspected to pose a threat to health or
the environment.
The term "Hazardous Materials" shall mean materials, substances, waste
or by-products defined as "hazardous substances", "hazardous wastes" or "solid
wastes" in CERLA, RCRA or any other federal, state or local environmental
statute or regulation or any unwholesome toxic or radioactive material. For the
purposes of this representation and warranty, the term "claim" shall mean any
and all claims, demands, causes of action, suits, proceedings, administrative
proceedings, losses, judgments, decrees, debts, damages, liabilities, costs, and
attorneys' fees and other expenses regarding or against the assets of IQB.
4.21 Transactions with Affiliated Parties.
------------------------------------
(a) There are no transactions currently engaged in between IQB and
any party affiliated with IQB (other than transactions
inherent in the normal capacities of shareholders, officers,
directors, or employees);
(b) Except for the ownership of non-controlling interests in
securities of corporations the shares of which are publicly
traded, no party affiliated with IQB has any investment or
ownership interest, directly, indirectly, or beneficially, in
any competitor or potential competitor, major supplier, or
customer of IQB; and
(c) There are no agreements to which IQB is a party under which
the transactions contemplated by this Agreement (i) will
require payment by IQB or any consent or waiver from any
shareholder, officer, director, employee, consultant or agent
of IQB, or (ii) will result in any change in the nature of any
rights of any shareholder, officer, director, employee,
consultant or agent of IQB under any such agreement.
4.22 Securities Representations. Each Shareholder believes that such
Shareholder is familiar with the business and financial condition, properties,
operations and prospects of JVWeb, such Shareholder has been given full access
to all material information concerning the condition, properties, operations and
prospects of JVWeb, and such Shareholder has had an opportunity to ask such
questions of, and to receive such information from, JVWeb as such Shareholder
has desired and to obtain any additional information necessary to verify the
accuracy of the information and data received; such Shareholder has such
knowledge, skill and experience in business, financial and investment matters so
that such Shareholder is capable of evaluating the merits and risks of an
acquisition of JVWeb Common Stock; such Shareholder has reviewed such
Shareholder's financial condition and commitments and that, based on such
review, such Shareholder is satisfied that such Shareholder (a) has adequate
means of providing for contingencies, (b) has no present or contemplated future
need to dispose of all or any of JVWeb Common Stock to satisfy existing or
contemplated undertakings, needs or indebtedness, (c) is capable of bearing the
economic risk of the ownership of JVWeb Common Stock for the indefinite future,
and (d) has assets or sources of income which, taken together, are more than
sufficient so that such Shareholder could bear the loss of the entire value of
JVWeb Common Stock; such Shareholder is acquiring JVWeb Common Stock solely for
such Shareholder's own beneficial account, for investment purposes, and not with
a view to, or for resale in connection with, any distribution of JVWeb Common
Stock; such Shareholder understands that JVWeb Common Stock has not been
registered under the Securities Act of 1933 or any state securities laws and
therefore JVWeb Common Stock is "restricted" under such laws; and such
Shareholder has not offered or sold any portion of JVWeb Common Stock and has no
present intention of reselling or otherwise disposing of any portion of JVWeb
Common Stock either currently or after the passage of a fixed or determinable
period of time or upon the occurrence or non-occurrence of any predetermined
event or circumstance.
4.23 Finder's Fees; Certain Expenses. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by IQB
and the Shareholders and their counsel directly with JVWeb and the Subsidiary
and their counsel, without the intervention of any other person as the result of
any act of any of them, and as far as is known to any of the Shareholders,
without the intervention of any other person in such manner as to give rise to
any valid claim against any of the parties hereto for a brokerage commission,
finder's fee, or any similar payment.
4.24 Untrue Statements. This Agreement, the schedules and exhibits
hereto, and all other documents and information furnished by IQB or any of the
Shareholders, or any of their respective representatives pursuant hereto or in
connection herewith, do not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made herein and
therein not misleading or otherwise.
4.25 Procurement of Investment Funds. IQB has procured investments
funds in an amount equaling or exceeding $250,000, which investment funds will
(upon completion of the Merger) be available for the unrestricted use for (and
will be used for) the business of the Surviving Corporation.
ARTICLE 5
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS
OF THE SUBSIDIARY
The Subsidiary hereby represents, warrants, and agrees to and with IQB
and each Shareholder that:
5.1. Organization and Standing of the Subsidiary. The Subsidiary is a
corporation organized and in good standing under the laws of the state of
Delaware. The Subsidiary has full requisite power and authority to carry on its
business as it is now being conducted, and to own, operate, and lease the
properties now owned, operated, or leased by it.
5.2 Capacity to Enter into Agreement. The Subsidiary has full right,
power and authority to execute and deliver this Agreement and all other
agreements, documents and instruments to be executed in connection herewith and
perform such its obligations hereunder and thereunder. The execution and
delivery by the Subsidiary of this Agreement and all other agreements, documents
and instruments to be executed by the Subsidiary in connection herewith have
been authorized by all necessary action by the Subsidiary, other than for the
approval of the Board of Directors and sole shareholder of the Subsidiary, which
will be sought pursuant to this Agreement. When this Agreement and all other
agreements, documents and instruments to be executed by the Subsidiary in
connection herewith have been executed by the Subsidiary and delivered to IQB,
this Agreement and such other agreements, documents and instruments will
constitute the valid and binding agreements of the Subsidiary, enforceable
against the Subsidiary in accordance with their respective terms, except as such
enforceability may be limited by or subject to (a) any bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3 Conflicts. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
the Subsidiary is a party or by which the Subsidiary is bound or by which any of
the assets of the Subsidiary is bound or affected, (b) violate any judgment
against, or binding upon, the Subsidiary or upon the assets of the Subsidiary,
(c) result in the creation of any lien, charge or encumbrance upon any assets of
the Subsidiary pursuant to the terms of any such contract, or (d) violate any
provision in the charter documents, bylaws or any other agreement affecting the
governance and control of the Subsidiary.
5.4 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by the
Subsidiary, other than for the approval of the Board of Directors and sole
shareholder of the Subsidiary, which will be sought pursuant to this Agreement.
5.5 Litigation. There is no action, suit, proceeding, or claim pending
or, to the knowledge of the Subsidiary, threatened against the Subsidiary by
persons not a party to this Agreement wherein an unfavorable decision, ruling,
or finding would render unlawful or otherwise adversely affect the consummation
of the transactions contemplated by this Agreement.
5.6 Finder's Fees. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Subsidiary and its
counsel directly with IQB and the Shareholders and their counsel, without the
intervention of any other person as the result of any act by the Subsidiary, and
so far as is known to the Subsidiary, without the intervention of any other
person in such manner as to give rise to any valid claim against any of the
parties hereto for a brokerage commission, finders' fee, or any similar payment.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF JVWEB
JVWeb hereby represents, warrants, and agrees to and with IQB and each
Shareholder that:
6.1. Organization and Standing of JVWeb. JVWeb is a corporation
organized and in good standing under the laws of the state of Delaware. JVWeb
has full requisite power and authority to carry on its business as it is now
being conducted, and to own, operate, and lease the properties now owned,
operated, or leased by it.
6.2 Capacity to Enter into Agreement. JVWeb has full right, power and
authority to execute and deliver this Agreement and all other agreements,
documents and instruments to be executed in connection herewith and perform such
its obligations hereunder and thereunder. The execution and delivery by JVWeb of
this Agreement and all other agreements, documents and instruments to be
executed by JVWeb in connection herewith have been authorized by all necessary
action by JVWeb, other than for the approval of the Board of Directors of JVWeb,
which will be sought pursuant to this Agreement. When this Agreement and all
other agreements, documents and instruments to be executed by JVWeb in
connection herewith are approved and authorized by the Board of Directors of
JVWeb and are executed by JVWeb and delivered to IQB, this Agreement and such
other agreements, documents and instruments will constitute the valid and
binding agreements of JVWeb, enforceable against JVWeb in accordance with their
respective terms, except as such enforceability may be limited by or subject to
(a) any bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
6.3 Conflicts. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
JVWeb is a party or by which JVWeb is bound or by which any of the assets of
JVWeb is bound or affected, (b) violate any judgment against, or binding upon,
JVWeb or upon the assets of JVWeb, (c) result in the creation of any lien,
charge or encumbrance upon any assets of JVWeb pursuant to the terms of any such
contract, or (d) violate any provision in the charter documents, bylaws or any
other agreement affecting the governance and control of JVWeb.
6.4 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
JVWeb.
6.5 Litigation. There is no action, suit, proceeding, or claim pending
or, to the knowledge of JVWeb, threatened against JVWeb by persons not a party
to this Agreement wherein an unfavorable decision, ruling, or finding would
render unlawful or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
6.6 Finder's Fees. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by JVWeb and its counsel
directly with IQB and the Shareholders and their counsel, without the
intervention of any other person as the result of any act by JVWeb, and so far
as is known to JVWeb, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the parties hereto for
a brokerage commission, finders' fee, or any similar payment.
6.7 Valid Issuance. Each share of JVWeb Common Stock to be issued to
the shareholders of IQB in connection with the Merger shall (when issued in
accordance with this Agreement) be duly and validly authorized and issued, fully
paid and non-assessable.
ARTICLE 7
COVENANTS
7.1 Conduct of Business of IQB. Except as contemplated by this
Agreement, during the period from the date hereof to the Effective Time or the
termination of this Agreement, unless otherwise agreed to in writing by JVWeb,
IQB shall conduct its business in the ordinary course consistent with past
practice and shall use reasonable efforts to keep its assets in good repair and
working order except for ordinary wear and tear, maintain any existing insurance
on the assets, and preserve intact IQB's business. Without limiting the
generality of the foregoing, after the date hereof and until the Effective Time
or the termination of this Agreement, IQB shall not (a) make any acquisition, by
means of a merger or otherwise, of a material amount of assets or securities,
other than acquisitions in the ordinary course consistent with past practice;
(b) agree to any sale, lease, encumbrance or other disposition of a material
amount of assets or securities or any material change in its capitalization,
other than sales or other dispositions in the ordinary course consistent with
past practice; (c) enter into any material contract other than in the ordinary
course of business or agree to any release or relinquishment of any material
contract rights; (d) incur any long-term debt or short-term debt for borrowed
money except for debt incurred in the ordinary course consistent with past
practice; or (e) agree in writing or otherwise to take any of the foregoing
actions.
7.2 Acquisition Proposals. Each of JVWeb and IQB agrees that it shall
not, directly or indirectly, and shall instruct its officers, directors,
employees, agents or advisors or other representatives or consultants not to,
directly or indirectly, until the Effective Time or the termination of this
Agreement, solicit or initiate any proposals or offers from any person relating
to any acquisition, purchase or sale of all or a material amount of the assets
of, or any securities of, or any merger, consolidation or business combination
with, JVWeb or IQB.
7.3 Access to Information. Between the date hereof and the Effective
Time, IQB shall (a) give JVWeb and its authorized representatives such access
during regular business hours to IQB's books, records, properties, personnel and
to such other information as JVWeb reasonably request and shall instruct IQB's
independent public accountants to provide access to their work papers and such
other information as JVWeb may reasonably request, and (b) cause its officers to
furnish JVWeb with such financial
and operating data and other information with respect to the business and
properties of IQB as JVWeb may reasonably request.
7.4 Best Efforts. Upon the terms and subject to the conditions hereof,
all of the parties hereto agree to use their best efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and to cooperate in connection with the
foregoing, including using best efforts (a) to obtain any necessary waivers,
consents and approvals from other parties to material notes, licenses,
agreements, and other instruments and obligations; (b) to obtain any material
consents, approvals, authorizations and permits required to be obtained under
any federal, state or local statute, rule or regulation; (c) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby; and (d) promptly to effect
all necessary filings and notifications. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of the Surviving Corporation
shall take all such action on behalf of IQB and the Subsidiary.
7.5 Board of Directors. Subject to full compliance with all applicable
laws, rules and regulations (including, without limitation, Section 14(f) of and
Rule 14f-1 under the Securities Exchange Act of 1934), as soon as possible after
the Effective Time, the Board of Directors of JVWeb shall be expanded to a total
of seven seats. Subject to the preceding, as soon as possible after the
Effective Time, JVWeb shall take all action as is necessary to cause Xxxxxx
Xxxx, Xxxx Xxxxx, Xxxx XxXxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxx and two other
persons selected by the preceding five persons to be elected to the expanded
Board of Directors. JVWeb shall take, at its expense, all action necessary to
effect any such election, including mailing to its stockholders the information
required by Section 14(f) of and Rule 14f-1 under the Securities Exchange Act of
1934. As a condition to the consummation of the Merger, Xxxx Xxxxx, on the one
hand, and the Shareholders, on the other hand, shall enter into a Voting
Agreement (in form and containing terms, provisions and conditions satisfactory
to them) providing that, for two years after the Effective Date, the
Shareholders shall cast all votes they have with respect to JVWeb Common Stock
in favor of Xx. Xxxxx or his designee for a single seat on the Board of
Directors of JVWeb in any election of board members. Also, subject to all of the
preceding, as soon as possible after the Effective Time, JVWeb shall establish
an Audit committee comprised of Xxxx XxXxxx and Xxxxx Xxxxxx, and a Compensation
committee comprised of Xxxx Xxxxx, Xxxx XxXxxx, Xxxxxx Xxxx and Xxxxx Xxxxxx.
7.6 Indemnification. All parties hereto hereby agree that all rights to
indemnification, exculpation, advancement of expenses and the like now existing
in favor of any director or officer of JVWeb or its subsidiaries (the
"Indemnified Parties") as provided in their respective charters or bylaws, or in
an agreement between an Indemnified Party and JVWeb or one of its subsidiaries,
are contract rights and shall survive the Merger. In addition, and without
limiting the foregoing, at all times after the Effective Date, JVWeb shall
indemnify all Indemnified Parties to the fullest extent permitted by applicable
law with respect to all acts and omissions arising out of such individuals'
services as officers, directors, employees or agents of JVWeb or any of its
subsidiaries, or as trustees or fiduciaries of any plan for the benefit of
employees, occurring at or prior to the Effective Time, including, without
limitation, the transactions contemplated by this Agreement. Without limiting
the foregoing, at all times after the Effective Date, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
complaint, petition, investigation, suit, audit, arbitration, litigation or
other proceeding, whether civil or criminal, in law or in equity, before any
arbitrator or governmental entity in connection with any matter, including,
without limitation, the transactions contemplated by this Agreement, occurring
at or prior to, and including, the Effective Time, JVWeb shall pay as incurred
such Indemnified Party's legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith so long as such
party shall enter into an undertaking with JVWeb to reimburse JVWeb, to the
extent required by applicable law, for all amounts advanced if a court of
competent jurisdiction shall ultimately determine, in a judgment that is not
subject to appeal or review, that indemnification of such Indemnified Party is
prohibited by applicable law. At all times after the Effective Date, JVWeb shall
pay all expenses, including reasonable attorneys' fees, that may be incurred by
any Indemnified Party in enforcing the indemnity and other obligations provided
for in this Section 7.6. Moreover, for six years after the Effective Time, JVWeb
shall cause to be maintained in effect in its certificate of incorporation and
bylaws, and shall not eliminate or modify, JVWeb's current provisions regarding
the elimination of liability of directors and the indemnification of officers,
directors and employees and advancement of expenses. The obligations of JVWeb
under this Section 7.6 shall not be terminated or modified in such a manner as
to adversely affect any Indemnified Party without the consent of such
Indemnified Party (it being expressly agreed that Indemnified Parties shall be
third party beneficiaries of this Section 7.6).
7.7 Voting Agreement. Each Shareholder agrees to vote all shares of IQB
Common Stock owned by such Shareholder in favor of the Merger. The voting
obligations imposed by this Section 7.7 are secured by the proxy granted in this
Section 7.7, and the holders of such proxy shall be entitled to exercise such
proxy to fulfill the voting obligations under this Section 7.7 of the grantors
of such proxy. Each Shareholder, by these presents does hereby irrevocably make,
constitute and appoint Xxxx X. Xxxxx and Xxxxx Xxxx, acting collectively or
singly, as such Shareholder's true and lawful proxies, agents and
attorneys-in-fact for the limited purpose and with the limited authority as
herein expressed, to act for, on behalf of, and in such Shareholder's name,
place and stead, hereby giving and granting to said proxies, agents and
attorneys-in-fact full power and authority, acting collectively or singly, to
vote on behalf of such Shareholder in favor of the Merger to fulfill the voting
obligations of such Shareholder pursuant to this Section 7.7 above. The proxy
granted by this Section 7.7 is irrevocable, but shall automatically terminate
upon the earlier to occur of the termination of this Agreement or the
consummation of the Merger. The proxy granted by this Section 7.7 is coupled
with an interest by virtue of the voting agreement provided for in this Section
7.7 above and certain other matters as well. All certificates representing IQB
Common Stock now owned or that may hereafter be acquired by a Shareholder shall,
at the request of JVWeb, be endorsed on the back thereof with a legend
describing the voting obligations imposed and the proxy granted by this Section
7.7.
7.8 Assumption of 2001 Stock Plan. At the Effective Time, JVWeb shall
assume the rights, obligations and issuances under the 2001 Stock Plan of IQB
(the "Stock Plan"). JVWeb agrees to use its best efforts to cause the securities
to be issued pursuant to the Stock Plan to be registered on a Registration
Statement on Form S-8 within 60 days after the Effective Time. The Company shall
not, without the consent of Xxxxx, establish or maintain in existence one or
more stock plans (in any form) whereby the aggregate number of shares of JVWeb
Common Stock available under the plan(s) (whether already issued, or reserved or
otherwise available for issuance, pursuant to the plan(s)) exceeds 10% of the
then outstanding shares of the JVWeb Common Stock.
7.9 Press Releases. JVWeb, the Subsidiary and IQB will seek to consult
with each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby.
ARTICLE 8
INDEMNIFICATION
8.1 Survival of Representations and Warranties. All of the
representations and warranties made by the parties hereto in this Agreement or
pursuant hereto, shall be continuing and shall survive the closing hereof and
the consummation of the transactions contemplated hereby, notwithstanding any
investigation at any time made by or on behalf of any party hereto.
8.2 Indemnification by Shareholders. Each Shareholder, jointly and
severally, shall protect, indemnify and hold harmless JVWeb, the Subsidiary and
the Surviving Corporation, and their respective officers, directors,
shareholders, attorneys, accountants, employees, affiliates, successors and
assigns, from any and all demands, claims, actions, causes of actions, lawsuits,
proceedings, judgments, losses, damages, injuries, liabilities, obligations,
expenses and costs (including costs of litigation and attorneys' fees), arising
from any breach of any agreement, representation or warranty made by any
Shareholder in this Agreement.
8.3 Indemnification by the Subsidiary. The Subsidiary shall protect,
indemnify and hold harmless IQB and each Shareholder, and their respective
officers, directors, shareholders, attorneys, accountants, employees,
affiliates, heirs, beneficiaries, legal representatives, successors and assigns,
from any and all demands, claims, actions, causes of actions, lawsuits,
proceedings, judgments, losses, damages, injuries, liabilities, obligations,
expenses and costs (including costs of litigation and attorneys' fees), arising
from any breach of any agreement, representation or warranty made by the
Subsidiary in this Agreement.
8.4 Indemnification by JVWeb. JVWeb shall protect, indemnify and hold
harmless IQB and each Shareholder, and their respective officers, directors,
shareholders, attorneys, accountants, employees, affiliates, heirs,
beneficiaries, legal representatives, successors and assigns, from any and all
demands, claims, actions, causes of actions, lawsuits, proceedings, judgments,
losses, damages, injuries, liabilities, obligations, expenses and costs
(including costs of litigation and attorneys' fees), arising from any breach of
any agreement, representation or warranty made by JVWeb in this Agreement.
ARTICLE 9
CONDITIONS TO CLOSING
9.1 Conditions to the Parties' Obligations to Close. The respective
obligations of IQB, the Subsidiary and JVWeb to enter into the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the Merger shall have been authorized and
approved by the shareholders of IQB in accordance with the
provisions of Section 1201 of the CCC, and by the Board of
Directors and sole shareholder of the Subsidiary in accordance
with Section 252 of the DGCL; and
(b) As of the Effective Time, no action, suit or proceeding shall
have been instituted or, to the knowledge of the parties, be
pending or threatened before any court or other governmental
body by any public agency or governmental authority seeking to
restrain, enjoin or prohibit the consummation of the
transactions contemplated hereby or to seek damages or other
relief in connection therewith against any officer or director
of IQB, the Subsidiary or JVWeb; and
(c) Each of the persons whose name appears on Schedule 9.1(c)
hereto shall have entered into an Employment Agreements in the
form of Exhibit 9.1(c) hereto, providing for employment with
JVWeb of the person who is the employee thereunder, in such
office of or position with JVWeb and for the salary and period
of time indicated on Schedule 9.1(c) hereto with respect to
such person; and
(d) JVWeb and IQB shall have agreed upon an arrangement acceptable
to them regarding the sale, spin-out or other disposition of
all of JVWeb's pre-Merger businesses and operations and the
satisfaction of all pre-Merger payables or other liabilities;
and
(e) All third party and other consents required for the Merger
shall have been obtained; and
(f) Dissenters' rights shall have been exercised with respect to
no more than five percent (5%) of the outstanding shares of
IQB Common Stock.
9.2 Further Conditions to IQB's and Shareholders' Obligations to Close.
The obligations of IQB and the Shareholders to enter into the Merger are further
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Each of the representations and warranties of JVWeb and the
Subsidiary contained in this Agreement shall be true and
correct in all respects at and as of the Closing as if each
such representation and warranty were made at and as of the
Closing, JVWeb and the Subsidiary shall have performed in all
respects all agreements and covenants required by this
Agreement to be performed by them separately or collectively
prior to or at the Closing, and at the Closing there shall be
delivered to Shareholders and IQB customary bring-down
certificates (each dated as of the Closing, signed by JVWeb
and the Subsidiary) to the foregoing effects; and
(b) Xxxx XxXxxx shall have entered into a Consulting Agreement in
the form of Exhibit 9.2(b) hereto; and
(c) All persons, who after the Merger will hold 5% or more of
outstanding shares of JVWeb Common Stock or who will serve as
a director or an executive officer of JVWeb, shall have
entered into a lockup agreement in the form of Exhibit 9.2(c)
hereto providing that, while continuing as a 5% stockholder or
as a director or an executive officer, such persons shall
comply with Rule 144 restrictions on any public sales of JVWeb
Common Stock; and
(d) Xxxx Xxxxx and his investors shall have fulfilled their
obligations pursuant to a separate agreement (reflected in the
Letter of Intent entered into with respect to the Merger prior
to the execution of this Agreement) pursuant to which they are
obligated to match on a dollar-for-dollar basis (up to
$500,000) such investment funds as Xxxx XxXxxx and his agents
have procured on behalf of JVWeb (including all warrant
exercises, private equity placements and other equity sales on
behalf of JVWeb), and Xx. XxXxxx'x procured funds and Xx.
Xxxxx'x matched funds shall total at least $500,000; and
(e) JVWeb shall have obtained directors & officers liability
insurance in the amount of not less than $1 million.
9.3 Further Conditions to the Subsidiary's and JVWeb Obligations to
Close. The obligations of the Subsidiary and JVWeb to enter into the Merger are
further subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Each of the representations and warranties of the Shareholders
contained in this Agreement shall be true and correct in all
respects at and as of the Closing as if each such
representation and warranty were made at and as of the
Closing, Shareholders and IQB shall have performed in all
respects all agreements and covenants required by this
Agreement to be performed by them separately or collectively
prior to or at the Closing, and at the Closing there shall be
delivered to JVWeb and the Subsidiary customary bring-down
certificates (each dated as of the Closing, signed by
Shareholders and IQB) to the foregoing effects; and
(b) The business, legal, technical and financial due diligence
of IQB shall have been completed and shall be satisfactory to
JVWeb in its sole discretion; and
(c) There shall not have been any material adverse change in the
financial condition, operations, business prospects, employee
relations, customer relations, assets, liabilities (accrued,
absolute, contingent, or otherwise) or income of the Merging
Corporation, or the business of the Merging Corporation; and
(d) The legal research and analysis as to the availability and
anticipated perfection of exemptions from all applicable
Federal and state securities offering registration
requirements relating to the issuance of the JVWeb Common
Stock in connection with the Merger shall have been completed
and shall be satisfactory to JVWeb in its sole discretion; and
(e) Xxxx Xxxxx and the Shareholders shall have entered into the
Voting Agreement described in Section 7.5; and
(f) JVWeb shall have issued warrants to Xx. Xxxxx and his
investors (in consideration of their matching commitment
described in Section 9.2(d) above), permitting them to
purchase 500,000 shares of the JVWeb Common Stock at an
exercise price of $1.00 per share with a maturity date of not
later than June 30, 2002; and
(g) JVWeb shall have entered into an agreement with Xx. Xxxxx (in
form satisfactory to Xx. Xxxxx) obligating JVWeb to conduct an
audit of the financial statements of the predecessor of IQB
for inclusion in the Current Report on Form 8-K regarding the
Merger if Xxxxxx & Xxxxxx, PLLC (in its sole discretion)
determines that such financial statements are required to be
included in such Current Report.
ARTICLE 10
ABANDONMENT OF MERGER
Notwithstanding anything contained in this Agreement to the contrary,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time, whether before or after adoption and approval of this
Agreement by the shareholders of IQB:
(a) By mutual consent of the Boards of Directors of IQB, the
Subsidiary and JVWeb; or
(b) By the Board of Directors of IQB if any of the conditions set
forth in Section 9.1 or 9.2 are not satisfied in any respect
or waived by IQB on or before the Closing, or if the Closing
has not occurred before the end of business hours on the
Closing Date, other than due to a breach of this Agreement by
IQB; or
(c) By the Boards of Directors of JVWeb and the Subsidiary if any
of the conditions set forth in Section 9.1 or 9.3 are not
satisfied in any respect or waived by JVWeb and the Subsidiary
on or before the Closing, or if the Closing has not occurred
before the end of business hours on the Closing Date, other
than due to a breach of this Agreement by either of JVWeb or
the Subsidiary; or
(d) By the Boards of Directors of JVWeb and the Subsidiary, if
such Boards of Directors determine that the consummation of
the transaction provided for herein would not, for any reason,
be in the best interests of JVWeb, the Subsidiary and their
respective shareholders.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Complete Agreement. This Agreement contains a complete and
exclusive statement of the agreement of the parties with respect to the subject
matter hereof, and all prior negotiations and agreements between the parties are
superseded by this Agreement.
11.2 Waiver and Amendment. Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party entitled to
the benefit thereof, and any term, condition or covenant hereof (including,
without limitation, the period during which any condition is to be satisfied or
any obligation performed) may be amended by the parties at any time. Any waiver,
extension or amendment shall be evidenced by any instrument in writing executed
on behalf of the appropriate party or parties or on its behalf by its Chairman,
President or any Vice President or other person who has been authorized by its
Board of Directors to execute waivers, extensions or amendments on its behalf.
11.3 Assignment; Binding Effect. This Agreement may not be
assigned by either party without the written consent of the other party. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
11.4 Notices. Any notice, demand, claim or other communication under
this Agreement shall be in writing and shall be deemed to have been given upon
the delivery or mailing thereof, as the case may be, if delivered personally or
sent by certified mail, return receipt requested, postage prepaid, to the
parties at such address as a party may specify by notice to the other.
11.5 Governing Law. AS TO ALL MATTERS OF LAW, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH TEXAS LAW, REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE BE APPLICABLE UNDER PRINCIPLES OF CONFLICTS OF LAW.
11.6 Headings. Any headings in this Agreement are solely for
convenience of reference and shall not affect its interpretation.
11.7 Execution of Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
11.8 Severability. If any provision of this Agreement is held or deemed
to be, or in fact is, invalid, inoperative or unenforceable for any reason, this
Agreement shall be construed as though such invalid, inoperative or
unenforceable provision had never been contained in this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
"JVWEB" "SUBSIDIARY"
JVWEB, INC., IQB ACQUISITION CORPORATION,
a Delaware corporation a Delaware corporation
By:_________________________________ By:__________________________
Xxxx X. Xxxxx, President Xxxx X. Xxxxx, President
"IQB"
I.Q. BIOMETRIX CALIFORNIA, INC.,
a California corporation
By:_________________________________
Xxxxxx Xxxx,
Chief Executive Officer
"SHAREHOLDERS"
------------------------------------ ---------------------------
Xxxxxx Xxxx Xxxxxx Xxxxxxxxx
------------------------------------
Xxxx XxXxxx
Schedule of Exceptions
I.Q. BIOMETRIX CALIFORNIA, INC.
SCHEDULE OF EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
February 27, 2002
Set forth below are exceptions to the representations and warranties of
I.Q. Biometrix California, Inc. made in Section 4 of the attached Agreement and
Plan of Merger (the "Merger Agreement"). All disclosures and exceptions are
intended to modify all of the Company's representations and warranties, and the
Section headings used below are for convenience only.
1. Section 4.2
Capitalization does not include those shares issued pursuant to the
closing of the current private placement of I.Q. Biometrix California, Inc.
which closing is contingent upon the signing of the Merger Agreement.
2. Section 4.4
Certain Stock Issuances are subject to vesting or repurchase rights
pursuant to the 2001 Stock Plan.
