EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AMONG
ARTRA GROUP INCORPORATED,
WORLDWIDE WEB NETWORX CORPORATION,
NA ACQUISITION CORP.
AND
WWWX MERGER SUBSIDIARY, INC.
DATED FEBRUARY 23, 1999
TABLE OF CONTENTS
Page
ARTICLE 1 - THE MERGER................................................1
1.1 The Merger................................................2
1.2 Effective Time............................................2
1.3 The Closing...............................................2
1.4 Directors.................................................2
1.5 Officers..................................................3
1.6 Options and Other Rights to Purchase
Artra Common Stock........................................3
1.7 Dissenters Rights.........................................3
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF WWWX,
THE ACQUISITION CORP. AND THE MERGER SUB..................4
2.1 Existence; Good Standing; Corporate Authority.............4
2.2 Authorization, Validity and Effect of Agreements..........4
2.3 Capitalization............................................4
2.4 Subsidiaries..............................................5
2.5 Other Interests...........................................5
2.6 Financial Condition.......................................5
2.7 Title to Properties.......................................5
2.8 Absence of Undisclosed Liabilities........................6
2.9 Material Contracts........................................6
2.10 Intangible Assets.........................................7
2.11 No Conflict; Required Filings and Consents................8
2.12 Litigation................................................8
2.13 Taxes.....................................................9
2.14 Employee Benefit Plans....................................9
2.15 Labor Matters............................................10
2.16 Insurance................................................10
2.17 No Brokers...............................................10
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF ARTRA..................10
3.1 Existence; Good Standing; Corporate Authority............10
3.2 Authorization, Validity and Effect of Agreements.........11
3.3 Capitalization...........................................11
3.4 Subsidiaries.............................................11
3.5 Other Interests..........................................12
3.6 No Conflict; Required Filings and Consents...............12
3.7 SEC Documents............................................13
3.8 Title to Properties......................................13
3.9 Absence of Undisclosed Liabilities.......................14
3.10 Material Contracts.......................................14
3.11 Litigation...............................................14
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Page
3.12 Absence of Certain Changes...............................14
3.13 Taxes....................................................15
3.14 Employee Benefit Plans...................................15
3.15 Labor Matters............................................15
3.16 Insurance................................................16
3.17 No Brokers...............................................16
ARTICLE 4 - COVENANTS................................................16
4.1 Alternative Proposals....................................16
4.2 Interim Operations.......................................17
4.3 Meetings of Stockholders.................................18
4.4 Filings, Other Action....................................19
4.5 Inspection of Records....................................19
4.6 Publicity................................................19
4.7 Registration Statements..................................19
4.8 Listing Application. ....................................20
4.9 Further Action...........................................21
4.10 Affiliate Letters........................................21
4.11 Expenses.................................................21
4.12 Takeover Statute.........................................21
4.13 Conveyance Taxes.........................................21
4.14 Entrade Funding..........................................22
4.15 Section 351 Qualification................................22
4.16 "Lock-Up" Provisions.....................................22
ARTICLE 5 - CONDITIONS...............................................22
5.1 Conditions to Each Party's Obligation
to Effect the Merger.....................................22
5.2 Conditions to Obligation of WWWX,
the Acquisition Corp.
and the Merger Sub to Effect the Merger..................23
5.3 Conditions to Obligation of Artra
to Effect the Merger.....................................24
ARTICLE 6 - TERMINATION..............................................25
6.1 Termination by Mutual Consent............................25
6.2 Termination by Either Artra or WWWX......................25
6.3 Termination by WWWX......................................25
6.4 Termination by Artra.....................................26
6.5 Effect of Termination and Abandonment....................26
6.6 Extension, Waiver........................................26
ARTICLE 7 - SURVIVAL OF REPRESENTATIONS AND
WARRANTIES, INDEMNIFICATION..............................27
7.1 Survival of Representations and Warranties...............27
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Page
7.2 Indemnification..........................................27
7.3 Procedure for Claims.....................................27
7.4 Third Party Claims.......................................28
ARTICLE 8 - GENERAL PROVISIONS.......................................28
8.1 Notices..................................................28
8.2 Assignment; Binding Effect...............................29
8.3 Entire Agreement.........................................29
8.4 Amendment................................................29
8.5 Governing Law............................................29
8.6 Counterparts.............................................29
8.7 Headings.................................................29
8.8 Interpretation...........................................29
8.9 Waivers..................................................29
8.10 Incorporation............................................29
8.11 Severability.............................................29
8.12 Enforcement of Agreement.................................29
8.13 Subsidiaries.............................................29
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of February
23, 1999 among Artra Group Incorporated ("Artra"), a Pennsylvania corporation;
WorldWide Web NetworX Corporation ("WWWX"), a Delaware corporation; NA
Acquisition Corp. (the "Acquisition Corp."), a Pennsylvania corporation and a
wholly owned subsidiary of WWWX; and WWWX Merger Subsid iary, Inc. (the "Merger
Sub"), a Pennsylvania corporation and a wholly owned subsidiary of the
Acquisition Corp.
Recitals:
The Boards of Directors of Artra and WWWX have approved and deem it
advisable and in the best interests of their respective companies and
shareholders to consummate the merger (the "Merger") described in this
Agreement. Pursuant to the Merger, the Merger Sub will merge into Artra, which
will result in Artra becoming a wholly owned subsidiary of the Acquisition
Corp., and the outstanding shares of Common Stock and Preferred Stock of Artra
will be converted into shares of Common Stock of the Acquisition Corp. on a
share-for-share basis.
For federal income tax purposes, it is intended that the Merger qualify
as an exchange under the provisions of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal
Revenue Code of 1986, as amended (the "Code").
On February 23, 1999, the Acquisition Corp. acquired from WWWX all of
the assets formerly held by BarterOne, LLC ("BarterOne"), a Delaware limited
liability company acquired by WWWX and dissolved prior to the date hereof (the
"BarterOne Assets"), and 25% of the outstanding shares of Class A voting common
stock of XxxxXxxxx.xxx, Inc. ("AsseTrade"), a Delaware corporation. Also on the
date hereof, the Acquisition Corp. is acquiring certain retained interests of
Energy Trading Company ("ETCO"), a Delaware corporation, arising out of the sale
of its membership interest in BarterOne to WWWX. Concurrently with the execution
and delivery of this Agreement, and in order to induce WWWX and the Acquisition
Corp. to enter into this Agreement, Artra is entering into a Loan Agreement (the
"Loan Agreement") with the Acquisition Corp. Pursuant to the Loan Agreement,
Artra will lend the Acquisition Corp. up to $2,000,000 to purchase the BarterOne
Assets and the AsseTrade interests, and to finance the working capital needs of
its business operations related to the BarterOne Assets (referred to herein as
"Entrade").
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Pursuant to the Plan of Merger in the form of Exhibit A
hereto (the "Plan of Merger"), at the Effective Time, the Merger Sub shall be
merged with and into Artra (the "Merger") in accordance with the applicable
provisions of the laws of the Commonwealth of
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Pennsylvania. Artra shall be the surviving corporation in the Merger and shall
continue its corporate existence under the laws of the Commonwealth of
Pennsylvania. As a result of the Merger, Artra shall become a wholly owned
subsidiary of the Acquisition Corp. At the Effective Time: (a) each outstanding
share of Common Stock, no par value, of Artra ("Artra Common Stock") shall be
converted into one share of Common Stock, no par value, of the Acquisition Corp.
("Acquisition Corp. Common Stock"); (b) each outstanding share of Series A
Preferred Stock, $1,000 par value, of Artra ("Artra Preferred Stock") shall be
converted into 329 shares of Acquisition Corp. Common Stock; (c) each share of
Artra Common Stock held as treasury stock shall be canceled; and (d) each
outstanding share of Common Stock, $.01 par value, of the Merger Sub shall be
canceled. Upon such conversion, all outstanding shares of Artra Common Stock and
Artra Preferred Stock shall be canceled and cease to exist, each certificate
theretofore representing any shares of Artra Common Stock shall, without any
action on the part of the holder thereof, be deemed to represent an equivalent
number of shares of Acquisition Corp. Common Stock and each certificate
theretofore representing any shares of Artra Preferred Stock shall, without any
action on the part of the holder thereof, be deemed to represent 329 shares of
Acquisition Corp. Common Stock for each share of Artra Preferred Stock. No
fractional shares of Acquisition Corp. Common Stock and no scrip or certifi
xxxxx therefor will be issued in connection with the Merger. Any former holder
of Artra Common Stock or Artra Preferred Stock who would otherwise be entitled
to receive a fraction of a share of Acquisition Corp. Common Stock shall
receive, in lieu thereof, a check for cash in an amount equal to such fraction
of a share multiplied by the closing price of Acquisition Corp. Common Stock on
the New York Stock Exchange ("NYSE") (or other applicable exchange as
hereinafter provided) on the first day Acquisition Corp. Common Stock is traded
after the Effective Time (hereinafter defined).
1.2 Effective Time. The term "Effective Time" shall mean the time and
date which is (A) the date and time of the filing of the articles of merger
relating to the Merger with the Secretary of the Commonwealth of Pennsylvania
(or such other date and time as may be specified in such certificate as may be
permitted by law) or (B) such other time and date as Artra and WWWX may agree.
1.3 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the transactions described in this Agreement (the "Closing")
shall take place (a) at the offices of Duane, Morris & Heckscher LLP, One
Liberty Place, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, at
10:00 a.m., local time, on the first business day following the day on which the
last to be fulfilled or waived of the conditions set forth in Article 5 shall be
fulfilled or waived in accordance herewith or (b) at such other time, date or
place as Artra and WWWX may agree. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
1.4 Directors. The directors of Artra immediately prior to the
Effective Time shall resign as directors of Artra and shall become the directors
of the Acquisition Corp. as of the Effective Time and until their successors are
duly appointed or elected in accordance with applicable law. For as long as
WWWX's percentage ownership of Acquisition Corp. Common Stock calculated on a
fully diluted basis is at least 5%, Acquisition Corp. shall use its best efforts
to cause the designee nominated by WWWX and mutually acceptable to WWWX and the
Board of Directors of Acquisition
2
Corp., who shall initially be Xxxxxx X. Xxxx, to be elected to the Board of
Directors of Acquisition Corp.
1.5 Officers. The officers of Artra immediately prior to the Effective
Time shall resign as officers of Artra and shall become the officers of the
Acquisition Corp. as of the Effective Time and until their successors are duly
appointed in accordance with applicable law.
1.6 Options and Other Rights to Purchase Artra Common Stock. At the
Effective Time, each outstanding option, warrant or right to purchase shares of
Artra Common Stock (an "Artra Option") shall be assumed in such manner that it
is converted into an option, warrant or right to purchase shares of Acquisition
Corp. Common Stock (an "Acquisition Corp. Option"). Each such Acquisition Corp.
Option shall be exercisable upon the same terms and conditions as then are
applicable to such Artra Option. It is the intention of the parties that, to the
extent that any such Artra Option constituted an "incentive stock option"
(within the meaning of Section 422 of the Code) immediately prior to the
Effective Time, such option continue to qualify as an incentive stock option to
the maximum extent permitted by Section 422 of the Code, and that the assumption
of the Artra Options provided by this Section 1.6 satisfy the conditions of
Section 424(a) of the Code. At the Effective Time, the Acquisition Corp. shall
assume all rights and obligations of Artra under Artra's stock option plans as
in effect at the Effective Time and shall continue such plans in accordance with
their terms.
1.7 Dissenters Rights.
(a) The holders of shares of Artra Common Stock shall not be
entitled to appraisal rights under the Pennsylvania Business Corporation Law
(the "PBCL").
(b) Notwithstanding anything in this Agreement to the
contrary, any shares of Artra Preferred Stock that are issued and outstanding as
of the Effective Time and that are held by a shareholder who has exercised and
has not failed to perfect or effectively withdrawn or lost his right (to the
extent such right is available by law) to demand and to receive the "fair value"
of such shares (the "Dissenting Shares") under the PBCL shall not be converted
into shares of Acquisition Corp. Common Stock unless and until the holder shall
have failed to perfect, or shall have effectively withdrawn or lost his right to
dissent from the Merger under the PBCL and to receive such consider ation as may
be determined to be due with respect to such Dissenting Shares pursuant to and
subject to the requirements of the PBCL. If any such holder shall have so failed
to perfect or have effectively withdrawn or lost such right, each share of such
xxxxxx'x Xxxxx Preferred Stock shall thereupon be deemed to have been converted
into and to have become, as of the Effective Time, 329 shares of Acquisition
Corp. Common Stock. Artra shall give the Acquisition Corp. (i) prompt notice of
any notice or demand for appraisal or payment for shares of Artra Preferred
Stock received by Artra and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands or notices.
Any payment required to be made to an Artra Preferred Stockholder shall be an
obligation of Artra.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF WWWX,
THE ACQUISITION CORP. AND THE MERGER SUB
Except as set forth in the disclosure letter delivered to Artra at or
prior to the execution hereof (the "Acquisition Corp. Disclosure Letter"), WWWX,
the Acquisition Corp. and the Merger Sub jointly and severally represent and
warrant to Artra as of the date of this Agreement as follows:
2.1 Existence; Good Standing; Corporate Authority. Each of WWWX, the
Acquisition Corp. and the Merger Sub, and each of their respective Subsidiaries,
is a corporation or limited liability company duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of WWWX, the Acquisition Corp. and the
Merger Sub, and each of their respective Subsidiaries, is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing would not have a material adverse effect on the
business, results of operations or financial condition of the Acquisition Corp.
and its Subsidiaries (a "WWWX Material Adverse Effect"). Each of WWWX, the
Acquisition Corp. and the Merger Sub, and each of their respective Subsidiaries,
has all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted. The copies of the
Articles or Certificates of Incorporation and Bylaws, Operating Agreements
and/or other applicable governing documents of WWWX, the Acquisition Corp., the
Merger Sub, and each of their respective Subsidiaries, previously made available
to Artra, are true and correct and have not been modified or amended except as
set forth therein.
2.2 Authorization, Validity and Effect of Agreements. Each of WWWX, the
Acquisition Corp. and the Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement and all agreements and documents
to be executed by it as described herein. Subject only to the approval of this
Agreement and the transactions described herein by the holders of WWWX voting
securities, the consummation by WWWX, the Acquisition Corp. and the Merger Sub
of the transactions described herein has been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements and documents
described herein (when executed and delivered pursuant hereto for value
received) will constitute, the valid and binding obligations of WWWX, the
Acquisition Corp. and the Merger Sub enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
2.3 Capitalization. The authorized capital stock of WWWX consists of
100,000,000 shares of Common Stock, $.001 par value, of which 11,035,186 shares
are issued and outstanding. The authorized capital stock of the Acquisition
Corp. consists of 40,000,000 shares of Acquisition Corp. Common Stock, no par
value, of which 2,000,000 shares are issued and outstanding, and 4,000,000
shares of Preferred Stock, $1,000 par value, of which no shares are outstanding.
The authorized capital stock of the Merger Sub consists of 1000 shares of Common
Stock, of which 100 shares are
4
issued and outstanding. Neither the Acquisition Corp. nor the Merger Sub has any
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the shareholders of the Acquisition
Corp. or the Merger Sub on any matter. All issued and outstanding shares of
Acquisition Corp. Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned of record and
beneficially by WWWX. All issued and outstanding shares of Common Stock of the
Merger Sub are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights and are owned of record and beneficially by the
Acquisition Corp. Except as set forth in the Acquisition Corp. Disclosure
Letter, there are not at the date of this Agreement any existing options,
warrants, calls, subscriptions, convertible securities, or other rights,
agreements or commitments which obligate the Acquisition Corp. or any of its
Subsidiaries to issue, transfer or sell any shares of their respective capital
stock or membership interests.
2.4 Subsidiaries. Except as set forth in the Acquisition Corp.
Disclosure Letter, the Acquisition Corp. owns directly or indirectly all of the
outstanding shares of capital stock (or other ownership interests having by
their terms ordinary voting power to elect a majority of directors or others
performing similar functions with respect to such Acquisition Corp. Subsidiary)
of each of the Acquisition Corp.'s Subsidiaries, free and clear of all liens,
pledges, security interests, claims or other encumbrances other than liens
imposed by local law which are not material. Each of the outstanding shares of
capital stock or other equity interest of each of the Acquisition Corp.'s
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable.
The following informa tion for each Subsidiary of the Acquisition Corp. has been
previously provided to Artra: (i) its name and jurisdiction of incorporation or
organization; (ii) its authorized capital stock or total equity capital; and
(iii) the number of issued and outstanding shares of capital stock or total
equity capital.
2.5 Other Interests. Except for interests in the Acquisition Corp.
Subsidiaries, neither the Acquisition Corp. nor any Acquisition Corp. Subsidiary
owns directly or indirectly any interest or investment (whether equity or debt)
in any corporation, partnership, joint venture, business, trust or entity (other
than non-controlling investments in the ordinary course of business and
corporate partnering, development, cooperative marketing and similar
undertakings or arrangements entered into in the ordinary course of business).
2.6 Financial Condition. Set forth in the Acquisition Corp. Disclosure
Letter are true and complete lists of the assets and liabilities of the
Acquisition Corp. on the date hereof and as anticipated to exist at the
Effective Time of the Merger. The Entrade Business Plan and AsseTrade Business
Plan delivered to Artra together present fairly the financial condition, results
of operations, business, properties, assets, liabilities and future prospects of
the Acquisition Corp. and the Acquisi tion Corp. Subsidiaries as of the dates
thereof and for the periods indicated therein, there has been no material
adverse change in the financial condition or future prospects of the Acquisition
Corp. or the Acquisition Corp. Subsidiaries as reflected therein, and no fact is
known to WWWX or the Acquisition Corp. that materially adversely affects or in
the future may materially adversely affect
5
the financial condition or future prospects of the Acquisition Corp. or any
Acquisition Corp. Subsidiary.
2.7 Title to Properties. Except as set forth in the Acquisition Corp.
Disclosure Letter, the Acquisition Corp. and each of the Acquisition Corp.
Subsidiaries owns outright, and has good and marketable title to, all of its
assets, including without limitation all computer software and related technical
information and other intellectual property rights necessary to conduct the
Entrade business, free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or other encumbrances or conflicting
claims of any nature whatsoever. None of such assets are subject to restrictions
with respect to the transferability thereof and the Acquisition Corp.'s title
thereto will not be affected in any way by the transactions described in the
Agreement. WWWX has complete and unrestricted power and right to sell such
assets to the Acquisition Corp. Neither the Acquisition Corp. nor any of its
Subsidiaries owns any real property or any interest in real property.
2.8 Absence of Undisclosed Liabilities. Neither the Acquisition Corp.
nor any Acquisition Corp. Subsidiary has any material liabilities, obligations
or guaranties accrued, absolute, contingent or otherwise, except as disclosed in
the Acquisition Corp. Disclosure Letter.
2.9 Material Contracts. The Acquisition Corp. Disclosure Letter
contains a true and correct list of each contract, agreement, commitment or
obligation (a) which involves or may involve the payment to or from the
Acquisition Corp. or any Acquisition Corp. Subsidiary of amounts in excess of
$100,000 per year, (b) any license, franchise or distribution agreement, which
involves or may involve payments to or from the Acquisition Corp. or any
Acquisition Corp. Subsidiary in excess of $100,000 per year, (c) any lease of
tangible personal property, which involves or may involve payments to or from
the Acquisition Corp. or any Acquisition Corp. Subsidiary in excess of $100,000
per year and (d) any contract between the Acquisition Corp. or any of its
Subsidiaries and any affiliate of WWWX, the Acquisition Corp. or any of their
Subsidiaries (collectively the "Acquisition Corp. Material Contracts"). Each of
the Acquisition Corp. Material Contracts constitutes a valid and binding
obligation of the parties thereto, is in full force and effect and will continue
in full force and effect following the consummation of the transactions
described herein and thereby, in each case without breaching the terms thereof
or resulting in the forfeiture or impairment of any rights thereunder and
without the consent, approval or act of, or the making of any filing with, any
other party (except as set forth in the Acquisition Corp. Disclosure Letter).
Neither the Acquisition Corp. nor any Acquisition Corp. Subsidiary is in, or to
the knowledge of WWWX or the Acquisition Corp. alleged to be in, breach or
default under, nor is there or is there alleged to be any basis for termina tion
of, any Acquisition Corp. Material Contract and, to the knowledge of WWWX and
the Acquisition Corp., no other party to any Acquisition Corp. Material Contract
has breached or defaulted thereunder, and no event has occurred and no condition
or state of facts exists which, with the passage of time or the giving of notice
or both, would constitute such a default or breach by the Acquisition Corp., any
Acquisition Corp. Subsidiary or, to the knowledge of WWWX and the Acquisi tion
Corp., by any such other party. Neither the Acquisition Corp. nor any
Acquisition Corp. Subsidiary is currently renegotiating any Acquisition Corp.
Material Contract or paying liquidated damages in lieu of the performance
thereunder.
6
2.10 Intangible Assets. The Acquisition Corp. Disclosure Letter sets
forth a list of (a) all patents, copyrights, trade names, trademarks, service
marks and names (registered or unregistered), and applications and registrations
therefor, (b) all research, development and commercially practiced processes,
trade secrets, know-how, inventions, and engineering and other technical
information, (c) all computer programs, software and data bases, (d) all
information, drawings, specifications, designs, plans, financial, marketing and
business data and plans, other proprietary, confidential or intellectual
information or property and all copies and embodiments thereof in whatever form
or medium and (e) all customer and membership lists owned by or licensed to the
Acquisition Corp. or any Acquisition Corp. Subsidiary (items (a) through (e) are
defined, collectively, as "Intangible Assets") as well as a list of all
registrations thereof and pending applications therefor. Each of the Intangible
Assets owned by the Acquisition Corp. or any Acquisition Corp. Subsidiary is
owned free and clear of any and all liens and encumbrances and, to the knowledge
of WWWX and the Acquisition Corp., no other Person or entity has any claim of
ownership with respect thereto. The Acquisition Corp. and each Acquisition Corp.
Subsidiary has adequate licenses or other valid rights to use all of the
Intangible Assets that it does not own and that are material to the conduct of
its business as currently proposed. To the knowledge of WWWX and the Acquisition
Corp., the use of the Intangible Assets by the Acquisition Corp. or any
Acquisition Corp. Subsidiary does not and will not conflict with, infringe upon,
violate or interfere with any intellectual property rights or claimed
intellectual property rights of any other Person or entity, nor, to the
knowledge of WWWX and the Acquisition Corp., is any other Person or entity
infringing upon, violating or interfering with any intellectual property rights
or claimed intellectual property rights of the Acquisition Corp. or any
Acquisition Corp. Subsidiary. Neither WWWX, the Acquisition Corp. nor any
Acquisition Corp. Subsidiary has received notice of any claim of infringement or
violation of any third party's copy rights, patents, trade secrets, trademarks
or other proprietary rights relating to the Intangible Assets nor, to the
knowledge of WWWX or the Acquisition Corp., is there any basis for any such
claim of right or interest in the Intangible Assets or otherwise adverse to the
Acquisition Corp.'s or any Acquisition Corp. Subsidiary's unqualified right to
exclusively own and fully utilize any of the Intangible Assets. To the knowledge
of WWWX and the Acquisition Corp., there are no pending or threatened suits,
legal proceedings, claims or governmental investigations against or with respect
to any of the Intangible Assets or any component thereof. Each of the Intangible
Assets will perform in substantial conformity with its specifications as
identified in any and all documentation provided to Artra. To the knowledge of
WWWX and the Acquisition Corp., the Intangible Assets do not and will not
contain any "backdoor" or concealed access or any "software locks" or any
similar devices which, upon the occurrence of a certain event, the passage of a
certain amount of time, or the taking of any action (or the failure to take any
action) by or on behalf of any Person or entity, will cause any of the
Intangible Assets to be destroyed, erased, damaged or otherwise made inoperable.
To the knowledge of WWWX and the Acquisition Corp., the Intangible Assets are
and will be free from defects in operation or otherwise relating to the year
2000, date data century recognition calculations that accommodate same century
and multi-century formulas and date values, and century correct date data
interface values, and will accurately process date and time data (including but
not limited to, calculation, comparing and sequencing) from, into and between
the twentieth and twenty-first centuries, and the years 1999 and 2000 and leap
year calculation, and, to the knowledge of WWWX and the Acquisition Corp., when
used in combination with other information technology, will
7
accurately process date and time data if the other information technology
exchanges date and time data with it.
2.11 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by WWWX, the
Acquisition Corp. and the Merger Sub do not, and the consummation by WWWX, the
Acquisition Corp. and the Merger Sub of the transactions described herein will
not, (i) conflict with or violate the certificate of incorporation or by-laws or
equivalent organizational documents of WWWX, the Acquisition Corp., the Merger
Sub or any of their Subsidiaries, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to WWWX, the Acquisition Corp.,
the Merger Sub or any of their Subsidiaries or by which any property or asset of
WWWX, the Acquisition Corp., the Merger Sub or any of their Subsidiaries is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, result in the loss of a material benefit under, or give to others any
right of purchase or sale, or any right of termination, amendment, acceleration,
increased payments or cancellation of, or result in the creation of a lien or
other encumbrance on any property or asset of WWWX, the Acquisition Corp., the
Merger Sub or any of their Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which WWWX, the Acquisition Corp., the Merger Sub or
any of their Subsidiaries is a party or by which WWWX, the Acquisition Corp.,
the Merger Sub or any of their Subsidiaries or any property or asset of WWWX,
the Acquisition Corp., the Merger Sub or any of their Subsidiaries is bound or
affected, , in each case except for any such defaults or violations that would
not, individually or in the aggregate, have a WWWX Material Adverse Effect.
WWWX, the Acquisition Corp., the Merger Sub and their Subsidiaries have obtained
all licenses, permits and other authorizations and have taken all actions
required by applicable law or governmental regulations in connection with their
business as now conducted, except where the failure to obtain any such item or
to take any such action would not have, individually or in the aggregate, a WWWX
Material Adverse Effect.
(b) The execution and delivery of this Agreement by WWWX, the
Acquisition Corp. and/or the Merger Sub do not, and the performance of this
Agreement and the consummation by WWWX, the Acquisition Corp. and/or the Merger
Sub of the transactions described herein will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign (each a "Governmental
Entity"), except for (i) applicable requirements, if any, of the Securities Act
of 1933 (the "Securities Act"), the Exchange Act of 1934 (the "Exchange Act"),
state securities laws and state takeover laws, (ii) filing of appropriate merger
documentation as Pennsylvania law shall require, and (iii) applicable
requirements of the Code and state and local tax laws.
2.12 Litigation. There are no actions, suits or proceedings pending
against WWWX, the Acquisition Corp., the Merger Sub or any of their Subsidiaries
or, to the knowledge of WWWX or the Acquisition Corp., threatened against WWWX,
the Acquisition Corp., the Merger Sub or any of their
8
Subsidiaries, at law or in equity, or before or by any federal or state
commission, board, bureau, agency or instrumentality, that are likely to have a
WWWX Material Adverse Effect.
2.13 Taxes.
(a) Except as set forth in the Acquisition Corp. Disclosure
Letter, each of WWWX, the Acquisition Corp., the Merger Sub and each of their
Subsidiaries has filed all material tax returns and reports required to be filed
by it, or requests for extensions to file such returns or reports have been
timely filed and granted and have not expired, and all tax returns and reports
are complete and accurate in all respects, except to the extent that such
failures to file, have extensions granted that remain in effect, or be complete
and accurate in all respects, as applicable, individually or in the aggregate,
would not have a WWWX Material Adverse Effect. WWWX, the Acquisition Corp., the
Merger Sub and each of their Subsidiaries has paid (or WWWX or the Acquisition
Corp. has paid on its behalf) all taxes shown as due on such tax returns and
reports, and no deficiencies for any taxes have been proposed, asserted or
assessed against WWWX, the Acquisition Corp., the Merger Sub or any of their
Subsidiaries that are not adequately reserved for, except for inadequately
reserved taxes and inadequately reserved deficiencies that would not,
individually or in the aggregate, have a WWWX Material Adverse Effect. No
requests for waivers of the time to assess any taxes against WWWX, the
Acquisition Corp., the Merger Sub or any of their Subsidiaries have been granted
or are pending.
(b) Neither WWWX, the Acquisition Corp., the Merger Sub or any
of their Subsidiaries has knowingly taken any action or has any knowledge of any
fact or circumstance that is reasonably likely to prevent the Merger from
qualifying as an exchange governed by Section 351 of the Code.
(c) As used in this Section 2.13, "taxes" shall include all
federal, state, local and foreign income, franchise, property, sales, use,
excise and other taxes, including obligations for withholding taxes from
payments due or made to any other Person or entity and any interest, penalties
or additions to tax.
2.14 Employee Benefit Plans. Except as described in the Acquisition
Corp. Disclosure Letter: (i) all employee benefit plans or programs maintained
for the benefit of the current or former employees or directors of WWWX, the
Acquisition Corp., the Merger Sub or any of their Subsidiaries that are
sponsored, maintained or contributed to by WWWX, the Acquisition Corp., the
Merger Sub or any of their Subsidiaries (if any), or with respect to which WWWX,
the Acquisition Corp., the Merger Sub or any of their Subsidiaries has any
liability, including without limitation any such plan that is an "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), are in compliance with all applicable
requirements of law, including ERISA and the Code, and (ii) neither WWWX, the
Acquisition Corp., the Merger Sub nor any of their Subsidiaries has any
liabilities or obligations with respect to any such employee benefit plans or
programs, whether accrued, contingent or otherwise, nor to the knowledge of WWWX
or the Acquisi tion Corp. are any such liabilities or obligations expected to be
incurred. The execution of, and
9
performance of the transactions described in, this Agreement will not (either
alone or upon the occurrence of any additional or subsequent events) constitute
an event under any benefit plan, policy, arrangement or agreement or any trust
or loan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee. The only severance agree ments or severance policies applicable to
WWWX, the Acquisition Corp., the Merger Sub or any of their Subsidiaries are the
agreements and policies specifically referred to in the Acquisition Corp.
Disclosure Letter.
2.15 Labor Matters. There is no labor strike, labor dispute, work
slowdown, stoppage or lockout actually pending, or to the knowledge of WWWX or
the Acquisition Corp., threatened against or affecting WWWX, the Acquisition
Corp., the Merger Sub or any of their Subsidiaries. There is no unfair labor
practice or labor arbitration proceeding pending or, to the knowledge of WWWX or
the Acquisition Corp., threatened against WWWX, the Acquisition Corp., the
Merger Sub or any of their Subsidiaries relating to their business.
2.16 Insurance. The Acquisition Corp. Disclosure Letter contains a
complete and accurate list and description of all policies of fire, liability,
product liability and other forms of insurance presently in effect insuring the
Acquired Corp., its Subsidiaries and their respective assets.
2.17 No Brokers. Neither WWWX, the Acquisition Corp. nor the Merger Sub
has entered into any contract, arrangement or understanding with any person or
firm which may result in the obligation of WWWX, the Acquisition Corp., Artra or
the Merger Sub to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions described herein. Neither
WWWX, the Acquisition Corp. nor the Merger Sub is aware of any claim for payment
of any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions described herein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF ARTRA
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to WWWX (the "Artra Disclosure Letter") or in the Artra
Reports (as defined below), Artra represents and warrants to WWWX, the
Acquisition Corp. and the Merger Sub as of the date of this Agreement as
follows:
3.1 Existence; Good Standing; Corporate Authority. Artra is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Artra is duly licensed or qualified
to do business as a foreign corporation and is in good standing under the laws
of any other state of the United States in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary, except
10
where the failure to be so qualified or to be in good standing would not have a
material adverse effect on the business, results of operations or financial
condition of Artra and its Subsidiaries taken as a whole (an "Artra Material
Adverse Effect"). Artra has all requisite corporate power and authority to own,
operate and lease its properties and carry on its business as now conducted.
Each of the Subsidiaries of Artra is a corporation or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the corporate or partnership
power and authority to own its properties and to carry on its business as it is
now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing would not have
an Artra Material Adverse Effect. The copies of the Articles of Incorporation
and Bylaws of Artra previously made available to WWWX are true and correct, and
have not been modified or amended except as set forth therein.
3.2 Authorization, Validity and Effect of Agreements. Artra has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents described herein. Subject only to the approval
of this Agreement and the transactions described herein by the holders of Artra
Common Stock, the consummation by Artra of the transactions described herein has
been duly authorized by all requisite corporate action. This Agreement
constitutes, and all agreements and documents described herein (when executed
and delivered pursuant hereto for value received) will constitute, the valid and
legally binding obligations of Artra, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
3.3 Capitalization. The authorized capital stock of Artra consists of
20,000,000 shares of Artra Common Stock and 2,000,000 shares of Artra Preferred
Stock. As of February 17, 1999, there were 7,975,206 shares of Artra Common
Stock and 1,849.34 shares of Artra Preferred Stock issued and outstanding, plus
494,017 shares of Artra Common Stock held in Artra's treasury. Since such date,
no additional shares of capital stock of Artra have been issued, except pursuant
to Artra's 1995 stock option and 1996 disinterested director stock option plan
(the "Artra Option Stock Plans"). Except as set forth in the Artra Disclosure
Letter, Artra does not have any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Artra on any matter. All such issued and outstanding shares
of Artra Common Stock and Artra Preferred Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. Except as
described in this Agreement and as set forth in the Artra Disclosure Letter,
there are not at the date of this Agreement any existing options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments that obligate Artra or any of its Subsidiaries to issue, transfer or
sell any shares of capital stock of Artra or any of its Subsidiaries (other than
under the Artra Option Plans).
3.4 Subsidiaries. Except as set forth in the Artra Disclosure Letter,
Artra owns directly or indirectly each of the outstanding shares of capital
stock of each of its Subsidiaries (or other
11
ownership interests having by their terms ordinary voting power to elect a
majority of directors or others performing similar functions with respect to
such Subsidiary). Each of the outstanding shares of capital stock of each of
such Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and is owned, directly or indirectly, by Artra, free and clear of
all liens, pledges, security interests, claims or other encumbrances other than
liens imposed by local law which are not material. The following information for
each such Subsidiary has been previously made available to WWWX, if requested
and if applicable: (i) its name and jurisdiction of incorporation or organiza
tion; (ii) its authorized capital stock or share capital; and (iii) the number
of issued and outstanding shares of capital stock or share capital.
3.5 Other Interests. Except as set forth in the Artra Disclosure Letter
and for interests in the Artra Subsidiaries, neither Artra nor any Artra
Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, business, trust
or entity (other than (i) passive investments in securities in the ordinary
course of business and corporate partnering, development, cooperative marketing
and similar undertakings and arrangements entered into in the ordinary course of
business and (ii) other investments of less than $1,000,000).
3.6 No Conflict; Required Filings and Consents.
(a) Except as set forth in the Artra Disclosure Letter: the
execution and delivery of this Agreement by Artra does not, and the consummation
by Artra of the transactions described herein will not, (i) conflict with or
violate its articles of incorporation or by-laws, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Artra or any
Artra Subsidiary or by which any property or asset of Artra or any Artra
Subsidiary is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit under, or give to
others any right of purchase or sale, or any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any property or asset of Artra or any Artra
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Artra or any Artra Subsidiary is a party or by which Artra or any Artra
Subsidiary or any property or asset of Artra or any Artra Subsidiary is bound or
affected, , in each case except for any such conflicts, defaults or violations
that would not, individually or in the aggregate, have an Artra Material Adverse
Effect. Artra and its Subsidiaries have obtained all licenses, permits and other
authoriza tions and have taken all actions required by applicable law or
governmental regulations in connec tion with their business as now conducted,
except where the failure to obtain any such item or to take any such action
would not have, individually or in the aggregate, an Artra Material Adverse
Effect.
(b) The execution and delivery of this Agreement by Artra do
not, and the performance of this Agreement and the consummation by Artra of the
transactions described herein will not require any consent, approval,
authorization or permit of, or filing with or notification to any Governmental
Entity, except for (i) applicable requirements, if any, of the Securities Act,
the
12
Exchange Act, state securities laws and state takeover laws, and the NYSE, (ii)
filing of appropriate merger documentation as Pennsylvania law shall require,
and (iii) applicable requirements of the Code and state and local tax laws.
3.7 SEC Documents.
(a) Artra has filed all forms, reports and documents required
to be filed by it with the Securities and Exchange Commission (the "SEC") since
December 31, 1996 (collectively, the "Artra Reports"). As of their respective
dates, the Artra Reports, and any such reports, forms and other documents filed
by Artra with the SEC after the date of this Agreement (i) complied, or will
comply, as to form in all material respects with the applicable requirements of
the Securities Act, the Exchange Act, and the rules and regulations thereunder
and (ii) did not, or will not, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. The representation in clause (ii) of the
preceding sentence shall not apply to any misstatement or omission in any Artra
Report filed prior to the date of this Agreement that was superseded by a
subsequent Artra Report filed prior to the date of this Agreement that
specifically corrected such misstatement or omission in the applicable Artra
Report.
(b) Each of the consolidated balance sheets included in or
incorporated by reference into the Artra Reports (including the related notes
and schedules) fairly presents the consolidated financial position of Artra and
its Subsidiaries as of its date, and each of the xxxxxxx dated statements of
income, retained earnings and cash flows included in or incorporated by
reference into the Artra Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings or cash flows, as
the case may be, of Artra and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments that would not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein. Neither Artra nor
any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of Artra or in the
notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except for (i) liabilities and obligations that
were reserved on or reflected in (including the notes to), the xxxxxxx dated
balance sheet of Artra as of December 31, 1998, (ii) liabilities arising in the
ordinary course of business since December 31, 1998, and (iii) liabilities or
obligations which would not, individually or in the aggregate, have an Artra
Material Adverse Effect.
3.8 Title to Properties. Except as set forth in the Artra Disclosure
Letter, Artra and each of the Artra Subsidiaries owns outright, and has good and
marketable title to, all of its assets, free and clear of all liens, pledges,
mortgages, security interests, conditional sales contracts or other encumbrances
or conflicting claims of any nature whatsoever. None of such assets are subject
to restrictions with respect to the transferability thereof and Artra's title
thereto will not be affected
13
in any way by the transactions described in the Agreement. Neither Artra nor any
of its Subsidiaries owns any real property or any interest in real property.
3.9 Absence of Undisclosed Liabilities. Neither Artra nor any Artra
Subsidiary has any liabilities, obligations or guaranties accrued, absolute,
contingent or otherwise, except as disclosed in the Artra Disclosure Letter or
the Artra Reports, none of which is material and adverse.
3.10 Material Contracts. The Artra Disclosure Letter contains a true
and correct list of each contract, agreement, commitment or obligation (a) which
involves or may involve the payment to or from Artra or any Artra Subsidiary of
amounts in excess of $100,000 per year, (b) any license, franchise or
distribution agreement, which involves or may involve payments to or from Artra
or any Artra Subsidiary in excess of $100,000 per year, (c) any lease of
tangible personal property, which involves or may involve payments to or from
Artra or any Artra Subsidiary in excess of $100,000 per year and (d) any
contract between Artra or any of its Subsidiaries and any affiliate of Artra or
any of the Artra Subsidiaries (collectively the "Artra Material Contracts").
Each of the Artra Material Contracts constitutes a valid and binding obligation
of the parties thereto, is in full force and effect and will continue in full
force and effect following the consummation of the transactions described herein
and thereby, in each case without breaching the terms thereof or resulting in
the forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party (except as
set forth in the Artra Disclosure Letter). Neither Artra nor any Artra
Subsidiary is in, or to the knowledge of Artra alleged to be in, breach or
default under, nor is there or is there alleged to be any basis for termination
of, any Artra Material Contract and, to the knowledge of Artra, no other party
to any Artra Material Contract has breached or defaulted thereunder, and no
event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by Artra, any Artra Subsidiary or, to the knowledge of Artra, by any
such other party. Neither Artra nor any Artra Subsidiary is currently
renegotiating any Artra Material Contract or paying liquidated damages in lieu
of the performance thereunder.
3.11 Litigation. Except as set forth in the Artra Disclosure Letter,
there are no actions, suits or proceedings pending against Artra or any Artra
Subsidiaries or, to the knowledge of Artra, threatened against Artra or the
Artra Subsidiaries, at law or in equity, or before or by any federal or state
commission, board, bureau, agency or instrumentality, that are reasonably likely
to have an Artra Material Adverse Effect.
3.12 Absence of Certain Changes. Except as specifically described in
this Agreement or set forth in the Artra Disclosure Letter, since December 31,
1998, there has not been any: (i) Artra Material Adverse Effect; (ii)
declaration, setting aside or payment of any dividend or other distribu tion
with respect to Artra's capital stock (other than regular quarterly cash
dividends including any increase thereof consistent with past practice); (iii)
material change in Artra's financial condition, or (iv) material change in
Artra's accounting principles, practices or methods.
14
3.13 Taxes.
(a) Each of Artra and its Subsidiaries has filed all material
tax returns and reports required to be filed by it, or requests for extensions
to file such returns or reports have been timely filed and granted and have not
expired, and all tax returns and reports are complete and accurate in all
respects, except to the extent that such failures to file, have extensions
granted that remain in effect or be complete and accurate in all respects, as
applicable, individually or in the aggregate, would not have an Artra Material
Adverse Effect. Artra and each of the Artra Subsidiaries has paid (or Artra has
paid on its behalf) all taxes shown as due on such tax returns and reports. The
most recent financial statements contained in the Artra Reports reflect an
adequate reserve for all taxes payable by Artra and its Subsidiaries for all
taxable periods and portions thereof accrued through the date of such financial
statements, and no deficiencies for any taxes have been proposed, asserted or
assessed against Artra and its Subsidiaries that are not adequately reserved
for, except for inadequately reserved taxes and inadequately reserved
deficiencies that would not, individually or in the aggregate, have an Artra
Material Adverse Effect. No requests for waivers of the time to assess any taxes
against Artra or any Artra Subsidiary have been granted or are pending, except
for requests with respect to such taxes that have been adequately reserved for
in the most recent financial statements contained in the Artra Reports, or, to
the extent not adequately reserved, the assessment of which would not,
individually or in the aggregate, have an Artra Material Adverse Effect.
(b) As used in this Section 3.13, "taxes" shall include all
federal, state, local and foreign income, franchise, property, sales, use,
excise and other taxes, including obligations for withholding taxes from
payments due or made to any other Person or entity and any interest, penalties
or additions to tax.
3.14 Employee Benefit Plans. Except as described in the Artra
Disclosure Letter: (i) all employee benefit plans or programs maintained for the
benefit of the current or former employees or directors of Artra or any of its
Subsidiaries that are sponsored, maintained or contributed to by Artra or any of
its Subsidiaries, or with respect to which Artra or any of its Subsidiaries has
any liability, including without limitation any such plan that is an "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), are in compliance with all applicable
requirements of law, including ERISA and the Code, and (ii) neither Artra nor
any of its Subsidiaries has any liabilities or obligations with respect to any
such employee benefit plans or programs, whether accrued, contingent or
otherwise, nor to the knowledge of Artra are any such liabilities or obligations
expected to be incurred. The execution of, and performance of the transactions
described in this Agreement will not (either alone or upon the occurrence of any
additional or subsequent events) constitute an event under any benefit plan,
policy, arrangement or agreement or any trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any employee. The only severance agreements or
severance policies applicable to Artra or any of its Subsidiaries are the
agreements and policies specifically referred to in the Artra Disclosure Letter.
3.15 Labor Matters. There is no labor strike, labor dispute, work
slowdown, stoppage or lockout actually pending, or to the knowledge of Artra,
threatened against or affecting Artra or any
15
of its Subsidiaries. There is no unfair labor practice or labor arbitration
proceeding pending or, to the knowledge of Artra, threatened against Artra or
any of its Subsidiaries relating to their business.
3.16 Insurance. The Artra. Disclosure Letter contains a complete and
accurate list and description of all policies of fire, liability, product
liability and other forms of insurance presently in effect insuring Artra, its
Subsidiaries and their respective assets.
3.17 No Brokers. Artra has not entered into any contract, arrangement
or understanding with any person or firm that may result in the obligation of
Artra, the Acquisition Corp., WWWX or the Merger Sub to pay any finder's fee,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
described herein except as set forth in the Artra Disclosure Letter. Other than
the foregoing arrangements, Artra is not aware of any claim for payment of any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions described herein.
ARTICLE 4
COVENANTS
4.1 Alternative Proposals. Prior to the Effective Time, each of WWWX
and the Acquisition Corp. agrees (a) that neither it nor any of its Subsidiaries
shall, nor shall it or any of its Subsidiaries permit their respective officers,
directors, employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its shareholders) with respect to a
merger, acquisition, consolidation or similar transaction involving, and
purchase of (i) all or any significant portion of the assets of the Acquisition
Corp. or of any Subsidiary of the Acquisition Corp., (ii) any of the outstanding
shares of Acquisition Corp. Common Stock or Preferred Stock or (iii) any of the
outstanding shares of the capital stock or other equity interest of any
Subsidiary of the Acquisition Corp. (any such proposal or offer being
hereinafter referred to as an "Alternative Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Alternative Proposal
(excluding the Merger described in this Agreement), or otherwise facilitate any
effort or attempt to make or implement an Alternative Proposal; and (b) that it
will notify Artra immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such negotia tions or
discussions are sought to be initiated or continued with, it; provided, however,
that nothing contained in this Section 4.1 shall prohibit the Board of Directors
of WWWX from furnishing information to or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona fide
Alternative Proposal, if, and only to the extent that, (i) the Board of
Directors of WWWX, determines in good faith that such action is required for the
Board of Directors to comply with its fiduciary duties to shareholders imposed
by law, (ii) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, WWWX provides written
16
notice to Artra to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person or entity, and (iii) WWWX
keeps Artra informed of the status and all material information with respect to
any such discussions or negotiations. Nothing in this Section 4.1 shall (x)
permit WWWX or Artra to terminate this Agreement (except as specifically
provided in Article 6 hereof), (y) permit WWWX or the Acquisition Corp. to enter
into any agreement with respect to an Alternative Proposal for as long as this
Agreement remains in effect (it being agreed that for as long as this Agreement
remains in effect, neither WWWX nor the Acquisition Corp. shall enter into any
agreement with any person that provides for, or in any way facilitates, an
Alternative Proposal (other than a confidentiality agreement in customary
form)), or (z) affect any other obligation of WWWX, the Acquisition Corp. or the
Merger Sub under this Agreement.
4.2 Interim Operations.
(a) Prior to the Effective Time, except as may be set forth in
the Acquisition Corp. Disclosure Letter or as described in any other provision
of this Agreement, unless Artra has consented in writing thereto, WWWX: (i)
shall, and shall cause the Acquisition Corp. and each of its Subsidiaries to
conduct their respective operations according to their usual, regular and
ordinary course; (ii) shall use its reasonable efforts, and shall cause the
Acquisition Corp. and each of its Subsidiaries to use its reasonable efforts, to
preserve intact their assets and business organizations and goodwill, keep
available the services of their respective officers and employees and maintain
satisfactory relationships with those persons having business relationships with
them; (iii) shall not amend the Articles of Incorporation or Bylaws or
comparable governing instruments of the Acquisi tion Corp. or any of its
Subsidiaries; (iv) shall promptly notify Artra of any material breach of any
representation or warranty contained herein or any WWWX Material Adverse Effect;
(v) shall promptly deliver to Artra true and correct copies of all monthly
financial statements of WWWX, the Acquisition Corp. and each of its Subsidiaries
promptly after the end of each month; (vi) shall not permit the Acquisition
Corp. or any of its Subsidiaries to (x) issue any shares of its capital stock,
effect any stock split or otherwise change its capitalization as it existed on
the date hereof, (y) grant, confer or award any option, warrant, conversion
right or other right to acquire any shares of its capital stock or grant, confer
or award any bonuses or other forms of cash incentives to any officer, director
or key employee except consistent with past practice or (z) increase any
compensation under any employment agreement with any of its present or future
officers, directors or employees, except for normal increases consistent with
past practice, grant any severance or termination pay to, or enter into any
employment or severance agreement with any officer or director or amend any such
agreement in any material respect, adopt any new employee benefit plan
(including any stock option, stock benefit or stock purchase plan) or amend any
existing employee benefit plan in any material respect; (vii) shall not permit
the Acquisition Corp. or any of its Subsidiaries, to (x) declare, set aside or
pay any dividend or make any other distribution or payment with respect to any
shares of the Acquisition Corp.'s capital stock or other ownership interests or
(y) directly or indirectly redeem, purchase or otherwise acquire any shares of
its capital stock or capital stock of any of its Subsidiar ies, or make any
commitment for any such action; (viii) shall not permit the Acquisition Corp. or
any of its Subsidiaries to, sell, lease or otherwise dispose of any of its
assets (including capital stock of Subsidiaries) except in the ordinary course
of business, or to acquire any business or assets; (ix) shall
17
not, and shall not permit the Acquisition Corp. or any of its Subsidiaries to
incur any material amount of indebtedness for borrowed money or make any loans,
advances or capital contributions to, or investments in, any other person other
than pursuant to the Loan Agreement, or issue or sell any debt securities, other
than borrowings under existing lines of credit in the ordinary course of
business; (x) shall not permit the Acquisition Corp. or any of its Subsidiaries
to, authorize or make capital expenditures except as described in the Loan
Agreement; (xi) shall not permit the Acquisition Corp. or any of its
Subsidiaries to mortgage or otherwise encumber or subject to any lien any of
their properties or assets except as would not be reasonably likely to have an
Acquisition Corp. Material Adverse Effect; (xii) shall not, and shall not permit
the Acquisition Corp. or any of its Subsidiaries to, make any change to its
accounting (including tax accounting) methods, principles or practices, except
as may be required by generally accepted accounting principles and except, in
the case of tax accounting methods, principles or practices, in the ordinary
course of business of the Acquisition Corp. or any of its Subsidiaries; and
(xiii) shall not permit the Acquisition Corp. or any of its Subsidiaries to
enter into any joint venture, production or marketing arrangements without
consulting with Artra prior thereto.
(b) Prior to the Effective Time, except as set forth in the
Artra Disclosure Letter or as described in this Agreement, unless WWWX has
consented in writing thereto, Artra: (i) shall not issue any shares of its
capital stock (other than pursuant to any Artra Stock Option Plans) or effect
any stock split of its capital stock; (ii) shall promptly notify the Acquisition
Corp. of any breach of any representation or warranty contained herein or any
Artra Material Adverse Effect; and (iii) shall promptly deliver to WWWX true and
correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
4.3 Meetings of Stockholders. Each of Artra, WWWX and the Acquisition
Corp. shall take all action necessary in accordance with applicable law and its
Articles or Certificate of Incorporation and Bylaws to convene a meeting of its
shareholders as promptly as practicable to consider and vote upon the approval
of this Agreement, the Plan of Merger and the Merger. The Board of Directors of
each of Artra, WWWX and the Acquisition Corp. shall recommend such approval, and
Artra, WWWX and the Acquisition Corp. shall each take all lawful action to
solicit such approval, including, without limitation, to the extent applicable
to each, timely mailing the Proxy Statement/Prospectus (as defined in Section
4.7); provided, however, that such recommendation or solicitation is subject to
any action (including any withdrawal or change of its recommendation) taken by,
or upon authority of, the Board of Directors of Artra, WWWX or the Acquisition
Corp., as the case may be, in the exercise of its good faith judgment as to its
fiduciary duties to its shareholders imposed by law. As used herein, the
"approval" of the WWWX shareholders shall mean the approval by at least a
majority in interest of all disinterested WWWX shareholders of record entitled
to vote at a duly convened meeting, unless a greater number is otherwise
required by law. "Disinterested WWWX shareholders" shall mean all shareholders
of record other than Xxxxxx X. Xxxx and any person or entity directly or
indirectly, through one or more intermediaries, controlled by Xxxxxx X. Xxxx,
and any entity under common control with any such entity controlled by Xxxxxx X.
Xxxx.
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4.4 Filings, Other Action. Subject to the terms and conditions herein
provided, Artra and WWWX shall: (a) use all reasonable efforts to cooperate with
one another in (i) determining which filings are required to be made prior to
the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connec tion with the execution and delivery of this
Agreement and the consummation of the transactions described herein and (ii)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations; and (b) use all reasonable efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions described in this Agreement. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors of the Artra, WWWX and the
Acquisition Corp. shall take all such necessary action.
4.5 Inspection of Records. From the date hereof to the Effective Time,
each of Artra and WWWX shall: (i) allow all designated officers, attorneys,
accountants and other representatives of the other reasonable access at all
reasonable times to the offices, records and files, correspondence, audits and
properties, as well as to all information relating to commitments, contracts,
titles and financial position, or otherwise pertaining to the business and
affairs, of Artra and WWWX and their respective Subsidiaries, as the case may
be, (ii) furnish to the other, the other's counsel, financial advisors, auditors
and other authorized representatives such financial and operating data and other
information as such persons may reasonably request and (iii) instruct their
respective employees, counsel and financial advisors to cooperate with the
investigation of the respective businesses of each.
4.6 Publicity. The initial press release relating to this Agreement
shall be a joint press release approved by both parties and thereafter Artra and
WWWX shall, subject to their respective legal obligations (including
requirements of stock exchanges and other similar regulatory bodies), consult
with each other, and use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise making public
statements with respect to the transactions described herein and in making any
filings with any federal or state governmental or regulatory agency or with any
national securities exchange with respect thereto.
4.7 Registration Statements. Artra and WWWX shall cooperate and
promptly prepare and the Acquisition Corp. shall file with the SEC as soon as
practicable a Registration Statement on Form S-4 (the "Form S-4") under the
Securities Act, with respect to the Acquisition Corp. Common Stock issuable in
the Merger, which shall also serve as the proxy statement with respect to the
meeting of the shareholders of Artra and WWWX in connection with the Merger (the
"Proxy State ment/Prospectus"). In addition, Artra and WWWX shall cooperate and
promptly prepare a Registra tion Statement or Form S-1 (the "Form S-1") under
the Securities Act, or such other form as may be permitted under applicable SEC
regulations, with respect to the reoffer and resale of shares of Acquisition
Corp. Common Stock presently held by WWWX and ETCO. The respective parties will
cause the Proxy Statement/Prospectus, the Form S-4 and the Form S-1 to comply as
to form in all
19
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. The Acquisition Corp.
shall use all reasonable efforts, and WWWX and Artra shall cooperate with the
Acquisition Corp., to have the Form S-4 and the Form S-1 declared effective by
the SEC as promptly as practicable, to keep the Form S-4 and the Form S-1
effective as long as is necessary to consummate the Merger and to keep the Form
S-1 effective until the earlier of the date the shares are sold or the date such
shares may be sold pursuant to Rule 144 or similar provision under the
Securities Act. The Acquisition Corp. shall, as promptly as practicable, provide
copies of any written comments received from the SEC with respect to the Form
S-4 or the Form S-1 to Artra and WWWX and advise Artra and WWWX of any verbal
comments with respect to the Form S-4 or the Form S-1 received from the SEC. The
Acquisition Corp. shall use its best efforts to obtain, prior to the effective
date of the Form S-4 or the Form S-1, all necessary state securities law or
"blue sky" permits or approvals required to carry out the transactions described
in this Agreement. The Acquisition Corp. agrees that the Proxy
Statement/Prospectus and each amendment or supplement thereto at the time of
mailing thereof and at the time of the meetings of shareholders of Artra and
WWWX, or, in the case of the Form S-4 or the Form S-1 and each amendment or
supplement thereto, at the time it is filed or becomes effective, will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the foregoing shall not apply to the extent that any such untrue
statement of a material fact or omission to state a material fact was made by
the Acquisition Corp. in reliance upon and in confor mity with written
information concerning Artra furnished to the Acquisition Corp. by Artra specifi
cally for use in the Proxy Statement/Prospectus or the Form S-1 or any amendment
or supplement thereto. Artra agrees that the written information concerning it
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the meeting of shareholders of Artra, or, in the case of written information
concerning Artra provided by it for inclusion in the Form S-4 or the Form S-1 or
any amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No amendment or supplement to the Proxy Statement/ Prospectus or
the Form S-4 or the Form S-1 will be made by the Acquisition Corp., WWWX or
Artra without the approval of the other parties. The Acquisition Corp. will
advise Artra and WWWX promptly of the times when the Form S-4 and the Form S-1
have become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the
Acquisition Corp. Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Proxy Statement/Prospectus, the Form S-4 or the Form S-1 or comments thereon
and responses thereto or requests by the SEC for additional information.
4.8 Listing Application. The Acquisition Corp. shall promptly prepare
and submit to the NYSE a listing application covering the shares of Acquisition
Corp. Common Stock issuable in the Merger, and shall use reasonable efforts to
obtain, prior to the Effective Time, approval for such listing of such Acquired
Corp. Common Stock, subject to official notice of issuance. If the shares of the
Acquisition Corp. Common Stock issuable in the Merger are not approved for
listing on the
20
NYSE prior to the Effective Time, Artra shall prepare and file an application
with the National Association of Securities Dealers, Inc. to list the shares of
the Acquisition Corp. Common Stock on the National Association of Securities
Dealers Automated Quotation Service National Market System ("NASDAQ/NMS"), and
shall use all reasonable efforts to obtain, prior to the Effective Time,
approval for such listing of such Acquisition Corp. Common Stock on the
NASDAQ/NMS.
4.9 Further Action. Each party hereto shall, subject to the fulfillment
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
4.10 Affiliate Letters. At least 30 days prior to the Closing Date,
Artra shall deliver to the Acquisition Corp. a list of names and addresses of
those persons who were, in Artra's reasonable judgment, at the record date for
its shareholders' meeting to approve the Merger, "affiliates" (each such person,
an "Affiliate") of Artra within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act. Artra shall use all reasonable
efforts to deliver or cause to be delivered to the Acquisition Corp., prior to
the Closing Date, from each of the Affiliates of Artra identified in the
foregoing list, an Affiliate Letter in form and substance reasonably
satisfactory to the Acquisition Corp. The Acquisition Corp. shall be entitled to
place legends as specified in such Affiliate Letters on the certificates
evidencing any Acquisition Corp. Common Stock to be received by such Affiliates
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Acquisition Corp. Common Stock,
consistent with the terms of such Affiliate Letters.
4.11 Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
described herein shall be paid by the party incurring such expenses except as
expressly provided herein and except that (a) the filing fee in connection with
the filing of the Form S-4 or Proxy Statement/Prospectus with the SEC and (b)
the expenses incurred in connection with printing and mailing the Form S-4 and
the Proxy Statement/Prospectus, shall be borne by Artra.
4.12 Takeover Statute. If any "fair price", "moratorium", "control
share acquisition" or other form of antitakeover statute or regulation shall
become applicable to the transactions described herein, the Acquisition Corp.
and the members of the Board of Directors of the Acquisition Corp. shall grant
such approvals and take such actions as are reasonably necessary so that the
transactions described herein may be consummated as promptly as practicable on
the terms described herein and thereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions described
herein and thereby.
4.13 Conveyance Taxes. Artra and WWWX shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection
21
with the transactions described in this Agreement that are required or permitted
to be filed on or before the Effective Time.
4.14 Entrade Funding. From and after the Effective Time, Artra shall
commit to provide the Acquisition Corp. with guaranteed funding for the working
capital needs of Entrade, in an amount equal to at least $4,000,000, with credit
for all working capital contributions to Entrade funded by the loans from Artra
made pursuant to the terms of the Loan Agreement, as the same may be amended
from time to time.
4.15 Section 351 Qualification. None of the parties hereto nor any of
their respective Subsidiaries shall knowingly take any action that may
jeopardize the qualification of the Merger as an exchange governed by Section
351 of the Code.
4.16 "Lock-Up" Provisions. WWWX agrees that, except as set forth
herein, commencing on the date hereof and continuing until the first anniversary
of the Effective Time, it shall not: (a) directly or indirectly assign,
transfer, offer, sell, agree to sell, make any short sale, pledge, hypothe cate
or otherwise dispose (collectively, a "Disposition") of any shares of
Acquisition Corp. Common Stock owned by WWWX on the date hereof ("WWWX Stock"),
or (b) engage in any hedging or other transactions with respect to its WWWX
Stock that may have a material impact on the market price of its WWWX Stock, or
that is designed to result in a Disposition of its WWWX Stock, even if such WWWX
Stock would be disposed of by someone other than WWWX, including, without
limitation, any short sale (whether or not against the box) or any purchase,
sale, or grant of any right (including, without limitation, any put or call
option) with respect to any of its WWWX Stock or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from its WWWX Stock. Notwithstanding
the foregoing, from and after the Effective Time, WWWX shall be entitled to (a)
make bona fide pledges of its WWWX Stock to an institutional lender or
nationally recognized brokerage house, and any such pledgee shall have the right
to liquidate such shares in the exercise of any remedies available to it under
its loan arrange ments with WWWX, without regard to the restrictions set forth
herein, and (b) make a one-time distribution of up to 25% of its WWWX Stock to
the shareholders of WWWX, pro rata in accordance with their respective stock
interests in WWWX as determined by the WWWX Board of Directors.
ARTICLE 5
CONDITIONS
5.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions described herein shall
have been approved in the manner required by applicable law or by the applicable
regulations of any stock exchange or other regulatory body, as the case may be,
by the holders of the issued and outstanding shares of capital stock of Artra
and WWWX.
22
(b) None of the parties hereto shall be subject to any order
or injunction of a court of competent jurisdiction that prohibits the
consummation of the transactions described in this Agreement. In the event any
such order or injunction shall have been issued, each party agrees to use its
reasonable efforts to have any such injunction lifted.
(c) The Form S-4 shall have become effective and shall be
effective at the Effective Time, and no stop order suspending effectiveness of
the Form S-4 shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, or, to the knowledge of the Acquisition Corp,
threatened, and all necessary approvals under state securities laws relating to
the issuance or trading of the Acquisition Corp. Common Stock and Preferred
Stock to be issued to the Artra shareholders in connection with the Merger shall
have been received.
(d) All consents, authorizations, orders and approvals of (or
filings or registra tions with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time and except where, in the opinion of Artra or
WWWX, as the case may be, the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have a material
adverse effect on the business, results of operations or financial condition of
Artra and the Acquisition Corp. (and their respective Subsidiaries), taken as a
whole, following the Effective Time.
(e) The Acquisition Corp. Common Stock to be issued to the
Artra shareholders in connection with the Merger shall have been approved for
listing on the NYSE, subject only to official notice of issuance, or if such
listing has not been approved, the Acquisition Corp. shall have applied for and
be diligently pursuing listing on the NASDAQ/NMS.
(f) The Employment Agreements between Artra and Xxxxxx X.
Xxxx, Xxxxxxxx Xxxxx, Xxxx Xxxxx and Xxxx Xxxxxx shall have been assigned by
Artra to, and amended by, the Acquisition Corp.
(g) The Board of Directors of the Acquisition Corp. shall have
been elected in accordance with Section 1.4 hereof, and the Articles of
Incorporation and By-Laws of the Acquisition Corp. shall have been amended to
the extent required to cause them to be in compliance with any then applicable
provision or requirement of the PBCL or the NYSE (or, if applicable, the
NASDAQ/NMS).
5.2 Conditions to Obligation of WWWX, the Acquisition Corp. and the
Merger Sub to Effect the Merger. The obligation of WWWX and the Acquisition
Corp. to effect the Merger shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions:
23
(a) Artra shall have performed in all material respects its
agreements contained in this Agreement and the Loan Agreement required to be
performed on or prior to the Closing Date, the representations and warranties of
Artra contained in this Agreement and in any document delivered in connection
herewith shall be true and correct as of the Closing Date, except (i) for
changes specifically permitted by this Agreement and (ii) that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date, and WWWX and the Acquisition
Corp. shall have received a certificate of the President or a Vice President of
Artra, dated the Closing Date, certifying to such effect.
(b) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial condition,
business or operations of Artra and its Subsidiaries, taken as a whole, that
would have or would be reasonably likely to have an Artra Material Adverse
Effect.
5.3 Conditions to Obligation of Artra to Effect the Merger. The
obligation of Artra to effect the Merger shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions:
(a) Each of WWWX, the Acquisition Corp. and the Merger Sub
shall have performed in all material respects its respective agreements
contained in this Agreement required to be performed on or prior to the Closing
Date, the representations and warranties of WWWX, the Acquisition Corp. and the
Merger Sub contained in this Agreement and in any document delivered in
connection herewith shall be true and correct as of the Closing Date, except (i)
for changes specifically permitted by this Agreement and (ii) that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date, and Artra shall have received a
certificate of the President or a Vice President of WWWX, the Acquisition Corp.
and the Merger Sub, dated the Closing Date, certifying to such effect.
(b) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial condition,
business or operations of the Acquisition Corp. or any of its Subsidiaries that
would have or would be reasonably likely to have an Acquisition Corp.
Material Adverse Effect.
(c) Artra and the Acquisition Corp. shall have received
written affirmations from Global Trade Group, Ltd. ("GTG") and all of the
shareholders of GTG ("GTG Shareholders") that their representations, warranties,
covenants, and indemnifications set forth in the Acquisition Agreement dated
January 29, 1999 between GTG, the GTG Shareholders and WWWX, shall inure to the
benefit of and be enforceable by Artra and the Acquisition Corp. as if
originally given to Artra and the Acquisition Corp.
(d) Artra and the Acquisition Corp. shall have received
written affirmations from Positive Asset Remarketing, Inc. ("PAR") and all of
the shareholders of PAR ("PAR Shareholders") that their representations,
warranties, covenants, and indemnifications set forth in the Acquisition
24
Agreement dated January 29, 1999 between PAR, the PAR Shareholders and WWWX,
shall inure to the benefit of and be enforceable by Artra and the Acquisition
Corp. as if originally given to Artra and the Acquisition Corp.
(e) The Acquisition Corp. shall have caused AsseTrade to be
converted into or re-created as a Delaware limited liability company, in
accordance with the terms and conditions of an operating agreement that are
reasonably satisfactory to Artra.
(f) That certain Non-Competition Agreement of even date
herewith, by and between the Acquisition Corp. and Xxxxxx X. Xxxx, shall be in
effect at the time of the Closing, without modification or amendment, and there
shall have been no default thereunder.
ARTICLE 6
TERMINATION
6.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval of this Agreement by the shareholders of Artra or WWWX, by
the mutual consent of Artra and WWWX.
6.2 Termination by Either Artra or WWWX. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of Artra if (a) the Merger shall not have been consummated by September 30,
1999, or (b) the approval of either Artra's shareholders or WWWX's shareholders
as required by Section 4.3 shall not have been obtained at a meeting duly
convened therefor or at any adjournment thereof, or (c) a United States federal
or state court of competent jurisdiction or United States federal or state
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions described in
this Agreement and such order, decree, ruling or other action shall have become
final and non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause (c) shall have used all reasonable efforts to
remove such injunction, order or decree; and provided, in the case of a
termination pursuant to clause (a) above, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to consummate
the Merger by September 30, 1999.
6.3 Termination by WWWX. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the shareholders of WWWX referred to in Section 4.3, by action
of the Board of Directors of WWWX, if (a) in the exercise of its good faith
judgment as to fiduciary duties to its shareholders imposed by law, the Board of
Directors of WWWX determines that such termination is required, including by
reason of an Alternative Proposal being made; provided that WWWX shall notify
Artra promptly of WWWX's intention to terminate this Agreement or enter into a
definitive agreement with respect to any Alternative Proposal, but in no event
shall such notice be given less than 48 hours prior to the public announcement
of WWWX's termination of this Agreement, or (b) there has been a breach by Artra
25
of any representation or warranty contained in this Agreement that would have or
would be reasonably likely to have an Artra Material Adverse Effect, or (c)
there has been a material breach of any of the material covenants or agreements
set forth in this Agreement on the part of Artra, which breach is not curable
or, if curable, is not cured within 30 days after written notice of such breach
is given by WWWX to Artra, or (d) the Board of Directors of Artra shall have
withdrawn or modified in a manner materially adverse to WWWX its approval or
recommendation of this Agreement or the Merger.
6.4 Termination by Artra. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the shareholders of Artra referred to in Section 4.3, by action
of the Board of Directors of Artra, if (a) the Board of Directors of WWWX shall
have withdrawn or modified in a manner materially adverse to Artra its approval
or recommendation of this Agreement or the Merger, or (b) there has been a
breach by WWWX or the Acquisition Corp. of any representation or warranty
contained in this Agreement that would have or would be reasonably likely to
have an Acquisition Corp. Material Adverse Effect, or (c) there has been a
material breach of any of the material covenants or agreements set forth in this
Agreement on the part of WWWX, the Acquisition Corp. or the Merger Sub, which
breach is not curable or, if curable, is not cured within 30 days after written
notice of such breach is given by Artra to WWWX.
6.5 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article 6,
all obligations of the parties hereto shall terminate, except the obligations of
the parties pursuant to Section 4.11 and except for the provisions of Sections
8.2, 8.3, 8.5, 8.7, 8.8, 8.11, 8.12 and 8.13. In the event of the termination of
this Agreement solely pursuant to clause (b) of Section 6.2 because the
requisite approval of Artra's shareholders shall not have been obtained, all
obligations of WWWX and the Acquisition Corp. to repay the amounts loaned to
either or both of them by Artra under the Loan Agreement shall terminate and the
loans made by Artra to WWWX and to the Acquisition Corp. under the Loan
Agreement shall be forgiven as a "break-up" fee to WWWX and the Acquisition
Corp. equal to the aggregate amount of the Loan as defined in the Loan
Agreement. In the event of the termina tion of this Agreement solely pursuant to
clause (b) of Section 6.2 because the requisite approval of WWWX's shareholders
shall not have been obtained, WWWX and Acquisition Corp. shall be jointly and
severally obligated to pay Artra a "break-up" fee of $2,000,000, payable in cash
on the date of such termination, in addition to their obligation to repay the
Loan in full. The parties acknowledge and agree that the foregoing "break-up"
fees represent reasonable estimates of their respective costs and expenses
incurred or to be incurred in connection with the transactions described in this
Agreement. Moreover, in the event of termination of this Agreement pursuant to
Section 6.3 or 6.4, nothing herein shall prejudice the ability of the
non-breaching party from seeking damages from any other party for any willful
breach of this Agreement, including without limitation, reasonable attorneys'
fees and the right to pursue any remedy at law or in equity.
6.6 Extension, Waiver. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the
26
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES, INDEMNIFICATION
7.1 Survival of Representations and Warranties. All representations,
warranties, covenants, stipulations, certifications, indemnities and agreements
contained herein or in any document delivered pursuant hereto shall survive the
consummation of the transactions described in this Agreement.
7.2 Indemnification.
(a) WWWX, the Acquisition Corp. and the Merger Sub shall
defend, indemnify and hold Artra harmless from and against any and all claims,
liabilities, damages, losses, deficiencies and expenses, including reasonable
attorneys' fees and expenses and costs of suit (individually a "Loss" and
collectively "Losses") arising out of any and all inaccurate representations and
warran ties and out of any and all breaches of covenants, agreements and
certifications made by or on behalf of WWWX, the Acquisition Corp. and/or the
Merger Sub in this Agreement or in any document delivered by any of them
hereunder, or arising out of or resulting from any occurrence with respect to
the Acquisition Corp. or any of its Subsidiaries or assets prior to the Closing
Date and not disclosed herein.
(b) Artra shall defend, indemnify and hold WWWX, the
Acquisition Corp. and the Merger Sub harmless from and against any and all
Losses arising out of any and all inaccurate representations and warranties and
out of any and all breaches of covenants and agreements and certifications made
by or on behalf of Artra in this Agreement or in any document delivered by Artra
hereunder, or arising out of or resulting from any occurrence with respect to
Artra or any of its Subsidiaries or assets prior to the Closing Date and not
disclosed herein.
7.3 Procedure for Claims. A party seeking indemnification under this
Article 7 (an "Indemnified Party") shall give notice of the claim for losses and
a brief explanation of the basis thereof to the party alleged to be responsible
for indemnification hereunder (an "Indemnitor"). The Indemnitor shall promptly
pay the Indemnified Party any amount due under this Article 7. The Indemnified
Party may pursue whatever legal remedies may be available for recovery of the
losses claimed from any Indemnitor.
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7.4 Third Party Claims. An Indemnified Party shall give any indemnitor
prompt notice of the institution by a third party of any actions, suits or other
administrative or judicial proceedings if the Indemnified Party would be
entitled to claim indemnification under this Article 7 in connection with any
such action, suit or other proceeding. After such notice, any Indemnitor may, or
if so requested by the Indemnified Party, any Indemnitor shall, participate in
any such action, suit or other proceeding or assume the defense thereof, with
counsel satisfactory to the Indemnified Party; provided, however, that the
Indemnified Party shall have the right to participate at its own expense in the
defense of any such action, suit or other proceeding; and provided, further,
that the Indemnitor shall not consent to the entry of any judgment or enter into
any settlement, except with the written consent of the Indemnified Party, that
(a) fails to include as an unconditional term thereof the giving by the claimant
or plaintiff to the Indemnified Party of a release from all liability in respect
of any such action, suit or other proceeding or (b) grants the claimant or
plaintiff any injunctive relief against the Indemnified Party. Any failure to
give prompt notice under this Section 7.4 shall not bar an Indemnified Party's
right to claim indemnification under this Article 7, except to the extent that
an Indemnified Party shall have been harmed by such failure.
ARTICLE 8
GENERAL PROVISIONS
8.1 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to Artra: If to WWWX, the Acquisition Corp. or
the Merger Sub:
Artra Group Incorporated WorldWide Web NetworX Corporation
000 Xxxxxxx Xxxxxx 000 Xxxxxx Xxx, Xxxxx 000
Xxxxxxxxxx, XX 00000 Xx. Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Attention: Xxxxxx X. Xxxx, President
President and COO (000) 000-0000
(000) 000-0000
With copies to: With copies to:
Duane, Morris & Heckscher LLP Xxxxxxxx Xxxxxxx Xxxx, Esquire
One Liberty Place 000 Xxxxxxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000 Ft. Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, (000) 000-0000
Esquire
(000) 000-0000
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or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
8.2 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
8.3 Entire Agreement. This Agreement, the Plan of Merger, the
Acquisition Corp. Disclosure Letter, and the Artra Disclosure Letter constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
8.4 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
shareholders of Artra and WWWX, but after any such share holder approval, no
amendment shall be made which by law requires the further approval of
shareholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
its rules of conflict of laws.
8.6 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
8.7 Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
8.8 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
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8.9 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.10 Incorporation. The Acquisition Corp. Disclosure Letter, the Artra
Disclosure Letter, and the Plan of Merger referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
8.11 Severability. Any term or provision of this Agreement which is
invalid or unenforce able in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unen forceable, the provision shall be
interpreted to be only so broad as is enforceable.
8.12 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court located in the
Commonwealth of Pennsylvania, this being in addition to any other remedy to
which they are entitled at law or in equity.
8.13 Subsidiaries. As used in this Agreement, the word "Subsidiary"
when used with respect to any party means any corporation or other organization,
whether incorporated or unincor porated, of which such party directly or
indirectly owns or controls at least one-half of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organiza tion, or any organization of which such party is a
general partner or manager.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
ARTRA GROUP INCORPORATED
By:________________________________
Title:________________________
WORLDWIDE WEB NETWORX
CORPORATION
By:________________________________
Title:________________________
NA ACQUISITION CORP.
By:________________________________
Title:________________________
WWWX MERGER SUBSIDIARY, INC.
By:________________________________
Title:________________________
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