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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
MESSAGEMEDIA, INC.,
a Delaware corporation;
MM1 ACQUISITION CORP.,
an Alabama corporation;
and
REVNET SYSTEMS, INC.,
an Alabama corporation;
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Dated as of July 22, 1999
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EXHIBITS INDEX
EXHIBIT
NUMBER DESCRIPTION
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Exhibit A - Certain definitions
Exhibit B1 - Form of Voting Agreement
Exhibit B2 - Persons to execute Voting Agreements
Exhibit C - Assumed Company Options
Exhibit D - Intrinsic Value Company Options
Exhibit E - Non-Compensatory Company Options
Exhibit F - Persons to sign Employment and Noncompetition Agreements
Exhibit G - Form of Employment Agreement
Exhibit H - Form of Noncompetition Agreement
Exhibit I - Form of Securityholder Representation Statement
Exhibit J - Certain employees
Exhibit K - Form of Registration Rights Agreement
Exhibit L - Form of Escrow Agreement
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TABLE OF CONTENTS
PAGE
1. DESCRIPTION OF TRANSACTION................................................1
1.1 Merger of Merger Sub into the Company...............................1
1.2 Effect of the Merger................................................1
1.3 Closing; Effective Time.............................................1
1.4 Articles of Incorporation and Bylaws; Directors and Officers........2
1.5 Conversion of Shares................................................2
1.6 Stock Options.......................................................3
1.7 Closing of the Company's Transfer Books.............................4
1.8 Escrow..............................................................5
1.9 Exchange of Certificates............................................5
1.10 Dissenting Shares...................................................7
1.11 Tax Consequences....................................................7
1.12 Accounting Treatment................................................7
1.13 Further Action......................................................7
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................8
2.1 Due Organization; No Subsidiaries; Etc..............................8
2.2 Articles of Incorporation and Bylaws; Records.......................9
2.3 Capitalization, Etc.................................................9
2.4 Financial Statements...............................................10
2.5 Absence of Changes.................................................10
2.6 Title to Assets....................................................12
2.7 Bank Accounts; Receivables.........................................13
2.8 Equipment; Leasehold...............................................13
2.9 Proprietary Assets.................................................13
2.10 Contracts..........................................................16
2.11 Liabilities........................................................18
2.12 Compliance with Legal Requirements.................................18
2.13 Governmental Authorizations........................................18
2.14 Tax Matters........................................................19
2.15 Employee and Labor Matters; Benefit Plans..........................20
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TABLE OF CONTENTS
(CONTINUED)
PAGE
2.16 Environmental Matters...........................................22
2.17 Insurance.......................................................23
2.18 Related Party Transactions......................................23
2.19 Legal Proceedings; Orders.......................................24
2.20 Authority; Binding Nature of Agreement..........................24
2.21 Non-Contravention; Consents.....................................25
2.22 Full Disclosure.................................................26
2.23 Vote Required...................................................26
2.24 Financial Advisor...............................................26
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..................27
3.1 Organization, Standing and Power................................27
3.2 SEC Filings; Financial Statements...............................27
3.3 Authority; Binding Nature of Agreement..........................27
3.4 Valid Issuance..................................................28
3.5 Absence of Changes..............................................28
4. CERTAIN COVENANTS OF THE COMPANY.........................................28
4.1 Access and Investigation........................................28
4.2 Operation of the Company's Business.............................29
4.3 Notification; Updates to Disclosure Schedule....................31
4.4 No Negotiation..................................................31
5. ADDITIONAL COVENANTS OF THE PARTIES......................................32
5.1 Filings and Consents............................................32
5.2 Company Shareholders' Meeting...................................32
5.3 Stock Options...................................................32
5.4 Public Announcements............................................33
5.5 Best Efforts....................................................33
5.6 Employment and Noncompetition Agreements........................33
5.7 FIRPTA Matters..................................................33
5.8 Listing.........................................................33
5.9 Resignation of Officers and Directors...........................33
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.10 Certain Stock Option Matters......................................34
5.11 Securityholder Representation Statements; Appointment
of Purchaser Representative.......................................34
5.12 Securities Act Exemption..........................................34
5.13 Stock Restrictions................................................35
5.14 Registration on Form S-3..........................................35
5.15 Xxxxxxx Post Closing Stock Issuance...............................35
5.16 Blue Sky Laws.....................................................36
5.17 Retention Options.................................................36
5.18 Personal Guarantees...............................................36
5.19 Use of Warrant Proceeds...........................................36
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB...............36
6.1 Accuracy of Representations.......................................36
6.2 Performance of Covenants..........................................36
6.3 Shareholder Approval..............................................36
6.4 Consents..........................................................37
6.5 Agreements and Documents..........................................37
6.6 FIRPTA Compliance.................................................38
6.7 Listing...........................................................38
6.8 No Restraints.....................................................38
6.9 No Legal Proceedings..............................................38
6.10 Employees.........................................................38
6.11 Securities Exemption..............................................38
6.12 Director and Officer Insurance....................................38
6.13 Dissenters' Rights................................................38
6.14 Debt Payoff.......................................................39
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.........................39
7.1 Accuracy of Representations.......................................39
7.2 Performance of Covenants..........................................39
7.3 Documents.........................................................39
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.4 Listing......................................................39
7.5 No Restraints................................................39
8. TERMINATION...........................................................39
8.1 Termination Events...........................................39
8.2 Termination Procedures.......................................40
8.3 Effect of Termination........................................40
9. INDEMNIFICATION, ETC..................................................41
9.1 Survival of Representations, Etc.............................41
9.2 Indemnification by Company Shareholders......................41
9.3 Threshold; Ceiling...........................................42
(b) 42
9.4 Exclusive Remedy.............................................42
9.5 No Contribution..............................................42
9.6 Defense of Third Party Claims................................42
9.7 Exercise of Remedies by Indemnitees Other Than Parent........43
10. MISCELLANEOUS PROVISIONS..............................................43
10.1 Securityholders' Agent.......................................43
10.2 Further Assurances...........................................44
10.3 Fees and Expenses............................................44
10.4 Attorneys' Fees..............................................44
10.5 Legacy Capital Fees..........................................45
10.6 Notices......................................................45
10.7 Confidentiality..............................................46
10.8 Time of the Essence..........................................46
10.9 Headings.....................................................46
10.10 Counterparts.................................................46
10.11 Governing Law................................................46
10.12 Successors and Assigns.......................................47
10.13 Remedies Cumulative; Specific Performance....................47
10.14 Waiver.......................................................47
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TABLE OF CONTENTS
(CONTINUED)
PAGE
10.15 Amendments...................................................47
10.16 Severability.................................................47
10.17 Parties in Interest..........................................48
10.18 Entire Agreement.............................................48
10.19 Construction.................................................48
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of July 22, 1999, by and among: MESSAGEMEDIA, INC., a
Delaware corporation ("Parent"); MM1 ACQUISITION CORP., an Alabama corporation
and a wholly owned subsidiary of Parent ("Merger Sub"); and REVNET SYSTEMS,
INC., an Alabama corporation (the "Company"). Certain other capitalized terms
used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the Alabama
Business Corporation Act (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly owned subsidiary
of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "purchase."
C. This Agreement has been approved by the respective boards of
directors of Parent, Merger Sub and the Company.
D. In order to induce Parent to enter into this Agreement and to
consummate the Merger, certain shareholders of the Company listed on Exhibit B-2
of the Company are entering into Voting Agreements, a form of which is attached
hereto as Exhibit B-1, pursuant to which they are agreeing to vote in favor of
the adoption and approval of this Agreement and the approval of the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth
in this Agreement and in the applicable provisions of the Alabama Business
Corporation Act.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward LLP,
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0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000, at 10:00 a.m. on
August 5, 1999, or as soon as practicable after such time as the parties agree,
but not later than two (2) business days following satisfaction or waiver of
each of the conditions set forth in Section 6 and Section 7 below (the
"Scheduled Closing Time"). The date on which the Closing actually takes place is
referred to in this Agreement as the "Closing Date." Contemporaneously with or
as promptly as practicable after the Closing, properly executed articles of
merger conforming to the requirements of the Alabama Business Corporation Act
shall be filed with the Secretary of State of the State of Alabama. The Merger
shall become effective at the time such articles of merger are filed with the
Secretary of State of the State of Alabama or at such later time as may be
specified in such articles of merger (the "Effective Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined by Parent and the Company prior to the Effective
Time:
(a) the Articles of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Articles of Incorporation of
Merger Sub as in effect immediately prior to the Effective Time;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time; and
(c) the directors and officers of Merger Sub immediately prior to
the Effective Time shall continue as the directors and officers of the Surviving
Corporation immediately after the Effective Time.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.5(b), 1.5(c) and 1.9, at the Effective
Time, by virtue of the Merger and without any further action on the part of
Parent, Merger Sub, the Company or any shareholder of the Company ("Company
Shareholder"):
(i) any shares of Company Common Stock then held by the Company
or any subsidiary of the Company (or held in the Company's treasury) shall be
canceled and retired and shall cease to exist at the Effective Time, and no
consideration shall be delivered in exchange therefor;
(ii) any shares of Company Common Stock then held by Parent,
Merger Sub or any other subsidiary of Parent shall be canceled and retired and
shall cease to exist at the Effective Time, and no consideration shall be
delivered in exchange therefor;
(iii) each share of the common stock, $0.01 par value per
share, of Merger Sub then outstanding shall be converted into one share of
common stock of the Surviving Corporation; and
(iv) except as provided in clauses "(i)" and "(ii)" of this
sentence, each share of Company Common Stock and Company Non-Voting Common Stock
outstanding
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immediately prior to the Effective Time shall be converted into the right to
receive a fraction of a share(s) of the common stock (par value $0.001 per
share) of Parent ("Parent Common Stock") equal to a fraction (the "Exchange
Ratio"):
(1) if the Parent Average Stock price is $12.00 or more,
(x) the numerator of which is 4,000,000 minus the Excluded Expenses (expressed
on an as converted to Parent Common Stock basis using the Parent Average Stock
Price as the measure for the per-share value of the Parent Common Stock) and (y)
the denominator of which is the Fully Diluted Number of Company Shares;
(2) if the Parent Average Stock price is less than $12.00
and greater than or equal to $10.67, (x) the numerator of which is (i)
$48,000,000 minus the dollar amount of the Excluded Expenses divided by (ii) the
Parent Average Stock Price and (y) the denominator of which is the Fully Diluted
Number of Company Shares; or
(3) if the Parent Average Stock price is less than $10.67,
(x) the numerator of which is 4,500,000 minus the Excluded Expenses (on an as
converted to Parent Common Stock basis using the Parent Average Stock Price as
the measure for the per-share value of the Parent Common Stock) and (y) the
denominator of which is the Fully Diluted Number of Company Shares.
(b) The numerator of the fraction used to calculate the Exchange
Ratio, in accordance with this Agreement but prior to the deduction of any
Excluded Expenses, is hereinafter referred to as the "Aggregate Parent Share
Number."
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of Company Common Stock or Parent Common Stock are
changed into a different number or class of shares by reason of any stock split,
division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction, then the Exchange Ratio shall be appropriately adjusted.
(d) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends.
1.6 STOCK OPTIONS.
(a) At the Effective Time, each stock option listed on Exhibit C
hereto that is then outstanding, whether vested or unvested (an "Assumed Company
Option"), shall be assumed by Parent in accordance with the terms (as in effect
as of the Effective Time) of the stock option agreement by which such Company
Option is evidenced. All rights with respect to Company Common Stock under
outstanding Assumed Company Options shall thereupon be converted into rights
with respect to Parent Common Stock. Accordingly, from and after the
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Effective Time, (a) each Assumed Company Option assumed by Parent may be
exercised solely for shares of Parent Common Stock, (b) the number of shares of
Parent Common Stock subject to each such Assumed Company Option shall be equal
to the number of shares of Company Common Stock that were subject to such
Assumed Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock, (c) the per share exercise price for the Parent Common Stock
issuable upon exercise of each such Assumed Company Option shall be determined
by dividing the exercise price per share of Company Common Stock subject to such
Assumed Company Option, as in effect immediately prior to the Effective Time, by
the Exchange Ratio, and rounding the resulting exercise price up to the nearest
whole cent, and (d) all restrictions on the exercise of each such Assumed
Company Option shall continue in full force and effect, and the term,
exercisability, vesting schedule and other provisions of such Assumed Company
Option shall otherwise remain unchanged; provided, however, that each such
Assumed Company Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split, reverse stock
split, stock dividend, recapitalization or other similar transaction effected by
Parent after the Effective Time. The Company and Parent shall take all action
that may be necessary (under the Company's 1994 Incentive Stock Option Plan and
otherwise) to effectuate the provisions of this Section 1.6. Following the
Closing, Parent will send to each holder of an Assumed Company Option a written
notice setting forth (i) the number of shares of Parent Common Stock subject to
such assumed Company Option, and (ii) the exercise price per share of Parent
Common Stock issuable upon exercise of such assumed Company Option. Parent shall
file with the SEC, within thirty (30) days after the Closing Date, a
registration statement on Form S-8 registering the exercise of the Company
Options assumed by Parent pursuant to this Section 1.6(a), provided such Company
Options are registrable on Form S-8.
(b) Prior to the Effective Time, each stock option listed on
Exhibit D hereto that is then outstanding (an "Intrinsic Value Company Option"),
shall be settled by the issuance by Company of additional shares of Company
Non-Voting Common Stock to the option holders in accordance with the terms of
the Company's amended 1994 Incentive Stock Option Plan. All such shares of
Company Non-Voting Common Stock shall thereafter be converted in the Merger into
the right to receive shares of Parent Common Stock pursuant to Section 1.5
above. All shares of Parent Common Stock issuable with respect to Intrinsic
Value Company Options shall be Restricted Resale Stock.
(c) Prior to the Effective Time, each stock option listed on
Exhibit E hereto that is then outstanding (a "Non-Compensatory Company Option"),
shall be fully exercised in cash for additional shares of Company Common Stock.
All such shares of Company Common Stock shall thereafter be converted in the
Merger into the right to receive shares of Parent Common Stock pursuant to
Section 1.5 above. All shares of Parent Common Stock issuable with respect to
Non-Compensatory Company Options shall be Restricted Resale Stock.
1.7 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time (a)
all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of the Company's
capital stock that were outstanding immediately prior to the Effective Time
shall cease to have any rights as shareholders of the Company, and (b) the
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stock transfer books of the Company shall be closed with respect to all shares
of such capital stock outstanding immediately prior to the Effective Time. No
further transfer of any such shares of the Company's capital stock shall be made
on such stock transfer books after the Effective Time. If, after the Effective
Time, a valid certificate previously representing any of such shares of the
Company's capital stock (a "Company Stock Certificate") is presented to the
Exchange Agent (as defined in Section 1.9) or to the Surviving Corporation or
Parent, such Company Stock Certificate shall be canceled and shall be exchanged
as provided in Section 1.9.
1.8 ESCROW.
(a) The aggregate number of shares to be placed in escrow (the
"Escrow Shares") as collateral for the indemnification obligations of the
Company pursuant to Section 9 of this Agreement shall be equal to the product of
(x) .20 and (y) the Aggregate Parent Share Number less an amount (expressed on
an as converted to Parent Common Stock basis using the Parent Average Stock
Price) equal to the aggregate exercise price of the Intrinsic Value Company
Options. The Escrow Shares shall be withheld from the number of whole shares of
Parent Common Stock that each Company Shareholder has the right to receive
pursuant to the provisions of Section 1.5. At Closing, the Company shall deliver
to Parent a Schedule 1.8 indicating the number of Escrow Shares to be withheld
from each Company Shareholder.
(b) The number of Escrow Shares to be withheld from each Company
Shareholder shall be set forth on a Schedule 1.8 to be delivered by the
Securityholders' Agent prior to Closing, and shall equal the aggregate number of
shares determined in accordance with Section 1.8(a) above.
1.9 EXCHANGE OF CERTIFICATES.
(a) American Stock Transfer & Trust or such other reputable bank or
trust company selected by Parent prior to the Closing Date shall act as exchange
agent in the Merger (the "Exchange Agent"). Promptly after the Effective Time,
Parent shall deposit with the Exchange Agent certificates representing the
shares of Parent Common Stock issuable pursuant to this Section 1. The shares of
Parent Common Stock so deposited with the Exchange Agent, together with any
dividends or distributions received by the Exchange Agent with respect to such
shares, are referred to collectively as the "Exchange Fund."
(b) At or as soon as practicable after the Effective Time, the
Exchange Agent will send to the holders of Company Stock Certificates (i) a
letter of transmittal in customary form and containing such provisions as Parent
may reasonably specify (including a provision confirming that delivery of
Company Stock Certificates shall be effected, and risk of loss and title to
Company Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent), and (ii) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for certificates
representing Parent Common Stock. Upon surrender of a Company Stock Certificate
to the Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent or Parent, the holder of such Company Stock Certificate shall be
entitled to receive in exchange therefor a certificate representing the number
of whole shares of
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Parent Common Stock that such holder has the right to receive pursuant to the
provisions of this Section 1, and the Company Stock Certificate so surrendered
shall be canceled. As soon as practicable after receipt by the Exchange Agent of
the Company Stock Certificates, the duly executed letter of transmittal and such
other documents as may be reasonably required by the Exchange Agent or Parent,
the Exchange Agent shall deliver to each former Company Shareholder a
certificate representing the number of whole shares of Parent Common Stock that
such shareholder has the right to receive pursuant to the provisions of Section
1.5 less the number of shares to be delivered to the escrow agent (determined in
accordance with Section 1.8(b) above) and (ii) deliver to the escrow agent
pursuant to the Escrow Agreement (as defined below), on behalf and in the name
of each shareholder, a certificate representing such shareholder's proportionate
share of the Escrow Shares. Until surrendered as contemplated by this Section
1.9(b), each Company Stock Certificate shall be deemed, from and after the
Effective Time, to represent only the right to receive upon such surrender a
certificate representing shares of Parent Common Stock as contemplated by this
Section 1 and as adjusted to reflect any claims made against the Escrow Shares.
If any Company Stock Certificate shall have been lost, stolen or destroyed,
Parent may, in its discretion and as a condition precedent to the issuance of
any certificate representing Parent Common Stock, require the owner of such
lost, stolen or destroyed Company Stock Certificate to provide an appropriate
affidavit and to deliver a bond (in such sum as Parent may reasonably direct) as
indemnity against any claim that may be made against the Exchange Agent, Parent
or the Surviving Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby until such
holder surrenders such Company Stock Certificate in accordance with this Section
1.9 (at which time such holder shall be entitled to receive all such dividends
and distributions).
(d) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no cash, certificates or scrip for any such
fractional shares shall be issued. In lieu thereof, the number of shares
otherwise issued or issuable to any holder of capital stock of the Company
(after aggregating all fractional shares of Parent Common Stock issuable to such
holder) shall, upon surrender of such holder's Company Stock Certificate(s), be
rounded to the nearest whole share of Parent Common Stock, with one-half share
or more being rounded up.
(e) Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder of capital stock of the Company pursuant to this
Agreement such amounts as the Exchange Agent, Parent or the Surviving
Corporation may be required to deduct or withhold therefrom under the Code or
under any provision of state, local or foreign tax law. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
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(f) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of capital stock of the Company for any shares of
Parent Common Stock (or dividends or distributions with respect thereto), or for
any cash amounts, delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
1.10 DISSENTING SHARES.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any shareholder of the Company that, as of the Effective Time, is or
may become a "Dissenter" within the meaning of Section 10-2B-13.01(3) of the
Alabama Business Corporation Act ("Dissenting Shareholder") shall not be
converted into or represent the right to receive Parent Common Stock in
accordance with Section 1.5, and each Dissenting Shareholder shall be entitled
only to such rights as may be granted to such Dissenter in Article 13 of the
Alabama Business Corporation Act; provided, however, that if the status of a
Dissenting Shareholder as a Dissenter shall not be perfected in accordance with
Article 13 of the Alabama Business Corporation Act, then, as of the later of the
Effective Time or the time of the failure to perfect such status or the loss of
such status, the shares of capital stock of the Company held by the Dissenting
Shareholder shall automatically be converted into and shall represent only the
right to receive (upon the surrender of the certificate or certificates
representing such shares) Parent Common Stock in accordance with Section 1.5.
(b) The Company shall give Parent (i) prompt notice of any written
demand received by the Company prior to the Effective Time to require the
Company to purchase shares of capital stock of the Company pursuant to
10-2B-13.21 of the Alabama Business Corporation Act and of any other demand,
notice or instrument delivered to the Company prior to the Effective Time
pursuant to the Alabama Business Corporation Act, and (ii) the opportunity to
participate in all negotiations and proceedings with respect to any such demand,
notice or instrument. The Company shall not make any payment or settlement offer
prior to the Effective Time with respect to any such demand unless Parent shall
have consented in writing to such payment or settlement offer.
1.11 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations. Parent and the Company shall each use its
commercially reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368(a) of the Code. From and after
the Effective Time, neither Parent, Merger Sub nor the Company shall take any
action that could reasonably be expected to cause the Merger not to be treated
as a reorganization within the meaning of Section 368(a) of the Code.
1.12 ACCOUNTING TREATMENT. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.13 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation or Parent
with full right, title and possession of and to all rights
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and property of Merger Sub and the Company, the officers and directors of the
Surviving Corporation and Parent shall be fully authorized (in the name of
Merger Sub, in the name of the Company and otherwise) to take such action.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a document dated as of the date of this
Agreement and delivered by Company to Parent prior to the execution and delivery
of this Agreement and referring to the representations and warranties in this
Agreement (including, but not limited to the schedules specifically referenced
in this Article 2, the "Disclosure Schedule"), the Company represents and
warrants, to and for the benefit of the Indemnitees, as follows:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Alabama and has all
necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Company Contracts.
(b) Except as set forth in Part 2.1 of the Disclosure Schedule, the
Company has not conducted any business under or otherwise used, for any purpose
or in any jurisdiction, any fictitious name, assumed name, trade name or other
name, other than the name "Revnet Systems, Inc."
(c) The Company is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1 of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on the Company. The Company is in good standing as a foreign corporation in each
of the jurisdictions identified in Part 2.1 of the Disclosure Schedule.
(d) Part 2.1 of the Disclosure Schedule accurately sets forth (i)
the names of the members of the Company's board of directors, (ii) the names of
the members of each committee of the Company's board of directors, and (iii) the
names and titles of the Company's officers.
(e) The Company does not own any controlling interest in any Entity
and, except for the equity interests identified in Part 2.1 of the Disclosure
Schedule, the Company has never owned, beneficially or otherwise, any shares or
other securities of, or any direct or indirect equity interest in, any Entity.
The Company has not agreed and is not obligated to make any future investment in
or capital contribution to any Entity. The Company has not guaranteed and is not
responsible or liable for any obligation of any of the Entities in which it owns
or has owned any equity interest.
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2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to Parent accurate and complete copies of: (1) the Company's Articles
of Incorporation and bylaws, including all amendments thereto; (2) the stock
records of the Company; and (3) except as set forth in Part 2.2 of the
Disclosure Schedule, the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the shareholders of the Company, the board of directors of the
Company and all committees of the board of directors of the Company. There have
been no formal meetings or other proceedings of the shareholders of the Company,
the board of directors of the Company or any committee of the board of directors
of the Company that are not fully reflected in such minutes or other records.
There has not been any violation of any of the provisions of the Company's
Articles of Incorporation or bylaws, and the Company has not taken any action
that is inconsistent in any material respect with any resolution adopted by the
Company's shareholders, the Company's board of directors or any committee of the
Company's board of directors. The stock and stock option records, minute books
and other records of the Company are accurate, up-to-date and complete in all
material respects, and have been maintained in accordance with prudent business
practices.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of: (i)
9,000,000 shares of Common Stock ($0.001 par value), of which 5,430,125 shares
have been issued and are outstanding as of July 20, 1999; and (ii) 1,000,000
shares of Non-Voting Common Stock ($0.001 par value), of which 227,000 shares
have been issued and are outstanding as of July 20, 1999. All of the outstanding
shares of Company Common Stock and Non-Voting Common Stock have been duly
authorized and validly issued, and are fully paid and non-assessable. Part 2.3
of the Disclosure Schedule provides an accurate and complete description of the
terms of each repurchase option that is held by the Company and to which any of
such shares is subject.
(b) The Company has reserved 700,000 shares of Company Non-Voting
Common Stock for issuance under its 1994 Incentive Stock Option Plan, of which
options to purchase 470,333 shares are outstanding as of the date of this
Agreement. Part 2.3 of the Disclosure Schedule accurately sets forth, with
respect to each Company Option (whether granted under the 1994 Incentive Stock
Option Plan or otherwise) that is outstanding as of the date of this Agreement:
(i) the name of the holder of such Company Option; (ii) the total number of
shares that are subject to such Company Option and the number of shares with
respect to which such Company Option is immediately exercisable; (iii) the date
on which such Company Option was granted and the term of such Company Option;
(iv) the vesting schedule for such Company Option; (v) the exercise price per
share purchasable under such Company Option; and (vi) whether such Company
Option has been designated an "incentive stock option" as defined in Section 422
of the Code. Except as set forth in Part 2.3 of the Disclosure Schedule, there
is no: (i) outstanding subscription, option, call, warrant or right (whether or
not currently exercisable) to acquire any shares of the capital stock or other
securities of the Company; (ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of the
capital stock or other securities of the Company; (iii) Contract under which the
Company is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities; or (iv) to the best of the knowledge of
the Company, condition or
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circumstance that may give rise to or provide a basis for the assertion of a
claim by any Person to the effect that such Person is entitled to acquire or
receive any shares of capital stock or other securities of the Company.
(c) All outstanding shares of Company Common Stock and Non-Voting
Common Stock, all outstanding Company Options and all other outstanding
securities of the Company have been issued and granted in compliance with (i)
all applicable securities laws and other applicable Legal Requirements, and (ii)
all requirements set forth in applicable Contracts.
(d) Except as set forth in Part 2.3 of the Disclosure Schedule, the
Company has never repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities of the Company. All securities so reacquired
by the Company were reacquired in compliance with (i) the applicable provisions
of the Alabama Business Corporation Act and all other applicable Legal
Requirements, and (ii) all requirements set forth in applicable restricted stock
purchase agreements and other applicable Contracts.
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Company Financial Statements"):
(i) The balance sheets of the Company as of December 31, 1998,
1997 and 1996, and the income statements, statements of shareholders' equity and
statements of cash flows of the Company for the years then ended, together with
the notes thereto; and
(ii) the unaudited balance sheet of the Company as of March 31,
1999 (the "Unaudited Interim Balance Sheet"), and the related unaudited income
statement of the Company for the three (3) months then ended.
(b) The Company Financial Statements present fairly, in all
material respects, the financial position of the Company as of the respective
dates thereof and the results of operations and (in the case of the financial
statements referred to in Section 2.4(a)(i)) cash flows of the Company for the
periods covered thereby. The Company Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered (except that the financial statements
referred to in Section 2.4(a)(ii) do not contain footnotes and are subject to
normal and recurring year-end audit adjustments, which will not, individually or
in the aggregate, be material in magnitude). The Company Financial Statements
referred to in Section 2.4(a)(i) shall be identical to those statements on which
PricewaterhouseCoopers LLP will issue an unqualified report and opinion after
the date hereof.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since March 31, 1999:
(a) there has not been any material adverse change in the Company's
business, condition, capitalization, assets, liabilities, operations, financial
performance or
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prospects, and no event has occurred that will, or could reasonably be expected
to, have a Material Adverse Effect on the Company;
(b) there has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of the Company's assets (whether
or not covered by insurance);
(c) the Company has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Company has not sold, issued, granted or authorized the
issuance of (i) any capital stock or other security (except for Company Common
Stock issued upon the valid exercise of outstanding Company Options in
accordance with the terms of the option agreement pursuant to which such Company
Options are outstanding), (ii) any option or right to acquire any capital stock
or any other security (except for Company Options described in Part 2.3 of the
Disclosure Schedule), or (iii) any instrument convertible into or exchangeable
for any capital stock or other security;
(e) other than those amendments that are specifically contemplated
by Section 5.10 of this Agreement, the Company has not amended or waived any of
its rights under, or permitted the acceleration of vesting under, (i) any
provision of its 1994 Incentive Stock Option Plan, (ii) any provision of any
agreement evidencing any outstanding Company Option, or (iii) any restricted
stock purchase agreement;
(f) there has been no amendment to the Company's Articles of
Incorporation or bylaws, and the Company has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, division or subdivision of shares, reverse stock split, consolidation of
shares or similar transaction;
(g) the Company has not formed any subsidiary or acquired any
equity interest or other interest in any other Entity;
(h) the Company has not made any capital expenditure that, when
added to all other capital expenditures made on behalf of the Company since
March 31, 1999, exceeds $125,000;
(i) the Company has not (i) entered into or permitted any of the
assets owned or used by it to become bound by any Contract that is or would
constitute a Material Contract (as defined in Section 2.10(a)), or (ii) amended
or prematurely terminated, or waived any material right or remedy under, any
such Contract;
(j) the Company has not (i) acquired, leased or licensed any right
or other asset from any other Person, (ii) sold or otherwise disposed of, or
leased or licensed, any right or other asset to any other Person, or (iii)
waived or relinquished any right, except for immaterial rights or other
immaterial assets acquired, leased, licensed or disposed of in the ordinary
course of business and consistent with the Company's past practices;
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(k) the Company has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable or
other indebtedness;
(l) the Company has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Company's past practices;
(m) the Company has not (i) lent money to any Person, or (ii)
incurred or guaranteed any indebtedness for borrowed money;
(n) the Company has not (i) established or adopted any employee
benefit plan, (ii) paid any bonus or made any profit-sharing or similar payment
to, or increased the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors, officers
or employees, or (iii) hired any new employee;
(o) the Company has not changed any of its methods of accounting or
accounting practices in any respect;
(p) the Company has not made any Tax election;
(q) the Company has not commenced or settled any Legal Proceeding;
(r) the Company has not entered into any material transaction or
taken any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(s) the Company has not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(r)" above.
2.6 TITLE TO ASSETS.
(a) The Company owns, and has good, valid and marketable title to,
all assets purported to be owned by it, including: (i) all assets reflected on
the Unaudited Interim Balance Sheet; (ii) all assets referred to in Parts 2.1,
2.7 and 2.9 of the Disclosure Schedule and all of the Company's rights under the
Contracts identified in Part 2.10 of the Disclosure Schedule; and (iii) all
other assets reflected in the Company's books and records as being owned by the
Company. Except as set forth in Part 2.6 of the Disclosure Schedule, all of said
assets are owned by the Company free and clear of any liens or other
Encumbrances, except for (x) any lien for current taxes not yet due and payable,
and (y) minor liens that have arisen in the ordinary course of business and that
do not (in any case or in the aggregate) materially detract from the value of
the assets subject thereto or materially impair the operations of the Company.
(b) Part 2.6 of the Disclosure Schedule identifies all assets that
are material to the business of the Company and that are being leased or
licensed to the Company.
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2.7 BANK ACCOUNTS; RECEIVABLES.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
information, including bank name, bank contact information, account number,
authorized signatories and most recent available balance, with respect to each
account maintained by or for the benefit of the Company at any bank or other
financial institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of the Company as of March 31, 1999. Except as set forth in
Part 2.7(b) of the Disclosure Schedule, all existing accounts receivable of the
Company (including those accounts receivable reflected on the Unaudited Interim
Balance Sheet that have not yet been collected and those accounts receivable
that have arisen since March 31, 1999 and have not yet been collected) (i)
represent valid obligations of customers of the Company arising from bona fide
transactions entered into in the ordinary course of business, (ii) are current
and will be collected in full when due, without any counterclaim or set off (net
of an allowance for doubtful accounts of $74,000 and of an allowance for the
sales returns of $50,000).
2.8 EQUIPMENT; LEASEHOLD.
(a) All material items of equipment and other tangible assets owned
by or leased to the Company are adequate for the uses to which they are being
put, are in good condition and repair (ordinary wear and tear excepted) and are
adequate for the conduct of the Company's business in the manner in which such
business is currently being conducted.
(b) The Company does not own any real property or any interest in
real property, except for the leasehold created under the real property lease
identified in Part 2.10 of the Disclosure Schedule.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Company Proprietary Asset registered with any Governmental Body
or for which an application has been filed with any Governmental Body, (i) a
brief description of such Proprietary Asset, and (ii) the names of the
jurisdictions covered by the applicable registration or application. Part
2.9(a)(ii) of the Disclosure Schedule identifies and provides a brief
description of all other Company Proprietary Assets owned by the Company. Part
2.9(a)(iii) of the Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset licensed to the Company by any Person
(except for any Proprietary Asset that is licensed to the Company under any
third party software license generally available to the public at a cost of less
than $10,000), and identifies the license agreement under which such Proprietary
Asset is being licensed to the Company. Except as set forth in Part 2.9(a)(iv)
of the Disclosure Schedule, the Company has good, valid and marketable title to
all of the Company Proprietary Assets identified in Parts 2.9(a)(i) and
2.9(a)(ii) of the Disclosure Schedule, free and clear of all liens and other
Encumbrances, and has a valid right to use all Proprietary Assets identified in
Part 2.9(a)(iii) of the Disclosure Schedule. Except as set forth in Part
2.9(a)(v) of the Disclosure Schedule, the Company is not obligated to make any
payment to any Person for the use of any Company
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Proprietary Asset. Except as set forth in Part 2.9(a)(vi) of the Disclosure
Schedule, the Company has not developed jointly with any other Person any
Company Proprietary Asset with respect to which such other Person has any
rights.
(b) The Company has taken all measures and precautions necessary to
protect and maintain the confidentiality and secrecy of all Company Proprietary
Assets (except Company Proprietary Assets whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the value of all
Company Proprietary Assets. Except as set forth in Part 2.9(b) of the Disclosure
Schedule, the Company has not (other than pursuant to license agreements
identified in Part 2.10 of the Disclosure Schedule) disclosed or delivered to
any Person, or permitted the disclosure or delivery to any Person of, (i) the
source code, or any portion or aspect of the source code, of any Company
Proprietary Asset, or (ii) the object code, or any portion or aspect of the
object code, of any Company Proprietary Asset.
(c) None of the Company Proprietary Assets infringes or conflicts
with any Proprietary Asset owned or used by any other Person. The Company is not
infringing, misappropriating or making any unlawful use of, and the Company has
not at any time infringed, misappropriated or made any unlawful use of, or
received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement, misappropriation or
unlawful use of, any Proprietary Asset owned or used by any other Person. To the
best of the knowledge of the Company, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Company Proprietary
Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure Schedule:
(i) each Company Proprietary Asset conforms in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of the Company; and (ii)
there has not been any claim by any customer or other Person alleging that any
Company Proprietary Asset (including each version thereof that has ever been
licensed or otherwise made available by the Company to any Person) does not
conform in all material respects with any specification, documentation,
performance standard, representation or statement made or provided by or on
behalf of the Company, and, to the best of the knowledge of the Company, there
is no basis for any such claim.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Company to conduct its business in the manner in
which such business has been and is being conducted. Except as set forth in Part
2.9(e) of the Disclosure Schedule, (i) the Company has not licensed any of the
Company Proprietary Assets to any Person on an exclusive basis, and (ii) the
Company has not entered into any covenant not to compete or Contract limiting
its ability to exploit fully any of its Proprietary Assets or to transact
business in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure Schedule,
(i) all current and former employees of the Company have executed and delivered
to the Company an agreement (containing no exceptions to or exclusions from the
scope of its coverage) that is substantially identical to the form of
Confidential Information and Invention Assignment Agreement previously delivered
to Parent, and (ii) all current and former consultants and
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independent contractors to the Company have executed and delivered to the
Company an agreement (containing no exceptions to or exclusions from the scope
of its coverage) that is substantially identical to the form of Confidential
Information and Invention Assignment Agreement previously delivered to Parent.
No person not subject to any such agreement has made any material contribution
to the Company Proprietary Assets.
(g) Except as set forth in Part 2.9(g)(i) of the Disclosure
Schedule, each computer, item of computer related hardware, computer program and
other item of software (whether installed on a computer or on any other piece of
equipment, including firmware) that is owned, licensed or used by the Company
for its internal business operations is Year 2000 Compliant. Except as set forth
in Part 2.9(g)(ii) of the Disclosure Schedule, each computer program and other
item of software that has been designed, developed, sold, licensed or otherwise
made available to any Person by the Company is Year 2000 Compliant. Except as
set forth in Part 2.9(g)(iii) of the Disclosure Schedule, the Company has
conducted sufficient Year 2000 compliance testing for each computer, item of
computer related hardware, computer program and item of software referred to in
the preceding two sentences to be able to determine whether such computer, item
of computer related hardware, computer program and item of software is Year 2000
Compliant, and has obtained warranties or other written assurances from each of
its suppliers to the effect that the products and services provided by such
suppliers to the Company is Year 2000 Compliant. As used in this Section 2.9,
"Year 2000 Compliant" means, with respect to a computer, item of computer
related hardware, computer program or other item of software (i) the functions,
calculations, and other computing processes of the computer, program or software
(collectively, "Processes") perform in a consistent and correct manner without
interruption regardless of the date on which the Processes are actually
performed and regardless of the date input to the applicable computer system,
whether before, on, or after January 1, 2000; (ii) the computer, program or
software accepts, calculates, compares, sorts, extracts, sequences, and
otherwise processes date inputs and date values, and returns and displays date
values, in a consistent and correct manner regardless of the dates used whether
before, on, or after January 1, 2000; (iii) the computer, program or software
accepts and responds to year input, if any, in a manner that resolves any
ambiguities as to century in a defined, predetermined, and appropriate manner;
(iv) the computer, program or software stores and displays date information in
ways that are unambiguous as to the determination of the century; and (v) leap
years will be determined by the following standard (A) if dividing the year by 4
yields an integer, it is a leap year, except for years ending in 00, but (B) a
year ending in 00 is a leap year if dividing it by 400 yields an integer.
Notwithstanding the foregoing, the Company's computers, items of computer
related hardware, computer programs and other items of software shall not be
considered to be non-Year 2000 Compliant to the extent that any adverse effects
are directly attributable to date data that is input or transmitted that is
incorrect, ambiguous or does not specify a century.
(h) Except with respect to evaluation or trial copies, no product,
system, program or software module designed, developed, sold, licensed or
otherwise made available by the Company to any Person contains any "back door,"
"time bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
software routines or hardware components designed to permit unauthorized access
or to disable or erase software, hardware or data without the consent of the
user.
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2.10 CONTRACTS.
(a) Part 2.10 of the Disclosure Schedule identifies:
(i) each Company Contract relating to the employment of, or
the performance of services by, any employee, consultant or independent
contractor; any Contract pursuant to which the Company is or may become
obligated to make any severance, termination or similar payment to any current
or former employee or director; and any Contract pursuant to which the Company
is or may become obligated to make any bonus or similar payment (other than
payments in respect of salary) to any current or former employee or director;
(ii) each Company Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Proprietary Asset (other than for purchase orders and Express Hosting Agreements
entered into in the ordinary course of business consistent with past practice);
(iii) each Company Contract imposing any restriction on the
Company's right or ability (A) to compete with any other Person, (B) to acquire
any product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or (C)
develop or distribute any technology;
(iv) each Company Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) each Company Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) each Company Contract relating to the creation of any
Encumbrance with respect to any asset of the Company;
(vii) each Company Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Company Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(ix) each Company Contract relating to the purchase or sale of
any product or other asset by or to, or the performance of any services by or
for, any Related Party (as defined in Section 2.18);
(x) any other Company Contract that was entered into outside
the ordinary course of business or was inconsistent with the Company's past
practices;
(xi) any other Company Contract that has a term of more than
60 days and that may not be terminated by the Company (without penalty) within
60 days after the delivery of a termination notice by the Company;
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(xii) any Contract which provides for indemnification of any
officer, director, employee or agent;
(xiii) any other Company Contract that contemplates or
involves (A) the payment or delivery of cash or other consideration in an amount
or having a value in excess of $10,000 in the aggregate, or (B) the performance
of services having a value in excess of $10,000 in the aggregate.
(xiv) any Contract imposing any confidentiality obligation on
the Company;
(xv) any Contract (not otherwise identified in clauses "(i)"
through "(xiv)" of this sentence) that could reasonably be expected to have a
material effect on the business, condition, capitalization, assets, liabilities,
operations, financial performance or prospects of the Company or to any of the
transactions contemplated by this Agreement; and
(xvi) any other Contract, if a breach of such Contract could
reasonably be expected to have a Material Adverse Effect on the Company.)
(Contracts in the respective categories described in clauses "(i)" through
"(xvi)" above are referred to in this Agreement as "Material Contracts.")
(b) The Company has delivered to Parent accurate and complete
copies of all written Contracts identified in Part 2.10 of the Disclosure
Schedule, including all amendments thereto. Part 2.10 of the Disclosure Schedule
provides an accurate description of the terms of each Company Contract that is
not in written form. Each Contract identified in Part 2.10 of the Disclosure
Schedule is valid and in full force and effect, and, to the best of the
knowledge of the Company, is enforceable by the Company in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 2.10 of the Disclosure Schedule:
(i) the Company has not violated or breached, or committed any
default under, any Company Contract, and, to the best of the knowledge of the
Company, no other Person has violated or breached, or committed any default
under, any Company Contract;
(ii) to the best of the knowledge of the Company, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or could reasonably be expected to, (A) result in a
violation or breach of any of the provisions of any Company Contract, (B) give
any Person the right to declare a default or exercise any remedy under any
Company Contract, (C) give any Person the right to accelerate the maturity or
performance of any Company Contract, or (D) give any Person the right to cancel,
terminate or modify any Company Contract;
(iii) since December 31, 1997, the Company has not received
any notice or other communication regarding any actual or possible violation or
breach of, or default
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under, any Company Contract that has had, or is reasonably likely to have, a
Material Adverse Effect on the Company; and
(iv) the Company has not waived any of its material rights
under any Material Contract.
(d) No Person is renegotiating, or has a right pursuant to the
terms of any Company Contract to renegotiate, any amount paid or payable to the
Company under any Material Contract or any other material term or provision of
any Material Contract.
(e) The Contracts identified in Part 2.10 of the Disclosure
Schedule collectively constitute all of the Contracts necessary to enable the
Company to conduct its business in the manner in which its business is currently
being conducted.
(f) Part 2.10 of the Disclosure Schedule identifies and provides a
brief description of each proposed Contract as to which any bid, offer, award,
written proposal, term sheet or similar document has been submitted or received
by the Company since January 1, 1999.
(g) Part 2.10 of the Disclosure Schedule provides an accurate
description and breakdown of the Company's backlog under Company Contracts.
(h) The Company has entered into no Government Contracts.
2.11 LIABILITIES. The Company has no accrued, contingent or other
liabilities of any nature, either matured or unmatured (whether or not required
to be reflected in financial statements in accordance with generally accepted
accounting principles, and whether due or to become due), except for: (a)
liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; (b) accounts payable, accrued salaries or other
immaterial liabilities that have been incurred by the Company since March 31,
1999 in the ordinary course of business and consistent with the Company's past
practices; (c) liabilities under the Company Contracts identified in Part 2.10
of the Disclosure Schedule, to the extent the nature and magnitude of such
liabilities can be specifically ascertained by reference to the text of such
Company Contracts; and (d) the liabilities identified in Part 2.11 of the
Disclosure Schedule.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company is, and has at all
times since the Company's inception been, in compliance with all applicable
Legal Requirements, except where the failure to comply with such Legal
Requirements has not had and will not have a Material Adverse Effect on the
Company. Except as set forth in Part 2.12 of the Disclosure Schedule, since the
Company's inception, the Company has not received any notice or other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Company, and the
Company has delivered to Parent accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. The
Governmental Authorizations identified in Part
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2.13 of the Disclosure Schedule are valid and in full force and effect, and
collectively constitute all Governmental Authorizations necessary to enable the
Company to conduct its business in the manner in which its business is currently
being conducted. The Company is, and at all times since the Company's inception
has been, in substantial compliance with the terms and requirements of the
respective Governmental Authorizations identified in Part 2.13 of the Disclosure
Schedule. Since the Company's inception, the Company has not received any notice
or other communication from any Governmental Body regarding (a) any actual or
possible violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.14 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
Company with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "Company Returns") (i) have been or will be
filed on or before the applicable due date (including any extensions of such due
date), and (ii) have been, or will be when filed, accurately and completely
prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the Closing Date have been or will be paid on or before the Closing Date. The
Company has delivered to Parent accurate and complete copies of all Company
Returns filed since 1994.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. The Company
will establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period from
March 31, 1999 through the Closing Date, and the Company will disclose the
dollar amount of such reserves to Parent on or prior to the Closing Date.
(c) No Company Return relating to income Taxes has ever been
examined or audited by any Governmental Body. Except as set forth in Part 2.14
of the Disclosure Schedule, there have been no examinations or audits of any
Company Return. The Company has delivered to Parent accurate and complete copies
of all audit reports and similar documents (to which the Company has access)
relating to the Company Returns. Except as set forth in Part 2.14 of the
Disclosure Schedule, no extension or waiver of the limitation period applicable
to any of the Company Returns has been granted (by the Company or any other
Person), and no such extension or waiver has been requested from the Company.
(d) Except as set forth in Part 2.14 of the Disclosure Schedule,
no claim or Proceeding is pending or has been threatened against or with respect
to the Company in respect of any Tax. There are no unsatisfied liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by the Company with respect to any Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by the Company and with respect
to which adequate reserves for payment have been established). There are no
liens for Taxes upon any of the assets of the Company except liens for current
Taxes not yet due and payable. The Company has not entered
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into or become bound by any agreement or consent pursuant to Section 341(f) of
the Code or any comparable provisional state or foreign Tax laws. The Company
has not been, and the Company will not be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of the Company that, considered individually or
considered collectively with any other such Contracts, will, or could reasonably
be expected to, give rise directly or indirectly to the payment of any amount
that would not be deductible pursuant to Section 280G or Section 162 of the Code
or any comparable provisional state or foreign Tax laws, other than payments for
which shareholder approval meeting the requirements of Section 280G(b)(5) of the
Code are obtained prior to the Closing Date. The Company is not, and has never
been, a party to or bound by any tax indemnity agreement, tax sharing agreement,
tax allocation agreement or similar Contract.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by the Company for
the benefit of any current or former employee of the Company ("Employee"),
except for Plans which would not require the Company to make payments or provide
benefits having a value in excess of $25,000 in the aggregate.
(b) Except as set forth in Part 2.15(a) of the Disclosure
Schedule, the Company does not maintain, sponsor or contribute to, and, to the
best of the knowledge of the Company, has not at any time in the past
maintained, sponsored or contributed to, any employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Merger Subtitles of ERISA) for the benefit of Employees or former
Employees (a "Pension Plan").
(c) The Company maintains, sponsors or contributes only to those
employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Merger Subtitles of ERISA)
for the benefit of Employees or former Employees which are described in Part
2.15(c) of the Disclosure Schedule (the "Welfare Plans"), none of which is a
multiemployer plan (within the meaning of Section 3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered to
Parent:
(i) an accurate and complete copy of such Plan (including all
amendments thereto);
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(ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Plan for the last two years;
(iii) an accurate and complete copy of the most recent summary
plan description, together with each Summary of Material Modifications, if
required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete copies of
the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating to
such Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-loss agreements, investment management agreements,
subscription and participation agreements and recordkeeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) The Company is not required to be, and, to the best of the
knowledge of the Company, has never been required to be, treated as a single
employer with any other Person under Section 4001(b)(1) of ERISA or Section
414(b), (c), (m) or (o) of the Code. The Company has never been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code. The
Company has never made a complete or partial withdrawal from a multiemployer
plan, as such term is defined in Section 3(37) of ERISA, resulting in
"withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(f) The Company does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law) in a
manner that would affect any Employee.
(g) Except as set forth in Part 2.15(g) of the Disclosure
Schedule, no Welfare Plan provides death, medical or health benefits (whether or
not insured) with respect to any current or former Employee after any such
Employee's termination of service (other than (i) benefit coverage mandated by
applicable law, including coverage provided pursuant to Section 4980B of the
Code, (ii) deferred compensation benefits accrued as liabilities on the
Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which are
borne by current or former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
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(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination from the Internal
Revenue Service, and the Company is not aware of any reason why any such
determination letter could be revoked.
(k) Except as set forth in Part 2.15(k) of the Disclosure
Schedule, neither the execution, delivery or performance of this Agreement, nor
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will result in any payment (including any bonus, golden
parachute or severance payment) to any current or former Employee or director of
the Company (whether or not under any Plan), or materially increase the benefits
payable under any Plan, or result in any acceleration of the time of payment or
vesting of any such benefits.
(l) Part 2.15(l) of the Disclosure Schedule contains a list of all
salaried employees of the Company as of the date of this Agreement, and
correctly reflects, in all material respects, their salaries, any other
compensation payable to them (including compensation payable pursuant to bonus,
deferred compensation or commission arrangements), their dates of employment and
their positions. The Company is not a party to any collective bargaining
contract or other Contract with a labor union involving any of its Employees.
All of the Company's employees are "at will" employees.
(m) Part 2.15(m) of the Disclosure Schedule identifies each
Employee who is not fully available to perform work because of disability or
other leave and sets forth the basis of such leave and the anticipated date of
return to full service.
(n) The Company is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(o) Except as set forth in Part 2.15(o) of the Disclosure
Schedule, the Company has good labor relations, and has no knowledge of any
facts indicating that (i) the consummation of the Merger or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on the Company's labor relations, or (ii) any of the Company's employees intends
to terminate his or her employment with the Company.
2.16 ENVIRONMENTAL MATTERS. The Company is in compliance in all
material respects with all applicable Environmental Laws, which compliance
includes the possession by the Company of all permits and other Governmental
Authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof. The Company has not received any notice or
other communication (in writing or otherwise), whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that the Company is not in
compliance with any Environmental Law, and, to the best of the knowledge of the
Company, there are no circumstances that may prevent or interfere with the
Company's compliance with any Environmental Law in the future. To the best of
the knowledge of the Company (a) all
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property that is leased to, controlled by or used by the Company, and all
surface water, groundwater and soil associated with or adjacent to such property
is free of any material environmental contamination of any nature, (b) none of
the property leased to, controlled by or used by the Company contains any
underground storage tanks, asbestos, equipment using PCBs, underground injection
xxxxx, and (c) none of the property leased to, controlled by or used by the
Company contains any septic tanks in which process wastewater or any Materials
of Environmental Concern have been disposed. The Company has never sent or
transported, or arranged to send or transport, any Materials of Environmental
Concern to a site that, pursuant to any applicable Environmental Law, (i) has
been placed on the "National Priorities List" of hazardous waste sites or any
similar state list, (ii) is otherwise designated or identified as a potential
site for remediation, cleanup, closure or other environmental remedial activity,
or (iii) is subject to a Legal Requirement to take "removal" or "remedial"
action as detailed in any applicable Environmental Law or to make payment for
the cost of cleaning up the site. No current or prior owner of any property
leased or controlled by the Company has received any notice or other
communication (in writing or otherwise), whether from a Government Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or the Company is not in compliance with any Environmental Law. All
Governmental Authorizations currently held by the Company pursuant to
Environmental Laws are identified in Part 2.16 of the Disclosure Schedule. (For
purposes of this Section 2.16: (i) "Environmental Law" means any federal, state,
local or foreign Legal Requirement relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern; and (ii) "Materials of Environmental
Concern" include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now or
hereafter regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment.)
2.17 INSURANCE. Part 2.17 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of the
Company and identifies any material claims made thereunder, and the Company has
delivered to Parent accurate and complete copies of the insurance policies
identified on Part 2.17 of the Disclosure Schedule. Each of the insurance
policies identified in Part 2.17 of the Disclosure Schedule is in full force and
effect. Since the Company's inception, the Company has not received any notice
or other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any claim under any insurance policy, or (c) material adjustment in the
amount of the premiums payable with respect to any insurance policy.
2.18 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.18 of
the Disclosure Schedule: (a) no Related Party has, and no Related Party has at
any time since the Company's inception had, any direct or indirect interest in
any material asset used in or otherwise relating to the business of the Company;
(b) no Related Party is, or has at any time since the Company's inception been,
indebted to the Company; (c) since the Company's inception, no Related Party has
entered into, or has had any direct or indirect financial interest in, any
material Contract, transaction or business dealing involving the Company; (d) no
Related Party is competing, or has
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at any time since the Company's inception competed, directly or indirectly, with
the Company; and (e) no Related Party has any claim or right against the Company
(other than rights under Company Options and rights to receive compensation for
services performed as an employee of the Company). (For purposes of the Section
2.18 each of the following shall be deemed to be a "Related Party": (i) each
individual who is, or who has at any time since the Company's inception been, an
officer or director of the Company; (ii) each member of the immediate family of
each of the individuals referred to in clause "(i)" above; and (iii) any trust
or other Entity (other than the Company) in which any one of the individuals
referred to in clauses "(i)" and "(ii)" above holds (or in which more than one
of such individuals collectively hold), beneficially or otherwise, a material
voting, proprietary or equity interest.)
2.19 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.19 of the Disclosure Schedule,
there is no pending Legal Proceeding, and (to the best of the knowledge of the
Company no Person has threatened to commence any Legal Proceeding: (i) that
involves the Company or any of the assets owned or used by the Company or any
Person whose liability the Company has or may have retained or assumed, either
contractually or by operation of law; or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, the Merger or any of the other transactions contemplated by this
Agreement. To the best of the knowledge of the Company, except as set forth in
Part 2.19 of the Disclosure Schedule, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that could
reasonably be expected to, give rise to or serve as a basis for the commencement
of any such Legal Proceeding.
(b) Except as set forth in Part 2.19 of the Disclosure Schedule,
no Legal Proceeding has ever been commenced by or has ever been pending against
the Company.
(c) There is no order, writ, injunction, judgment or decree to
which the Company, or any of the assets owned or used by the Company, is
subject. To the best of the knowledge of the Company, no officer or other
employee of the Company is subject to any order, writ, injunction, judgment or
decree that prohibits such officer or other employee from engaging in or
continuing any conduct, activity or practice relating to the Company's business.
2.20 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under this Agreement; and the execution, delivery and
performance by the Company of this Agreement have been duly authorized by all
necessary action on the part of the Company and its board of directors, subject
only to approval of the Merger by the shareholders of the Company. The board of
directors of the Company (at a meeting duly called and held) has (a) determined
(pursuant to a unanimous vote of all members of the board of directors of the
Company) that the Merger is advisable and fair and in the best interests of the
Company and its shareholders, (b) authorized and approved (pursuant to a
unanimous vote of all members of the board of directors of the Company) the
execution, delivery and performance of this Agreement by the Company and
approved (pursuant to a unanimous vote of all members of the board of directors
of the Company) the Merger, (c) recommended (pursuant to a unanimous vote of all
members of the board of directors of the Company) the approval of this Agreement
and the Merger by the
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holders of Company's capital stock and directed that this Agreement and the
Merger be submitted for consideration by the Company's shareholders at the
Company Shareholders' Meeting (as defined in Section 5.2), and (d) adopted
(pursuant to a unanimous vote of all members of the board of directors of the
Company) a resolution having the effect of causing the Company not to be subject
to any state takeover law or similar Legal Requirement that might otherwise
apply to the Merger or any of the other transactions contemplated by this
Agreement. This Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.21 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.21 of
the Disclosure Schedule, neither (1) the execution, delivery or performance of
this Agreement or any of the other agreements referred to in this Agreement, nor
(2) the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will directly or indirectly (with or without notice or lapse
of time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of the Company's Articles of Incorporation or bylaws, or (ii)
any resolution adopted by the Company's shareholders, the Company's board of
directors or any committee of the Company's board of directors;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order, writ, injunction, judgment
or decree to which the Company, or any of the assets owned or used by the
Company, is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the Company's business
or to any of the assets owned or used by the Company;
(d) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any Company Contract that is
or would constitute a Material Contract, or give any Person the right to (i)
declare a default or exercise any remedy under any such Company Contract, (ii)
accelerate the maturity or performance of any such Company Contract, or (iii)
cancel, terminate or modify any such Company Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the Company
(except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of the Company).
Except as set forth in Part 2.21 of the Disclosure Schedule, the Company is not
and will not be required to make any filing with or give any notice to, or to
obtain any Consent from, any Person
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in connection with (x) the execution, delivery or performance of this Agreement
or any of the other agreements referred to in this Agreement, or (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.
2.22 FULL DISCLOSURE.
(a) This Agreement (including the Disclosure Schedule) does not,
and the certificate referred to in Section 6.5(o) will not, (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact, or (ii) omit to state any material fact necessary in order
to make the representations, warranties and information contained and to be
contained herein and therein (in the light of the circumstances under which such
representations, warranties and information were or will be made or provided)
not false or misleading.
(b) The information supplied by the Company for inclusion in the
information statement to be delivered to the Company's shareholders at the
Company Shareholders' Meeting will not, as of the date of the Information
Statement or as of the date of the Company Shareholders' Meeting (as defined in
Section 5.2), (i) contain any statement that is inaccurate or misleading with
respect to any material fact, or (ii) omit to state any material fact necessary
in order to make such information (in the light of the circumstances under which
it is provided) not false or misleading.
2.23 VOTE REQUIRED. The affirmative vote of the holders of (i) 66 2/3ds
of the shares of Company Common Stock outstanding on the record date for the
Company Shareholders' Meeting and (ii) 66 2/3ds of the shares of Company
Non-Voting Common Stock outstanding on the record date for the Company
Shareholders' Meeting (collectively, the "Required Company Shareholder Vote") is
the only vote of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement, the Merger and the other transactions
contemplated by this Agreement.
2.24 FINANCIAL ADVISOR. Except for Legacy Capital, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
any of the Acquired Corporations. The total of all fees, commissions and other
amounts that have been paid by the Company to Legacy Capital and all fees,
commissions and other amounts, whether paid in cash or equity, that may become
payable to Legacy Capital by the Company if the Merger is consummated will not
exceed 2% of the product of the Aggregate Parent Share Number multiplied by the
Parent Average Stock Price, plus all out-of-pocket expenses. The Company has
furnished to Parent accurate and complete copies of all agreements under which
any such fees, commissions or other amounts have been paid or may become payable
and all indemnification and other agreements related to the engagement of Legacy
Capital.
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3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant
to the Company as follows:
3.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and the State of Alabama, respectively, and has
all necessary power and authority: (a) to conduct its business in the manner in
which its business is currently being conducted; (b) to own and use its assets
in the manner in which its assets are currently owned and used; and (c) to
perform its obligations under all Contracts by which it is bound. Each of Parent
and Merger Sub is duly qualified to do business as a foreign corporation, and is
in good standing, under the laws of all jurisdictions where the nature of its
business requires such qualification and where the failure to be so qualified
would have a Material Adverse Effect on Parent.
3.2 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has delivered or made available to the Company,
including through the SEC XXXXX system, accurate and complete copies (excluding
copies of exhibits) of each report, registration statement (on a form other than
Form S-8) and definitive proxy statement filed by Parent with the SEC between
January 1, 1999 and the date of this Agreement (the "Parent SEC Documents"). As
of the time it was filed with the SEC (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i) each
of the Parent SEC Documents complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act (as the case
may be); and (ii) none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements contained in the Parent
SEC Documents: (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered, except as may be indicated in
the notes to such financial statements and (in the case of unaudited statements)
as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the consolidated financial position of
Parent and its subsidiaries as of the respective dates thereof and the
consolidated results of operations of Parent and its subsidiaries for the
periods covered thereby.
3.3 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement (including the contemplated issuance of
Parent Common Stock in the Merger in accordance with this Agreement) have been
duly authorized by all necessary action on the part of Parent and Merger Sub and
their respective boards of directors. No vote of Parent's stockholders is needed
to approve the Merger. This Agreement constitutes the legal, valid and binding
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obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
3.4 VALID ISSUANCE. Subject to Section 1.5(c), the Parent Common Stock
to be issued in the Merger will, when issued in accordance with the provisions
of this Agreement, be validly issued, fully paid and nonassessable.
3.5 ABSENCE OF CHANGES. Except as set forth in the SEC Documents, since
March 31, 1999 there has not been any material adverse change in Parent's
business, condition, capitalization, assets, liabilities, operations, financial
performance or prospects, and no event has occurred that will, or could
reasonably be expected to, have a Material Adverse Effect on Parent.
4. CERTAIN COVENANTS OF THE COMPANY
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Company's Representatives,
personnel and assets and to all existing books, records, Tax Returns, work
papers and other documents and information relating to the Company; and (b)
provide Parent and Parent's Representatives with copies of such existing books,
records, Tax Returns, work papers and other documents and information relating
to the Company, and with such additional financial, operating and other data and
information regarding the Company, as Parent may reasonably request. Without
limiting the generality of the foregoing, during the Pre-Closing Period, the
Company shall promptly provide Parent with copies of:
(a) all material operating and financial reports prepared by the
Company and its Subsidiaries for the Company's senior management, including (A)
copies of the unaudited monthly consolidated balance sheets of the Company and
the related unaudited monthly consolidated statements of operations, statements
of shareholders' equity and statements of cash flows and (B) copies of any sales
forecasts, marketing plans, development plans, discount reports, write-off
reports, hiring reports and capital expenditure reports prepared for the
Company's senior management;
(b) any written materials or communications sent by or on behalf
of the Company to its shareholders;
(c) any material notice, document or other communication sent by
or on behalf of the Company to any party to any Company Contract or sent to the
Company by any party to any Company Contract (other than any communication that
relates solely to routine commercial transactions between the Company and the
other party to any such Company Contract and that is of the type sent in the
ordinary course of business and consistent with past practices);
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(d) any notice, report or other document filed with or sent to any
Governmental Body in connection with the Merger or any of the other transactions
contemplated by this Agreement; and
(e) any material notice, report or other document received by the
Company from any Governmental Body.
4.2 OPERATION OF THE COMPANY'S BUSINESS. During the Pre-Closing Period:
(a) the Company shall conduct its business and operations in the
ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement;
(b) the Company shall use all reasonable efforts to preserve
intact its current business organization, keep available the services of its
current officers and employees and maintain its relations and goodwill with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with the Company;
(c) the Company shall keep in full force all insurance policies
identified in Part 2.17 of the Disclosure Schedule;
(d) the Company shall cause its officers to report regularly (but
in no event less frequently than weekly) to Parent concerning the status of the
Company's business;
(e) the Company shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock, and shall not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities (except that the Company may repurchase
Company Common Stock from former employees pursuant to the terms of existing
restricted stock purchase agreements);
(f) the Company shall not sell, issue or authorize the issuance of
(i) any capital stock or other security, (ii) any option or right to acquire any
capital stock or other security, or (iii) any instrument convertible into or
exchangeable for any capital stock or other security (except that the Company
shall be permitted (x) to grant stock options to employees in accordance with
its past practices and as contemplated by this agreement, and (y) to issue
Company Common Stock to employees upon the exercise of outstanding Company
Options);
(g) except as expressly provided in this Agreement, the Company
shall not amend or waive any of its rights under, or permit the acceleration of
vesting under, (i) any provision of its 1994 Incentive Stock Option Plan, (ii)
any provision of any agreement evidencing any outstanding Company Option, or
(iii) any provision of any restricted stock purchase agreement;
(h) The Company shall not amend or permit the adoption of any
amendment to the Company's Articles of Incorporation or bylaws, or effect or
permit the Company to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock
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split, division or subdivision of shares, reverse stock split, consolidation of
shares or similar transaction;
(i) the Company shall not form any subsidiary or acquire any
equity interest or other interest in any other Entity;
(j) the Company shall not make any capital expenditure, except for
capital expenditures that, when added to all other capital expenditures made on
behalf of the Company during the Pre-Closing Period, do not exceed $10,000 in
the aggregate;
(k) the Company shall not (i) enter into, or permit any of the
assets owned or used by it to become bound by, any Contract that is or would
constitute a Material Contract, or (ii) amend or prematurely terminate, or waive
or exercise any material right or remedy under, any such Contract;
(l) the Company shall not (i) acquire, lease or license any right
or other asset from any other Person, (ii) sell or otherwise dispose of, or
lease or license, any right or other asset to any other Person, or (iii) waive
or relinquish any right, except for assets acquired, leased, licensed or
disposed of by the Company pursuant to Contracts that are not Material
Contracts;
(m) the Company shall not (i) lend money to any Person (except
that the Company may make routine travel advances to employees in the ordinary
course of business) or (ii) incur or guarantee any indebtedness for borrowed
money;
(n) the Company shall not (i) establish, adopt or amend any
Employee Benefit Plan, (ii) pay any bonus or make any profit-sharing payment,
cash incentive payment or similar payment to, or increase the amount of the
wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees, or (iii)
hire any new employee;
(o) the Company shall not change any of its methods of accounting
or accounting practices in any material respect;
(p) the Company shall not make any Tax election;
(q) the Company shall not commence or settle any Legal Proceeding;
(r) the Company shall not agree or commit to take any of the
actions described in clauses "(e)" through "(q)" above.
Notwithstanding the foregoing, the Company may take any action described in
clauses "(e)" through "(r)" above if Parent gives its prior written consent to
the taking of such action by the Company.
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4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Company shall promptly
notify Parent in writing of:
(i) the discovery by the Company of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by the Company in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Company in this Agreement if (A) such representation or warranty had been
made as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) any breach of any covenant or obligation of the Company;
and
(iv) any event, condition, fact or circumstance that would
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required
to be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company shall promptly deliver to Parent an update to the
Disclosure Schedule specifying such change. No such update shall be deemed to
supplement or amend the Disclosure Schedule for the purpose of (i) determining
the accuracy of any of the representations and warranties made by the Company in
this Agreement, or (ii) determining whether any of the conditions set forth in
Section 6 has been satisfied.
4.4 NO NEGOTIATION. During the Pre-Closing Period, none of the Company,
any of its Representatives or any of its shareholders shall, directly or
indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal
or offer from any Person (other than Parent) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into
any agreement with, or provide any non-public information to, any Person (other
than Parent) relating to or in connection with a possible Acquisition
Transaction; or
(c) consider, entertain or accept any proposal or offer from any
Person (other than Parent) relating to a possible Acquisition Transaction.
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The Company shall promptly notify Parent in writing of any material inquiry,
proposal or offer relating to a possible Acquisition Transaction that is
received by the Company during the Pre-Closing Period.
5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (a) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Merger and the other transactions contemplated
by this Agreement, and (b) shall use all commercially reasonable efforts to
obtain all Consents (if any) required to be obtained (pursuant to any applicable
Legal Requirement or Contract, or otherwise) by such party in connection with
the Merger and the other transactions contemplated by this Agreement. The
Company shall (upon request) promptly deliver to Parent a copy of each such
filing made, each such notice given and each such Consent obtained by the
Company during the Pre-Closing Period.
5.2 COMPANY SHAREHOLDERS' MEETING. The Company shall, in accordance
with its Articles of Incorporation and bylaws and the applicable requirements of
the Alabama Business Corporation Act, call and hold a special meeting of its
shareholders as promptly as practicable for the purpose of permitting them to
consider and to vote upon and approve the Merger and this Agreement (the
"Company Shareholders' Meeting"). The Company Shareholders' Meeting will be held
as promptly as practicable and in any event within 10 business days after
execution of this agreement. The Company shall ensure that the Company
Shareholders' Meeting is called, noticed, convened, held and conducted, and that
all proxies solicited in connection with the Company Shareholders' Meeting are
solicited, in compliance with all applicable Legal Requirements. The Company's
obligation to call, give notice of, convene and hold the Company Shareholders'
Meeting in accordance with this Section 5.2 shall not be limited or otherwise
affected by the commencement, disclosure, announcement or submission of any
Superior Offer or other Acquisition Proposal, or by any withdrawal, amendment or
modification of the recommendation of the board of directors of the Company with
respect to the Merger.
5.3 STOCK OPTIONS.
(a) Subject to Section 5.3(b), at the Effective Time, all rights
with respect to Company Common Stock or Non-Voting Common Stock under each
Assumed Company Option then outstanding shall be converted into and become
rights with respect to Parent Common Stock, and Parent shall assume each such
Company Option in accordance with the terms (as in effect as of the closing
date) of the stock option plan under which it was issued and the stock option
agreement by which it is evidenced. From and after the Effective Time, (i) each
Assumed Company Option assumed by Parent may be exercised solely for shares of
Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to
each such Assumed Company Option shall be equal to the number of shares of
Company Common Stock subject to such Assumed Company Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, rounding down to the
nearest whole share, (iii) the per share exercise price under each such Assumed
Company Option shall be adjusted by dividing the per share exercise price under
such Company Option by the Exchange Ratio and rounding up to the nearest cent
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and (iv) any restriction on the exercise of any such Assumed Company Option
shall continue in full force and effect and the term, exercisability, vesting
schedule and other provisions of such Company Option shall otherwise remain
unchanged; provided, however, that each Assumed Company Option assumed by Parent
in accordance with this Section 5.3(a) shall, in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock split,
division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction subsequent to the Effective Time. Parent shall file with the SEC,
within 30 days after the date on which the Merger becomes effective, a
registration statement on Form S-8 relating to the shares of Parent Common Stock
issuable with respect to the Assumed Company Options, which may be legally
registered on a Form S-8.
(b) The Company shall take all action that may be necessary to
effectuate the provisions of this Section 5.3 and to ensure that, from and after
the Effective Time, holders of Company Options have no rights with respect
thereto other than those specifically provided in this Section 5.3.
5.4 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) the
Company shall not (and the Company shall not permit any of its Representatives
to) issue any press release or make any public statement regarding this
Agreement or the Merger, or regarding any of the other transactions contemplated
by this Agreement, without Parent's prior written consent, and (b) Parent will
use reasonable efforts to consult with the Company prior to issuing any press
release or making any public statement regarding the Merger.
5.5 BEST EFFORTS. During the Pre-Closing Period, (a) the Company shall
use its best efforts to cause the conditions set forth in Section 6 to be
satisfied on a timely basis, and (b) Parent and Merger Sub shall use their best
efforts to cause the conditions set forth in Section 7 to be satisfied on a
timely basis.
5.6 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. At or prior to the
Closing, the Company shall use all commercially reasonable efforts to cause each
of the persons identified on Exhibit F to execute and deliver to the Company and
Parent, at the Closing, an Employment Agreement and a Noncompetition Agreement
in a form acceptable to Parent.
5.7 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasure Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
5.8 LISTING. Parent shall use reasonable efforts to cause the shares of
Parent Common Stock being issued in the Merger to be approved for listing
(subject to notice of issuance) on the Nasdaq National Market.
5.9 RESIGNATION OF OFFICERS AND DIRECTORS. The Company shall use all
reasonable efforts to obtain and deliver to Parent on or prior to the Closing
the resignation of each officer and director of the Company.
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5.10 CERTAIN STOCK OPTION MATTERS. At the Closing, the Company shall
show evidence of the completion of the following actions:
(a) ASSUMED COMPANY OPTIONS WITH PERFORMANCE VESTING. Each of the
Assumed Company Options with performance vesting shall continue to vest in
accordance with the original terms of the respective option agreements and the
portions of such options that are already vested as of the Closing Date shall
remain vested; provided, however, that the unvested portion of Xx. Xxxxxxxx'x
option will remain unvested for a period of one year from the Closing Date
whereupon such option shall become fully vested; and provided further, that the
unvested portion of the options granted to Messrs. Xxxxxxxxx and Xxxxx shall
accelerate such that their respective options become fully vested prior to the
Closing. Any shares of Parent Common Stock issued upon the exercise of such
Assumed Company Options shall be Restricted Resale Stock.
(b) NEW ASSUMED COMPANY OPTIONS. The option grants issued as of
February 1, 1999 to certain of the Company's key employees for an aggregate of
1,185,000 shares of Company Common Stock shall have a vesting schedule
reasonably acceptable to Parent. Such options shall have an exercise price of at
least $0.40 per share of Company Common Stock.
(c) INTRINSIC VALUE COMPANY OPTIONS. Prior to the Effective Time,
each Intrinsic Value Company Option shall have been (i) validly amended to
permit such options to be settled by the issuance by Company of additional
shares of Company Non-Voting Common Stock to the option holders, and (ii)
settled in such manner in accordance with the terms of such amended options and
the Company's amended 1994 Incentive Stock Option Plan.
(d) NON-COMPENSATORY COMPANY OPTIONS. Every Non-Compensatory
Option shall have been exercised in full or lapsed prior to the Effective Time;
no such options or warrants shall be outstanding as of the Effective Time. Any
shares of Parent Common Stock issued or issuable upon exercise of such Company
Options shall be Restricted Resale Stock.
5.11 SECURITYHOLDER REPRESENTATION STATEMENTS; APPOINTMENT OF PURCHASER
REPRESENTATIVE. Each securityholder of the Company who is to receive Parent
Common Stock in connection with this Agreement shall complete and execute a
securityholder representation statement, which shall, among other things,
provide certain representations and warranties to Parent, and appoint Xxxxxx X.
Xxxxx to serve as such securityholder's purchaser representative in the event
that such securityholder is not an "accredited investor." A form of such
securityholder representation statement is attached as Exhibit G to this
Agreement.
5.12 SECURITIES ACT EXEMPTION. The Parent Common Stock to be issued
pursuant to this Agreement initially will not be registered under the Securities
Act in reliance on the exemption set forth in Section 4(2) and Rule 506 of
Regulation D thereunder. In connection with the acquisition of Parent Common
Stock, each securityholder of the Company who is to receive Parent Common Stock
in connection with this Agreement shall represent to the Company, among other
things, that (i) such Company Shareholder is acquiring the Parent Common Stock
for investment purposes only and not with a view to, or for resale in connection
with, any "distribution" thereof as that term is used for purposes of the
Securities Act; (ii) such
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Company Shareholder is aware of Parent's business affairs and financial
condition and has sufficient information about Parent (together with such
securityholder's purchaser representative if applicable) to reach an informed
and knowledgeable decision to acquire Parent Common Stock; and (iii) the Company
Shareholder understands that the Parent Common Stock has not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
investment intent as expressed herein.
5.13 STOCK RESTRICTIONS. In addition to any legend imposed by
applicable state securities laws or by any contract that continues in effect
after the Effective Time, the certificates representing shares of Parent Common
Stock issued pursuant to this Agreement shall bear a restrictive legend (and
stop orders shall be placed against the transfer thereof with the Parent's
Transfer Agent), stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THEY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, OR AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT, OR A NO-ACTION
LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
The certificates representing shares of Parent Common Stock issued pursuant to
this Agreement that are Restricted Resale Stock shall bear a restrictive legend
(and stop orders shall be placed against the transfer thereof with the Parent's
Transfer Agent), stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH CERTAIN VOLUME
LIMITATIONS PURSUANT TO THE TERMS OF A CERTAIN AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION DATED JULY 22, 1999, A
COPY OF WHICH WILL BE PROVIDED TO THE HOLDER OF THIS
CERTIFICATE UPON REQUEST.
5.14 REGISTRATION ON FORM S-3. Parent shall use its commercially
reasonable efforts to file, within 30 days of the Closing Date, a registration
statement on Form S-3 with the Securities and Exchange Commission covering the
resale of shares of Parent Common Stock issued to Company Shareholders in
connection with the Merger. Any such registration shall be subject to the terms
and conditions set forth in Registration Rights Agreement attached hereto as
Exhibit I. All shares eligible for registration on the above-mentioned
registration statement shall be deemed Restricted Resale Stock.
5.15 XXXXXXX POST CLOSING STOCK ISSUANCE. After the Closing, Parent
shall issue to Xxxxx Xxxxxxx $146,104 (net of applicable withholding) of Parent
Common Stock, valued at the closing market price of Parent Common Stock on the
Nasdaq National Market on the date of the issuance, in consideration for the
cancellation of $146,104 of deferred salary owed by the
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Company to Xxxxx Xxxxxxx. Such shares shall be deemed Restricted Resale Stock
but shall not be subject to the lock-up agreement executed by Xxxxx Xxxxxxx in
connection with this Agreement.
5.16 BLUE SKY LAWS. Parent shall take such steps as may be necessary to
comply with the securities blue sky laws of all jurisdictions that are
applicable to the issuance of the Parent Common Stock pursuant to hereto. The
Company shall use its best efforts to assist Parent as may be necessary to
comply with the securities blue sky laws of all jurisdictions that are
applicable in connection with the issuance of the Parent Common Stock pursuant
to hereto.
5.17 RETENTION OPTIONS. Parent agrees to grant to former employees of
the Company who are then current employees of Parent within 90 days of the
Closing Date non-qualified options to purchase an aggregate of 900,000 shares of
Parent Common Stock with a per share exercise price equal to Parent's closing
stock price as reported on The Nasdaq National Market on the date of grant and
with terms substantially equivalent to options granted pursuant to Parent's
current option plan. The distribution of the options shall be to mutually agreed
upon by Parent and Xxxxxx Xxxxxxxx.
5.18 PERSONAL GUARANTEES. Parent and the Company will cooperate to
remove any Company stockholders as guarantors on the Company's existing bank
lines of credit. Parent will indemnify any such guarantors against any related
liabilities or obligations until such releases are obtained.
5.19 USE OF WARRANT PROCEEDS. Parent agrees to apply the proceeds from
the exercise of the Non-Compensatory Company Options in the following manner:
(i) retire all outstanding debt for money borrowed prior to the Closing, (ii)
payment of the $300,000 cash portion of the Legacy Capital fee, and (iii)
payment of other transaction expenses.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger
and otherwise consummate the transactions contemplated by this Agreement are
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions:
6.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
made by the Company in this Agreement and in each of the other agreements and
instruments delivered to Parent in connection with the transactions contemplated
by this Agreement shall have been accurate in all material respects as of the
date of this Agreement, and shall be accurate in all material respects as of the
Scheduled Closing Time as if made at the Scheduled Closing Time.
6.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
the Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all respects.
6.3 SHAREHOLDER APPROVAL. The principal terms of the Merger shall have
been duly approved by the Required Company Shareholder Vote.
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6.4 CONSENTS. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement (including
the Consents identified in Part 2.21 of the Disclosure Schedule) shall have been
obtained and shall be in full force and effect.
6.5 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have
received the following agreements and documents, each of which shall be in full
force and effect:
(a) Voting Agreements in the form of Exhibit B-1, executed by the
Persons identified on Exhibit B-2;
(b) Employment Agreements in a form acceptable to Parent executed
by the individuals identified on Exhibit F;
(c) Noncompetition Agreements in a form acceptable to Parent
executed by the individuals identified on Exhibit F;
(d) Securityholder Representation Statements in the form of Exhibit
G, executed by each of the Company's securityholders;
(e) confidential invention and assignment agreements, reasonably
satisfactory in form and content to Parent, executed by all employees of the
Company and by all consultants and independent contractors to the Company who
have not already signed such agreements;
(f) the statement referred to in Section 5.7, executed by the
Company;
(g) the Escrow Agreement in the form of Exhibit J, executed by the
Securityholder Agent on behalf of each of the Company Shareholders, and also
executed by the escrow agent (the "Escrow Agreement:);
(h) an estoppel certificate, dated as of a date not more than five
days prior to the Closing Date and satisfactory in form and content to Parent,
executed by REFCO, LLC;
(i) a legal opinion of Sirotte & Permutt, dated as of the Closing
Date, in a form reasonably acceptable to Parent and its counsel;
(j) the Registration Rights Agreement in the form of Exhibit I,
executed by the Securityholder Agent on behalf of each of the Company
Shareholders (the "Registration Rights Agreement");
(k) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that each of the representations and warranties set
forth in Section 2 is accurate in all respects as of the Closing Date as if made
on the Closing Date and that the conditions set forth in Sections 6.1, 6.2, 6.3,
6.4, 6.8, and 6.9 have been duly satisfied;
(l) written resignations of all officers and directors of the
Company, effective as of the Effective Time;
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(m) evidence acceptable to Parent that certain amounts owing to
Xxxxx Xxxxxxx have been forgiven or retired and that Xx. Xxxxxxx has exercised
certain options to purchase shares of Non-Voting Common Stock;
(n) a market stand-off agreement executed by Xxxxx Xxxxxxx agreeing
to not to sell or dispose of his shares of Parent Company Common Stock, other
than those shares issuable pursuant to Section 5.15, during the period
commencing with the filing by Parent of a registration statement for an
underwritten public offering and ending on such date as may be specified by the
managing underwriter of such offering, provided that such period shall not
exceed the period agreed to by Parent's directors and officers with respect to
shares owned by them in connection with such offering; and
(o) articles of merger executed by the Company and Merger Sub to
filed with the Secretary of State of the State of Alabama in accordance with
Section 1.3.
6.6 FIRPTA COMPLIANCE. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.7(b).
6.7 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
6.8 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.9 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened
to commence any Legal Proceeding challenging or seeking the recovery of a
material amount of damages in connection with the Merger or seeking to prohibit
or limit the exercise by Parent of any material right pertaining to its
ownership of stock of the Surviving Corporation.
6.10 EMPLOYEES. None of the individuals identified on Exhibit H shall
have ceased to be employed by, or expressed an intention to terminate their
employment with, the Company.
6.11 SECURITIES EXEMPTION. The issuance of Parent Common Stock in
accordance with this Agreement shall be exempt from registration under the
Securities Act of 1933, as amended, pursuant to Rule 506 of Regulation D.
6.12 DIRECTOR AND OFFICER INSURANCE. The Company shall have obtained
and show evidence of a tail insurance policy that is reasonably acceptable to
Parent covering the Company's directors and officers for acts and omissions of
such directors and officers that occurred prior to the Closing.
6.13 DISSENTERS' RIGHTS. Holders of not more than 5% of the outstanding
shares of the Company's capital stock shall not have exercised, nor shall they
have any continued right to
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exercise, appraisal, dissenters' or similar rights under applicable law with
respect to their shares by virtue of the Merger.
6.14 DEBT PAYOFF. The Company shall have paid off all outstanding debt
for money borrowed.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. The representations and warranties
made by Parent and Merger Sub in this Agreement shall have been accurate in all
material respects as of the date of this Agreement, and shall be accurate in all
material respects as of the Scheduled Closing Time as if made at the Scheduled
Closing Time.
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all respects.
7.3 DOCUMENTS. The Company shall have received the following documents:
(a) a legal opinion of Xxxxxx Godward LLP, dated as of the Closing
Date, in form reasonably acceptable to Company and its counsel.
7.4 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing (subject to notice of issuance) on
the Nasdaq National Market.
7.5 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of Parent or Merger Sub to
comply with or perform any covenant or obligation of Parent or Merger Sub set
forth in this Agreement);
(b) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result
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of any failure on the part of the Company to comply with or perform any covenant
or obligation set forth in this Agreement or in any other agreement or
instrument delivered to Parent);
(c) by Parent at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by the Company at or after the Scheduled Closing Time if any
condition set forth in Section 7 has not been satisfied by the Scheduled Closing
Time;
(e) by Parent if the Closing has not taken place on or before
August 15, 1999 (other than as a result of any failure on the part of Parent to
comply with or perform any covenant or obligation of Parent set forth in this
Agreement);
(f) by the Company if the Closing has not taken place on or before
August 15, 1999 (other than as a result of the failure on the part of the
Company to comply with or perform any covenant or obligation set forth in this
Agreement or in any other agreement or instrument delivered to Parent); or
(g) by the mutual consent of Parent and the Company.
(h) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger;
(i) by the Company if the Parent Average Stock Price as of the
Scheduled Closing Time is less than $7.00.
8.2 TERMINATION PROCEDURES. If Parent wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), Parent
shall deliver to the Company a written notice stating that Parent is terminating
this Agreement and setting forth a brief description of the basis on which
Parent is terminating this Agreement. If the Company wishes to terminate this
Agreement pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(f), the
Company shall deliver to Parent a written notice stating that the Company is
terminating this Agreement and setting forth a brief description of the basis on
which the Company is terminating this Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1 and 8.2, all further obligations of the parties under this Agreement
shall terminate; provided, however, that: (a) neither the Company nor Parent
shall be relieved of any obligation or liability arising from any prior breach
by such party of any provision of this Agreement; (b) the parties shall, in all
events, remain bound by and continue to be subject to the provisions set forth
in Section 10; and (c) the Company shall, in all events, remain bound by and
continue to be subject to Section 5.4.
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9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) The representations and warranties made by the Company
(including the representations and warranties set forth in Section 2) shall
survive the Closing and shall expire on the first anniversary of the Closing
Date; provided, however, that if, at any time prior to the first anniversary of
the Closing Date, any Indemnitee (acting in good faith) delivers to the
Securityholders' Agent a written notice alleging the existence of an inaccuracy
in or a breach of any of the representations and warranties made by the Company
(and setting forth in reasonable detail the basis for such Indemnitee's belief
that such an inaccuracy or breach may exist) and asserting a claim for recovery
under Section 9.2 in accordance with the Escrow Agreement based on such alleged
inaccuracy or breach, then the claim asserted in such notice shall survive the
first anniversary of the Closing until such time as such claim is fully and
finally resolved. All representations and warranties made by Parent and Merger
Sub shall survive the Closing and shall expire nine (9) months following the
Closing Date, and any liability of Parent or Merger Sub with respect to such
representations and warranties shall thereafter cease.
(b) The representations, warranties, covenants and obligations of
the Company, and the rights and remedies that may be exercised by the
Indemnitees, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, any of
the Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company in this Agreement.
9.2 INDEMNIFICATION BY COMPANY SHAREHOLDERS.
(a) From and after the Effective Time (but subject to Section
9.1(a)), the Company Shareholders, jointly and severally, shall hold harmless
and indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages which are directly or
indirectly suffered or incurred by any of the Indemnitees or to which any of the
Indemnitees may otherwise become subject (regardless of whether or not such
Damages relate to any third-party claim) and which arise from or as a result of,
or are directly or indirectly connected with: (i) any inaccuracy in or breach of
any representation or warranty set forth in Section 2 or in the officers'
closing certificate (without giving effect to any "Material Adverse Effect" or
other materiality qualification or any similar qualification contained or
incorporated directly or indirectly in such representation or warranty, but
giving effect to any update to the Disclosure Schedule delivered by the Company
to Parent prior to the Closing); (ii) any breach of any covenant or obligation
of the Company (including the covenants set forth in Sections 4 and 5); (iii)
any Excluded Expenses to the extent not offset as of the Closing against the
Aggregate Parent Share Number pursuant to Section 1.5 above; (iv) those matters
set forth in the supplemental letter dated as of the date hereof between Parent
and Company, (v) those matters referred to in Section 2.9(a)(iv), 2.12, 2.14 and
2.15(h) of the Disclosure Scehdule or (vi) any Legal Proceeding relating to any
inaccuracy or breach or expense of the type referred
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to in clause (i), (ii), (iii), (iv) or (v) above (including any Legal Proceeding
commenced by any Indemnitee for the purpose of enforcing any of its rights under
this Section 9).
(b) The Company Shareholders acknowledge and agree that, if the
Surviving Corporation suffers, incurs or otherwise becomes subject to any
Damages as a result of or in connection with any inaccuracy in or breach of any
representation, warranty, covenant or obligation, then (without limiting any of
the rights of the Surviving Corporation as an Indemnitee) Parent shall also be
deemed, by virtue of its ownership of the stock of the Surviving Corporation, to
have incurred Damages as a result of and in connection with such inaccuracy or
breach.
9.3 THRESHOLD; CEILING.
(a) The Company Shareholders shall not be required to make any
indemnification payment pursuant to Section 9.2(a) for any inaccuracy in or
breach of any of the representations and warranties set forth in Section 2 until
such time as the total amount of all Damages (including the Damages arising from
such inaccuracy or breach and all other Damages arising from any other
inaccuracies in or breaches of any representations or warranties) that have been
directly or indirectly suffered or incurred by any one or more of the
Indemnitees, or to which any one or more of the Indemnitees has or have
otherwise become subject, exceeds $800,000 in the aggregate. If the total amount
of such Damages exceeds $800,000, then the Indemnitees shall be entitled to be
indemnified against and compensated and reimbursed for all of such Damages. The
provisions of this Section 9.3(a) shall not apply to any claims made by any
Indemnitee regarding reimbursement of costs incurred in connection with Excluded
Expenses.
(b) With the exception of claims based upon fraud, the maximum
liability of each Company Shareholder under Section 9.2(a) for breaches of the
representations and warranties set forth in Section 2 shall be equal to the
value of the shares of Parent Common Stock placed in escrow by such Company
Shareholders pursuant to Section 1.8 of this Agreement determined in accordance
with the terms of the Escrow Agreement.
9.4 EXCLUSIVE REMEDY. With the exception of claims based upon fraud,
from and after the Closing, recourse of Parent to the shares of Parent Common
Stock held in escrow pursuant to the Escrow Agreement shall be the sole and
exclusive remedy of Parent and the other Indemnitees for Damages for any matters
covered by this Article 9.
9.5 NO CONTRIBUTION. Each Company Shareholder waives, and acknowledges
and agrees that he shall not have and shall not exercise or assert (or attempt
to exercise or assert), any right of contribution, right of indemnity or other
right or remedy against the Surviving Corporation in connection with any
indemnification obligation or any other liability to which he may become subject
under or in connection with this Agreement or the Officers' Closing Certificate.
9.6 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which any of the Company
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Shareholders may become obligated to hold harmless, indemnify, compensate or
reimburse any Indemnitee pursuant to this Section 9, Parent shall have the
right, at its election, to proceed with the defense of such claim or Legal
Proceeding on its own with counsel reasonably acceptable to the Securityholders'
Agent (whose consent to such counsel shall not be unreasonably withheld). The
Company Shareholders, by and through the Securityholders' Agent, may
participate, through counsel chosen by Securityholders' Agent and at the expense
of the Company Shareholders, in (but not control) the defense of any such Legal
Proceeding. If Parent so proceeds with the defense of any such claim or Legal
Proceeding:
(a) all reasonable expenses relating to the defense of such claim
or Legal Proceeding shall be borne and paid exclusively by the Company
Shareholders;
(b) each Company Shareholder shall make available to Parent any
documents and materials in his possession or control that may be necessary to
the defense of such claim or Legal Proceeding; and
(c) Parent shall have the right to settle, adjust or compromise
such claim or Legal Proceeding with the consent of the Securityholders' Agent
(as defined in Section 10.1); provided, however, that such consent shall not be
unreasonably withheld.
Parent shall give the Securityholders' Agent prompt notice of the commencement
of any such Legal Proceeding against Parent or the Surviving Corporation;
provided, however, that any failure on the part of Parent to so notify the
Securityholders' Agent shall not limit any of the obligations of the Company
Shareholders under this Section 9 (except to the extent such failure materially
prejudices the defense of such Legal Proceeding).
9.7 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PARENT. No
Indemnitee (other than Parent or any successor thereto or assign thereof) shall
be permitted to assert any indemnification claim or exercise any other remedy
under this Agreement unless Parent (or any successor thereto or assign thereof)
shall have consented to the assertion of such indemnification claim or the
exercise of such other remedy.
10. MISCELLANEOUS PROVISIONS
10.1 SECURITYHOLDERS' AGENT. In the event that the Merger is approved,
effective upon such vote and without any further act of any shareholder, the
Company Shareholders shall be deemed to have approved, among other matters, the
indemnification and escrow terms set forth in Section 9, the terms of the Escrow
Agreement and the terms of the Registration Rights Agreement, and shall
irrevocably appoint Xxxxx Xxxxxxx as their agent for all purposes in connection
therewith (the "Securityholders' Agent"), including to give and receive notices
and communications, to authorize delivery to Parent of Parent Common Stock, cash
or other property from the Escrow Fund, to object to such deliveries, to agree
to, negotiate, enter into settlements and compromises of, and demand dispute
resolution pursuant to the Escrow Agreement and comply with orders of courts and
awards of arbitrators with respect to indemnification claims, and to take all
actions necessary or appropriate in the judgment of the Securityholders' Agent
for the accomplishment of the foregoing. Xxxxx Xxxxxxx hereby accepts his
appointment as the
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Securityholders' Agent. Parent shall be entitled to deal exclusively with the
Securityholders' Agent on all matters relating to Section 9, and shall be
entitled to rely conclusively (without further evidence of any kind whatsoever)
on any document executed or purported to be executed on behalf of any Company
Shareholder by the Securityholders' Agent (including, without limitation, the
execution of the Escrow Agreement and the Registration Rights Agreement on
behalf of the Company Shareholders) and on any other action taken or purported
to be taken on behalf of any Company Shareholder by the Securityholders' Agent,
as fully binding upon such Company Shareholder. If the Securityholders' Agent
shall die, become disabled or otherwise be unable to fulfill his
responsibilities as agent of the Company Shareholders, then the Company
Shareholders shall, in accordance with the Escrow Agreement, appoint a successor
agent and, promptly thereafter, shall notify Parent of the identity of such
successor. Any such successor shall become the "Securityholders' Agent" for
purposes of Section 9 and this Section 10.1. If for any reason there is no
Securityholders' Agent at any time, all references herein to the
Securityholders' Agent shall be deemed to refer to the Company Shareholders.
10.2 FURTHER ASSURANCES. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the transactions contemplated by this Agreement.
10.3 FEES AND EXPENSES. Each party to this Agreement shall bear and pay
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) the
investigation and review conducted by Parent and its Representatives with
respect to the Company's business (and the furnishing of information to Parent
and its Representatives in connection with such investigation and review), (b)
the negotiation, preparation and review of this Agreement (including the
Disclosure Schedule) and all agreements, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
transactions contemplated by this Agreement, (c) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated by this Agreement, and the obtaining of any
Consent required to be obtained in connection with any of such transactions, and
(d) the consummation of the Merger; provided, however, that upon the successful
Closing of the transactions contemplated by this Agreement, Parent agrees to pay
transaction expenses of Company Shareholders (without any adjustment to the
purchase price) in an amount equal to the lesser of (i) fifty percent (50%) of
the transaction expenses incurred by the Company (exclusive of any fees and
expenses paid to Legacy Capital) or (ii) $100,000. Transaction expenses not paid
by Parent shall be "Excluded Expenses." If Excluded Expenses are not paid in
cash by the Company Shareholders, the amount of such fees (i) shall reduce the
Aggregate Parent Share Number in accordance with Section 1.5 hereof or (ii)
shall be paid out of the Escrow Fund.
10.4 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
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10.5 LEGACY CAPITAL FEES. Upon the Closing, Legacy Capital shall be
entitled to receive a fee and expense reimbursements in the amount referred to
in Section 2.24 hereof. The Company shall pay Legacy Capital a $300,000 portion
of such fee (less the amount of any previous expense reimbursements) in cash.
The balance of such fee shall be paid in the form of that number of shares of
Parent Common Stock equal to the remaining fee divided by the Parent Average
Stock Price. Such shares shall be included in the S-3 registration statement
referred to in the Registration Rights Agreement attached hereto as Exhibit I.
Such shares shall be considered Restricted Resale Stock.
10.6 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
IF TO PARENT:
MessageMedia, Inc.
0000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (fax)
Attention: Chief Executive Officer
WITH A COPY TO:
Xxxxxx Godward LLP
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (fax)
Attention: Xxxxx X. Xxxxxxx, Esq.
IF TO THE COMPANY:
Revnet Systems, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
(000) 000-0000 (fax)
Attention: President
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WITH A COPY TO:
Sirote & Permutt, P.C.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
(000) 000-0000 (fax)
Attention: Xxxx X. Xxxxxx, Esq.
IF TO THE SECURITYHOLDERS' AGENT:
Xxxxx Xxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxx 00000
(000) 000-0000 (fax)
WITH A COPY TO:
Sirote & Permutt, P.C.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
(000) 000-0000 (fax)
Attention: Xxxx X. Xxxxxx, Esq.
10.7 CONFIDENTIALITY. Without limiting the generality of anything
contained in Section 5.4, on and at all times after the Closing Date, the
Company shall keep confidential, and shall not use or disclose to any other
Person, any non-public document or other non-public information in the Company's
possession that relates to the business of the Company or Parent.
10.8 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
10.9 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.11 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
Colorado (without giving effect to principles of conflicts of laws), except that
the Merger and matters of corporate governance shall be governed by the laws of
Alabama.
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10.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Company Shareholders and
their respective personal representatives, executors, administrators, estates,
heirs, successors and assigns (if any); Parent and its successors and assigns
(if any); and Merger Sub and its successors and assigns (if any). This Agreement
shall inure to the benefit of: the Company; the Company Shareholders (to the
extent set forth in Section 1.5); the holders of assumed Company Options (to the
extent set forth in Section 1.6); Parent; Merger Sub; the other Indemnitees; and
the respective successors and assigns (if any) of the foregoing. Parent may
freely assign any or all of its rights under this Agreement (including its
indemnification rights under Section 9 and the Escrow Agreement), in whole or in
part, to any other Person without obtaining the consent or approval of any other
party hereto or of any other Person.
10.13 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any breach or threatened
breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (b) an injunction restraining such breach or threatened
breach.
10.14 WAIVER.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.15 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
10.16 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
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10.17 PARTIES IN INTEREST. Except for the provisions of Sections 1.5,
1.6 and 9, none of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
10.18 ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof; provided, however, that the
non-disclosure agreements dated February 25, 1999 and March 30, 1999 shall not
be superseded by this Agreement and shall remain in effect in accordance with
its terms until the earlier of (a) the Effective Time, or (b) the date on which
such non-disclosure agreements are terminated in accordance with their terms.
10.19 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
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The parties hereto have caused this Agreement to be executed and delivered as of
July 22, 1999.
MESSAGEMEDIA, INC.,
a Delaware corporation
By: /s/Xxxxx Xxxxx
-------------------------------------
Print name: Xxxxx Xxxxx
Title: President
MM1 ACQUISITION CORP.,
an Alabama corporation
By: /s/Xxxxx Xxxxx
-------------------------------------
Print name: Xxxxx Xxxxx
Title: President
REVNET SYSTEMS, INC.
an Alabama corporation
By: /s/Xxxxx Xxxxxxx
-------------------------------------
Print name: Xxxxx Xxxxxxx
Title: Chairman
SECURITYHOLDERS' AGENT
By: /s/Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a
material portion of the Company's business or assets;
(b) the issuance, disposition or acquisition of (i) any capital
stock or other equity security of the Company (other than common stock
issued to employees of the Company, upon exercise of Company Options or
otherwise, in routine transactions in accordance with the Company's
past practices), (ii) any option, call, warrant or right (whether or
not immediately exercisable) to acquire any capital stock or other
equity security of the Company (other than stock options granted to
employees of the Company in routine transactions in accordance with the
Company's past practices), or (iii) any security, instrument or
obligation that is or may become convertible into or exchangeable for
any capital stock or other equity security of the Company; or
(c) any merger, consolidation, business combination, reorganization
or similar transaction involving the Company.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer,
proposal or inquiry (other than an offer or proposal by Parent) contemplating or
otherwise relating to any Acquisition Transaction.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Disclosure
Schedule), as it may be amended from time to time.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Company is a party; (b) by which the Company or any of its assets is
or may become bound or under which the Company has, or may become subject to,
any obligation; or (c) under which the Company has or may acquire any right or
interest.
COMPANY OPTION. "Company Option" shall mean, collectively, the Assumed
Company Options, the Intrinsic Value Company Options and the Non-Compensatory
Company Options.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Company or otherwise used by the
Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
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CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Parent on behalf of the
Company.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
EXCLUDED EXPENSES. "Excluded Expenses" shall mean (i) any fees and
expenses payable to Legacy Capital, (ii) any fees and expenses payable to any
other any other financial advisor, investment banker, broker or finder, (iii)
any other transaction fees and expenses of the Company and the Company
Shareholders (other than the amounts agreed to be paid by Parent, not to exceed
$100,000 pursuant to Section 10.3 hereof), and (iv) an amount equal to the
aggregate exercise price of the Intrinsic Value Company Options.
FULLY DILUTED NUMBER OF COMPANY SHARES. "Fully Diluted Number of
Company Shares" means the sum of (i) the aggregate number of shares of capital
stock of the Company outstanding immediately prior to the Effective Time, plus
(ii) the aggregate number of shares of capital stock of the Company (if any)
issuable upon the exercise of any option or other right to acquire capital stock
of the Company, or the conversion of any convertible securities, outstanding
immediately prior to the Effective Time.
GOVERNMENT CONTRACT. "Government Contract" shall mean any prime
contract, subcontract, letter contract, purchase order or delivery order
executed or submitted to or on behalf of any Governmental Body or any prime
contractor or higher-tier subcontractor, or under which any Governmental Body or
any such prime contractor or subcontractor otherwise has or may acquire any
right or interest.
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59
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a)
Parent; (b) Parent's current and future affiliates (including the Surviving
Corporation); (c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of
the Persons referred to in clauses "(a)", "(b)" and "(c)" above.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Company if such violation or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement or
in the officers closing certificate but for the presence of "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications, in
such representations and warranties) would have a material adverse effect on the
Company's business, condition, assets, liabilities, operations, financial
performance or prospects.
PARENT AVERAGE STOCK PRICE. "Parent Average Stock Price" shall mean the
average of the closing sales price of a share of Parent Common Stock as reported
on the Nasdaq National Market for each of the twenty consecutive trading days
ending on and including the trading day immediately preceding the Scheduled
Closing Time.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious
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business name, service xxxx (whether registered or unregistered), service xxxx
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, customer
list, franchise, system, computer software, computer program, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (b) right to
use or exploit any of the foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
RESTRICTED RESALE STOCK. "Restricted Resale Stock" shall mean shares of
Parent Common Stock issued as consideration for the Merger that are subject to
restrictions on resale in accordance with the following volume limitations: (i)
upon the effectiveness of a registration statement registering such shares of
Parent Common Stock, any Person holding Restricted Resale Stock may sell up to
15% of their total equity position in Parent as measured on the Closing Date;
(ii) during period between three months and six months following the Closing
Date any Person holding Restricted Resale Stock may sell up to an additional 20%
(aggregating 35%) of their total equity position in Parent as measured on the
Closing Date (iii) during period between six months and nine months following
the Closing date, any Person holding Restricted Resale Stock may sell up to an
additional 20% (aggregating 55%) of their total equity position in Parent as
measured on the Closing Date (iv) during period between nine months and twelve
months following the Closing date, any Person holding Restricted Resale Stock
may sell up to an additional 20% (aggregating 75%) of their total equity
position in Parent as measured on the Closing Date; and (v) during period
following the first anniversary of the Closing date, any Person holding
Restricted Resale Stock may sell up to an additional 25% (aggregating 100%) of
their total equity position in Parent as measured on the Closing Date; provided,
however, in no event may any Person sell more than the total number of shares
that they hold that are vested at the time of such sale; provided, further, no
Person may sell any shares that are otherwise subject to other resale
restrictions where such sale would be in violation of such other resale
restrictions.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase more than 50% of the outstanding
shares of Company Common Stock on terms that the board of directors of the
Company determines, in its reasonable judgment, based upon the written advice of
its financial advisor, to be more favorable to the Company's shareholders than
the terms of the Merger; provided, however, that any such offer shall not be
deemed to be a "Superior Offer" if any financing required to consummate the
transaction contemplated by such offer is not committed and is not likely to be
obtained by such third party on a timely basis.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or
A-4
61
amount (including any fine, penalty or interest), imposed, assessed or collected
by or under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
A-5
62
EXHIBIT B-1
FORM OF VOTING AGREEMENTS
63
EXHIBIT B-2
PERSONS TO EXECUTE VOTING AGREEMENTS
VOTING COMMON NON-VOTING COMMON
------------------ -----------------
Xxxxx X. Xxxxxxx 3,290,000 (60.58%) 200,000 (88.1)
Xxxxxx Xxxxxxxx 195,000 (3.59)
Xxxxxxx X. Xxxxxxxxx 35,000 (0.64)
Xxx Xxxxx 14,000 (0.26)
Xxxx Xxxxxx 300,000 (5.52)
Xxxx Xxxxx 30,000 (0.55)
Xxxxx Xxxxxx 83,333 (1.53)
Xxxxx X. Xxxxxxx 88,000 (1.62)
Totals 4,177,001 (74.31%)
64
EXHIBIT C
LIST OF ASSUMED COMPANY OPTIONS
Name Date of Grant Shares Price
--------------------------------------------------------------------------------
Xxxxx Xxxxxxxxx 2/1/99 424,200 $ 0.40
Xxxxxxx Xxxxxxxxx 1/1/99 100,000 $ 1.50
Xxx Xxxxxx 2/1/99 5,000 $ 0.40
Xxxxx Xxxx 2/1/99 45,000 $ 0.40
Xxxxxx Xxxxxxxx 2/1/99 7,500 $ 0.40
Xxx Xxxxx 1/1/99 50,000 $ 1.00
Xxx Xxxxx 2/1/99 336,100 $ 0.40
Xxxxx Xxxxx 2/1/99 15,000 $ 0.40
Xxxxxx XxXxxx 2/1/99 10,000 $ 0.40
Xxxxxx Xxxxxx 2/1/99 13,000 $ 0.40
Xxxxxxx Xxx 2/1/99 20,000 $ 0.40
Xxxxxxx' Xxxxxxx 2/1/99 22,500 $ 0.40
Xxxxxx Xxxx 2/1/99 10,000 $ 0.40
Xxxx Xxxxxx 2/1/99 5,000 $ 0.40
Xxxxxx Xxxxxxxx 1/1/99 250,000 $ 1.00
Xxxxxx Xxxxxxxx 2/1/99 239,700 $ 0.40
Xxxxxxxx Xxxxxxxx 2/8/99 10,000 $ 0.40
Xxxxxx Xxxxxx 2/1/99 22,000 $ 0.40
65
EXHIBIT D
LIST OF INTRINSIC VALUE COMPANY OPTIONS
Exercise
Name Date of Grant # Shares Price
-------------------------------------------------------------------------------
Xxxxx Xxxxxxxxx 6/2/98 50,000 $ 1.50
Xxxxxx Xxxxxxx 6/1/98 1,000 $ 1.50
Xxx Xxxxxx 11/24/97 5,000 $ 1.50
Xxxxx Xxxx 6/15/98 10,000 $ 1.50
Xxxxxx Xxxxxxxx 1/25/99 15,000 $ 1.50
Xxx Xxxxx 3/2/98 10,000 $ 1.50
Xxxxx Xxxxx 1/26/98 10,000 $ 1.50
Xxxxxx XxXxxx 6/1/98 1,000 $ 1.50
Xxxxxx Xxxxxx 12/28/98 2,000 $ 1.50
Xxxxx Xxxxxxx 5/11/98 10,000 $ 1.50
Xxxxx Xxxxxxx 1/1/99 7,000 $ 1.50
Xxxx Xxxxxxx 1/11/99 5,000 $ 1.50
Xxxxxxx Xxx 6/28/99 17,000 $ 1.50
Xxxxxx Xxxx 1/1/99 8,000 $ 1.50
Xxxxxx Xxxx 2/1/98 10,000 $ 1.50
Xxxx Xxxxxx 5/4/98 5,000 $ 1.50
Xxxxxx Xxxxxxxx 4/7/97 200,000 $ 1.00
Xxxx Xxxxxxx 2/16/98 10,000 $ 1.50
Xxxx Xxxxxxx 1/1/99 5,333 $ 1.50
Xxxxxxxx Xxxxxxxx 2/8/99 5,000 $ 1.50
Xxxxxx Xxxxxx 9/30/96 5,000 $ 1.00
Xxxxxx Xxxxxx 12/2/97 5,000 $ 1.50
Xxxxxx Xxxxxx 12/18/96 10,000 $ 1.00
Xxxxxx Xxxxxx 2/17/96 40,000 $ 0.30
Xxxxxxx' (Xxxxxx) Xxxxxxx 1/5/98 5,000 $ 1.50
Xxxxxxx' (Xxxxxx) Xxxxxxx 7/19/96 3,000 $ 1.00
Xxxxx Xxxxxxxxx 1/1/99 6,000 $ 1.50
Xxxxx Xxxxxxxxx 7/13/98 10,000 $ 1.50
66
EXHIBIT E
LIST OF NON-COMPENSATORY COMPANY OPTIONS
Exercise
Name Date of Grant # Shares Price
---------------------------------------------------------------------------
XX Xxxxx 3/12/98 30,000 $ 2.50
J. Xxxxx Xxxxx 3/9/98 8,333 $ 2.50
Xxxx X. Xxxxxxx 2/1/98 10,000 $ 1.50
Xxx Xxxxx 8/22/97 4,000 $ 1.50
Xxx Xxxxx 6/15/98 4,000 $ 2.50
Xxx Xxxxxxxx 3/13/98 50,000 $ 2.50
Xxxx Xxxxxxx 6/1/98 4,667 $ 2.50
Xxxx Xxxxxxx 8/22/97 4,667 $ 1.50
Xxxx Xxxxx 3/31/98 10,000 $ 2.50
Xxxx Xxxxx 1/12/98 20,000 $ 2.50
Xxxx Xxxxx 3/31/98 20,000 $ 1.50
Xxxxx and Xxxxxxxx Xxxxx 12/31/97 6,667 $ 2.50
Xxxx Xxxxxx 3/19/98 10,000 $ 2.50
Xxxxx X. Xxxxx 3/9/98 16,666 $ 2.50
Xxxx Xxxxxx 8/22/97 33,333 $ 1.50
Xxx Xxxxxx 3/26/98 20,000 $ 2.50
Xxxx and Xxxxxx Xxxxxxx 1/1/98 20,000 $ 2.50
Xxxxxxx Investments 3/9/98 141,668 $ 2.50
JHF Holdings, Inc. 3/31/98 20,000 $ 2.50
Xxxxxxx Xxx 3/30/98 6,667 $ 2.50
Xxx Xxxxxx 8/22/97 11,325 $ 1.50
Xxx XxXxxxxx 3/31/98 20,000 $ 1.50
Xxxx Xxxx 4/30/98 13,333 $ 2.50
Xxxxxx Xxxx 3/31/98 10,000 $ 2.50
Momentum Company, LLC 3/25/98 33,333 $ 2.50
Mountain Shade Devel 3/31/98 20,000 $ 1.50
Xxxxx Xxxxxxxx 3/20/98 10,000 $ 2.50
Xxxxx X. Xxxxxxx 3/31/98 20,000 $ 1.50
Xxxxxxx Xxxxxx 3/30/98 10,000 $ 2.50
Xxxxxxx Xxxxxx 3/30/98 10,000 $ 2.50
Xxxxxxx Xxxxxx 3/30/98 10,000 $ 2.50
Portrush Group LLC 4/15/98 16,667 $ 2.50
Portrush Group, LLC 1/2/98 33,333 $ 2.50
Xxxxxxx Family Trust 3/25/98 20,000 $ 2.50
67
Exercise
Name Date of Grant # Shares Price
---------------------------------------------------------------------------
Xxx Xxxx 3/6/98 10,000 $ 2.50
Richgood Corporation 4/28/98 11,325 $ 2.50
Richgood Corporation 8/22/97 11,325 $ 1.50
Xxxx Xxxxxxx 3/1/98 20,000 $ 1.50
Xxxx Xxxxxxx 3/1/98 20,000 $ 2.50
RNR Ventures, LLC 2/1/98 10,000 $ 1.50
RNR Ventures, LLC 2/99 100,000 $ 2.25
RNR Ventures, LLC 2/99 12,500 $ 2.00
Xxxx Xxxxxx 2/19/98 20,000 $ 2.50
Xxxx Xxxxxx 3/31/98 20,000 $ 1.50
Xxxxxxx Xxxxxxx III 3/18/98 33,334 $ 2.50
Xxxxx Xxxxx 3/23/98 100,000 $ 2.50
Xxxx Xxxxx 10/23/95 5,000 $ 0.30
Xxx Xxxxxxxxxx III 3/26/98 40,000 $ 2.50
Xxxxx Xxxxxxxx 11/20/97 20,000 $ 2.50
Xxxxx Xxxxxxxx 8/22/97 20,000 $ 1.50
Xxxxx Xxxxxxxx 3/6/98 30,000 $ 2.50
Xxxxxx Xxxxx 2/1/98 10,000 $ 2.50
Xxxxxx X. Xxxxx, III 2/1/98 2,500 $ 2.50
Xxxxxx X. Xxxxx, Xx 2/1/98 5,000 $ 2.50
Xxxxxxx X. Xxxxx 2/1/98 2,500 $ 2.50
The following non-qualified options granted to members of the Board of Directors
for attending meetings of the Board of Directors:
Exercise
Name # Shares Price
--------------------------------------------------------------------------------
Xxxx Xxxxx 10,000 $ 1.50
Xxxx Xxxxxx 11,000 $ 1.50
Xxxx Xxxxxx 3,000 $ 1.00
Xxx Xxxxxx 3,000 $ 1.00
Xxx Xxxxxx 11,000 $ 1.50
68
EXHIBIT F
PERSONS TO EXECUTE EMPLOYMENT AND NONCOMPETITION AGREEMENTS
Xxxxx X. Xxxxxxx (noncompete only)
Xxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxx Xxxxx
69
EXHIBIT G
FORM OF SECURITYHOLDER REPRESENTATION STATEMENT
70
EXHIBIT H
CERTAIN EMPLOYEES
Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxxx
Xxx Xxxxx
Xxxxxxxx Xxxxxxxx
Xxxxxxx Xxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxx Xxxx
71
EXHIBIT I
FORM OF REGISTRATION RIGHTS AGREEMENT
72
EXHIBIT J
FORM OF ESCROW AGREEMENT
