EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
by and among
SHAMPAN, LAMPORT HOLDINGS LIMITED,
TOMCI ACQUISITION CORP.,
and
XXXXXXXXXXXX.XXX, INC.
January 26, 2000
TABLE OF CONTENTS
Page
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I. THE MERGER.............................................................2
Section 1.01 The Merger..................................................2
Section 1.02 Effective Time..............................................2
Section 1.03 Closing.....................................................3
Section 1.04 Certificate of Incorporation and By-Laws of the
Surviving Corporation............................................3
II. STATUS AND CONVERSION OF SECURITIES; OTHER AGREEMENTS..................3
Section 2.01 Common Stock of Xxxxxxxxxxxx.xxx and the Merger-Sub.........3
Section 2.02 Xxxxxxxxxxxx.xxx Options and Warrants.......................4
Section 2.03 Exchange of Xxxxxxxxxxxx.xxx Capital Stock..................6
Section 2.04 Registration................................................7
Section 2.05 Board of Directors of the Parent............................7
III. REPRESENTATIONS AND WARRANTIES.........................................8
Section 3.01 Representations and Warranties of Xxxxxxxxxxxx.xxx..........8
Section 3.02 Representations and Warranties of the Parent and the
Merger-Sub......................................................17
IV. COVENANTS.............................................................29
Section 4.01 Covenants of the Parent and the Merger-Sub.................29
Section 4.02 Covenants of Xxxxxxxxxxxx.xxx..............................34
Section 4.03 British Columbia Reporting.................................38
Section 4.04 Amendment to Form 10-SB....................................38
V. CONDITIONS............................................................39
Section 5.01 Conditions to Each Party's Obligation to Effect the Merger.39
Section 5.02 Conditions to Obligations of the Parent and the Merger-Sub.40
Section 5.03 Conditions to Obligation of Xxxxxxxxxxxx.xxx to Effect the
Merger..........................................................42
VI. TERMINATION...........................................................44
Section 6.01 Termination................................................44
Section 6.02 Effect of Termination......................................46
VII. MISCELLANEOUS.........................................................46
Section 7.01 Fees and Expenses..........................................46
Section 7.02 Further Actions............................................46
Section 7.03 Availability of Equitable Remedies.........................47
Section 7.04 Survival...................................................47
Section 7.05 Modification...............................................47
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Page
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Section 7.06 Notices....................................................47
Section 7.07 Waiver.....................................................48
Section 7.08 Binding Effect.............................................49
Section 7.09 No Third-Party Beneficiaries...............................49
Section 7.10 Severability...............................................49
Section 7.11 Merger; Assignability......................................49
Section 7.12 Headings...................................................50
Section 7.13 Counterparts; Governing Law; Jurisdiction..................50
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AGREEMENT AND PLAN OF MERGER
by and among
SHAMPAN, LAMPORT HOLDINGS LIMITED,
TOMCI ACQUISITION CORP.,
and
XXXXXXXXXXXX.XXX, INC.
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), is dated
as of January 26, 2000, by and among SHAMPAN, LAMPORT HOLDINGS LIMITED, a
Washington corporation, whose address is 1260 000 Xxxxxxxxx Xxxxxx, P.O. Box
10372 Pacific Center, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 (the "Parent"), TOMCI
ACQUISITION CORP., a Delaware corporation and wholly-owned subsidiary of Parent,
whose address is 1260 000 Xxxxxxxxx Xxxxxx, P.O. Box 10372 Pacific Center,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 (the "Merger-Sub") and XXXXXXXXXXXX.XXX,
INC., a Delaware corporation, whose address is 000 Xxxxxxxx, Xxxxx 000, Xxx
Xxxx, Xxx Xxxx 00000 ("Xxxxxxxxxxxx.xxx"). Xxxxxxxxxxxx.xxx shall be the
surviving corporation of the proposed merger between the Merger-Sub and
Xxxxxxxxxxxx.xxx and, in such capacity, Xxxxxxxxxxxx.xxx shall sometimes be
referred to herein as the "Surviving Corporation."
W I T N E S S E T H:
-------------------
WHEREAS, the respective Board of Directors of the Parent, the
Merger-Sub and Xxxxxxxxxxxx.xxx have determined that it is advisable and in the
best interests of their respective equity owners to consummate the business
combination transaction provided for herein in which the Merger-Sub would merge
(the "Merger") with and into Xxxxxxxxxxxx.xxx; and
WHEREAS, Parent, the Merger-Sub and Xxxxxxxxxxxx.xxx desire to
make certain agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the mutual premises,
covenants, and agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I. THE MERGER.
Section 1.01 The Merger.
At the Effective Time (as defined in Section 1.02), upon the
terms and subject to the conditions of this Agreement, the Merger-Sub shall be
merged with and into Xxxxxxxxxxxx.xxx in accordance with the Delaware General
Corporation Law (the "DGCL"). Xxxxxxxxxxxx.xxx shall be the surviving
corporation in the Merger, and the name of the Surviving Corporation shall be
"XXXXXXXXXXXX.XXX, INC." As a result of the Merger, all outstanding shares of
capital stock of Xxxxxxxxxxxx.xxx (the "Xxxxxxxxxxxx.xxx Capital Stock"), and
any options, warrants or other securities convertible into Xxxxxxxxxxxx.xxx
Capital Stock shall be converted in the manner provided in Article II.
Section 1.02 Effective Time.
At the Closing (as defined in Section 1.03), a certificate of
merger (the "Certificate of Merger") shall be duly prepared by the Surviving
Corporation and delivered to the Secretary of State of Delaware for filing as
provided in the DGCL, on, or as soon as practicable after, the Closing Date (as
defined in Section 1.03). The Merger shall become effective as soon as the
Certificate of Merger has been filed with the Secretary of State of Delaware
(the date and time when such condition has been satisfied being referred to
herein as the "Effective Time").
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Section 1.03 Closing.
The closing of the Merger (the "Closing") will take place at
the offices of Camhy Karlinsky & Xxxxx LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000 on or before February ___, 2000 (the "Closing Date"). At the Closing,
there shall be delivered to Xxxxxxxxxxxx.xxx and the Parent the certificates and
other documents and instruments required to be delivered under Article V. The
Closing will be effective as of the Effective Time.
Section 1.04 Certificate of Incorporation and By-Laws of the Surviving
Corporation.
At the Effective Time, (i) the Certificate of Incorporation of
Xxxxxxxxxxxx.xxx in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation and (ii) the By-Laws
of Xxxxxxxxxxxx.xxx as in effect immediately prior to the Effective Time shall
be the By-Laws of the Surviving Corporation. The Certificate of Incorporation
and By-Laws of Xxxxxxxxxxxx.xxx as in effect as of the date hereof and to be in
effect as of the Effective Time are attached hereto as Exhibits 1.04-1 and
1.04-2, respectively.
Section 1.05 Certificate of Incorporation and By-Laws of
the Parent The Certificate of Incorporation and the By-Laws of the Parent as in
effect on the date hereof and to be in effect as of the Effective Time are
attached hereto as Exhibits 1.05-1 and 1.05-2, respectively.
II. STATUS AND CONVERSION OF SECURITIES; OTHER AGREEMENTS.
Section 2.01 Common Stock of Xxxxxxxxxxxx.xxx and the Merger-Sub.
(a) Each share of common stock, par value $.01 per share, of
the Merger-Sub outstanding immediately prior to the Closing shall remain
outstanding and shall, by virtue of the Merger and without any further action on
the part of the holders thereof, be converted into one (1)
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share of common stock, par value $.01 per share, of the Surviving Corporation
(the "Surviving Corporation Common Stock"), so that at the Effective Time, the
Parent shall be the holder of all of the issued and outstanding shares of the
Surviving Corporation Common Stock.
(b) Each share of common stock, par value $.01 per share, of
Xxxxxxxxxxxx.xxx (the "Xxxxxxxxxxxx.xxx Common Stock") issued and outstanding
prior to the Closing shall be converted into 1.15 shares of the Parent Common
Stock.
Section 2.02 Xxxxxxxxxxxx.xxx Options and Warrants.
(a) Schedule 2.02(a) sets forth a true, correct and complete
list of all outstanding options (the "Xxxxxxxxxxxx.xxx Options") to acquire
shares of Xxxxxxxxxxxx.xxx Common Stock granted pursuant to the Xxxxxxxxxxxx.xxx
1999 Incentive Compensation Plan (the "Stock Option Plan") or otherwise, the
dates on which such Xxxxxxxxxxxx.xxx Options were granted, the number of
outstanding Xxxxxxxxxxxx.xxx Options granted on each such date and the exercise
price thereof. A copy of the Stock Option Plan is attached hereto as Exhibit
2.02(a)-1.
(b) At the Effective Time, the Parent shall assume the Stock
Option Plan as its own plan (the "Parent Stock Option Plan") and one million
three hundred eighty thousand (1,380,000) shares of Parent Common Stock shall be
reserved for issuance of nonqualified and incentive stock options thereunder.
Parent shall issue options (the "Parent Stock Options") to the former holders of
the Xxxxxxxxxxxx.xxx Options and the director nominees of the Parent as set
forth on Schedule 2.02(b).
(c) At the Effective Time, each outstanding Xxxxxxxxxxxx.xxx
Option, whether vested or unvested, shall be cancelled and replaced with an
option (the "Substituted Option") to acquire, on the same terms and conditions
as were applicable under such Xxxxxxxxxxxx.xxx Option,
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a number of shares of Parent Common Stock equal to the product (rounded down to
the nearest whole share) of (i) the number of shares of Xxxxxxxxxxxx.xxx Common
Stock issuable upon exercise of the Xxxxxxxxxxxx.xxx Option immediately prior to
the Effective Time and (ii) 1.15; and the option exercise price per share of
Parent Common Stock at which such option is exercisable shall be the amount
(rounded up to the nearest whole cent) obtained by dividing (x) the option
exercise price per share of Xxxxxxxxxxxx.xxx Common Stock at which such option
is exercisable immediately prior to the Effective Time by (y) 1.15, pursuant to
the terms and conditions of the Parent Stock Option Plan; provided, however,
that, with respect to Substituted Options granted in respect of any
Xxxxxxxxxxxx.xxx Option to which Section 421 of the Internal Revenue Code of
1986, as amended (the "Code") applies by reason of its qualification under any
of Sections 422-424 of the Code ("qualified stock options"), the option price,
the number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in order to comply
with Section 425(a) of the Code.
(d) Schedule 2.02(d) sets forth a copy of the sole outstanding
warrant (the "Xxxxxxxxxxxx.xxx Warrant") to acquire shares of Xxxxxxxxxxxx.xxx
Common Stock. Xxxxxxxxxxxx.xxx obtain and deliver to the Parent, prior to the
Effective Time, an executed consent (the "Warrant Consent") relating to the
cancellation of the Xxxxxxxxxxxx.xxx Warrant. As soon as practicable after the
Effective Time, the Xxxxxxxxxxxx.xxx Warrant shall be cancelled and replaced
with a warrant (the "Substituted Warrant") to acquire, on the same terms and
conditions as were applicable under such Xxxxxxxxxxxx.xxx Warrant, a number of
shares of Parent Common Stock equal to the product (rounded down to the nearest
whole share) of (i) the number of shares of Xxxxxxxxxxxx.xxx Common Stock
issuable upon exercise of the Xxxxxxxxxxxx.xxx Warrant
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immediately prior to the Effective Time and (ii) 1.15; and the warrant exercise
price per share of Parent Common Stock at which such Warrant is exercisable
shall be the amount (rounded up to the nearest whole cent) obtained by dividing
(x) the warrant exercise price per share of Xxxxxxxxxxxx.xxx Common Stock at
which such warrant is exercisable immediately prior to the Effective Time by (y)
1.15. The Parent shall reserve the aggregate number of shares of Parent Common
Stock underlying such warrant for fulfillment thereof in the event such warrant
is exercised.
Section 2.03 Exchange of Xxxxxxxxxxxx.xxx Capital Stock.
(a) The Parent shall authorize one or more persons to act as a
transfer and exchange agent hereunder (the "Exchange Agent") pursuant to an
agreement (the "Exchange Agent Agreement") in a form to be agreed upon by the
parties hereto. Promptly after the Closing, the Parent shall deposit or cause to
be deposited with the Exchange Agent the certificates representing the shares of
Parent Common Stock issuable to the holders of Xxxxxxxxxxxx.xxx Capital Stock.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding shares of Xxxxxxxxxxxx.xxx Capital Stock (the "Xxxxxxxxxxxx.xxx
Certificates"), a form letter of transmittal (which shall specify that delivery
shall be effective, and risk of loss and title to the Xxxxxxxxxxxx.xxx
Certificates shall pass, only upon delivery of the Xxxxxxxxxxxx.xxx Certificates
to the Exchange Agent) and instructions for such holder's use in effecting
surrender of the Xxxxxxxxxxxx.xxx Certificates in exchange for certificates
representing shares of Parent Common Stock.
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(c) As of the Effective Time, each holder of a
Xxxxxxxxxxxx.xxx Certificate shall surrender the same at the principal offices
of the Exchange Agent, and shall be entitled to receive in exchange therefor a
certificates of the Parent reflecting the amount of Parent Common Stock to be
received by such holder.
Section 2.04 Registration.
The Parent hereby expressly assumes the obligations of
Xxxxxxxxxxxx.xxx under the Investors' Rights Agreement (the "XXX") dated
November 16, 1999 and December 30, 1999 among Xxxxxxxxxxxx.xxx and purchasers of
the Xxxxxxxxxxxx.xxx Common Stock listed on Exhibit A thereto (the "Investors"),
pursuant to Section 2.2 thereof. In the event the Investors exercise their right
to a demand registration, the Parent shall also (i) cause to be registered any
Parent Common Stock underlying the Parent Options and Substituted Warrant and
(ii) shall permit the holders of Parent Common Stock issued to the investors in
the July 16, 1999, private placement of 1,500,003 shares of Xxxxxxxxxxxx.xxx
Common Stock to include such securities in such registration upon the terms and
conditions set forth in the XXX.
Section 2.05 Board of Directors of the Parent.
At the Effective Time, the existing directors of Parent shall
elect to the Board of Directors of the Parent between five (5) and seven (7)
nominees of the Former Xxxxxxxxxxxx.xxx Stockholders, as designated by such
Former Xxxxxxxxxxxx.xxx Stockholders, and immediately thereafter tender their
own resignations from the Board of Directors of Parent.
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III. REPRESENTATIONS AND WARRANTIES.
Section 3.01 Representations and Warranties of Xxxxxxxxxxxx.xxx.
Xxxxxxxxxxxx.xxx represents and warrants to the Parent and the
Merger-Sub as follows:
(a) Organization and Qualification. Xxxxxxxxxxxx.xxx is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full power and authority to conduct its
business as and to the extent now conducted, and currently proposed to be
conducted, and to own, use and lease its assets and properties, except for such
failures to have such power and authority which, individually or in the
aggregate, do not and are not reasonably expected to have a Material Adverse
Effect (as defined in this Section 3.01(a)) on Xxxxxxxxxxxx.xxx.
Xxxxxxxxxxxx.xxx is duly qualified, licensed or admitted to do business and is
in good standing in New York. As used in this Agreement, a "Material Adverse
Effect" shall mean a material adverse effect on the businesses, properties,
assets, liabilities, condition (financial or otherwise) or results of operations
of an entity (or group of entities taken as a whole). Notwithstanding the
foregoing, a Material Adverse Effect shall not include any change in political
or economic matters of general applicability. Xxxxxxxxxxxx.xxx does not directly
or indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
(b) Organizational Documents; Capital Stock; Capitalization.
(i) A true and complete copy of the Certificate of
Incorporation of Xxxxxxxxxxxx.xxx as in effect on the date hereof has
been delivered to Parent.
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(ii) The authorized capital stock of Xxxxxxxxxxxx.xxx
consists of 50,000,000 shares of Xxxxxxxxxxxx.xxx Common Stock. As of
the date hereof, 8,754,733 shares of Xxxxxxxxxxxx.xxx Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable. Xxxxxxxxxxxx.xxx has heretofore delivered a true and
complete table of all of its stockholders.
(iii) Schedule 3.01(b)(iii) attached hereto sets
forth the number of shares of Xxxxxxxxxxxx.xxx Common Stock reserved
for future issuance upon exercise of Xxxxxxxxxxxx.xxx Options granted
and outstanding as of the date hereof and under the Stock Option Plan.
Except as disclosed in Schedule 2.02(a), since January 15, 2000,
through the date of this Agreement, Xxxxxxxxxxxx.xxx has not made any
grants under the Stock Option Plan. Except as set forth on Schedule
2.02(a) and Schedule 2.02(d), there are no outstanding options,
warrants, calls, subscriptions, rights, agreements or other commitments
of any character (contingent or otherwise) of Xxxxxxxxxxxx.xxx to
issue, sell, repurchase, redeem, or otherwise acquire any shares of
Xxxxxxxxxxxx.xxx Capital Stock.
(iv) There are no debt obligations of
Xxxxxxxxxxxx.xxx of any nature whatsoever except as set forth on
Schedule 3.01(b)(iv), and as of the Closing Date, Xxxxxxxxxxxx.xxx will
not have any debt, liabilities, obligations, or contingent obligations
of any nature whatsoever, except as set forth on Schedule 3.01(b)(iv).
(c) Authority Relative to this Agreement. Xxxxxxxxxxxx.xxx has
full power and authority to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery, and performance of this Agreement by Xxxxxxxxxxxx.xxx
and the consummation by Xxxxxxxxxxxx.xxx of the Merger and the
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transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Xxxxxxxxxxxx.xxx, and upon the approval of the
stockholders of Xxxxxxxxxxxx.xxx, no other proceedings on the part of
Xxxxxxxxxxxx.xxx will be necessary to authorize the execution, delivery, and
performance of this Agreement by Xxxxxxxxxxxx.xxx and the consummation by
Xxxxxxxxxxxx.xxx of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Xxxxxxxxxxxx.xxx, and
constitutes the legal, valid, and binding obligation of Xxxxxxxxxxxx.xxx
enforceable against Xxxxxxxxxxxx.xxx in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer or similar laws affecting the enforcement of
creditors' rights generally and general principles of equity (whether considered
in a proceeding at law or in equity).
(d) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of this Agreement by
Xxxxxxxxxxxx.xxx does not, and the performance by Xxxxxxxxxxxx.xxx of
its obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or
breach of, constitute (with or without notice or lapse of time or both)
a default under, result in or give to any person any right of payment
or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any lien,
claim, mortgage, encumbrance, pledge, security interest, equity, or
charge of any kind (any of the foregoing, a "Lien") upon any of the
assets or properties of Xxxxxxxxxxxx.xxx under any of the terms,
conditions, or provisions of (x) the Certificate of Incorporation of
Xxxxxxxxxxxx.xxx, (y) any statute, law, rule, regulation, or ordinance
(collectively, "Laws"), or any judgment, decree, order, writ, permit,
or license (collectively, "Orders"), of any court,
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tribunal, arbitrator, authority, agency, commission, official, or other
instrumentality of the United States, any foreign country, or any
domestic or foreign state, county, city, or other political subdivision
(a "Governmental or Regulatory Authority"), applicable to
Xxxxxxxxxxxx.xxx or any of its assets or properties, or (z) any note,
bond, mortgage, security agreement, indenture, license, franchise,
permit, concession, contract, lease (capital or operating) or other
instrument, obligation, or agreement of any kind (collectively,
"Contracts") to which Xxxxxxxxxxxx.xxx is a party or by which
Xxxxxxxxxxxx.xxx or any of its assets or properties is bound, excluding
from the foregoing clauses (y) and (z) conflicts, violations, breaches,
defaults, terminations, modifications, accelerations and creations, and
impositions of Liens which, individually or in the aggregate, could not
be reasonably expected to have a Material Adverse Effect on
Xxxxxxxxxxxx.xxx or on its ability to consummate the transactions
contemplated by this Agreement.
(ii) Except (x) for the filing of the Certificate of
Merger and other appropriate merger documents required by the DGCL with
the Secretary of State of Delaware, (y) as otherwise disclosed in
Schedule 3.01(d)(ii) hereto, and (z) for the approval of stockholders
of Xxxxxxxxxxxx.xxx, no consent, approval, or action of, filing with,
or notice to any Governmental or Regulatory Authority or other public
or private third party is necessary or required under any of the terms,
conditions or provisions of any Law or Order of any Governmental or
Regulatory Authority or any Contract to which Xxxxxxxxxxxx.xxx is a
party or by which Xxxxxxxxxxxx.xxx or any of its assets or properties
is bound for the execution and delivery of this Agreement by
Xxxxxxxxxxxx.xxx, the performance by Xxxxxxxxxxxx.xxx of its
obligations hereunder or the consummation of the transactions
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contemplated hereby, except for such consents, approvals, or actions
of, filings with or notices to any Governmental or Regulatory Authority
or other public or private third party the failure of which to make or
obtain could not reasonably be expected to have a Material Adverse
Effect on Xxxxxxxxxxxx.xxx, the Surviving Corporation, or on
Xxxxxxxxxxxx.xxx's ability to consummate the transactions contemplated
by this Agreement.
(e) Legal Proceedings. There are no actions, suits,
arbitrations, or proceedings pending, nor to the knowledge of Xxxxxxxxxxxx.xxx,
threatened against, relating to or affecting, Xxxxxxxxxxxx.xxx or any of its
assets and properties which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on Xxxxxxxxxxxx.xxx or on the
ability of Xxxxxxxxxxxx.xxx to consummate the transactions contemplated by this
Agreement. Xxxxxxxxxxxx.xxx is not subject to any judgment, decree, court order,
or writ of any Governmental or Regulatory Authority.
(f) Patents, Trademarks, Intangibles. To the best of
Xxxxxxxxxxxx.xxx's knowledge and belief, it has all right, title and interest
in, or a valid and binding license to use all patents, patent applications,
trademarks, trademark applications, trade names, service marks, copyrights,
copyright applications, franchises, trade secrets, computer programs (in object
or source code form), or other intangible property or asset (collectively,
"Intangibles") which individually or in the aggregate are material to the
conduct of its business. Attached as Schedule 3.01(f) is a true and complete
list of all material Intangibles of Xxxxxxxxxxxx.xxx. Xxxxxxxxxxxx.xxx is not in
default (or with the giving of notice or lapse of time or both, would be in
default) in any material respect under any license to use such Intangibles. To
Xxxxxxxxxxxx.xxx's knowledge, no such Intangibles are being infringed by any
third party and, to Xxxxxxxxxxxx.xxx's knowledge,
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Xxxxxxxxxxxx.xxx is not infringing any Intangible of any third party, except for
such defaults and infringements which, individually or in the aggregate, do not
and are not reasonably expected to have a Material Adverse Effect on
Xxxxxxxxxxxx.xxx or the Surviving Corporation.
(g) Financial Statements. Xxxxxxxxxxxx.xxx has delivered to
the Parent and the Merger-Sub a true, correct and complete copy of the unaudited
financial statements of Xxxxxxxxxxxx.xxx as of December 31, 1999 (the
"Xxxxxxxxxxxx.xxx Balance Sheet"). The Xxxxxxxxxxxx.xxx Balance Sheet fairly
presents the financial condition, assets, liabilities, and stockholders' equity
of Xxxxxxxxxxxx.xxx as of such date.
(h) Absence of Certain Changes or Events. Except as set forth
in Schedule 3.01(h) hereto or as contemplated hereby, since December 31, 1999,
no change, event, or development or combination of changes or developments
(including any worsening of any condition currently existing) has occurred or is
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Xxxxxxxxxxxx.xxx (without regard, however, to changes in
conditions generally applicable to the industry in which Xxxxxxxxxxxx.xxx is
involved or general economic conditions).
(i) Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the Xxxxxxxxxxxx.xxx Balance Sheet,
Xxxxxxxxxxxx.xxx did not have at such date and has not incurred since that date,
any liabilities or obligations (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any nature, except liabilities or
obligations which were incurred in connection with this Agreement and the
transactions contemplated hereby, which were incurred in the ordinary course of
business consistent with past practice.
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(j) Information Supplied. Nothing in this Agreement or any
schedule, exhibit, certificate, document, or statement in writing which has been
supplied by or on behalf of Xxxxxxxxxxxx.xxx, in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact, or omits any statement of a material fact required to be stated or
necessary in order to make the statements contained herein or therein not
misleading. There is no fact known to Xxxxxxxxxxxx.xxx which materially and
adversely affects Xxxxxxxxxxxx.xxx or the Surviving Corporation, which has not
been set forth in this Agreement or in the schedules, exhibits, certificates,
documents, or statements in writing furnished by Xxxxxxxxxxxx.xxx in connection
with the transactions contemplated by this Agreement.
(k) Compliance with Laws and Orders. Xxxxxxxxxxxx.xxx holds
all permits, licenses, variances, exemptions, orders, and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of its
business (the "Xxxxxxxxxxxx.xxx Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders, and approvals which,
individually or in the aggregate, do not and are not reasonably expected to have
a Material Adverse Effect on Xxxxxxxxxxxx.xxx. Xxxxxxxxxxxx.xxx is in compliance
with the terms of the Xxxxxxxxxxxx.xxx Permits, except failures so to comply
which, individually or in the aggregate, do not have and are not reasonably
expected to have a Material Adverse Effect on Xxxxxxxxxxxx.xxx. Xxxxxxxxxxxx.xxx
is not in violation of, or in default under, any Law or Order of any
Governmental or Regulatory Authority, except for violations which, individually
or in the aggregate, do not and are not reasonably expected to have a Material
Adverse Effect on Xxxxxxxxxxxx.xxx.
(l) Compliance with Agreements; Certain Agreements. Neither
Xxxxxxxxxxxx.xxx, nor to the knowledge of Xxxxxxxxxxxx.xxx, any other party
thereto, is in breach
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or violation of, or in default in the performance or observance of any term or
provision of, and no event has occurred which, with notice or lapse of time or
both, is reasonably expected to result in a default under, (x) the Certificate
of Incorporation of Xxxxxxxxxxxx.xxx or (y) any material Contract to which
Xxxxxxxxxxxx.xxx is a party or by which Xxxxxxxxxxxx.xxx or any of its assets or
properties is bound, except in the case of clause (y) for breaches, violations,
and defaults which, individually or in the aggregate, do not and are not
reasonably expected to have a Material Adverse Effect on Xxxxxxxxxxxx.xxx.
(m) Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by Xxxxxxxxxxxx.xxx
and its affiliates directly with the Parent and the Merger-Sub without the
intervention of any person on behalf of Xxxxxxxxxxxx.xxx and its affiliates in
such manner as to give rise to any valid claim by any person against
Xxxxxxxxxxxx.xxx, the Parent, or the Surviving Corporation for a finder's fee,
brokerage commission, or similar payment.
(n) Consents Without Any Condition. Xxxxxxxxxxxx.xxx has not
made any agreement or reached any understanding not approved by the Parent and
the Merger-Sub as a condition for obtaining any consent, authorization,
approval, order, license, certificate, or permit required for the consummation
of the transactions contemplated by this Agreement.
(o) Tax Matters.
(i) Xxxxxxxxxxxx.xxx has filed all tax returns
required to be filed by applicable law prior to the Closing. All tax
returns were (and, as to tax returns not filed as of the date hereof,
will be) true, complete, and correct and filed on a timely basis.
Xxxxxxxxxxxx.xxx (x) has paid all taxes due, or claimed or asserted in
writing by any taxing
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authority to be due, for the periods covered by such tax returns or (y)
has duly and fully provided reserves (in accordance with GAAP) adequate
to reflect all such taxes.
(ii) Xxxxxxxxxxxx.xxx has established (and until the
Closing will maintain) on its books and records reserves adequate to
reflect all material taxes not yet due and payable. Xxxxxxxxxxxx.xxx
has made available to the Parent and the Merger-Sub complete, and
accurate copies of all work papers associated with the calculation of
Xxxxxxxxxxxx.xxx's tax reserves.
(iii) There are no tax liens upon the assets of
Xxxxxxxxxxxx.xxx.
(iv) Xxxxxxxxxxxx.xxx has not requested (and no
request has been made on its behalf) any extension of time within which
to file any material tax return.
(v) (A) No income tax returns have been examined by
any taxing authorities for any periods; and (B) no deficiency for any
material taxes has been suggested, proposed, asserted, or assessed
against Xxxxxxxxxxxx.xxx that has not been resolved and paid in full.
(vi) No audits or other administrative proceedings or
court proceedings are presently pending with regard to any taxes or tax
returns of Xxxxxxxxxxxx.xxx. No written claim has been made by a taxing
authority in a jurisdiction where Xxxxxxxxxxxx.xxx does not file tax
returns such that it is or may be subject to taxation by that
jurisdiction.
(vii) To the extent requested by the Parent and the
Merger-Sub, Xxxxxxxxxxxx.xxx has made available to the Parent and the
Merger-Sub (or, in the case of tax returns to be filed on or before the
Closing, will make available) complete and accurate
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copies of all tax returns and associated work papers filed by or on
behalf of Xxxxxxxxxxxx.xxx for all taxable years ending on or prior to
the Closing.
(viii)No agreements relating to allocating or sharing
of any taxes have been entered into by Xxxxxxxxxxxx.xxx.
(ix) Xxxxxxxxxxxx.xxx has not entered into any
transactions that could give rise to an understatement of Federal
Income Tax.
(x) None of Xxxxxxxxxxxx.xxx or any other person on
behalf of Xxxxxxxxxxxx.xxx has agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar
provisions of state, local or foreign law by reason of a change in
accounting method initiated by Xxxxxxxxxxxx.xxx or has any application
pending with any taxing authority requesting permission for any change
in accounting methods that relate to the business or operations of
Xxxxxxxxxxxx.xxx, and Xxxxxxxxxxxx.xxx has no knowledge that the IRS
has proposed any such adjustment or change in accounting method.
(xi) Xxxxxxxxxxxx.xxx has not been, and is not now, a
member of any consolidated, combined, unitary or affiliated group of
corporations for any tax purposes.
Section 3.02 Representations and Warranties of the Parent and the
Merger-Sub.
The Parent and the Merger-Sub represent and warrant to
Xxxxxxxxxxxx.xxx as follows:
(a) Organization and Qualification. The Parent and the
Merger-Sub are corporations duly organized, validly existing, and in good
standing under the laws of Washington and Delaware, respectively, and have full
corporate power and authority to conduct their business as and to the extent now
conducted, and currently proposed to be conducted, and to own, use and
17
lease their assets and properties. Except for the Parent's ownership of the
Merger-Sub, neither the Parent nor the Merger-Sub directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture, or other business association or entity.
(b) Organizational Documents; Capital Stock; Capitalization.
(i) Attached hereto as Exhibits 3.02(b)-1 and
3.02(b)-2, respectively, are true and complete copies of the
Certificate of Incorporation and By-Laws of the Merger-Sub as in effect
on the date hereof. Attached hereto as Exhibits 1.05-1 and 1.05-2,
respectively, are true and complete copies of the Certificate of
Incorporation and By-Laws of the Parent as in effect on the date
hereof.
(ii) As of the Closing Date, the authorized capital
stock of the Parent will consist solely of one hundred million
(100,000,000) shares of the Parent Common Stock and fifty million
(50,000,000) shares of the Parent Preferred Stock. As of the Closing
Date, the authorized capital stock of the Merger-Sub will consist
solely of one thousand (1,000) shares of the common stock, par value
$.01 per share, of the Merger-Sub (the "Merger-Sub Common Stock"). The
shares of the Parent Common Stock issuable to the Former
Xxxxxxxxxxxx.xxx Stockholders pursuant to Article II hereof, will be,
when issued in accordance with this Agreement, duly authorized, validly
issued, fully paid, and nonassessable.
(iii) As of the date hereof, (i) approximately
2,438,889 shares of Parent Common Stock were issued and outstanding,
all of which are validly issued, fully paid and nonassessable. Schedule
3.02(b)(iii) attached hereto sets forth the number of shares of
18
Parent Common Stock reserved for future issuance upon exercise of
Parent options granted and outstanding as of the date hereof and under
the existing Parent stock option plan. No options have been granted
under the existing Parent stock option plan, and Parent shall undertake
to have such option plan terminated on or before the Effective Date.
Except as set forth on Schedule 3.02(b)(iii), there are no outstanding
options, warrants, calls, subscriptions, rights, agreements or other
commitments of any character (contingent or otherwise) of the Parent or
the Merger-Sub to issue, sell, repurchase, redeem, or otherwise acquire
any shares of the Parent Common Stock or the Merger-Sub Common Stock,
respectively. True and complete copies of all such options, warrants,
calls, subscriptions, rights, agreements and other commitments as in
effect on the date hereof have been delivered to Xxxxxxxxxxxx.xxx.
(iv) There are no debt obligations of the Parent or
the Merger-Sub of any nature whatsoever except as set forth on Schedule
3.02(b)(iv), and as of the Closing Date, neither the Parent nor the
Merger-Sub will have any debt, liabilities, obligations, or contingent
obligations of any nature whatsoever, except as set forth on Schedule
3.02(b)(iv).
(c) Authority Relative to this Agreement. The Parent and the
Merger-Sub have full corporate power and authority to enter into this Agreement
and to perform their respective obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement by the Parent and the Merger-Sub and the consummation by the
Parent and the Merger-Sub of the Merger and the transactions contemplated hereby
have been duly and validly approved by the respective Boards of Directors of the
Parent and the Merger-Sub and Parent as the sole stockholder of the Merger-Sub,
and no other corporate
19
proceedings on the part of the Parent or the Merger-Sub are necessary to
authorize the execution, delivery, and performance of this Agreement by the
Parent and the Merger-Sub and the consummation by the Parent and the Merger-Sub
of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Parent and the Merger-Sub, and constitutes
a legal, valid, and binding obligation of the Parent and the Merger-Sub
enforceable against the Parent and the Merger-Sub in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity
(whether considered in a proceeding at law or in equity).
(d) Non-Contravention; Approvals and Consents.
(i) Except as set forth in Schedule 3.02(d)(i)
hereto, the execution and delivery of this Agreement by the Parent and
the Merger-Sub does not, and the performance by the Parent and the
Merger-Sub of their obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of
time or both) a default under, result in, or give to any person any
right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or
imposition of any Lien on any of the respective assets or properties of
the Parent or the Merger-Sub under any of the terms, conditions or
provisions of (x) the Certificate of Incorporation or By-Laws of the
Parent or the Merger-Sub, (y) any Laws or Orders of any Governmental or
Regulatory Authority applicable to the Parent or the Merger-Sub or any
of their respective assets or properties, or (z) any Contracts to which
either the Parent or the Merger-Sub is a party or by which either
20
the Parent or the Merger-Sub or any of their respective assets or
properties are bound, excluding from the foregoing clauses (y) and (z)
conflicts, violations, breaches, defaults, terminations, modifications,
accelerations, and creations and impositions of Liens, which
individually or in the aggregate, could not be reasonably expected to
have a Material Adverse Effect on the Parent or the Merger-Sub or on
their ability to consummate the transactions contemplated by this
Agreement.
(ii) Except (x) for the filing of the Certificate of
Merger and other appropriate merger documents required by the DGCL with
the Secretary of State of Delaware and appropriate documents with the
relevant authorities of other states in which the Constituent Entities
are qualified to do business, and (y) as disclosed in Schedule
3.02(d)(ii) hereto, no consent, approval, or action of, filing with or
notice to any Governmental or Regulatory Authority or other public or
private third party is necessary or required under any of the terms,
conditions or provisions of any Law or Order of any Governmental or
Regulatory Authority or any Contract to which the Parent or the Merger-
Sub is a party or by which the Parent or the Merger-Sub or any of their
respective assets or properties is bound for the execution and delivery
of this Agreement by the Parent and the Merger-Sub, the performance by
the Parent and the Merger-Sub of their respective obligations hereunder
or the consummation of the transactions contemplated hereby, except for
such consents, approvals or actions of, filing with or notices to any
Governmental or Regulatory Authority or other public or private third
party the failure of which to make or obtain could not reasonably be
expected to have a Material Adverse Effect on the Parent, the
21
Merger-Sub or the Surviving Corporation or on the Parent's and the
Merger-Sub's ability to consummate the transactions contemplated by
this Agreement.
(e) Financial Statements. The Parent has delivered to
Xxxxxxxxxxxx.xxx true, correct, and complete copies of the following: the
audited balance sheets of the Parent (the "Parent Balance Sheets") as of
December 31, 1997 and December 31, 1998; the audited statement of operations of
the Parent (the "Parent Operations Statement") for the years ending December 31,
1997 and December 31, 1998; the audited statement of changes in stockholders'
deficit of the Parent (the "Parent Stockholders' Equity Statement") for the
years ending December 31, 1997 and December 31, 1998; and the audited statement
of cash flows of the Parent (the "Parent Cash Flow Statement") for the years
ending December 31, 1997 and December 31, 1998, and interim unaudited financial
statements of Parent for the quarters ended March 31, 1999, June 30, 1999 and
September 30, 1999 and for the year ended December 31, 1999 (the "Parent Interim
Financial Statements") (together, the "Parent Financial Statements"). The Parent
Financial Statements fairly present the financial condition, assets,
liabilities, stockholders equity and results of operations of the Parent for the
periods indicated. The Merger-Sub is a newly-formed subsidiary of the Parent
which, as of the date hereof, has no assets or liabilities, other than a stated
capital account, has been formed solely for the purposes of the Merger, and has
not conducted and shall not conduct any business except in connection with the
Merger.
(f) Absence of Certain Changes or Events. Except as set forth
in Schedule 3.02(f) hereto, in the Parent Interim Financial Statements or as
contemplated hereby, since December 31, 1999, no change, event, or development
or combination of changes or developments (including any worsening of any
condition currently existing) has occurred or is reasonably expected to have,
22
individually or in the aggregate, a Material Adverse Effect on the Parent or the
Merger-Sub (without regard, however, to changes in conditions generally
applicable to the industries in which the Parent and the Merger-Sub are involved
or general economic conditions).
(g) Absence of Undisclosed Liabilities. Except as set forth in
Schedule 3.02(g) hereto, and for matters reflected or reserved against in the
Parent Balance Sheets included in the Parent Financial Statements, neither
Parent nor the Merger-Sub had at such date and has not incurred since that date,
any liabilities or obligations (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due) of any nature, except liabilities or
obligations which were incurred in connection with this Agreement and the
transactions contemplated hereby or in the ordinary course of business
consistent with past practice.
(h) Legal Proceedings. Except as set forth in Schedule
3.02(h), there are no actions, suits, arbitrations, or proceedings pending or to
the knowledge of the Parent or the Merger- Sub, threatened against, relating to
or affecting, nor to the knowledge of the Parent or the Merger- Sub, are there
any Governmental or Regulatory Authority investigations or audits pending or
threatened against, relating to or affecting, the Parent or the Merger-Sub or
any of their assets and properties which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the Parent or
the Merger-Sub or on the ability of the Parent or the Merger-Sub to consummate
the transactions contemplated by this Agreement. Neither the Parent nor the
Merger- Sub is subject to any judgment, decree, court order, or writ of any
Governmental or Regulatory Authority.
(i) Information Supplied. Nothing in this Agreement or any
schedule, exhibit, certificate, document, or statement in writing which has been
supplied by or on behalf of the Parent
23
or the Merger-Sub, in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact, or omits any statement of a
material fact required to be stated or necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to the Parent
or the Merger-Sub which materially and adversely affects the Parent or the
Merger-Sub, which has not been set forth in this Agreement or in the schedules,
exhibits, certificates, documents, or statements in writing furnished by the
Parent or the Merger-Sub in connection with the transactions contemplated by
this Agreement.
(j) Compliance with Laws and Orders. Except as set forth in
Schedule 3.02(j) hereto, the Parent and the Merger-Sub hold all permits,
licenses, variances, exemptions, orders, and approvals of all Governmental and
Regulatory Authorities necessary for the lawful conduct of its business (the
"Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders, and approvals which, individually or in the aggregate, do
not and are not reasonably expected to have a Material Adverse Effect on the
Parent or the Merger-Sub. The Parent and the Merger-Sub are in compliance with
the terms of the Permits, except failures so to comply which, individually or in
the aggregate, do not have and are not reasonably expected to have a Material
Adverse Effect on the Parent or the Merger-Sub. The Parent and the Merger-Sub
are not in violation of, or in default under, any Law or Order of any
Governmental or Regulatory Authority except for violations which, individually
or in the aggregate, do not and are not reasonably expected to have a Material
Adverse Effect on the Parent or the Merger-Sub.
(k) Compliance with Agreements; Certain Agreements. Neither
the Parent nor the Merger-Sub, nor to the knowledge of the Parent or the
Merger-Sub, any other party thereto, is in breach or violation of, or in default
in the performance or observance of any term or provision of
24
and no event has occurred which, with notice or lapse of time or both, is
reasonably expected to result in a default under, (x) the respective
Certificates of Incorporation and By-Laws of the Parent and the Merger-Sub or
(y) any material Contract to which the Parent or the Merger-Sub is a party or by
which the Parent or the Merger-Sub or any of their assets or properties is
bound, except in the case of clause (y) for breaches, violations, and defaults
which, individually or in the aggregate, do not and are not reasonably expected
to have a Material Adverse Effect on the Parent or the Merger- Sub.
(l) Employee Benefit Plans. Neither the Parent nor the
Merger-Sub has or contributes to any pension, profit-sharing, option, other
incentive plan, or any other type of employee benefit plan, or has any
obligation to or customary arrangement with employees for bonuses, incentive
compensation, vacations, severance pay, sick pay, sick leave, insurance, service
award, relocation, disability, tuition refund, or other benefits, whether oral
or written, other than the existing Parent stock option plan, which plan shall
be cancelled on or prior to the Effective Date.
(m) Patents, Trademarks, Et Cetera. Neither the Parent nor the
Merger-Sub has any material Intangibles.
(n) Insurance. Neither the Parent nor the Merger-Sub has an
insurance policy.
(o) Labor Matters. Xxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxx
are the sole officers of the Parent and the Merger-Sub as of the date hereof,
and neither the Parent nor the Merger-Sub has any other employees.
(p) Facilities, Tangible Property and Assets. Except as set
forth on Schedule 3.02(p), the Parent and the Merger-Sub have no facilities,
tangible property or assets.
25
(q) Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried out by the Parent and the
Merger-Sub and their affiliates directly with Xxxxxxxxxxxx.xxx, without the
intervention of any person on behalf of the Parent or the Merger-Sub and their
affiliates in such manner as to give rise to any valid claim by any person
against the Parent, the Merger-Sub, Xxxxxxxxxxxx.xxx or the Surviving
Corporation for a finder's fee, brokerage commission or similar payment.
(r) Transactions with AffiliatExcept as set forth on Schedule
3.02(r), neither the Parent nor the Merger-Sub is a party to any material
Contract with any of their affiliates or any director or officer for the
purchase, sale, lease or other disposition of property or services.
(s) Tax Matters.
(i) Except as set forth in Schedule 3.02(s), the
Parent and the Merger-Sub have filed all tax returns required to be
filed by applicable law prior to the Closing. All tax returns were
(and, as to tax returns not filed as of the date hereof, will be) true,
complete, and correct and filed on a timely basis. The Parent and the
Merger-Sub (x) have paid all taxes due, or claimed or asserted in
writing by any taxing authority to be due, for the periods covered by
such tax returns or (y) have duly and fully provided reserves (in
accordance with GAAP) adequate to reflect all such taxes.
(ii) The Parent and the Merger-Sub have established
(and until the Closing will maintain) on their respective books and
records reserves adequate to reflect all material taxes not yet due and
payable. The Parent and the Merger-Sub have made available to
Xxxxxxxxxxxx.xxx complete and accurate copies of all work papers
associated with the calculation of the Parent's and the Merger-Sub's
respective tax reserves.
26
(iii) There are no tax liens upon the assets of the
Parent or the Merger-Sub.
(iv) The Parent and the Merger-Sub have not requested
(and no request has been made on their behalf) any extension of time
within which to file any material tax return.
(v) No income tax returns have been examined by any
taxing authorities for any periods; and no deficiency for any material
taxes has been suggested, proposed, asserted, or assessed against the
Parent or the Merger-Sub that has not been resolved and paid in full.
(vi) No audits or other administrative proceedings or
court proceedings are presently pending with regard to any taxes or tax
returns of the Parent or the Merger-Sub. No written claim has been made
by a taxing authority in a jurisdiction where the Parent or the
Merger-Sub does not file tax returns such that it is or may be subject
to taxation by that jurisdiction.
(vii) To the extent requested by Xxxxxxxxxxxx.xxx,
the Parent and the Merger-Sub have made available to Xxxxxxxxxxxx.xxx
(or, in the case of tax returns to be filed on or before the Closing,
will make available) complete and accurate copies of all tax returns
and associated work papers filed by or on behalf of the Parent or the
Merger-Sub for all taxable years ending on or prior to the Closing.
(viii)No agreements relating to allocating or sharing
of any taxes have been entered into by the Parent or the Merger-Sub.
(ix) Neither the Parent nor the Merger-Sub has
entered into any transactions that could give rise to an understatement
of Federal Income Tax.
27
(x) Neither the Parent, the Merger-Sub nor any other
person on behalf of the Parent or the Merger-Sub has agreed to or is
required to make any adjustments pursuant to Section 481(a) of the Code
or any similar provision of state, local or foreign law by reason of a
change in accounting method initiated by the Parent or the Merger-Sub
or has any application pending with any taxing authority requesting
permission for any change in accounting methods that relate to the
business or operations of the Parent or the Merger-Sub, and neither the
Parent nor the Merger-Sub has knowledge that the IRS has proposed any
such adjustment or change in accounting method.
(xi) Except as set forth on Schedule 3.02(s), neither
the Parent nor the Merger-Sub has been, or is now, a member of any
consolidated, combined, unitary or affiliated group of corporations for
any tax purposes.
(t) Accuracy of Information. The Parent has made with the
Securities and Exchange Commission ("SEC") all filings required by the
Securities Exchange Act of 1934, as amended (all such filings and any future
filings made thereunder are collectively, the "Exchange Act Filings"). None of
the Exchange Act Filings contain any untrue statement of a material fact or omit
to state any 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. Neither the SEC nor any state regulatory authority has
issued any order preventing or suspending the use of any preliminary prospectus
or registration statement or any part thereof, and no proceedings for a stop
order suspending the effectiveness of any of the Company's securities have been
instituted or are pending or threatened.
(u) NASD Report.
28
(i) To the knowledge of the Parent, the Parent has
made all requisite filings with the National Association of Securities
Dealers (the "NASD") and the Over-the- Counter Bulletin Board (the
"OTCBB") pursuant to Rule 6740 (the "Rule"). As of the date of filing
thereof, such filings (i) complied as to form in all material respects
with the requirements of the Securities Exchange Act of 1934, as
amended, and the rules promulgated by the NASD, and (ii) did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading.
(ii) As of the date hereof, the Parent's Common Stock
is quoted on the OTCBB and, upon the declaration or ordering of
effectiveness of the registration statement on Form 10-SB of the
Parent, filed with the SEC on January 7, 2000, as amended or
supplemented from time to time (as so amended and supplemented, the
"Form 10-SB"), the Parent shall be in compliance with the NASD
Eligibility Rule, as effective January 4, 1999. Parent makes no
representation as to the timing or ultimate effectiveness of such
registration statement.
(iii) No quotation is being submitted or published,
directly or indirectly, on behalf of the Parent or any director or
officer, or any person, directly or indirectly, who is the beneficial
owner of more than ten percent (10%) of the outstanding shares of any
equity security of the Parent.
IV. COVENANTS.
Section 4.01 Covenants of the Parent and the Merger-Sub.
The Parent and the Merger-Sub covenant and agree as follows:
29
(a) Certificate of Incorporation and By-Laws. As of the
Closing Date, the Certificate of Incorporation and By-Laws of the Merger-Sub
shall be substantially in the form of Exhibits 3.02(b)-1 and 3.02(b)-2,
respectively, and the Certificate of Incorporation and By-Laws of the Parent
shall be substantially in the form of Exhibits 1.05-1 and 1.05-2, respectively.
(b) Shares and Options. Except as contemplated hereby, until
the earlier of the Effective Time or the Termination of this Agreement pursuant
to Article VI (the "Release Time") without the prior written consent of
Xxxxxxxxxxxx.xxx, no share of capital stock of the Parent or the Merger-Sub or
any option or warrant for any such share, right to subscribe to or purchase any
such share, or security convertible into or exchangeable for any such share,
shall be issued or sold by the Parent or the Merger-Sub, nor shall the Parent or
the Merger-Sub enter into any agreement or commitment to effect any such
issuance or sale.
(c) Dividends and Purchases of Stock. Until the Release Time,
without the prior written consent of Xxxxxxxxxxxx.xxx, no cash or non-cash
dividend, or liquidating or other distribution or stock split shall be
authorized, declared, paid, or effected by the Parent or the Merger- Sub in
connection with their respective outstanding capital stock except as set forth
in Schedule 4.01(c) hereto.
(d) Borrowing of Money; Working Capital. Until the Release
Time, neither the Parent nor the Merger-Sub shall incur indebtedness for
borrowed money except as set forth on Schedule 3.02(b)(iv). Until the Release
Time, neither the Parent nor the Merger-Sub shall guarantee the borrowing of
money by any third party, enter into or modify any capital or operating lease or
enter into any agreement.
30
(e) Access. Until the Release Time, the Parent and the
Merger-Sub will afford the directors, stockholders, counsel, agents, investment
bankers, accountants, and other representatives of Xxxxxxxxxxxx.xxx reasonable
access to the plants, properties, books, and records of the Parent and the
Merger-Sub, will permit them to make extracts from and copies of such books and
records, and will from time to time furnish Xxxxxxxxxxxx.xxx with such
additional financial and operating data and other information as to the
financial condition, results of operations, businesses, properties, assets,
liabilities, or future prospects of the Parent and the Merger-Sub as
Xxxxxxxxxxxx.xxx from time to time may reasonably request.
(f) Conduct of Business. Except as otherwise contemplated or
permitted hereby, until the Release Time, neither the Parent nor the Merger-Sub
shall take any action that would or is reasonably likely to result in any of the
representations or warranties of the Parent or the Merger-Sub set forth in this
Agreement being untrue at the Closing Date, or in any of the conditions to the
Merger set forth in Article V not being satisfied. Except as otherwise
contemplated or permitted hereby, until the Release Time, the Parent or the
Merger-Sub will conduct their affairs in all respects only in the ordinary
course.
(g) Advice of Changes. Until the Release Time, the Parent and
the Merger-Sub will promptly advise Xxxxxxxxxxxx.xxx in a reasonably detailed
written notice of any fact or occurrence or any pending threatened occurrence of
which it obtains knowledge and which (if existing and known at the date of the
execution of this Agreement) would have been required to be set forth or
disclosed in or pursuant to this Agreement, which (if existing or known at any
time prior to or at the Effective Time) would make the performance by any party
of a covenant contained in this Agreement impossible or make such performance
materially more difficult in the absence of
31
such fact or occurrence, or which (if existing or known at the time of the
Effective Time) would cause a condition to any party's obligations under this
Agreement not to be fully satisfied.
(h) Public Statements. Before either the Parent or the
Merger-Sub releases any information concerning this Agreement, the Merger, or
any other transactions contemplated by this Agreement which is intended for or
is reasonably expected to result in public dissemination thereof, the Parent and
the Merger-Sub shall cooperate with Xxxxxxxxxxxx.xxx, shall furnish drafts of
all documents or proposed oral statements to Xxxxxxxxxxxx.xxx for comments, and
shall not release any such information without the prior consent of
Xxxxxxxxxxxx.xxx; provided, however, that the foregoing shall not be deemed to
prevent the Parent or the Merger-Sub from releasing any information or making
any disclosure to the extent that the Parent or the Merger-Sub reasonably
determines that it is required to do so by law.
(i) Other Proposals. Until the Release Time the Parent shall
not authorize or permit any officer, director, employee, counsel, agent,
investment banker, accountant, or other representative of the Parent, directly
or indirectly, to: (i) initiate contact with any person or entity in an effort
to solicit any Takeover Proposal (as such term is defined in this Section
4.01(i)); (ii) cooperate with, or furnish or cause to be furnished any
non-public information concerning the financial condition, results of
operations, businesses, properties, assets, liabilities, or future prospects of
the Parent to, any person or entity in connection with any Takeover Proposal;
(iii) negotiate with any person or entity with respect to any Takeover Proposal;
or (iv) enter into any agreement or understanding with the intent to effect a
Takeover Proposal; provided, however, that the Parent shall be entitled to take
any action described in the foregoing clauses (ii)-(iv) if and to the extent
that the Board of Directors of the Parent determines in good faith, based on the
advice of their respective
32
counsel, that the failure to take any such action would violate their fiduciary
duties to the stockholders of the Parent. The Parent will immediately give
written notice to Xxxxxxxxxxxx.xxx of the details of any Takeover Proposal of
which the Parent becomes aware. As used in Section 4.01(i), "Takeover Proposal"
shall mean any proposal, other than as contemplated by this Agreement, for a
merger, consolidation, reorganization, other business combination, or
recapitalization involving the Parent, for the acquisition of a ten percent
(10%) or greater interest in the equity or in any class or series of capital
stock of the Parent, for the acquisition of the right to cast ten percent (10%)
or more of the votes on any matter with respect to the Parent, or for the
acquisition of one of their divisions or of a substantial portion of any of
their respective assets, the effect of which may be to prohibit, restrict, or
delay the consummation of the Merger or any of the other transactions
contemplated by this Agreement, or impair the contemplated benefits to
Xxxxxxxxxxxx.xxx of the Merger or any of the other transactions contemplated by
this Agreement.
(j) Consents Without Any Condition. Neither the Parent nor the
Merger-Sub shall make any agreement or reach any understanding, not approved in
writing by Xxxxxxxxxxxx.xxx, as a condition for obtaining any consent,
authorization, approval, order, license, certificate, or permit required for the
consummation of the transactions contemplated by this Agreement..
(k) Transfer Taxes. The Parent and the Merger-Sub shall timely
prepare and file any declaration or filing necessary to comply with any transfer
tax statutes that require any such filing before the Effective Time.
(l) Exchange Act Filings. The Parent shall use reasonable
efforts to prepare and file in a timely manner any Exchange Act Filings to be
made prior to or after the Closing Date. If
33
at any time prior to the Closing Date the Parent finds that any Exchange Act
Filings contained an untrue statement of a material fact or omitted to state any
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, the Parent shall, upon becoming aware of any such untrue statement
or omission, promptly notify Xxxxxxxxxxxx.xxx.
(m) CUSIP; Symbol. The Parent shall use its best efforts to
obtain a CUSIP number from the CUSIP Service Bureau for the Parent Common Stock
to be issued pursuant to the Merger and to cause the Parent's trading symbol to
be changed on the OTCBB as instructed by Xxxxxxxxxxxx.xxx as soon as
practicable.
Section 4.02 Covenants of Xxxxxxxxxxxx.xxx.
Xxxxxxxxxxxx.xxx covenants and agrees as follows:
(a) Certificate of Incorporation and By-Laws. As of the
Closing Date, the Certificate of Incorporation and By-Laws of Xxxxxxxxxxxx.xxx
shall be substantially in the form of Exhibits 1.04-1 and 1.04-2, respectively.
(b) Shares and Options. Except as contemplated hereby, until
the earlier of the Effective Time or the Termination of this Agreement pursuant
to Article VI (the "Release Time") without the prior written consent of Parent
and Merger-Sub, no share of capital stock of Xxxxxxxxxxxx.xxx or any option or
warrant for any such share, right to subscribe to or purchase any such share, or
security convertible into or exchangeable for any such share, shall be issued or
sold by Xxxxxxxxxxxx.xxx, nor shall Xxxxxxxxxxxx.xxx enter into any agreement or
commitment to effect any such issuance or sale.
34
(c) Dividends and Purchases of Stock. Until the Release Time,
without the prior written consent of the Parent and Merger-Sub, no cash or
non-cash dividend, or liquidating or other distribution or stock split shall be
authorized, declared, paid, or effected by Xxxxxxxxxxxx.xxx in connection with
its outstanding capital stock.
(d) Borrowing of Money; Working Capital. Until the Release
Time, Xxxxxxxxxxxx.xxx shall not incur indebtedness for borrowed money or
guarantee the borrowing of money by any third party, or enter into or modify any
capital or operating lease.
(e) Access. Until the Release Time, Xxxxxxxxxxxx.xxx will
afford the directors, stockholders, counsel, agents, investment bankers,
accountants, and other representatives of the Parent and the Merger-Sub
reasonable access to the plants, properties, books, and records of
Xxxxxxxxxxxx.xxx, will permit them to make extracts from and copies of such
books and records, and will from time to time furnish the Parent and the
Merger-Sub with such additional financial and operating data and other
information as to the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of Xxxxxxxxxxxx.xxx as the
Parent and the Merger- Sub from time to time may reasonably request.
(f) Conduct of Business. Until the Release Time,
Xxxxxxxxxxxx.xxx shall not take any action that would or is reasonably likely to
result in any of the representations or warranties of Xxxxxxxxxxxx.xxx set forth
in this Agreement being untrue at the Closing Date or to any of the conditions
to the Merger set forth in Article V not being satisfied. Until the Release
Time, Xxxxxxxxxxxx.xxx will use all reasonable efforts to preserve the business
operations of Xxxxxxxxxxxx.xxx intact, to keep available the services of its
present personnel, and to preserve the good will of its suppliers, customers,
and others having business relations with any of them.
35
(g) Advice of Changes. Until the Release Time,
Xxxxxxxxxxxx.xxx will promptly advise the Parent and the Merger-Sub in a
reasonably detailed written notice of any fact or occurrence or any pending
threatened occurrence of which it obtains knowledge and which (if existing or
known at the date of the execution of this Agreement) would have been required
to be set forth or disclosed in or pursuant to this Agreement, which (if
existing and known at any time prior to or at the Effective Time) would make the
performance by any party of a covenant contained in this Agreement impossible or
make such performance materially more difficult than in the absence of such fact
or occurrence, or which (if existing and known at the time of the Effective
Time) would cause a condition to any party's obligations under this Agreement
not to be fully satisfied.
(h) Public Statements. Before Xxxxxxxxxxxx.xxx releases any
information concerning this Agreement, the Merger, or any of the other
transactions contemplated by this Agreement which is intended for, or is
reasonably expected to, result in public dissemination thereof, Xxxxxxxxxxxx.xxx
shall cooperate with the Parent and the Merger-Sub, shall furnish drafts of all
documents or proposed oral statements to the Parent and the Merger-Sub for
comments, and shall not release any such information without the prior consent
of the Parent and the Merger-Sub; provided, however, that the foregoing shall
not be deemed to prevent Xxxxxxxxxxxx.xxx from releasing any information or
making any disclosure to the extent Xxxxxxxxxxxx.xxx reasonably determines that
it is required to do so by law.
(i) Other Proposals. Until the Release Time, Xxxxxxxxxxxx.xxx
shall not authorize or permit any officer, director, employee, counsel, agent,
investment banker, accountant, or other representative of Xxxxxxxxxxxx.xxx,
directly or indirectly, to (i) initiate contact with any
36
person or entity in an effort to solicit any Takeover Proposal (as such term is
defined in this Section 4.02(i)); (ii) cooperate with, or furnish or cause to be
furnished any non-public information concerning the financial condition, results
of operations, businesses, properties, assets, liabilities, or future prospects
of Xxxxxxxxxxxx.xxx to, any person or entity in connection with any Takeover
Proposal; (iii) negotiate with any person or entity with respect to any Takeover
Proposal; or (iv) enter into any agreement or understanding with the intent to
effect a Takeover Proposal; provided, however, that Xxxxxxxxxxxx.xxx shall be
entitled to take any action described in the foregoing clauses (ii)-(iv) if and
to the extent that the Board of Directors of Xxxxxxxxxxxx.xxx determines in good
faith, based on the advice of their counsel, that the failure to take any such
action would violate their fiduciary duties to the stockholders of
Xxxxxxxxxxxx.xxx. Xxxxxxxxxxxx.xxx will immediately give written notice to the
Parent of the details of any Takeover Proposal of which Xxxxxxxxxxxx.xxx becomes
aware. As used in Section 4.02(i), "Takeover Proposal" shall mean any proposal,
other than as contemplated by this Agreement, for a merger, consolidation,
reorganization, other business combination, or recapitalization involving
Xxxxxxxxxxxx.xxx, for the acquisition of a ten percent (10%) or greater interest
in the equity or in any class or series of capital stock of Xxxxxxxxxxxx.xxx,
for the acquisition of the right to cast ten percent (10%) or more of the votes
on any matter with respect to Xxxxxxxxxxxx.xxx, or for the acquisition of one of
their divisions or of a substantial portion of any of their respective assets,
the effect of which may be to prohibit, restrict, or delay the consummation of
the Merger or any of the other transactions contemplated by this Agreement, or
37
impair the contemplated benefits to the Parent of the Merger or any of the other
transactions contemplated by this Agreement.
(j) Approval of Stockholders. Xxxxxxxxxxxx.xxx shall, through
its Board of Directors, duly call, give notice of, convene, and hold a meeting
of its stockholders for the purpose of voting on the ratification and approval
of this Merger Agreement as soon as reasonably practicable following the date
hereof, or shall take such other action as will satisfy the requirement of
stockholder approval under Delaware law.
Section 4.03 British Columbia Reporting.
Prior to the Effective Time, the Parent shall make an
application to the British Columbia Securities Commission ("BCSC") to change the
reporting status of the Parent in the province of British Columbia such that the
Parent shall not be required to report pursuant to the rules of the BCSC at or
following the Effective Time.
Section 4.04 Amendment to Form 10-SB.
The Parent shall prepare and file with the SEC an amendment to
the Form 10-SB as soon as reasonably practicable after the date hereof if
required to effect the transactions contemplated hereby. The Parent shall use
its best efforts to have the Form 10-SB declared effective by the SEC as
promptly as practicable after filing such amendment. The Parent shall also take
any action (other than qualifying as a foreign corporation or taking any action
which would subject it to service of process in any jurisdiction where the
Parent is not now so qualified or subject) required to be taken under applicable
state "Blue Sky" or securities laws in connection with the issuance of the
Parent Common Stock in connection with the Merger. If at any time prior to the
Effective Time any event shall occur that should be set forth in an amendment of
or a supplement to the Form 10-
38
SB, the Parent shall prepare and file with the SEC such amendment or supplement
as soon thereafter as is reasonably practicable. The Parent, Merger-Sub and
Xxxxxxxxxxxx.xxx shall cooperate with each other in the preparation of the Form
10-SB and any amendment or supplement thereto, and each shall notify the other
of the receipt of any comments of the SEC with respect to the Form 10-SB and of
any requests by the SEC for any amendment or supplement thereto or for
additional information. Xxxxxxxxxxxx.xxx agrees to use its best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments and requests of the SEC and to cause the Form 10-SB to be declared
effective by the SEC.
V. CONDITIONS.
Section 5.01 Conditions to Each Party's Obligation to Effect the
Merger.
The respective obligations of each party to effect the Merger
are subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been adopted by the requisite vote of the stockholders of Xxxxxxxxxxxx.xxx.
(b) State Securities Laws. The Parent shall have received all
state securities or "Blue Sky" permits and other authorizations necessary to
issue the Parent Common Stock pursuant to the Merger.
(c) No Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall have
enacted, issued, promulgated, enforced, or entered any Law or Order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making illegal or otherwise restricting, preventing, or prohibiting
consummation of the Merger or the other transactions contemplated by this
Agreement.
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(d) Consents and Approvals. Other than the filings provided
for by Section 1.02, all consents, approvals and actions of, filings with and
notices to any Governmental or Regulatory Authority or any other public or
private third parties required of the Parent, the Merger-Sub or Xxxxxxxxxxxx.xxx
to consummate the Merger shall have been obtained, all in form and substance
reasonably satisfactory to the Parent, the Merger-Sub and Xxxxxxxxxxxx.xxx, and
no such consent, approval, or action shall contain any term or condition which
could be reasonably expected to result in a material diminution of the benefits
of the Merger to the stockholders of the Parent, the Merger- Sub and
Xxxxxxxxxxxx.xxx.
Section 5.02 Conditions to Obligations of the Parent and the
Merger-Sub.
The obligations of the Parent and the Merger-Sub to effect the
Merger is further subject to the fulfillment, at or prior to the Closing, of
each of the following additional conditions (all or any of which may be waived
in whole or in part by the Parent and the Merger-Sub and in their sole
discretion):
(a) Representations and Warranties. The representations and
warranties made by Xxxxxxxxxxxx.xxx in this Agreement shall be true and correct
in all material respects as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
and Xxxxxxxxxxxx.xxx shall have delivered to the Parent and Merger-Sub a
certificate, dated the Closing Date and executed on behalf of Xxxxxxxxxxxx.xxx
by a duly authorized officer, to such effect.
(b) Performance of Obligations. Xxxxxxxxxxxx.xxx shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this
40
Agreement to be so performed or complied with by Xxxxxxxxxxxx.xxx at or prior to
the Closing, and Xxxxxxxxxxxx.xxx shall have delivered to the Parent and
Merger-Sub a certificate dated the Closing Date and executed on behalf of
Xxxxxxxxxxxx.xxx by a duly authorized officer, to such effect.
(c) Other Closing Documents. Xxxxxxxxxxxx.xxx shall have
delivered to the Parent and the Merger-Sub at or prior to the Closing Date such
other documents as the Parent and the Merger-Sub may reasonably request in order
to enable the Parent and the Merger-Sub to determine whether the conditions to
their obligations under this Agreement have been met and otherwise to carry out
the provisions of this Agreement.
(d) Review of Proceedings. All actions, proceedings,
instruments, and documents required by the Parent and the Merger-Sub to carry
out this Agreement or incidental thereto and all other related legal matters
shall be subject to the reasonable approval of X'Xxxxxx & Xxxxxx, counsel to the
Parent and the Merger-Sub, and Xxxxxxxxxxxx.xxx shall have furnished such
documents as such counsel may have reasonably requested for the purpose of
enabling it to pass upon such matters.
(e) Legal Opinion. The Parent and the Merger-Sub shall receive
at the Closing Date an opinion of Camhy Xxxxxxxxx & Xxxxx LLP, counsel for
Xxxxxxxxxxxx.xxx, addressed to the Parent and the Merger-Sub, in a form
reasonably acceptable to the Parent and the Merger-Sub.
(f) Legal Action. There shall not have been instituted or
threatened any legal proceeding relating to, or seeking to prohibit, or
otherwise challenge the consummation of, the transactions contemplated by this
Agreement, or to obtain substantial damages with respect thereto.
41
Section 5.03 Conditions to Obligation of Xxxxxxxxxxxx.xxx to Effect the
Merger.
The obligation of Xxxxxxxxxxxx.xxx to effect the Merger is
further subject to the fulfillment, at or prior to the Closing, of each of the
following additional conditions (all or any of which may be waived in whole or
in part by Xxxxxxxxxxxx.xxx in its sole discretion):
(a) Representations and Warranties. The representations and
warranties made by the Parent and the Merger-Sub in this Agreement shall be true
and correct in all material respects as of the Closing Date as though made on
and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date, and the Parent and the Merger-Sub shall have delivered to
Xxxxxxxxxxxx.xxx a certificate, dated the Closing Date and executed on behalf of
the Parent and the Merger-Sub by a duly authorized officer, to such effect.
(b) Performance of Obligations. The Parent and the Merger-Sub
shall have performed and complied with in all material respects, each agreement,
covenant, and obligation required by this Agreement to be so performed or
complied with by the Parent and the Merger-Sub at or prior to the Closing, and
the Parent and the Merger-Sub shall have delivered to Xxxxxxxxxxxx.xxx a
certificate, dated the Closing Date and executed on behalf of the Parent and the
Merger-Sub by a duly authorized officer, to such effect.
(c) Other Closing Documents. The Parent and the Merger-Sub
shall have delivered to Xxxxxxxxxxxx.xxx at or prior to the Effective Time such
other documents as Xxxxxxxxxxxx.xxx may reasonably request in order to enable
Xxxxxxxxxxxx.xxx to determine whether the conditions to its obligations under
this Agreement have been met and otherwise to carry out the provisions of this
Agreement.
42
(d) Review of Proceedings. All actions, proceedings,
instruments, and documents required by Xxxxxxxxxxxx.xxx to carry out this
Agreement or incidental thereto and all other related legal matters shall be
subject to the reasonable approval of Camhy Xxxxxxxxx & Xxxxx LLP, counsel to
Xxxxxxxxxxxx.xxx, and the Parent and the Merger-Sub shall have furnished such
documents as such counsel may have reasonably requested for the purpose of
enabling it to pass upon such matters.
(e) Legal Opinion. Xxxxxxxxxxxx.xxx shall receive at the
Closing Date an opinion of X'Xxxxxx & Xxxxxx, counsel for the Parent and the
Merger-Sub, addressed to Xxxxxxxxxxxx.xxx, in a form reasonably acceptable to
Xxxxxxxxxxxx.xxx.
(f) Legal Action. There shall not have been instituted or
threatened any legal proceeding relating to, or seeking to prohibit or otherwise
challenge the consummation of, the trans actions contemplated by this Agreement,
or to obtain substantial damages with respect thereto.
(g) Indemnification. As of the Closing Date, Xxxxxxxxxxxx.xxx
shall have received from each of Xxxxxx X. Xxxxxxxxx and Xxxxxx Xxxxxxxxxx an
agreement to indemnify Xxxxxxxxxxxx.xxx for up to $16,000 each, on a pari passu
basis, from all liabilities of the Parent incurred prior to the Closing Date,
for an aggregate of up to $32,000, in form and substance satisfactory to
Xxxxxxxxxxxx.xxx.
(h) Capital. The Parent and the Merger-Sub shall be in strict
compliance with Section 3.02(b)(iii).
43
VI. TERMINATION.
Section 6.01 Termination.
This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether prior to or after the Xxxxxxxxxxxx.xxx stockholders' approval:
(a) By mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors.
(b) By either Xxxxxxxxxxxx.xxx, the Parent or the Merger-Sub
upon written notification to the other party, if:
(i) the Xxxxxxxxxxxx.xxx stockholders' approval shall
not be obtained by reason of the failure to obtain the requisite vote
upon a vote held at a meeting of such stockholders or pursuant to a
written consent; or
(ii) facts exist which render impossible the
satisfaction of one or more of the conditions set forth in Section 5.01
and such are not waived by the Parent, the Merger- Sub and
Xxxxxxxxxxxx.xxx.
(c) By the Parent and the Merger-Sub upon written notification
to Xxxxxxxxxxxx.xxx, if:
(i) there has been a material breach of any
representation, warranty, covenant, or agreement on the part of
Xxxxxxxxxxxx.xxx set forth in this Agreement which breach has not been
cured within ten (10) business days following receipt by
Xxxxxxxxxxxx.xxx of notice of such breach from the Parent or the
Merger-Sub or assurance
44
of such cure reasonably satisfactory to the Parent or the Merger-Sub
have not been given by or on behalf of Xxxxxxxxxxxx.xxx within such ten
(10) business day period; or
(ii) facts exist which render impossible the
satisfaction of one or more of the conditions set forth in Section 5.02
and such are not waived by the Parent or the Merger- Sub; or
(iii) the Parent or its stockholders receive a
proposal or offer for any Takeover Proposal, other than pursuant to the
transactions contemplated by this Agreement, in connection with which
the Board of Directors of the Parent exercises any of its rights
specified in Section 4.01(i).
(d) By Xxxxxxxxxxxx.xxx upon written notification to the
Parent or the Merger-Sub, if:
(i) at any time after June 30, 2000 if the Merger
shall not have been consummated on or prior to such date and such
failure to consummate the Merger is not caused by a breach of this
Agreement by Xxxxxxxxxxxx.xxx; or
(ii) there has been a material breach of any
representation, warranty, covenant, or agreement on the part of the
Parent or the Merger-Sub set forth in this Agreement which breach has
not been cured with ten (10) business days following receipt by the
Parent or the Merger-Sub of notice of such breach from Xxxxxxxxxxxx.xxx
or assurance of such cure reasonably satisfactory to Xxxxxxxxxxxx.xxx
shall not have been given by or on behalf of the Parent or the
Merger-Sub within such ten (10) business day period; or
45
(iii) facts exist which render impossible the
satisfaction of one or more of the conditions set forth in Section 5.03
and such are not waived by Xxxxxxxxxxxx.xxx.
Section 6.02 Effect of Termination.
If this Agreement is validly terminated by the Parent, the
Merger-Sub or Xxxxxxxxxxxx.xxx pursuant to Section 6.01, this Agreement shall
forthwith become null and void and there shall be no liability or obligation on
the part of either the Parent, the Merger-Sub or Xxxxxxxxxxxx.xxx (or any of
their respective officers, directors, representatives, or affiliates), except
that (i) the provisions of this Section 6.02 will continue to apply following
any such termination, and (ii) nothing contained herein shall relieve the
Parent, the Merger-Sub or Xxxxxxxxxxxx.xxx from liability for wilful or
intentional breach of their respective obligations contained in this Agreement
or for fraud.
VII. MISCELLANEOUS.
Section 7.01 Fees and Expenses.
Except as otherwise provided in this Agreement, all fees and
expenses incurred in connection with this Agreement, the documents appurtenant
hereto and the transactions contemplated hereby and thereby shall be paid by the
party incurring such fees or expenses, whether or not the Closing occurs.
Section 7.02 Further Actions.
Each party hereto will execute such further documents and
instruments and take such further actions as may reasonably be requested by the
other party to consummate the Merger, to vest the Surviving Corporation with
full title to all assets, properties, rights, approvals,
46
immunities, and franchises of either of the Constituent Entities or to effect
the other purposes of this Agreement.
Section 7.03 Availability of Equitable Remedies.
Since a breach of the provisions of this Agreement could not
adequately be compen sated by money damages, any party shall be entitled, either
before or after the Effective Time, in addition to any other right or remedy
available to it, to an injunction restraining such breach or threatened breach
and to specific performance of any such provision of this Agreement, and, in
either case, no bond or other security shall be required in connection
therewith, and the parties hereby consent to the issuance of such an injunction
and to the ordering of specific performance.
Section 7.04 Survival.
The representations, warranties, covenants, and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Merger for a period of three (3) years after the
Effective Time.
Section 7.05 Modification.
This Agreement may be amended, supplemented, or modified by
action taken by or on behalf of the respective Boards of Directors of the
parties hereto at any time prior to the Effective Time. No such amendment,
supplement, or modification shall be effective unless set forth in a written
instrument duly executed by or on behalf of each party hereto.
Section 7.06 Notices.
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested or by Federal Express, express mail or similar
overnight delivery or courier service or delivered (in person or by
47
telecopy, telex or similar telecommunications equipment) against receipt to the
party to which it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 7.06)
with copies (which copies shall not constitute notice) as follows:
If to the Parent or the Merger-Sub: 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
With a copy to: X'Xxxxxx & Xxxxxx LLC
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Arthur Don, Esq.
If to Xxxxxxxxxxxx.xxx: 000 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mori S. Ninomiya
With a copy to: Camhy Xxxxxxxxx & Xxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Annex, Esq.
Any notice shall be addressed to the attention of the
President. Any notice or other communication given by certified mail shall be
deemed given three business days after certification thereof, except for a
notice changing a party's address which will be deemed given at the time of
receipt thereof. Any notice given by other means permitted by this Section 7.06
shall be deemed given at the time of receipt hereof.
Section 7.07 Waiver.
Any waiver by any party of a breach of any term of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this
48
Agreement on one or more occasions will not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver must be in writing and be
authorized by a resolution of the Board of Directors or by an officer of the
waiving party.
Section 7.08 Binding Effect.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the Parent, the Merger-Sub and Xxxxxxxxxxxx.xxx, and
their respective successors and assigns.
Section 7.09 No Third-Party Beneficiaries.
This Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person not a party to this Agreement.
Section 7.10 Severability.
If any provision of this Agreement is hereafter held to be
invalid, illegal, or unenforceable for any reason, such provision shall be
reformed to the maximum extent permitted so as to preserve the parties' original
intent, failing which, it shall be severed from this Agreement, with the balance
of this Agreement continuing in full force and effect. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable. If any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances.
Section 7.11 Merger; Assignability.
This Agreement and the other agreements to be delivered
pursuant to this Agreement, and the Exhibits and Schedules attached hereto and
thereto, set forth the entire understanding of the parties with respect to the
subject matter hereof and supersede all existing
49
agreements concerning such subject matter. This Agreement may not be assigned by
any party without the prior written consent of each other party to this
Agreement.
Section 7.12 Headings.
The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
Section 7.13 Counterparts; Governing Law; Jurisdiction.
This Agreement may be executed in any number of counterparts
(and by facsimile), each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
giving effect to the rules governing the conflict of laws. Any action, suit, or
proceeding arising out of, based on, or in connection with this Agreement, the
Merger, or the other transactions contemplated hereby, or any document relating
hereto or delivered in connection with the transactions contemplated hereby, may
be brought only and exclusively in the Federal or State Courts located in the
State of New York; and each party covenants and agrees not to assert, by way of
motion, as a defense or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of such court if it
has been duly served with process, that its property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.
[The remainder of this page is intentionally left blank.]
50
IN WITNESS WHEREOF, this Agreement has been executed by duly
authorized officers of each of the parties hereto as of the date first above
written.
XXXXXXXXXXXX.XXX, INC.
By: /s/ XXXX XXXXXXX
-------------------------------------------
Name: Xxxx Xxxxxxx
Title: Executive Vice President,
Business Affairs
SHAMPAN, LAMPORT HOLDINGS LIMITED
By: /s/ XXXXXX X. XXXXXXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
TOMCI ACQUISITION CORP.
By: /s/ XXXXXX X. XXXXXXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
51
