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EXHIBIT 10.22
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SYMPOSIUM CORPORATION,
SYMPOSIUM FUSION, INC.,
XXXXXXXX.XXX, INC.
AND
CERTAIN OF THE STOCKHOLDERS OF XXXXXXXX.XXX, INC.
November 30, 2000
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of this 30th day of November, 2000 by and among SYMPOSIUM CORPORATION, a
Delaware corporation ("Symposium"), SYMPOSIUM FUSION, INC., a Delaware
corporation and a wholly-owned subsidiary of Symposium ("Symposium Sub"),
XXXXXXXX.XXX, INC., a Delaware corporation ("WeFusion") and those certain
stockholders of WeFusion listed on Schedule I hereto (the "Principal
Stockholders").
RECITALS
WHEREAS, the Boards of Directors of Symposium, Symposium Sub and
WeFusion have each determined that it is advisable and in the best interests of
their respective stockholders for Symposium, Symposium Sub and WeFusion to cause
WeFusion to merge with and into Symposium Sub upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such merger, the Boards of Directors of
Symposium, Symposium Sub and WeFusion have each approved the merger (the
"Merger") of WeFusion with and into Symposium Sub in accordance with the
applicable provisions of the Delaware General Corporation Law (the "DGCL"), and
upon the terms and subject to the conditions set forth herein;
WHEREAS, Symposium, Symposium Sub and WeFusion intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder; and
WHEREAS, pursuant to the Merger, (i) the Cash-Out Shares (as
hereinafter defined) shall be converted into the right to receive the Per Share
Common Stock Cash Amount (as hereinafter defined), and (ii) the Exchange Shares
(as hereinafter defined) shall be converted into the right to receive Merger
Consideration (as hereinafter defined), in each case upon the terms and subject
to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Symposium, Symposium Sub, WeFusion and the Principal Stockholders hereby
agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. At the Effective Time (as defined in Section 1.2), and
subject to and upon the terms and conditions of this Agreement and the DGCL,
WeFusion shall be merged with and into Symposium Sub, the separate corporate
existence of WeFusion shall cease, and Symposium Sub shall continue as the
surviving corporation. Symposium Sub as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "Surviving Corporation."
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1.2. Effective Time. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in Article 8, the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger as
contemplated by the DGCL (the "Certificate of Merger"), together with any
required related certificates, with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL (the time of such filing being the "Effective
Time").
1.3. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of WeFusion shall vest in the Surviving
Corporation, and all debts, liabilities and duties of WeFusion shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4. Certificate of Incorporation; By-Laws.
(a) Certificate of Incorporation. The Certificate of
Incorporation of Symposium Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the DGCL and such Certificate of
Incorporation.
(b) By-Laws. The By-Laws of Symposium Sub, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by the DGCL, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
1.5. Directors and Officers. The directors of Symposium Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the initial officers
of the Surviving Corporation shall be as set forth on Schedule 1.5, in each case
until their respective successors are duly elected or appointed and qualified.
ARTICLE II
PLAN OF REORGANIZATION
2.1. Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Symposium, Symposium Sub, WeFusion
or the holders of all of the issued and outstanding shares of capital stock of
WeFusion (the "Stockholders"):
(a) Conversion of Shares.
(i) All shares of WeFusion Capital Stock (as defined
in Section 3.2 below) other than the Cash-Out Shares (as
hereinafter defined) issued and outstanding immediately prior
to the Effective Time (the "Exchange Shares") shall be
converted into merger consideration (the "Merger
Consideration") consisting of: (A) an aggregate of 650,000
shares of common stock, par value $.001 per share, of
Symposium (the "Symposium Common Stock") and (B) five
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year cashless exercise warrants to purchase an aggregate of
250,000 shares of Symposium Common Stock at an exercise price
of $4.00 per share, which warrants shall be evidenced by
warrant certificates conforming in form and substance to
Exhibit 2.1(a)(i) (the "Warrants"). The total number of shares
of Symposium Common Stock included in the Merger Consideration
pursuant to this Section 2.1(a), together with the 110,000
shares of Symposium Common Stock being given to C2, LLC in
consideration for C2, LLC's assumption of all of the
liabilities of WeFusion arising before September 1, 2000
(other than the Back Salary Payment, as hereinafter defined)
shall be referred to as the "Merger Shares". As used herein,
"Merger Consideration" shall include all Merger Shares. The
Merger Consideration shall be allocated among the outstanding
classes and series of such Exchange Shares in accordance with
Exhibit 2.1(a) hereto.
(ii) In lieu of receiving Merger Shares and Warrants
as described in paragraph (i) above, those certain shares of
WeFusion Common Stock (the "Cash-Out Shares") held by each
holder (each a "Cash-Out Stockholder" and collectively the
"Cash-Out Stockholders") of WeFusion Common Stock who is not
(x) an "Accredited Investor" (as such term is defined in Rule
501 promulgated under the Securities Act of 1933, as amended
(the "Securities Act")) or (y) an executive officer of
WeFusion on the Closing Date who has appointed either Xxxxx
Xxxxxx or Xxxxx Xxxx to act as his Purchaser Representative
(as such term is defined under Rule 501 promulgated under the
Securities Act) shall be canceled by virtue of the Merger at
the Effective Time and without any further action on the part
of any holder thereof, and converted into cash in the amount
of $0.05 per share of WeFusion Common Stock (the "Per Share
Common Stock Cash Amount"). Payment of the aggregate Per Share
Common Stock Cash Amount payable to the Cash-Out Stockholders
shall be delivered to the Shareholder Representative for
distribution to such Cash-Out Stockholders and shall be made
by Symposium check upon the later of: (A) the Closing Date or
(B) the delivery to Symposium of both a fully-executed
cross-receipt from the Stockholder Representative in a form
reasonably acceptable to Symposium and the certificates
representing such Cash-Out Shares, together with duly executed
stock powers or letter of transmittal.
(iii) The options granted to certain employees of
WeFusion to purchase shares of WeFusion Common Stock listed on
Schedule 2.1(b)(iii) (the "Cash-Out Options") shall be
canceled by virtue of the Merger at the Effective Time and
without any further action on the part of any holder thereof,
and converted into cash in the amount of $0.01 per share of
WeFusion Common Stock (the "Per Share Option Cash Amount").
Payment of the aggregate Per Share Option Cash Amount shall be
delivered to the Shareholder Representative for distribution
to the holders of the Cash-Out Options and shall be made by
Symposium check upon the later of: (A) the Closing Date or (B)
the delivery to Symposium of a fully-executed cross-receipt
from the Stockholder Representative and a release, each in a
form reasonably acceptable to Symposium.
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(b) Cancellation. Each share of WeFusion Capital Stock held in
the treasury of WeFusion immediately prior to the Effective Time shall cease to
be outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist.
2.2. Adjustments to The Merger Consideration.
If prior to the Effective Time, the outstanding shares of Symposium
Common Stock shall have been changed into a different number of shares or a
different class by reason of any reclassification, recapitalization, stock
split, combination or readjustment, or a stock dividend thereon shall have been
declared with a record date within such period (each, an "Adjustment Event"),
the number and kind of shares of Symposium Common Stock to be issued and
delivered as provided in this Agreement shall be appropriately adjusted for each
Adjustment Event.
2.3. Tax Treatment. The parties intend to adopt this Agreement and the
Merger as a plan of reorganization under Section 368(a)(1) of the Code.
2.4. Appraisal Rights. The Stockholders are entitled to appraisal
rights under the laws of the State of Delaware. Notwithstanding the foregoing,
either by execution and delivery of this Agreement or by execution and delivery
of the unanimous written consent of the stockholders of WeFusion to this
Agreement and the Merger and transactions contemplated hereby, each Stockholder
shall be deemed to have consented to the Merger and effectively waived his or
her rights of appraisal and is therefore not entitled to appraisal under the
laws of the State of Delaware.
2.5. Exchange of Certificates.
(a) Surrender. Subject to the Escrow Agreement (as defined in
Section 2.8 herein) and to the escrow deposit required by Section 2.8, at the
Closing, the Principal Stockholders shall surrender to Symposium, in accordance
with this Agreement and the Certificate of Merger, certificates representing all
of the Exchange Shares, together with duly executed stock powers or letters of
transmittal, and Symposium shall deliver to the Principal Stockholders or the
Escrow Agent (as defined in Section 2.7 herein) as the case may be, the
certificates representing the Merger Shares and Warrants into which such
Exchange Shares are converted pursuant to the Merger.
(b) No Further Ownership Rights in WeFusion Capital Stock. The
Merger Shares and Warrants issuable upon the surrender of the Exchange Shares in
accordance with the terms of this Agreement, the Escrow Agreement and the
Certificate of Merger shall be deemed to have been issued in full satisfaction
of all rights pertaining to such Exchange Shares. The payment of the Per Share
Common Stock Cash Amount in exchange for the Cash-Out Shares shall be deemed to
have been paid in full satisfaction of all rights pertaining to such Cash-Out
Shares. The payment of the Per Share Option Cash Amount in exchange for the
Cash-Out Options shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Cash-Out Options. After the Effective Time, the stock
transfer books of the Surviving Corporation shall not further list registration
of transfers of the shares of WeFusion Capital Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates representing shares of WeFusion Capital Stock are presented to the
Surviving
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Corporation for any reason, such shares shall be cancelled pursuant to the terms
and conditions of this Agreement and the Certificate of Merger.
2.6. Lost, Stolen or Destroyed Certificates. In the event any
certificates representing shares of WeFusion Capital Stock are lost, stolen or
destroyed, upon the making of an affidavit of that fact by the holder thereof in
a form reasonably acceptable to Symposium, Symposium shall either: (i) in
exchange for such lost, stolen or destroyed certificates representing Exchange
Shares, issue such Merger Shares as may be required pursuant to Section 2.5, or
(ii) in exchange for such lost, stolen or destroyed certificates representing
Cash-Out Shares, pay such Per Share Common Stock Cash Amount as may be required
pursuant to Section 2.1(b)(ii); provided, however, that Symposium may, in its
discretion and as a condition precedent to the issuance or payment thereof,
require the owner of lost, stolen or destroyed certificates to deliver a bond in
such sum as it may reasonably direct as an indemnity against any claim that may
be made against Symposium with respect to the certificates alleged to have been
lost, stolen or destroyed.
2.7. Escrow Agreement. At the Effective Time, Symposium shall deposit
50% of the Merger Shares into escrow to be held and disbursed in accordance with
the Escrow Agreement among Symposium, the Stockholder Representatives (as
defined below) and United States Trust Company of New York, as escrow agent (the
"Escrow Agent"), conforming in form and substance to Exhibit 2.8 hereto (the
"Escrow Agreement"). Each Principal Stockholder (i) hereby appoints T. Xxxxx
Xxxxxx (the "Stockholder Representative") and any successor appointed in
accordance with Section 7 of the Escrow Agreement as agent and attorney-in-fact,
to serve as Stockholder Representative under the Escrow Agreement and to take
all action pursuant to the Escrow Agreement and (ii) agrees to indemnify the
Stockholder Representative for all costs and expenses incurred by such
Stockholder Representative in fulfilling his or her obligations under the Escrow
Agreement. All decisions of the Stockholder Representative under the Escrow
Agreement shall be binding upon the Principal Stockholders and notices to or
from the Stockholder Representative shall constitute notice to or from each of
the Principal Stockholders under the Escrow Agreement. At the Effective Time,
certificates representing the Warrants and the remaining 50% of the Merger
Shares that are not delivered to the Escrow Agent pursuant to this Section 2.7,
addressed to the Principal Stockholders, shall be distributed to the Principal
Stockholders by Symposium.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WEFUSION
WeFusion hereby represents and warrants to Symposium Sub and Symposium
that:
3.1. Organization; Good Standing; Qualification and Power. WeFusion is
a corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
presently conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business as it is
presently conducted and has been previously conducted or the ownership or
leasing of its properties makes such qualification necessary. Schedule 3.1
(together with all other schedules hereto provided by WeFusion, the "WeFusion
Disclosure Schedule") sets forth a correct and complete list of each
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jurisdiction in which WeFusion is duly qualified and in good standing to do
business. WeFusion has delivered to Symposium or its counsel complete and
correct copies of its Certificate of Incorporation and Bylaws, in each case as
amended to the date of this Agreement.
In this Agreement, any reference to any event, change or effect being
"Material" with respect to any entity means any material event, change or effect
related to the condition (financial or otherwise), properties, assets,
liabilities, businesses, operations, results of operations or prospects of such
entity. In this Agreement, the term "Material Adverse Effect" used in connection
with any entity means any event, change or effect that is materially adverse to
the condition (financial or otherwise), properties, assets, liabilities,
businesses, operations, results of operations or prospects of such party or to
such entity's ability to perform its obligations as contemplated in this
Agreement, the Certificate of Merger, the Stockholders Distribution and Waiver
Agreement among WeFusion and the Stockholders dated September 12, 2000, as
amended (the "Distribution Agreement"), the Employment Agreements (as defined in
Section 7.10 hereof) and the Stock Option Agreements (as defined in Section 7.10
hereof) and the Escrow Agreement (collectively, the "Transaction Documents") or
any of the other documents or agreements contemplated hereby or thereby.
3.2. WeFusion Capital Structure.
(a) Stock and Options. The authorized capital stock of
WeFusion consists of 8,963,000 shares of Common Stock, $0.001 par value per
share (the "WeFusion Common Stock") and 2,688,334 shares of Preferred Stock,
$0.001 par value per share of which: (i) 375,000 shares are designated Series A
Convertible Preferred Stock, par value $0.001 per share (the "Series A Preferred
Stock"); (ii) 513,334 Shares are designated Series B Convertible Preferred
Stock, par value $0.001 per share (the "Series B Preferred Stock"); and (iii)
1,800,000 shares are designated Series C Preferred Stock (the "Series C
Preferred Stock") (the Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock are collectively referred to herein as the
"WeFusion Preferred Stock" and, together with the WeFusion Common Stock are
sometimes collectively referred to herein as the "WeFusion Capital Stock"). As
of the date hereof, 5,351,500 shares of WeFusion Common Stock, 375,000 shares of
Series A Preferred Stock, 513,334 shares of Series B Preferred Stock, and
1,800,000 shares of Series C Preferred Stock are issued and outstanding, all of
which are owned of record by the Stockholders in such amounts as set forth on
the WeFusion Disclosure Schedule. As of the date hereof, no shares of WeFusion
Common Stock and no shares of WeFusion Preferred Stock are held by WeFusion in
its treasury. All outstanding shares of WeFusion Capital Stock are validly
issued, fully paid and nonassessable and not subject to preemptive rights. As of
the date hereof, all options other than the Cash-Out Options, warrants or other
rights to purchase shares of WeFusion Capital Stock have been exercised or
cancelled, or have expired.
(b) Title to the WeFusion Capital Stock. Each Cash-Out
Stockholder owns of record and beneficially the Cash-Out Shares and, where
applicable, Cash-Out Options, in the amounts set forth on the WeFusion
Disclosure Schedule and has good, valid and marketable title to such Cash-Out
Shares and, where applicable, Cash-Out Options, free and clear of all liens,
security interests and other encumbrances, including, without limitation, any
which affect transferability. To the Best Knowledge of WeFusion, each Principal
Stockholder owns of record and beneficially the Exchange Shares in the amounts
set forth on the WeFusion Disclosure Schedule and has good, valid and marketable
title to such Exchange Shares, free and clear of all liens, security interests
and other encumbrances, including, without limitation, any which affect
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transferability. As used herein, "Best Knowledge of WeFusion" shall mean the
best knowledge of T. Xxxxx Xxxxxx and the officers of WeFusion.
(c) No Commitments To Issue WeFusion Capital Stock. There are
no outstanding options other than the Cash-Out Options, warrants, calls, rights,
commitments, conversion rights or other instruments pursuant to which WeFusion
or any of the Cash-Out Stockholders or, to the Best Knowledge of WeFusion, any
of the Principal Stockholders is or may become obligated to issue, deliver or
sell or offer to sell, or cause to be issued, delivered or sold or offered to
sell, any shares of capital stock or securities convertible into or exchangeable
for shares of WeFusion Capital Stock, or obligating WeFusion or the Cash-Out
Stockholders or, to the Best Knowledge of WeFusion, any of the Principal
Stockholders to grant, extend or enter into any such option, warrant, call,
right, commitment, conversion right or agreement. Except as set forth in the
WeFusion Disclosure Schedule, there are no voting trusts or other agreements or
understandings to which WeFusion is a party with respect to the voting of any of
the WeFusion Capital Stock.
3.3. Authority.
(a) Authorization, Execution and Delivery. WeFusion has all
requisite corporate power and authority to enter into this Agreement and the
other Transaction Documents to which it is a party and to perform its
obligations hereunder and thereunder and to consummate the Merger and the other
transactions contemplated by this Agreement, the Certificate of Merger and the
other Transaction Documents to which it is a party. Each of the Cash-Out
Stockholders has the capacity and authority to enter into each of the
Transaction Documents to which it is a party and to perform its obligations
thereunder and to consummate the transactions contemplated hereunder and
thereunder. To the Best Knowledge of WeFusion, each of the Principal
Stockholders has the capacity and authority to enter into this Agreement and
each of the Transaction Documents to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the Merger and the other
transactions contemplated by this Agreement, the Certificate of Merger, and the
other Transaction Documents to which it is a party. The execution and delivery
of this Agreement and the Certificate of Merger by WeFusion and, to the Best
Knowledge of WeFusion, the Principal Stockholders, and the consummation by
WeFusion of the Merger and the other transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action on the part
of WeFusion. The Transaction Documents to which each is a party have been duly
executed and delivered by WeFusion, each of the Cash-Out Stockholders and, to
the Best Knowledge of WeFusion, each of the Principal Stockholders and are the
valid and binding obligations of WeFusion, each of the Cash-Out Stockholders
and, to the Best Knowledge of WeFusion, each of the Principal Stockholders,
enforceable against each in accordance with their terms, except as such
enforceability may be subject to (i) bankruptcy, insolvency, reorganization or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles.
(b) No Conflict. Neither the execution, delivery and
performance of this Agreement and the other Transaction Documents, nor the
consummation of the transactions contemplated hereby or thereby, nor compliance
with the provisions hereof or thereof will conflict with, or result in any
violations of, or cause a default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, amendment, cancellation or
acceleration of any obligation contained in, or the loss of any material benefit
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or
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assets of WeFusion, any Cash-Out Stockholder or, to the Best Knowledge of
WeFusion, any Principal Stockholders under any term, condition or provision of
(i) the Certificate of Incorporation or Bylaws of WeFusion, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other material
agreement to which WeFusion, any Cash-Out Stockholder or, to the Best Knowledge
of WeFusion, any Principal Stockholder is a party, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to WeFusion or
any of the Stockholders or any such Stockholder's respective properties or
assets.
(c) Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (each a "Governmental Entity"), is required
to be obtained by WeFusion, any Cash-Out Stockholder or, to the Best Knowledge
of WeFusion, any Principal Stockholder in connection with the execution and
delivery of this Agreement and the Certificate of Merger or the consummation of
the transactions contemplated hereby or thereby, except for: (i) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
and the filing of appropriate documents with the relevant authorities of other
states in which WeFusion is qualified to do business; (ii) such filings,
authorizations, orders and approvals as may be required under federal and state
securities laws; and (iii) where the failure to obtain such consents, approvals
and the like, would not prevent or delay the consummation of the Merger or
otherwise prevent WeFusion, any Cash-Out Stockholder or, to the Best Knowledge
of WeFusion, any Principal Stockholder from performing its or such Stockholder's
obligations under this Agreement or any of the Transaction Documents and would
not have a Material Adverse Effect on WeFusion.
3.4. Financial Statements; Absence of Undisclosed Liabilities. (a)
WeFusion has heretofore delivered to Symposium complete and correct copies of
the following financial statements (the "WeFusion Financial Statements"), all of
which have been prepared from the books and records of the WeFusion in
accordance with generally accepted accounting principles ("GAAP") consistently
applied and maintained throughout the periods indicated (except as may be
indicated in the notes thereto) and fairly present in all material respects the
financial condition of WeFusion as of the respective dates thereof and the
results of its operations and cash flows for the periods covered thereby, except
that unaudited interim results that were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount:
(i) unaudited consolidated balance sheets at December 31,
1997, 1998 and 1999 and unaudited consolidated statements of income,
cash flows and stockholders' equity of WeFusion for the fiscal years
then ended (the "WeFusion Balance Sheet"); and
(ii) unaudited consolidated balance sheet (the "WeFusion
Interim Balance Sheet") of WeFusion as of August 31, 2000 (the
"WeFusion Interim Balance Sheet Date") and consolidated statements of
income and cash flows for the six months then ended.
Such statements of income do not contain any items of special or nonrecurring
revenue or income or any revenue or income not earned in the ordinary course of
business, except as expressly specified therein.
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(b) Except as and to the extent reflected or reserved against
on the WeFusion Interim Balance Sheet, WeFusion does not have, as of the
WeFusion Interim Balance Sheet Date, any liabilities, debts or obligations
(whether absolute, accrued, contingent or otherwise) of any nature that would be
required as of such date to have been included on a balance sheet prepared in
accordance with GAAP. Since the WeFusion Interim Balance Sheet Date, WeFusion
has not incurred or suffered to exist any liability, debt or obligation (whether
absolute, accrued, contingent or otherwise), except liabilities, debt and
obligations incurred in the ordinary course of business, consistent with past
practice, none of which will have a Material Adverse Effect upon WeFusion or the
Surviving Corporation. Since the WeFusion Interim Balance Sheet Date, no event
has occurred which has caused, or which is reasonably likely to cause, a
Material Adverse Effect on the business, operations, assets (including
intangible assets), condition (financial or otherwise), liabilities or results
of operations of WeFusion.
(c) All receivables of WeFusion (including accounts
receivable, loans receivable and advances) which are reflected in the WeFusion
Interim Balance Sheet, and all such receivables which have arisen thereafter and
prior to the Effective Time, have arisen or will have arisen only from bona fide
transactions in the ordinary course of business, represent valid obligations to
WeFusion and have been collected or shall be fully collectible at the aggregate
recorded amounts thereof (except to the extent of appropriate reserves therefor
established in accordance with prior practice and GAAP) and are not and will not
be subject to defense, counterclaim or offset. There has been no Material
Adverse Change since the WeFusion Interim Balance Sheet Date in the amounts of
accounts and notes receivable or the allowances with respect thereto, or
accounts payable of WeFusion, from that reflected on the WeFusion Balance Sheet
at such date.
(d) WeFusion has delivered to Symposium or its counsel correct
and complete copies of all correspondence prepared by WeFusion's auditors in
connection with the last audit of WeFusion's financial statements and any such
correspondence since the date of the last such audit.
(e) As of the Effective Time, no Stockholder will have any
claim (whether or not actually asserted) against WeFusion with respect to any
matter or occurrence or state of affairs arising at or prior to the Effective
Time which has not been effectively waived or released.
3.5. Certain Other Financial Representations. Since the WeFusion
Interim Balance Sheet Date, WeFusion's accounts payable have been accrued and,
except as set forth in the WeFusion Disclosure Schedule, paid in a manner
consistent with WeFusion's prior practice and at no point in time since
September 1, 2000, have WeFusion's aggregate past due accounts payable been more
than $25,000.
3.6. Compliance with Applicable Laws. Except as disclosed in the
WeFusion Disclosure Schedule, WeFusion does not conduct its business in
violation of any law, ordinance, regulation, rule or order of any Governmental
Entity. Except as disclosed in the WeFusion Disclosure Schedule, there is
currently no pending investigation or review by a Governmental Entity with
respect to WeFusion nor has any Governmental Entity notified WeFusion or any of
the Stockholders or, to the Best Knowledge of WeFusion, any of the Principal
Stockholders of its intention to conduct the same. WeFusion has all permits,
licenses, approvals, orders, and franchises from Governmental Entities
("Permits") required to conduct its business as now being
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conducted, except where the failure to obtain such Permits would not have a
Material Adverse Effect on WeFusion. All of WeFusion's Permits are in full force
and effect and no violations thereunder have been recorded.
3.7. Litigation. Except as disclosed in the WeFusion Disclosure
Schedule, there is no suit, action, arbitration, demand, claim, dispute,
investigation or proceeding pending or Threatened, against WeFusion or any
Cash-Out Stockholder or, to the Best Knowledge of WeFusion, any Principal
Stockholder, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against WeFusion or any Cash-Out
Stockholder or, to the Best Knowledge of WeFusion, any Principal Stockholder
that, (i) individually or in the aggregate, could have a Material Adverse Effect
on WeFusion or (ii) could have an adverse effect on the ability of WeFusion or
any of the Stockholders to perform its or such Stockholder's respective
obligations under this Agreement or any of the Transaction Documents to which it
is a party or any documents contemplated hereby or thereby. No injunction, writ,
temporary restraining order, decree or order of any nature has been issued by
any court or other Governmental Entity against WeFusion or any Cash-Out
Stockholder or, to the Best Knowledge of WeFusion, any Principal Stockholder
purporting to enjoin or restrain the execution, delivery or performance of any
of the documents contemplated hereby. As used herein, "Threatened" shall refer
to any oral or written threat communicated or delivered to WeFusion or the
Stockholders, as the case may be.
3.8. Title to Properties. WeFusion does not own any real property. The
WeFusion Disclosure Schedule sets forth a correct and complete list of real
property leased by WeFusion. WeFusion holds interest as lessee under leases in
full force and effect in all real property used in connection with its business
or otherwise leased by WeFusion, except for such defects in title as would not,
individually or in the aggregate, have a Material Adverse Effect on WeFusion, or
a material adverse effect on the ability of WeFusion or any of the Stockholders
to perform its or such Stockholder's obligations under the terms and conditions
of this Agreement, the Certificate of Merger, the Transaction Documents or any
of the documents or agreements contemplated hereby or thereby.
3.9. Subsidiaries. WeFusion has no subsidiaries. Except as disclosed in
the WeFusion Disclosure Schedule, WeFusion does not directly or indirectly own
nor has it made any investment in any of the capital stock of, or assumed any
other proprietary interest in, any other Person. "Person" shall mean any
individual, firm, corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, Governmental
Authority or other entity of any kind, and shall include any successor (by
merger or otherwise) of such entity.
3.10. Employee Benefit Plans and Employment Matters.
(a) Except as listed on the WeFusion Disclosure Schedule,
neither WeFusion nor any ERISA Affiliate (as defined below) maintains any
Employee Benefit Plans. "Employee Benefit Plan" means any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended from time to time ("ERISA") and any other plan, policy,
program, practice, agreement, understanding or arrangement (whether written or
oral) providing compensation or other benefits to any current or former WeFusion
officer, employee or consultant (or to any dependent or beneficiary thereof), or
any ERISA Affiliate, which are now or have been maintained by WeFusion or any
ERISA Affiliate or under which WeFusion or any ERISA Affiliate has any
obligation or liability, whether actual or contingent,
12
including, without limitation, all incentive, bonus, deferred compensation,
vacation, holiday, medical, disability, share purchase or other similar plans,
policies, programs, practices, agreements, understandings or arrangements.
"ERISA Affiliate" means any entity (whether or not incorporated) other than
WeFusion that, together with WeFusion, is or was a member of a controlled group
of corporations within the meaning of Section 414(b) of the Code, of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Code, or of an affiliated service group within the meaning of Section
414(m) of the Code.
WeFusion has delivered to Symposium or its counsel prior to the date
hereto true and complete copies of (i) any employment agreements and any
procedures and policies relating to permanent employees, temporary employees and
independent contractors employed or retained by WeFusion including without
limitation summaries of any procedures and policies that are unwritten, (ii) all
Employee Benefit Plans and related trust agreements, insurance and other
contracts, summary plan descriptions and summaries of material modifications and
communications distributed to the participants of each Employee Benefit Plan,
(iii) the last three annual reports on Form 5500 and attached schedules for each
Employee Benefit Plan as to which such report is required to be filed and (iv)
where applicable, the most recent (A) determination letter issued by the
Internal Revenue Service, (B) audited financial statements and (C) actuarial
valuation reports for each Employee Benefit Plan.
(b) Neither WeFusion nor any ERISA Affiliate maintains or has
ever maintained an Employee Benefit Plan subject to Title IV of ERISA.
(c) With respect to each Employee Benefit Plan, no party in
interest or disqualified person (as defined in Section 3(14) of ERISA and
Section 4975 of the Code, respectively) has at any time engaged in a transaction
which could subject Symposium or WeFusion, directly or indirectly, to a tax,
penalty or liability for prohibited transactions imposed by ERISA or the Code
that would have a Material Adverse Effect on WeFusion, and no fiduciary (as
defined in Section 3(21) of ERISA) has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA that would have a
Material Adverse Effect on WeFusion.
(d) Each Employee Benefit Plan is and has been operated in
compliance with its terms and all applicable laws, and by its terms can be
amended and/or terminated at any time. As of the Closing Date, WeFusion shall
have made all required contributions under each Employee Benefit Plan for all
periods through and including the Closing Date or adequate accruals therefor
will have been provided for and will be reflected on the WeFusion Balance Sheet.
(e) No Employee Benefit Plan which is subject to Section 302
of ERISA or Section 412 of the Code has incurred an "accumulated funding
deficiency" as defined in either of such Sections, whether or not waived.
(f) Each Employee Benefit Plan which is intended to qualify
under Section 401(a) or 403(a) of the Code has received a favorable
determination letter from the IRS with respect to its qualification covering all
amendments required to have been adopted through the last day of the 1995 plan
year, and its related trust has been determined to be exempt from taxation under
Section 501(a) of the Code.
13
(g) Except as listed on the WeFusion Disclosure Schedule,
neither WeFusion nor any Stockholder has received or is aware of any actions,
claims (other than routine claims for benefits), lawsuits or arbitration
proceedings pending or Threatened with respect to any Employee Benefit Plan or
against any fiduciary of any Employee Benefit Plan, and neither WeFusion nor any
Stockholder has knowledge of any facts that could give rise to any such actions,
claims, lawsuits or arbitrations. There has not occurred any circumstances by
reason of which WeFusion may be liable for an act, or a failure to act, by a
fiduciary with respect to any Employee Benefit Plan that would have a Material
Adverse Effect on WeFusion.
(h) No Employee Benefit Plan provides for medical or health
benefits (through insurance or otherwise) or provided for the continuation of
such benefits or coverage for any participant or any dependent or beneficiary of
any participant after such participant's retirement or other termination of
employment except as may be required by Part 6 of Subtitle B of Title I of ERISA
and Section 4980B of the Code ("COBRA").
(i) Neither WeFusion nor any ERISA Affiliate has ever
contributed to, or withdrawn in a partial or complete withdrawal (within the
meaning of Sections 4205 or 4203 of ERISA, respectively) from, any
"multiemployer plan" (as defined in Section 3(37) of ERISA) or has any fixed or
contingent liability under Section 4204 of ERISA.
(j) No Employee Benefit Plan is a "multiple employer plan" as
described in Section 3(40) of ERISA or Section 413(c) of the Code.
(k) No Employee Benefit Plan, other than a "pension plan"
within the meaning of Section 3(2) of ERISA, is funded through a trust intended
to be exempt from tax pursuant to Section 501 of the Code.
(l) Neither WeFusion nor any Cash-Out Stockholder nor, to the
Best Knowledge of WeFusion, any Principal Stockholder has proposed or has agreed
to any increase in benefits under any Employee Benefit Plan (or the creation of
new benefits) or change in employee coverage which would increase the expense of
maintaining any such plan.
(m) Each Employee Benefit Plan may by its terms be amended
and/or terminated at any time with regard to any current or former officer,
employee or consultant or to any dependent or beneficiary thereof.
(n) The WeFusion Disclosure Schedule lists all employees of
WeFusion, their salaries and amount of their most recent salary increases as of
the date of this Agreement. Except as provided in the WeFusion Disclosure
Schedule, no person or entity has an employment, severance or independent
contractor agreement with WeFusion. No "leased employee" (within the meaning of
Section 414(n) or (o) of the Code) performs any material services for WeFusion.
The consummation of the transactions contemplated by the Transaction
Documents will not result in (i) any payment (including, without limitation,
severance, unemployment compensation, golden parachute or bonus payments or
otherwise) becoming due to any director, officer, employee or consultant of
WeFusion, (ii) any increase in the amount of compensation or benefits payable in
respect of any director, officer, employee or consultant of WeFusion, or (iii)
accelerate the vesting or timing of payment of any benefits or compensation
14
payable in respect of any director, officer, employee or consultant of WeFusion.
No Employee Benefit Plan provides benefits or payments contingent upon,
triggered by or increased as a result of, a change in the ownership or effective
control of WeFusion.
(o) WeFusion is in compliance in all material respects with
all applicable laws, agreements and contracts relating to employment, employment
practices, wages, hours, and terms and conditions of employment, including, but
not limited to, employee compensation matters.
(p) WeFusion has maintained good labor relations and has no
knowledge of any facts indicating that the consummation of the transactions
contemplated hereby will have an adverse effect on labor relations, and has no
knowledge that any of its key employees intends to leave its employ.
(q) WeFusion is not engaged in any unfair labor practice.
Except as set forth in the WeFusion Disclosure Schedule, (i) there is no
grievance or arbitration proceeding arising out of or under collective
bargaining agreements pending or Threatened; (ii) there is no strike, labor
dispute, slowdown or stoppage pending or Threatened against WeFusion and no
strike, labor dispute, slowdown or stoppage has occurred or been Threatened
during the past two years; (iii) WeFusion is not a party to any collective
bargaining agreement or contract; (iv) there is no pending or Threatened union
representation question existing with respect to the employees of WeFusion; and
(v) no union organizing activities are currently taking place or have taken
place during the past two years.
(r) There are no complaints or charges against WeFusion
pending before the National Labor Relations Board or any state or local labor
agency and no Person has Threatened during the past two years to file any
complaint or charge against WeFusion with any such board or agency.
(s) No charges against WeFusion are pending before the Equal
Employment Opportunity Commission or any state or local agency responsible for
the prevention of unlawful employment practices.
(t) WeFusion has not received notice of the intent of any
federal, state, local or foreign agency responsible for the enforcement of labor
or employment laws to conduct an investigation of WeFusion and no such
investigation is in progress.
3.11. Absence of Certain Changes or Events. Except as disclosed in the
WeFusion Disclosure Schedule, and except as specifically contemplated by the
Transaction Documents, since the WeFusion Interim Balance Sheet Date there has
not occurred:
(a) any change in the condition (financial or otherwise),
properties, assets, liabilities, business operations, results of operations that
could reasonably constitute a Material Adverse Effect;
(b) any amendments or changes in WeFusion's Certificate of
Incorporation or Bylaws;
15
(c) any damage, destruction or loss that could reasonably
constitute a Material Adverse Effect, whether covered by insurance or not;
(d) any redemption, repurchase or other acquisition of shares
of WeFusion Capital Stock by WeFusion (other than pursuant to arrangements with
terminated employees or consultants), or any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to WeFusion Capital Stock;
(e) any increase in or modification of the compensation or
benefits payable or to become payable by WeFusion to any of its directors,
employees or consultants;
(f) any modification of any term of benefits payable under any
Employee Benefit Plan;
(g) any acquisition or sale of a Material amount of property
or assets of WeFusion other than in the ordinary course of business consistent
with past practice;
(h) any (i) incurrence, assumption or guarantee by WeFusion of
any debt for borrowed money; (ii) issuance or sale of any securities convertible
into or exchangeable for debt securities of WeFusion; or (iii) issuance or sale
of options or other rights to acquire from WeFusion, directly or indirectly,
debt securities of WeFusion or any securities convertible into or exchangeable
for any such debt securities;
(i) any creation or assumption by WeFusion or any Stockholder
of any mortgage, pledge, material security interest or lien or other encumbrance
on any asset, except for liens for taxes not yet due or except in the ordinary
course of business which are not Material individually or in the aggregate;
(j) any making of any loan, advance or capital contribution to
or investment in any person other than travel loans or other loans or advances
made in the ordinary course of business of WeFusion;
(k) any entering into, amendment of, relinquishment,
termination or non-renewal by WeFusion of any contract, lease transaction,
commitment or other right or obligation, except for purchase and sale
commitments entered into in the ordinary course of business, consistent with
past practice;
(l) any transfer or grant of a right under the WeFusion IP
Rights (as such term is defined in Section 3.18 hereinafter);
(m) any labor dispute or charge of unfair labor practice
(other than routine individual grievances), any activity or proceeding by a
labor union or representative thereof to organize any employees of WeFusion or
any campaign being conducted to solicit authorization from employees to be
represented by such labor union; or
(n) any agreement or arrangement made by WeFusion to take any
action which, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement untrue or incorrect as of
the date when made unless otherwise disclosed.
16
3.12. Contracts. The WeFusion Disclosure Schedule sets forth a list of
any of the following written or oral contracts, agreements and other instruments
("Contractual Obligations") entered into by WeFusion, true, correct and complete
copies of each of which have been delivered to Symposium or its counsel:
(a) contract with or commitment to any labor union;
(b) continuing contract for the future purchase, sale or
manufacture of products, material, supplies, equipment or services requiring
payment to or from WeFusion in an amount in excess of $25,000 per annum which is
not terminable on 30 days' or less notice without cost or other liability at or
at any time after the Effective Time or in which WeFusion has granted or
received manufacturing rights, most favored nation pricing provisions or
exclusive marketing rights relating to any product, group of products or
territory;
(c) contract providing for the development of software for, or
license of software to, WeFusion which software is used or incorporated in any
of the WeFusion Products (as such term is defined in Section 3.19 hereinafter),
or other Intellectual Property Rights (as such term is defined in Section 3.18
hereinafter), including but not limited to rights of publicity, used or
incorporated in a WeFusion Product;
(d) joint venture contract or agreement which has involved or
is reasonably expected to involve a sharing of profits or losses in excess of
$25,000 per annum with any other party;
(e) contract or commitment for the employment of any officer,
employee or consultant, severance agreement, non-competition agreement,
non-disclosure agreement, agreement requiring a change of control or parachute
payments, or any other type of contract or understanding with any officer,
employee or consultant which is not immediately terminable without cost or other
liability;
(f) indenture, mortgage, promissory note, loan agreement,
guarantee or other agreement or commitment for the borrowing of money, for a
line of credit or for a leasing transaction of a type required to be capitalized
in accordance with Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board;
(g) lease or other agreement under which WeFusion is lessee of
or holds or operates any items of tangible personal property or real property
owned by any third party and under which payments to such third party exceed
$25,000 per annum;
(h) agreement or arrangement for the sale of any assets,
properties or rights having a value in excess of $25,000;
(i) agreement which restricts WeFusion or any of the
Stockholders from engaging in any aspect of its business or competing in any
line of business in any geographic area;
(j) WeFusion IP Rights Agreement (as such term is defined in
Section 3.18 hereinafter); or
(k) agreement between WeFusion and any of the Stockholders.
17
3.13. Trade Relations. The WeFusion Disclosure Schedule lists the top
ten customers of WeFusion for fiscal year ended December 31, 1999 and the two
month period ending May 31, 2000 (in decreasing order of sales and setting forth
both gross and net sales by such customers). Except as disclosed in the WeFusion
Disclosure Schedule, or as may be initiated by WeFusion, WeFusion has not
received any written or oral notice from any such customer, or any Material
supplier to WeFusion, that such customer or supplier intends to terminate,
cancel or limit or other adversely modify or change the business relationship
with WeFusion. No such termination, cancellation, or limitation, or any adverse
modification or change will arise as a result of the execution, delivery or
performance of this Agreement or the Transaction Documents by WeFusion or any of
the Stockholders.
3.14. No Defaults. Except as disclosed in the WeFusion Disclosure
Schedule, WeFusion is not in default under, and there exists no event, condition
or occurrence and none would result from the execution, delivery and performance
by WeFusion or by any of the Stockholders of this Agreement and the Transactions
Documents and the agreements and transactions contemplated hereby and thereby,
which, after notice or lapse of time, or both, would constitute such a default
by WeFusion under any Material contract or agreement to which WeFusion is a
party.
3.15. Certain Agreements. Neither the execution and delivery of the
Transaction Documents nor the consummation of the transactions contemplated
hereby or thereby will (i) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of WeFusion under any Employee Benefit
Plan or otherwise, (ii) materially increase any benefits otherwise payable under
any Employee Benefit Plan or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
3.16. Taxes.
(a) WeFusion has timely filed with the appropriate taxing
authorities all returns and reports in respect of Taxes (the "WeFusion Tax
Returns") required to be filed (taking into account any extension of time to
file granted to or on behalf of WeFusion). The information on the WeFusion Tax
Returns is complete and accurate in all respects except to the extent that an
adequate reserve for Taxes has been established in the WeFusion Financial
Statements in accordance with GAAP. Except as set forth on the WeFusion
Disclosure Schedule and except to the extent that an adequate reserve for Taxes
has been established in the WeFusion Financial Statements in accordance with
GAAP, WeFusion has paid on a timely basis all Taxes (whether or not shown on any
Return) due and payable. There are no liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of WeFusion.
(b) No unpaid (or unreserved in accordance with generally
accepted accounting principles applied on a consistent basis) deficiencies for
Taxes have been claimed, proposed or assessed by any taxing or other
governmental authority with respect to WeFusion for any Pre-Closing Period, and
there are no pending or Threatened audits, investigations or claims for or
relating to any liability in respect of Taxes of WeFusion. WeFusion has not
requested any extension of time within which to file any currently unfiled
returns in respect of any Taxes and no extension of a statute of limitations
relating to any Taxes is in effect with respect to WeFusion.
18
(c) The unpaid Taxes of WeFusion do not exceed the reserve for
the Tax liability (excluding any reserves for deferred Taxes established to
reflect timing differences between book and Tax income) set forth or included in
WeFusion's Interim Balance Sheet as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of WeFusion; (ii)
the provisions for Taxes with respect to WeFusion for the Pre-Closing Period
(excluding any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) are adequate to cover all Taxes with
respect to such period; (iii) WeFusion has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party;
(iv) all material elections with respect to Taxes affecting WeFusion as of the
date hereof are set forth in the WeFusion Disclosure Schedule or are included as
part of the WeFusion Tax Returns; (v) WeFusion is not a "consenting corporation"
under Section 341(f) of the Code or any corresponding provision of state, local
or foreign law; (vi) there are no private letter rulings in respect of any Tax
pending between WeFusion and any taxing authority; (vii) WeFusion owns no
interest in real property in the State of New York; (viii) WeFusion has never
been a member of an affiliated group within the meaning of Section 1504 of the
Code, or filed or been included in a combined, consolidated or unitary return of
any Person other than WeFusion; (ix) WeFusion is not liable for Taxes of any
other Person, or is currently under any contractual obligation to indemnify any
Person with respect to Taxes, or is a party to any tax sharing agreement or any
other agreement providing for payments by WeFusion with respect to Taxes; (x)
WeFusion is not, and has not been, a real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code; (xi) WeFusion is not a person other
than a United States person within the meaning of the Code; (xii) WeFusion is
not a party to any joint venture, partnership or other material arrangement or
contract which could be treated as a partnership for federal income tax
purposes; (xiii) WeFusion has not entered into any sale leaseback or any
leveraged lease transaction that fails to satisfy the requirements of Revenue
Procedure 75-21 (or similar provisions of foreign law); (xiv) WeFusion has not
agreed or is required, as a result of a change in method of accounting or
otherwise, to include any adjustment under Section 481 of the Code (or any
corresponding provision of state, local or foreign law) in taxable income, (xv)
WeFusion is not a party to any agreement, contract, arrangement or plan that
would result (taking into account the transactions contemplated by this
Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code; (xvi) the
WeFusion Disclosure Schedule contains a list of all jurisdictions to which any
Tax is properly payable by WeFusion; (xvii) WeFusion is not a personal holding
company within the meaning of Section 542 of the Code; and (xviii) WeFusion has
not made an election and is not required to treat any of its assets as owned by
another Person for federal income tax purposes or as tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of the
Code (or any corresponding provision of state, local or foreign law).
As used herein, "Taxes" shall mean taxes, fees, levies, duties,
tariffs, imposts, and governmental impositions or charges of any kind in the
nature of (or similar to) taxes, payable to any federal, state, local or foreign
taxing authority, including (without limitation) (i) income, franchise, profits,
gross receipts, ad valorem, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto.
As
19
used herein, "Pre-Closing Period" means all taxable periods ending on or before
the Closing Date and the portion ending on or before the Closing Date of any
taxable period that includes (but does not end on) the Closing Date.
3.17. Outstanding Borrowings. The WeFusion Disclosure Schedule sets
forth (a) the amount of all outstanding borrowings of WeFusion as of the date of
this Agreement, (b) any liens that relate to such outstanding borrowings and
that encumber the assets of WeFusion and (c) the name of each lender thereof.
3.18. Intellectual Property. As used herein, the term "Intellectual
Property Rights" shall mean all worldwide industrial and intellectual property
rights, including, without limitation, patents, patent applications, patent
rights, trademarks, trademark applications, trade names, service marks, service
xxxx applications, copyright, copyright applications, franchises, licenses,
inventories, know-how, trade secrets, customer lists, proprietary processes and
formulae, all source and object code, algorithm, architecture, structure,
display screens, layouts, inventions, development tools and all documentation
and media constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records. Except in each case as disclosed in
the WeFusion Disclosure Schedule:
(a) WeFusion owns, or has the right to use, sell or license
all Intellectual Property Rights used in its business as presently conducted and
as it is expected to be conducted as of the Effective Time (such Intellectual
Property Rights being hereinafter collectively referred to as the "WeFusion IP
Rights") and such rights to use, sell or license are sufficient for such conduct
of its business;
(b) the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not constitute
a breach of any instrument or agreement governing any WeFusion IP Right (the
"WeFusion IP Rights Agreements"), will not cause the forfeiture or termination
or give rise to a right of forfeiture or termination of any WeFusion IP Right or
impair the right of WeFusion or the Surviving Corporation to use, sell or
license any WeFusion IP Right or portion thereof;
(c) there are no material royalties, honoraria, fees or other
payments payable by WeFusion to any person with respect to any such WeFusion IP
Right other than as set forth in the WeFusion IP Rights Agreements listed in the
WeFusion Disclosure Schedule;
(d) neither the manufacture, marketing, license, sale or
intended use of any product currently licensed or sold by WeFusion or currently
under development by WeFusion violates any license or agreement between WeFusion
and any third party or infringes any Intellectual Property Right of any other
party, and there is no pending or Threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any WeFusion IP
Right nor is there any basis for any such claim, nor has WeFusion received any
notice asserting that any WeFusion IP Right or the proposed use, sale, license
or disposition thereof conflicts or will conflict with the rights of any other
party, nor is there any basis for any such assertion;
(e) WeFusion has taken reasonable and practicable steps
designed to safeguard and maintain the secrecy and confidentiality of its
proprietary rights in all WeFusion IP Rights. All officers, employees and
consultants of WeFusion having access to or developing
20
Intellectual Property for WeFusion have executed and delivered to WeFusion an
agreement regarding the protection of proprietary information and the assignment
to WeFusion of all Intellectual Property Rights arising from the services
performed for WeFusion by such persons. Such Intellectual Property Rights are
licensed or assigned to WeFusion or are works made for hire and WeFusion is the
author and owner of all such rights under the Copyright Act of 1976, as amended.
No current or prior officers, employees or consultants of WeFusion claim or have
a right to claim an ownership interest in any WeFusion IP Rights as a result of
having been involved in the development or licensing of such property while
employed by or consulting to WeFusion or otherwise;
(f) The WeFusion Disclosure Schedule sets forth a list of all
applications, registrations, filings and other formal actions made or taken
pursuant to federal, state and foreign laws by WeFusion to perfect or protect
its interest in the WeFusion IP Rights, including, without limitation, all
patents, patent applications, trademarks and service marks, trademark and
service xxxx applications, copyrights and copyright applications;
(g) The WeFusion Disclosure Schedule lists all of the
Intellectual Property licenses held by WeFusion; all such licenses are valid,
enforceable and in full force and effect, and will continue to be so in all
material respects on identical terms immediately following the Closing, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity); and
(h) Except as set forth in the WeFusion Disclosure Schedule,
there is, to the Best Knowledge of WeFusion, no unauthorized use, infringement
or misappropriation of any of WeFusion' IP Rights by any third party including
any employee or former employee of WeFusion.
3.19. Products and Distribution. The WeFusion Disclosure Schedule
contains a complete list of all of the software products (listed by title, in
order of aggregate sales receipts by WeFusion in calendar year 2000 from such
title) published and/or distributed by WeFusion (the "WeFusion Products").
The WeFusion Disclosure Schedule sets forth, for each WeFusion Product,
the following: (i) a list of all contracts and agreements (including without
limitation all development, trademark license, technology license, distribution
or other agreements, but excluding standard end-user agreements) relating to the
WeFusion Products; (ii) the advances paid or payable, and the royalties payable,
to any third parties with respect to such WeFusion Product; and (iii) a list of
the third parties with distribution or publication rights to such WeFusion
Product together with a description of: (A) the territory in which the third
party has distribution rights and (B) whether such distribution rights are
exclusive or nonexclusive.
3.20. Development Tools. The WeFusion Disclosure Schedule contains a
complete list of all material software development tools used or currently
intended to be used by WeFusion in the development of any of the WeFusion
Products, except for any such tools that are generally available and are used in
their generally available form (the "WeFusion Development Tools"). The WeFusion
Disclosure Schedule also sets forth, for each WeFusion Development Tool: (a) for
any WeFusion Development Tool not entirely developed internally by WeFusion
21
employees, the identity of the independent contractors and consultants involved
in such development and a list of the agreements with such independent
contractors and consultants; (b) a list of any third parties with any rights to
receive royalties or other payments with respect to such WeFusion Development
Tool, and a schedule of all such royalties payable; (c) a list of agreements
containing any restrictions on WeFusion's unrestricted right to use and
distribute such WeFusion Development Tool; and (d) a list of all agreements with
third parties for the use by such third party of such WeFusion Development Tool.
WeFusion has sufficient right, title and interest in and to the WeFusion
Development Tools for the conduct of its business as currently conducted and as
proposed to be conducted and, except as set forth on the WeFusion Disclosure
Schedule, all WeFusion Development Tools are works made for hire and WeFusion is
the author and owner of all such WeFusion Development Tools under the Copyright
Act of 1976, as amended.
3.21. Fees and Expenses. WeFusion has not paid and is not obligated to
pay any fee or commission to any broker, finder, intermediary or financial
adviser (including any Stockholder) in connection with the transactions
contemplated by this Agreement.
3.22. Insurance. WeFusion has in effect fire and casualty insurance
policies listed in the WeFusion Disclosure Schedule with the effective date and
coverage amounts indicated thereon. Such insurance coverage and coverage amounts
are adequate and customary for the business engaged in by WeFusion. Except as
disclosed in the WeFusion Disclosure Schedule such policies are valid and
enforceable in accordance with their terms and are in full force and effect.
3.23. Ownership of Property. Except (a) as disclosed in the WeFusion
Interim Balance Sheet or the WeFusion Disclosure Schedule, (b) for liens for
current Taxes not yet delinquent or (c) for liens imposed by law and incurred in
the ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers, materialmen and the like, WeFusion has good and
marketable title to all of its property and assets necessary for the conduct of
its business as presently conducted and as it has previously been conducted and
reflected as owned on the Financial Statements or so described in the Disclosure
Schedule, in each case free and clear of all security interests, mortgages,
liens, charges, claims, options and encumbrances. All real and personal property
owned or leased of WeFusion is generally in good repair and is operational and
usable in the operations of WeFusion, subject to ordinary wear and tear.
WeFusion is not in violation of any zoning, building or safety ordinance,
regulation or requirement or other law or regulation applicable to the operation
of owned or leased properties, nor has it received any notice of violation with
which it has not complied.
3.24. Environmental Matters.
(a) During the period that WeFusion has leased its respective
properties or owned or operated any facilities, it has not disposed, released,
or participated in or authorized the release or Threatened release of Hazardous
Materials (as such term is hereinafter defined) on, from or under such
properties or facilities. There is not now nor, to the Best Knowledge of
WeFusion, has there ever been any presence, disposal, release or Threatened
release of Hazardous Materials on, from or under any of such properties or
facilities, which may have occurred prior to WeFusion having taken possession of
any of such property or facilities. For the purposes of this Agreement, the
terms "disposal," "release," and "threatened release " shall have the
definitions assigned thereto by the Comprehensive Environmental Response,
Compensation
22
and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA
"). For the purposes of this Agreement "Hazardous Materials" shall mean any
petroleum or petroleum products, radioactive materials, asbestos-containing
materials, radon gas and any other hazardous or toxic substance, material or
waste which is or becomes prior to the Closing regulated under, or defined as a
"hazardous substance" "pollutant," "contaminant," "toxic chemical," "hazardous
materials," "toxic substance " or "hazardous chemical" " the release of which
would be a reportable event under any federal, state, foreign or local laws or
regulations.
(b) To the Best Knowledge of WeFusion, none of the properties
or facilities of WeFusion is in violation of any federal, state, foreign or
local law, ordinance, regulation or order relating to industrial hygiene or to
the environmental conditions on, under or about such properties or facilities,
including, but not limited to, soil and ground water condition. During the time
that WeFusion has owned or leased its respective properties and facilities,
WeFusion has not used, generated, manufactured or stored on, under or about such
properties or facilities or transported to or from such properties or facilities
any Hazardous Materials.
(c) During the time that WeFusion has owned or leased its
properties and facilities, there has been no litigation brought or Threatened
against WeFusion by, or any settlement reached by WeFusion with, any party or
parties alleging the presence, disposal, release or threatened release of any
Hazardous Materials, on from or under any of such properties or facilities.
3.25. Interested Party Transactions. Except as disclosed in the
WeFusion Disclosure Schedule, no Stockholder, officer or director of WeFusion or
any "affiliate" or "associate" (as those terms are defined in Rule 405
promulgated under the Securities Act of 1933, as amended (the "Securities Act"))
of any such person has had, either directly or indirectly, any interest in: (i)
any person or entity which purchases from or sells, licenses or furnishes to
WeFusion any goods, property, technology or intellectual or other property
rights or services; or (ii) any contract or agreement to which WeFusion is a
party or by which it may be bound or affected.
3.26. Disclosure. No representation or warranty made by WeFusion or any
Cash-Out Stockholder or, to the Best Knowledge of WeFusion, any Principal
Stockholder in this Agreement, nor in any document, written information,
statement, financial statement, certificate or exhibit attached hereto or
expressly referred to herein, when taken together, contains any untrue statement
of a material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
3.27. Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon WeFusion or any Cash-Out
Stockholder or, to the Best Knowledge of WeFusion, any Principal Stockholder
that has or could reasonably be expected to have the effect of prohibiting or
materially impairing any current business practice of WeFusion, any acquisition
of property by WeFusion or the conduct of business by WeFusion as currently
conducted.
3.28. Securities Laws Exemption. Each Principal Stockholder has
completed a Questionnaire conforming in form and substance to Exhibit 3.28
hereto (the "Stockholder's Questionnaire") setting forth information regarding
such Principal Stockholder and containing such representations, warranties and
agreements of such Principal Stockholder necessary for
23
Symposium to establish that the issuance of the Merger Shares and, if
applicable, Warrants to such Principal Stockholder pursuant to this Agreement
may be effected without registration pursuant to applicable Federal and state
securities laws. To the Best Knowledge of WeFusion, the information set forth in
each such Stockholder Questionnaire is true and correct as of the date hereof
and will be true and correct as of the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS
Each of the Principal Stockholders represents and warrants to Symposium
Sub and Symposium that:
4.1. Title to the WeFusion Stock.
(a) Such Principal Stockholder owns of record and beneficially
the Exchange Shares in the amounts set forth on the WeFusion Disclosure Schedule
and has good, valid and marketable title to such Exchange Shares, free and clear
of all liens, security interests and other encumbrances, including, without
limitation, any which affect transferability.
(b) No Commitments To Issue WeFusion Stock. Except as
disclosed in the WeFusion Disclosure Schedule, there are no outstanding options,
warrants, calls, rights, commitments, conversion rights or other instruments
pursuant to which any such Principal Stockholder is or may become obligated to
issue, deliver or sell or offer to sell, or cause to be issued, delivered or
sold or offered to sell, any shares of WeFusion Capital Stock or securities
convertible into or exchangeable for shares of WeFusion Capital Stock, or
obligating any such Principal Stockholders to grant, extend or enter into any
such option, warrant, call, right, commitment, conversion right or agreement.
Except as set forth in the WeFusion Disclosure Schedule, there are no voting
trusts or other agreements or understandings to which any such Principal
Stockholder is a party with respect to the voting of any of the WeFusion Capital
Stock.
4.2. Authority.
(a) Authorization, Execution and Delivery. Such Principal
Stockholder has the capacity and authority to enter into this Agreement and each
of the Transaction Documents to which it is a party, to perform such Principal
Stockholder's obligations hereunder and thereunder and to consummate the Merger
and the other transactions contemplated by this Agreement, the Certificate of
Merger and the other Transaction Documents to which it is a party. The execution
and delivery of this Agreement and such other Transaction Documents by such
Principal Stockholder, and the consummation by WeFusion of the Merger and the
other transactions contemplated hereby and thereby have been duly authorized by
all necessary action on the part of such Principal Stockholder. The Transaction
Documents to which such Principal Stockholder is a party have been duly executed
and delivered by such Principal Stockholder and are the valid and binding
obligations of such Principal Stockholder, enforceable against it in accordance
with their terms, except as such enforceability may be subject to (i)
bankruptcy, insolvency, reorganization or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles.
24
(b) No Conflict. Neither the execution, delivery and
performance of this Agreement, the Certificate of Merger and the Transaction
Documents, nor the consummation of the transactions contemplated hereby or
thereby, nor compliance with the provisions hereof or thereof, will conflict
with, or result in any violations of, or cause a default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation contained in, or the
loss of any material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the WeFusion Capital Stock
owned by such Principal Stockholder under any term, condition or provision of
(i) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other material agreement to which any such Principal Stockholder is a party, or
(ii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to any such Principal Stockholder or any of the WeFusion Capital
Stock owned by such Principal Stockholder.
4.3. Governmental Consents. No consent, approval, order or
authorization of a Governmental Entity is required to be obtained by such
Principal Stockholder in connection with the execution and delivery of this
Agreement and the other Transaction Documents to which it is a party or the
consummation of the transactions contemplated hereby or thereby, except for: (i)
such filings, authorizations, orders and approvals as may be required under
federal and state securities laws; and (iii) where the failure to obtain such
consents, approvals and the like, would not prevent or delay the consummation of
the Merger or otherwise prevent WeFusion or such Principal Stockholder from
performing its obligations under this Agreement or any of the Transaction
Documents and would not have a Material Adverse Effect on WeFusion.
4.4. No Claims Against WeFusion. As of the Effective Time, such
Principal Stockholder will not have any claim (whether or not actually asserted)
against WeFusion with respect to any matter or occurrence or state of affairs
arising at or prior to the Effective Time which has not been effectively waived
or released.
4.5. Compliance with Applicable Laws. Except as disclosed in the
WeFusion Disclosure Schedule, no Governmental Entity has notified such Principal
Stockholder of its intention to conduct any investigation or review by a
Governmental Entity with respect to WeFusion.
4.6. Litigation. Except as disclosed in the WeFusion Disclosure
Schedule, there is no suit, action, arbitration, demand, claim, dispute,
investigation or proceeding pending or Threatened, against such Principal
Stockholder, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against such Principal Stockholder
that, (i) individually or in the aggregate, could have a Material Adverse Effect
on WeFusion or (ii) could have an adverse effect on the ability of WeFusion or
such Principal Stockholder to perform such Stockholder's respective obligations
under this Agreement or any of the Transaction Documents to which it is a party
or any documents contemplated hereby or thereby. No injunction, writ, temporary
restraining order, decree or order of any nature has been issued by any court or
other Governmental Entity against such Principal Stockholder purporting to
enjoin or restrain the execution, delivery or performance of any of the
documents contemplated hereby.
4.7. Changes in Employee Benefit Plans. Such Principal Stockholder has
not proposed or agreed to any increase in benefits under any Employee Benefit
Plan (or the creation
25
of new benefits) or change in employee coverage which would increase the expense
of maintaining any such plan.
4.8. Interested Party Transactions. Except as disclosed in the WeFusion
Disclosure Schedule, neither such Principal Stockholder nor any "affiliate" nor
"associate" (as those terms are defined in Rule 405 promulgated under the
Securities Act) of such Principal Stockholder has had, either directly or
indirectly, any interest in: (i) any person or entity which purchases from or
sells, licenses or furnishes to WeFusion any goods, property, technology or
intellectual or other property rights or services; or (ii) any contract or
agreement to which WeFusion is a party or by which it may be bound or affected.
4.9. Disclosure. No representation or warranty made by such Principal
Stockholder in this Agreement, nor in any document, written information,
statement, financial statement, certificate or exhibit attached hereto or
expressly referred to herein, when taken together, contains any untrue statement
of a material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
4.10. Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon such Principal Stockholder
that has or could reasonably be expected to have the effect of prohibiting or
materially impairing any current business practice of WeFusion, any acquisition
of property by WeFusion or the conduct of business by WeFusion as currently
conducted.
4.11. Securities Laws Exemption. Such Principal Stockholder has
completed a Stockholder's Questionnaire setting forth information regarding such
Stockholder and containing such representations, warranties and agreements of
such Principal Stockholder as necessary for Symposium to establish that the
issuance of the Merger Shares and, if applicable, Warrants to such Principal
Stockholder pursuant to this Agreement may be effected without registration
pursuant to applicable Federal and state securities laws. The information set
forth in each such Stockholder Questionnaire is true and correct as of the date
hereof and will be true and correct as of the Effective Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SYMPOSIUM AND SYMPOSIUM SUB
Symposium and Symposium Sub jointly and severally represent and warrant
to WeFusion and the Stockholders that:
5.1. Organization; Good Standing; Qualification and Power. Each of
Symposium and Symposium Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is presently being conducted, and is duly qualified
to do business and is in good standing in each jurisdiction in which the nature
of its business as it is presently being conducted or the ownership or leasing
of its properties makes such qualification necessary, other than in such
jurisdictions where the failure to so qualify or to
26
be in good standing would not have a Material Adverse Effect on Symposium Sub or
upon Symposium and its subsidiaries, taken as a whole. Symposium has delivered
to WeFusion or its counsel complete and correct copies of the Certificate or
Articles of Incorporation and Bylaws of each of Symposium and Symposium Sub, in
each case as amended to the date of this Agreement.
5.2. Capital Structure.
(a) Capital Stock and Options of Symposium. The authorized
capital stock of Symposium consists of 100,000,000 shares of common stock, par
value $0.001 per share (the "Symposium Common Stock") and 10,000,000 shares of
preferred stock, $0.001 par value (the "Symposium Preferred Stock"). Symposium
is authorized to issue "blank check" preferred stock in one or more series from
time to time with such designation, rights and preferences as may be determined
from time to time by the Board of Directors. As of the date hereof, the Board of
Directors has authorized 50, 625 shares of Series A Convertible Preferred Stock,
25,000 shares of Series B Convertible Preferred Stock and 65,000 shares of
Series C Convertible Preferred Stock. As of the date hereof, 27,844,520 shares
of Common Stock, 50,625 shares of Series A Convertible Preferred Stock, no
shares of Series B Convertible Preferred Stock and 62.454.5 shares of Series C
Convertible Preferred Stock are issued and outstanding. All outstanding shares
of Symposium Common Stock are validly issued, fully paid and nonassessable and
are not subject to preemptive rights. The Merger Shares are duly authorized and
upon their issuance in accordance with the terms of this Agreement, the Shares
will be validly issued, fully paid and non-assessable and will be free and clear
of any liens, encumbrances or claims of any kind by others.
(b) Capital Stock of Symposium Sub. The authorized capital
stock of Symposium Sub consists of 1,000 shares of Common Stock, $0.001 par
value per share, of which one hundred shares are issued and outstanding and no
shares are held in the treasury of Symposium Sub. Symposium is the sole
stockholder of Symposium Sub. All of the issued and outstanding shares of
Symposium Sub Common Stock are validly issued, fully paid and non-assessable and
are not subject to preemptive rights.
(c) No Other Commitments. Except for the options and warrants
disclosed in the Symposium Disclosure Schedule or the reports filed by Symposium
with the Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934, as amended (the "Symposium SEC Reports"), there are no
options, warrants, calls, rights, commitments, conversion rights or agreements
of any character to which Symposium or Symposium Sub is a party or by which
Symposium or Symposium Sub is bound obligating Symposium or Symposium Sub to
issue, deliver or sell, or offer to sell, or cause to be issued, delivered or
sold or offer to sell any shares of capital stock of Symposium or Symposium Sub
or securities convertible into or exchangeable for shares of capital stock of
Symposium or Symposium Sub, or obligating Symposium or Symposium Sub to grant,
extend or enter into any such option, warrant, call, right, commitment,
conversion right or agreement. Except as disclosed in the Symposium Disclosure
Schedule or the Symposium SEC Reports, there are no voting trusts or other
agreements or understandings among any of the stockholders of Symposium or
Symposium Sub to which Symposium or Symposium Sub is a party with respect to the
voting of the capital stock of Symposium or Symposium Sub.
27
5.3. Authority.
(a) Corporate Action. Each of Symposium and Symposium Sub has
all requisite corporate power and authority to enter into this Agreement and the
other Transaction Documents to which it is a party and to perform its
obligations hereunder and thereunder and to consummate the Merger and the other
transactions contemplated by this Agreement and the other Transaction Documents
to which it is a party. The execution and delivery of this Agreement and the
other Transaction Documents to which it is a party by Symposium and Symposium
Sub and the consummation by Symposium and Symposium Sub of the Merger and the
other transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of each of Symposium and Symposium
Sub. This Agreement and each of the Transaction Documents to which Symposium or
Symposium Sub is a party have been duly executed and delivered by Symposium or
Symposium Sub, as applicable, and are the valid and binding obligation of
Symposium or Symposium Sub, enforceable against them in accordance with their
terms, except that such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles.
(b) No Conflict. Neither the execution, delivery and
performance of this Agreement nor the Transaction Documents to which it is a
party, nor the consummation of the transactions contemplated hereby or thereby
nor compliance with the provisions hereof or thereof will conflict with, or
result in any violations of, or cause a default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation contained in, or the loss of any
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Symposium or Symposium Sub under, any term, condition or provision of (x) the
Certificate or Articles of Incorporation or Bylaws of Symposium or Symposium
Sub, (y) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other material agreement, or (z) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Symposium or Symposium Sub or their
respective properties or assets.
(c) Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained by Symposium or Symposium Sub in connection
with the execution and delivery of this Agreement or any of the Transaction
Documents to which either is a party or the consummation of the transactions
contemplated hereby or thereby, except for: (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, and appropriate
documents with the relevant authorities of other states in which Symposium is
qualified to do business; (ii) such filings, authorizations, orders and
approvals as may be required under foreign laws and federal and state securities
laws; and (iii) where the failure to obtain such consents, approvals and the
like, would not prevent or delay the consummation of the Merger or otherwise
prevent Symposium or Symposium Sub from performing its obligations under this
Agreement or any of the Transaction Documents to which it is a party and would
not have a Material Adverse Effect on Symposium Sub or on Symposium and its
subsidiaries, taken as a whole.
5.4. Litigation. There is no suit, action, arbitration, demand, claim
or proceeding pending or, to the knowledge of Symposium or Symposium Sub,
threatened against Symposium or Symposium Sub, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Symposium or Symposium Sub that, (i)
28
individually or in the aggregate, could have a Material Adverse Effect on
Symposium or Symposium Sub or (ii) individually or in the aggregate, could have
an adverse effect on the ability of Symposium or Symposium Sub to perform its
obligations hereunder or under the other Transaction Documents to which it is a
party and any other documents contemplated hereby or thereby. No injunction,
writ, temporary restraining order, decree or order of any nature has been issued
by any court or other Governmental Entity against Symposium or Symposium Sub
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement and the other Transaction Documents to which it is a party or any
other documents contemplated hereby or thereby.
5.5. SEC Filings; Financial Statements. Symposium has filed all
Symposium SEC Reports required to be filed with the SEC from January 1, 2000
through the date of this Agreement. The Symposium SEC Reports (i) were prepared
in all material respects in accordance with the requirements of the Securities
Act, or the Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) 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 the light of the circumstances under which they were
made, not misleading. Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Symposium SEC Reports
has been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or in the Symposium SEC Reports), and each fairly presents in all material
respects the consolidated financial position of Symposium and its subsidiaries
as at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount.
Except as set forth in the Symposium Disclosure Schedule (and any
supplements thereto), since the date of the financial statements contained in
the most recent Symposium SEC Report there has been no event or occurrence
relating to Symposium or any of its subsidiaries which, in the reasonable
judgment of Symposium, will be required to be disclosed in a Symposium SEC
Report or which would have a Material Adverse Effect on Symposium and its
subsidiaries taken as a whole and which has not been disclosed to WeFusion
either in the Symposium Disclosure Schedule (including supplements thereto) or
in a Symposium SEC Report.
5.6. Fees and Expenses. Neither Symposium nor Symposium Sub has paid or
become obligated to pay any fee or commission to any broker, finder,
intermediary or financial adviser (including any Stockholder) in connection with
the transactions contemplated by this Agreement.
5.7. Issuance of Securities. Assuming the accuracy of the information
set forth in the Stockholders' Questionnaires, the issuance of the Merger Shares
in accordance herewith are, and (assuming no change in currently applicable law)
the issuance of the Symposium Common Stock upon the conversion of the Warrants
will be, exempt from the registration requirements of the Securities Act and the
qualification requirements of applicable state securities laws.
5.8. Disclosure. No representation or warranty made by Symposium or
Symposium Sub in this Agreement, nor any document, written information,
statement, financial statement, certificate or exhibit prepared and furnished or
to be prepared and furnished by Symposium or
29
Symposium Sub or its representatives pursuant hereto or in connection with the
transactions contemplated hereby, when taken together, contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements or facts contained herein or therein not misleading in light
of the circumstances under which they were furnished.
ARTICLE VI
CLOSING AND CLOSING DELIVERIES
6.1. The Closing. Subject to the termination of this Agreement as
provided in Article 10 hereof, the consummation of the transactions contemplated
by this Agreement (the "Closing") will take place at the offices of Xxxxxx Xxxxx
Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on or before
November 22, 2000, at a time to be mutually agreed upon by the parties, unless
another place, time and date is mutually selected by WeFusion and Symposium (the
"Closing Date"). Concurrently with the Closing, the Certificate of Merger will
be filed in the offices of the Secretary of State of the State of Delaware.
ARTICLE VII
COVENANTS
7.1. Rule 144. Symposium shall use its reasonable best efforts to make
publicly available and available to WeFusion and to the Principal Stockholders
pursuant to Rule 144, such information as is necessary to enable such Principal
Stockholders to make sales of Merger Shares or Warrants pursuant to that Rule.
Symposium shall use its reasonable best efforts to file timely with the SEC all
documents and reports required of Symposium under the Exchange Act. Symposium
shall furnish to any Principal Stockholders upon written request, a written
statement executed on behalf of Symposium as to compliance with the current
public information requirements of Rule 144.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF WEFUSION AND THE STOCKHOLDERS
The obligations of WeFusion and each of the Principal Stockholders
hereunder are subject to the fulfillment or satisfaction on or before the
Closing, of each of the following conditions (any one or more of which may be
waived by the Principal Stockholders but only in a writing signed by the
Principal Stockholders):
8.1. Accuracy of Representations and Warranties. The representations
and warranties of Symposium and Symposium Sub set forth in Article 4 (as
qualified by the Symposium Disclosure Schedule) shall be true and accurate in
every material respect on and as of the Closing Date with the same force and
effect as if they had been made at the Closing, and WeFusion shall receive a
certificate to such effect executed by Symposium's Chief Executive Officer and
Chief Financial Officer.
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8.2. Agreements and Covenants. Each of Symposium and Symposium Sub
shall have performed and complied in all material respects with all agreements
and covenants required to be performed or complied with by them under this
Agreement or the Certificate of Merger on or before the Closing Date, and
WeFusion shall receive a certificate to such effect signed by Symposium's Chief
Executive Officer and Chief Financial Officer.
8.3. Absence of Material Adverse Change. There shall not have occurred
any event which has had a Material Adverse Effect on the condition (financial or
otherwise), properties, assets, liabilities, business, operations, results of
operations or prospects of Symposium Sub or of Symposium and its subsidiaries,
taken as a whole.
8.4. Compliance with Law. There shall be no order, decree or ruling by
any governmental agency or threat thereof, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger, which would
prohibit or render illegal the transactions contemplated by this Agreement.
8.5. Government Consents. There shall have been obtained on or before
the Closing such material permits or authorizations, and there shall have been
taken such other action, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
federal and state securities laws.
8.6. Opinion of Symposium's Counsel. WeFusion shall have received from
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx, LLP, counsel to Symposium and Symposium Sub, an
opinion in the form of Exhibit 8.6 hereto.
8.7. Board of Director and Stockholder Approvals. The principal terms
of this Agreement and the Merger shall have been approved and adopted by the
Board of Directors of Symposium in accordance with applicable law and
Symposium's Certificate of Incorporation and Bylaws. The principal terms of this
Agreement and the Merger shall have been adopted by the Board of Directors of
Symposium Sub and its stockholders in accordance with applicable law and
Symposium Sub's Certificate of Incorporation and Bylaws.
8.8. No Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any Federal or state court and remain in
effect, nor shall any proceeding seeking any of the foregoing be pending.
8.9. Escrow Agreement. Symposium shall have entered into an Escrow
Agreement in the form of Exhibit 8.9.
8.10. Employment and Stock Option Agreements. Either Symposium or
Surviving Corporation shall have executed Employment Agreements with Xxxxx
Xxxxxxx, Xxx Xxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx and Xxxxx Xxxxxxxx conforming
in form and substance to Exhibit 8.10(b) hereto (each an "Employment Agreement"
and collectively, the "Employment Agreements") and Stock Option Agreements with
Symposium or Surviving Corporation conforming in form and substance to Exhibit
8.10(b) hereto (each a "Stock Option Agreement" and collectively the "Stock
Option Agreements").
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8.11. Xxxxxx Indemnification. Symposium shall have executed an
Agreement with T. Xxxxx Xxxxxx, agreeing to indemnify it against any liabilities
arising from the Dell Laptop Computer leases listed on Schedule 8.11 hereto.
8.12. Additional Payments. At or immediately prior to the Closing, upon
delivery by WeFusion to Symposium of the Back Salary Schedule, (as defined in
Section 9.19), Symposium will pay WeFusion (the "Back Salary Payment") an amount
equal to the lesser of (a) $85,000 and (b) the total amount of back salary
indicated on said schedule. The Symposium Back Salary Payment shall be used to
pay: (i) all such back salary to WeFusion employees against delivery by such
employees of releases, conforming in form and substance to Exhibit 8.12 hereto,
releasing WeFusion from any further claims; and (ii) all Taxes related thereto.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SYMPOSIUM AND SYMPOSIUM SUB
The obligations of Symposium and Symposium Sub to effect the Merger are
subject to the following conditions:
9.1. Appraisal Rights. No Shareholder of WeFusion shall have exercised
appraisal rights.
9.2. Representations and Warranties. The representations and warranties
of WeFusion and the Stockholders contained in this Agreement shall have been
true and correct in all material respects individually and in the aggregate on
and as of the Effective Time, with the same force and effect as if made on and
as of the Effective Time, except for (i) changes contemplated by this Agreement
and (ii) those representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date), and
Symposium and Symposium Sub shall have received a certificate of WeFusion to
such effect signed by the Chief Executive Officer or Chief Financial Officer of
WeFusion.
9.3. Consents Obtained. All consents, waivers, approvals,
authorizations, or orders required to be obtained, and all filings required to
be made, by WeFusion and the Stockholders for the authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made, except where the failure
to receive such consents, waivers, approvals, authorizations or orders would not
reasonably be expected, individually or in the aggregate with all other such
failures, to have a Material Adverse Effect on WeFusion or the Surviving
Corporation; and Symposium and Symposium Sub shall have received a certificate
to such effect signed by the Chief Executive Officer or Chief Financial Officer
of WeFusion with signed originals of all such consents, waivers, approvals,
authorizations, orders, and filings attached as exhibits to such certificate.
Notwithstanding the foregoing, each Stockholder shall have consented in writing
to the Merger and the transactions contemplated hereby and copies of all such
consents shall have been delivered to Symposium by WeFusion.
9.4. Secretary's Certificate. WeFusion shall have delivered to
Symposium a certificate of the Secretary or an Assistant Secretary of WeFusion,
dated as of the Effective Date
32
and in the form of Exhibit D, certifying: (i) that the necessary corporate
action by the Board of Directors and Stockholders of WeFusion has been taken to
authorize the execution and delivery of this Agreement by WeFusion, the
performance by WeFusion of its obligations under this Agreement and the
consummation by WeFusion of the transactions contemplated by this Agreement
(with copies of all such resolutions attached as exhibits thereto); (ii) that
the Certificate of Incorporation and By-laws of WeFusion attached to the
Secretary's certificate are true, complete, and correct and are in full force
and effect as of the Effective Date; and (iii) as to the incumbency and specimen
signature of the officers of WeFusion executing this Agreement and other
documents to be executed on behalf of WeFusion in connection therewith, together
with a certification by another officer of WeFusion as to the incumbency and
specimen signature of the Secretary or Assistant Secretary signing such
certificate.
9.5. Agreements and Covenants. WeFusion and the Stockholders shall have
performed and complied in all material respects with all agreements and
covenants required to be performed or complied with by them under the terms and
conditions of this Agreement or the Certificate of Merger on or before the
Closing Date, and Symposium and Symposium Sub shall receive a certificate to
such effect signed by WeFusion's Chief Executive Officer and Chief Financial
Officer.
9.6. Absence of Material Adverse Change. There shall not have occurred
any change since the Balance Sheet Date which has had a Material Adverse Effect
on the condition (financial or otherwise), properties, assets, liabilities,
business, operations, results of operations or prospects of WeFusion.
9.7. Compliance with Law. There shall be no order, decree or ruling by
any governmental agency or threat thereof, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger, which would
prohibit or render illegal the transactions contemplated by this Agreement.
9.8. Government Consents. There shall have been obtained on or before
the Closing such material permits or authorizations, and there shall have been
taken such other action, as may be required to consummate the Merger by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to requirements under applicable
federal and state securities laws.
9.9. Opinion of WeFusion's Counsel. Symposium and Symposium Sub shall
have received from Piper, Marbury, Xxxxxxx & Xxxxx, LLP, counsel to WeFusion, an
opinion in the form of Exhibit 9.9 hereto.
9.10. Documents. Symposium and Symposium Sub shall have received all
written consents, assignments, waivers, authorizations or other certificates
reasonably deemed necessary by Symposium's legal counsel to provide for the
continuation in full force and effect of any and all material contracts and
leases of WeFusion and for WeFusion to consummate the transactions contemplated
hereby.
9.11. No Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Merger shall have been issued by any Federal or state court and remain in
effect, nor shall any proceeding seeking any of the foregoing be pending.
33
9.12. Escrow Agreement. The Stockholders Representative shall have
entered into the Escrow Agreement.
9.13. Bank Debt. As of the date of Closing, WeFusion shall have no
indebtedness to any bank or financial institution other than as set forth on the
WeFusion Disclosure Schedule.
9.14. Liabilities. All liabilities owed by WeFusion to its trade
creditors and incurred prior to September 1, 2000, whether or not such
liabilities are disclosed on the WeFusion Disclosure Schedule, (the
"Pre-September Trade Liabilities") shall be either satisfied or assumed by C2
LLC in accordance with the Distribution Agreement and pursuant to terms and
conditions acceptable to Symposium in its reasonable discretion.
9.15. Certain Employees. Xxxxx Xxxxxxx, Xxxx Xxxxx and Xxxx Xxxxxx
shall each have accepted, in writing, three (3) year cashless warrants to
purchase 30,000 shares of Symposium Common Stock at a strike price equal to the
average closing sales price of Symposium Common Stock on the American Stock
Exchange for the ten (10) consecutive trading days ending on the Closing Date
(the "Average Closing Sales Price") in full and final satisfaction of any bonus
and severance provisions in their employment agreements and any other claims.
9.16. Releases. WeFusion shall have secured fully executed written
agreements from each of the following (each a "Releasor") releasing WeFusion,
Symposium and Symposium Sub from any liabilities arising prior to the Closing
Date, including, where applicable liabilities arising in connection with the
employment by WeFusion of such persons or the grant of (or promise to grant)
options or warrants to purchase shares of WeFusion Capital Stock:
(i) the current officers and directors of WeFusion,
including, but not limited to, T. Xxxxx Xxxxxx;
(ii) each employee receiving a Back Salary Payment pursuant
to Section 8.12;
(iii) each employee executing an Employment Agreement
pursuant to this Agreement;
(iv) each of Xxxx Ohdner, Xxxxx Xxxxxxx, Xxxx Xxxxx and Xxxx
Xxxxxx; and
(v) Persons listed on the WeFusion Disclosure Schedule as
holders of promissory notes, convertible notes or
outstanding warrants or other rights to purchase
WeFusion Capital Stock including, but not limited to
Xxxxx Xxxxxx & Associates, T. Xxxxx Xxxxxx, Cache Box,
Inc., Xxxxxxxx Xxxxx, Xxxxxxx X. Xxxxxxxx, Xxxx Xxxxx,
Xxxx Xxxxxx, Xxxxxx Investment Fund I, Xxx Xxxxxxxx,
Xxxx X'Xxxxx, Xxxx XXXX, and C2, LLC;
provided, however, that Symposium may elect to waive this condition with respect
to any Releasor.
9.17. Employment and Stock Option Agreements. Each of Xxxxx Xxxxxxx,
Xxx Xxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx and Xxxxx Xxxxxxxx shall have entered
into Employment Agreements as defined in Section 8.10 hereof and shall have
entered into Stock Option Agreements as defined in Section 8.10 hereof.
34
9.18. Regulatory Approvals. WeFusion will promptly execute and file, or
join in the execution and filing, of any application or other document that may
be necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or which Symposium may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. WeFusion will
use commercially reasonable efforts to promptly obtain all such authorizations,
approvals and consents.
9.19. Payment of Back Salary. At or immediately prior to the Closing,
WeFusion shall prepare and deliver to Symposium, a schedule showing the amount
of back salary owed to each WeFusion employee as of the Closing Date (the "Back
Salary Schedule"). Upon receipt of the Back Salary Payment (as defined in
Section 8.12 hereof) from Symposium, WeFusion shall cause all back salary owed
to its employees to be paid in full against receipt of the releases referred to
in Section 8.12.
9.20. Stockholder Questionnaire. Symposium shall have received executed
Stockholders Questionnaires in the form of Exhibit 8.20 hereto from each
Principal Stockholder.
ARTICLE X
TERMINATION OF AGREEMENT
10.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the Merger by the
Stockholders of WeFusion:
(a) by mutual agreement of WeFusion and Symposium;
(b) by either party, if all the conditions for Closing the
Merger shall not have been satisfied or waived on or before November 30, 2000
other than as a result of a breach of this Agreement by the terminating party;
or
(c) by either party, if a permanent injunction or other order
by any Federal or state court which would make illegal or otherwise restrain or
prohibit the consummation of the Merger shall have been issued and shall have
become final and nonappealable.
10.2. Notice of Termination. Any termination of this Agreement under
Section 10.1 above will be effective by the delivery of written notice of the
terminating party to the other party hereto.
10.3. Effect of Termination. In the case of any termination of this
Agreement as provided in this Article 10, this Agreement shall be of no further
force and effect (except as provided in Articles 7 or 11 or in Sections 12.1 and
12.8) and nothing herein shall relieve any party from liability for any breach
of this Agreement.
35
ARTICLE XI
INDEMNITY
11.1. Survival; Indemnity. The representations and warranties of the
parties set forth in this Agreement and the representations and warranties of
the Principal Stockholders set forth in the Stockholder's Questionnaires, shall
survive the date of the Closing until the six-month anniversary of the Closing
Date, except that the representation of WeFusion set forth in Section 3.4(e)
shall survive indefinitely. No party shall have any claim or right of recovery
for any breach of a representation or warranty unless written notice is given in
good faith by that party to the other party prior to the expiration of such
survival period of the representation or warranty pursuant to which the claim is
made or right of recovery is sought, setting forth in reasonable detail the
specific breach of the representation or warranty, the amount of the claim being
made and the basis for that amount. The sole and exclusive remedy of any party
for any breach or inaccuracy of any representation or warranty, or breach of any
covenant or agreement, by the other party or parties shall be the indemnities
contained in this Article 11, which shall survive the Closing.
11.2. Indemnification by the Principal Stockholders. Subject to Section
11.3 hereof, the Principal Stockholders jointly and severally agree to indemnify
Symposium, Symposium Sub and their respective, officers, directors,
stockholders, employees, affiliates, attorneys, accountants and agents (the
"Symposium Parties"), and hold them harmless from, any and all damages, losses,
liabilities and expenses (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding brought against the Symposium Parties (collectively
the "Damages") incurred or suffered by the Symposium Parties after the Closing
arising out of (i) any breach of any representation, warranty, covenant or
agreement of WeFusion or any of the Principal Stockholders set forth in this
Agreement or the Stockholder's Questionnaire, as the case may be; (ii) any
liabilities of WeFusion not reflected on the WeFusion Interim Balance Sheet,
(iii) any Pre-September Trade Liabilities, (iv) any liabilities or obligations
to any Releasor, notwithstanding the disclosure, if any, of such liability or
potential liability on the WeFusion Disclosure Schedule; or (v) any Taxes
payable by WeFusion with respect to the Pre-Closing Period (including any Taxes
payable by WeFusion with respect to the transactions contemplated hereby and by
the other Transaction Documents and including any Taxes listed on the WeFusion
Disclosure Schedule). Notwithstanding the foregoing, the Principal Stockholders
shall have no liability under this Section 11.2 in respect of: (A) breaches of
representations and warranties by WeFusion or the Principal Stockholder; (B)
liabilities other than Pre-September Trade Liabilities; or (C) the FICA and
other similar Taxes listed on Section 3.16(c) of the WeFusion Disclosure
Schedule unless and until the aggregate amount of all claims by the Symposium
Parties arising out of one or more such breaches exceeds $35,000 in the
aggregate, in which case the Stockholders shall be liable for all amounts in
excess of $35,000.
11.3. Satisfaction of Indemnity Claims Against the Principal
Stockholders .
(a) All claims by the Symposium Parties for indemnification
pursuant to Section 11.2 hereof (the "Symposium Party Indemnity Claims") shall
be satisfied first from the portion of the Merger Consideration deposited into
escrow (the "Escrow Proceeds") in accordance with the terms and provisions of
the Escrow Agreement. The parties acknowledge and agree that the Escrow Proceeds
may be insufficient fully to satisfy all Symposium Party
36
Indemnity Claims and/or that Symposium Party Indemnity Claims may arise
subsequent to the termination of the Escrow (all such Symposium Party Indemnity
Claims being hereinafter collectively referred to as the "Excess Indemnity
Claims"). Any Excess Indemnity Claims shall be asserted by written notice (the
"Claim Notice") to the Stockholder Representative (except that the Stockholder
Representative shall be deemed to have received a Claim Notice with respect to
any such claim that was previously asserted pursuant to the Escrow Agreement).
If a Claim Notice relates to an Excess Indemnity Claim that was not previously
asserted pursuant to the Escrow Agreement, the Stockholder Representative shall
have a period of thirty (30) days from the date of such Claim Notice within
which to satisfy or dispute such Excess Indemnity Claim. If the Stockholder
Representative fails timely to satisfy or dispute any such Excess Indemnity
Claim, the amount of such claim, as set forth in the Claim Notice, shall be
deemed to be acknowledged as payable by the Stockholder Representative, which
acknowledgment shall be binding on all of the Principal Stockholders, and
payment therefor shall be due not later than last day of such thirty (30) day
period. If such Excess Indemnity Claim is disputed, payment of such Claim (or
any portion thereof deemed to be due in accordance with the resolution of such
dispute) shall be due not later than ten (10) days following such resolution. If
an Excess Indemnity Claim was previously asserted pursuant to the Escrow
Agreement, the parties shall be bound by the disposition of such Claim,
including the resolution of any dispute with respect thereto, pursuant to the
Escrow Agreement and payment of such Claim shall be made within thirty (30) days
following the termination of the Escrow Agreement. Excess Indemnity Claims shall
be satisfied first by T. Xxxxx Xxxxxx up to the maximum amount of his liability
as set forth in paragraph (b) below; provided that if any amount of any such
Excess Indemnity Claim remains unsatisfied after a period of ten (10) days or is
in excess of the maximum amount of T. Xxxxx Xxxxxx'x liability, then the
Principal Stockholders other than T. Xxxxx Xxxxxx shall be severally liable for
the unpaid portion of such Excess Indemnity Claim up to the respective ratable
values of the aggregate Merger Consideration received by each of them. Excess
Indemnity Claims may be satisfied, in the sole discretion of each Principal
Shareholder making any payment under this Section 11.3(a), either by the payment
of cash or such amount of Merger Consideration (valued in accordance with
Section 11.3(b)) as is equivalent to the cash value of such Excess Indemnity
Claim or any combination thereof.
(b) Notwithstanding anything contained in this Agreement to
the contrary, the maximum liability of each Principal Stockholder (other than T.
Xxxxx Xxxxxx) in respect of Symposium Party Indemnity Claims shall be limited to
an amount equal to the aggregate value of the Merger Consideration received by
such Principal Stockholder in connection with the Merger, determined in
accordance with this Section 11.3 and T. Xxxxx Xxxxxx'x maximum liability in
respect of Symposium Party Indemnity Claims shall be limited to an amount equal
to the sum of the aggregate value of the Merger Consideration received by T.
Xxxxx Xxxxxx and deposited into escrow and 50% of the Excess Merger
Consideration (as defined below). For purposes of this Section 11.3, (i) Merger
Consideration consisting of Symposium Common Stock shall be valued at the
Average Closing Sales Price and (ii) Merger Consideration consisting of Warrants
shall be valued at an amount equal to the product obtained by multiplying (x)
the maximum number of shares of Symposium Common Stock purchasable upon exercise
of a Warrant at the Closing Date by (y) $0.25. As used herein, "Total Merger
Consideration" means the aggregate value, determined in accordance with this
Section 11.3, of the Merger Consideration paid to all of the Principal
Stockholders in connection with the Merger and "Excess Merger Consideration"
means the amount by which the Total Merger Consideration exceeds the value of
the Escrow Proceeds.
37
11.4. Tax Indemnification. Notwithstanding anything to the
contrary contained in this Agreement:
(a) The Principal Stockholders, jointly and severally, will be
liable for and indemnify the Symposium Parties against all Taxes payable by
WeFusion (including those payable by any Symposium Party as successor or
transferee and including any Taxes listed on the WeFusion Disclosure Schedule)
with respect to: (i) the Back Salary Payment and payments made pursuant to
Section 8.12 in connection therewith; and (ii) Pre-Closing Periods, including
Taxes for a period not ending prior to the Closing Date that are attributable to
the portion of the period ending on the Closing Date (which portion shall be
equal to (x) with respect to income or franchise Taxes, the amount of such Taxes
that would have been incurred had the taxable period ended on the Closing Date
and (y) with respect to other Taxes the amount that would be apportioned to the
period ending on the Closing Date on a per diem basis) and including, without
limitation, any Taxes payable by WeFusion with respect to the transactions
contemplated hereby and by the other Transaction Documents; provided, however
that claims made with respect to the FICA and other similar Taxes listed on
Section 3.16(c) of the WeFusion Disclosure Schedule remain subject to the last
sentence of Section 11.2 hereof.
(b) The Symposium Parties shall notify the Principal
Stockholders promptly upon receipt by any of the Symposium Parties, of notice of
any pending Tax audits or assessments that could reasonably be expected to
result in a claim for indemnification pursuant to Section 11.4(a) ("Tax Claim").
The Symposium Parties may represent its interest in any proceeding relating to a
Tax Claim, on condition that (i) it keep the Principal Stockholders informed on
a current basis of the status of any such proceeding; (ii) the Principal
Stockholders shall have the right to participate at their own expense, in any
such proceedings; and (iii) the Symposium Parties not settle any claim for taxes
that could have a material adverse effect on the Principal Stockholder's
liability for Taxes (including any claim for indemnification) without the prior
written consent of the Principal Stockholders, which consent may not be
unreasonably withheld.
(c) The Principal Stockholders shall satisfy any Tax Claim on
or prior to the due date for payment of such claim. The Symposium Parties shall
notify the Principal Stockholders at least 10 days prior to the due date for any
such Tax Claim.
(d) In the event that the Principal Stockholders are required
to make a payment pursuant to this Section 11.4 as the result of a determination
by a taxing authority which results in any of the Symposium Parties receiving an
increased tax basis in the WeFusion assets ("Stepup Transaction", and the amount
of such increased tax basis being referred to as the "Increased Basis"), then
the Symposium Parties shall make a payment to the Principal Stockholders equal
to the Tax Benefit actually received as a result of such Stepup Transaction as
described below; provided, however, that such payments, in the aggregate, shall
not exceed the amount of any Taxes, taking into account any available
Pre-Closing Period losses of WeFusion (but excluding for this purpose any
penalties, additions to tax or interest) paid by the Principal Stockholders with
respect to the Stepup Transaction. The Tax Benefit shall be equal to the product
of (x) the amount of any tax deduction directly arising from the Increased Basis
("Increased Basis Tax Deduction") which actually reduces the taxable income of
Symposium (but not below zero) and is deemed to have been "Used" by Symposium;
and (y) Symposium's actual effective tax rate for the period in which the
Increased Basis Tax Deduction was Used. No Increased Basis Tax Deduction shall
be deemed to have been "Used" prior to the time that
38
Symposium has fully utilized its Adjusted Losses. Adjusted Losses shall be equal
to the net operating losses of the Symposium Parties which existed as of
December 31, 1999 less any Increased Basis Tax Deductions which reduced the
taxable income of the Symposium Parties (but not below zero) but for which no
payment was made hereunder. After the Symposium Parties have fully utilized
their Adjusted Losses, they shall be deemed to use the Increased Tax Deductions
(including Increased Basis Tax Deductions from prior years to the extent no
payment was previously made with respect to such deductions hereunder) prior to
the use of any other losses. Payment shall be made to the Principal Stockholders
within 10 days following the filing of any income tax return resulting in a Tax
Benefit.
(e) The tax indemnification provided for in this Section 11.4:
(i) shall survive until the expiration of all applicable statutes of limitation;
(ii) shall not be subject to the last sentence of Section 11.2; and (iii) shall
not be subject to Section 11.3(b).
11.5. Indemnification by Symposium. Symposium agrees to indemnify the
Stockholders against, and to hold the Stockholders harmless from, any and all
damages, losses, liabilities and expenses (including, without limitation,
reasonable expenses of investigation and reasonable attorneys' fees and expenses
in connection with any action, suit or proceeding brought against the
Stockholders) incurred or suffered by the Stockholders after the Closing arising
out of any breach of any representation, warranty, covenant or agreement of
Symposium or Symposium Sub set forth in this Agreement.
11.6. Procedure for Claims Involving Litigation or Other Proceedings. A
party seeking indemnification under this Article 11 (an "Indemnified Party")
shall give prompt notice to the party from whom indemnification is sought (the
"Indemnifying Party") of the assertion of any claim, or the commencement of any
action, suit or proceeding, in respect of which indemnity may be sought
hereunder and will give the Indemnifying Party such information with respect
thereto as the Indemnifying Party may reasonably request, but no failure to give
such notice shall relieve the Indemnifying Party of any liability hereunder
(except to the extent the Indemnifying Party has suffered actual prejudice
thereby). The Indemnifying Party may, at its expense, participate in or assume
the defense of any such action, suit or proceeding. Notwithstanding the
Indemnifying Party's election to appoint counsel to represent the Indemnified
Party in an action, the Indemnified Party shall have the right to employ
separate counsel (including local counsel), and, subject to the final sentence
of Section 11.2 and to Section 11.3(b) the Indemnifying Party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use of
counsel chosen by the Indemnifying Party to represent the Indemnified Party
would present such counsel with a conflict of interest, (ii) the Indemnifying
Party shall not have employed counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party within a reasonable time after notice
of the institution of such action or (iii) the Indemnifying Party shall
authorize the Indemnified Party to employ separate counsel at the expense of the
Indemnifying Party. Whether or not the Indemnifying Party chooses to defend or
prosecute any claim involving a third party, all the parties shall cooperate in
the defense or prosecution thereof and shall furnish such records, information
and testimony, and attend such conferences, discovery proceedings, hearings,
trials and appeals, as may be reasonably requested in connection therewith. The
Indemnifying Party shall not be liable under this Section 11.6 for any
settlement, effected without the Indemnifying Party's consent, which consent
shall not be unreasonably withheld, of any claim, suit or proceeding in respect
of which indemnity may be sought hereunder. An Indemnifying Party will not,
without the prior written consent of the Indemnified
39
Party, settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
the Indemnified Party is an actual or potential party to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of the Indemnified Party from all liability arising out of such claim, action,
suit or proceeding. No settlement which involves injunctive relief or affects
the Indemnified Party shall be settled by the Indemnifying Party without the
prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld.
ARTICLE XII
MISCELLANEOUS
12.1. Governing Law. This Agreement is governed by the laws of the
State of New York without regard to its conflict of law provisions, and shall
inure to the benefit of and be binding upon the successors, assigns, heirs and
personal representatives of the parties hereto. All actions and proceedings
relating directly or indirectly to this Agreement shall be settled by final
binding arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any state or federal court located in New York,
New York. Any such arbitration shall be conducted in the City of New York or
such other place as may be mutually agreed upon by the parties to such
arbitration. Within fifteen (15) days after the commencement of the arbitration,
Symposium and Symposium Sub, on the one hand, and the Stockholders
Representative, acting on behalf of any and all Stockholders who are parties to
such arbitration, on the other hand, shall select one person to act as
arbitrator, and the two arbitrators so selected shall select a third arbitrator
within 10 days of their appointment. Each of Symposium and Symposium Sub on the
one hand, and the Principal Stockholders who are parties to such arbitration (in
such proportions as they shall determine among themselves) on the other hand,
shall bear their own costs and expenses and an equal share of the arbitrators'
expenses and administrative fees of arbitration, unless the judgment rendered by
the arbitrator or arbitrators allocates the costs, expenses and administrative
fees between the parties in a different manner. The parties hereto expressly
consent to the jurisdiction of any such court and to venue therein.
12.2. Assignment; Binding Upon Successors and Assigns. No party hereto
may assign any of its rights or obligations hereunder without the prior written
consent of the other parties hereto. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, legatees, distributee and permitted assigns.
12.3. Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the greatest extent possible, the economic,
business and other purposes of the void or unenforceable provision.
12.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of
40
which together will constitute one and the same instrument. This Agreement will
become binding when one or more counterparts hereof, individually or taken
together, will bear the signatures of all the parties reflected hereon as
signatories.
12.5. Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy will not preclude the exercise of any other.
12.6. Amendment and Waivers. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof will
not be deemed to constitute a waiver of any other default or any succeeding
breach or default. The Agreement may be amended by the parties hereto at any
time before or after its approval by the stockholders of WeFusion or Symposium
as the stockholder of Symposium Sub, but, after such approval, no amendment will
be made which by applicable law requires the further approval of the stockholder
of WeFusion or Symposium as the stockholder of Symposium Sub without obtaining
such further approval.
12.7. Expenses. Symposium will bear its respective expenses and legal
fees incurred with respect to this Agreement, and the transactions contemplated
hereby. WeFusion will bear its respective expenses and legal fees up to $15,000
in the aggregate (the "WeFusion Cap") incurred with respect to this Agreement
and the transactions contemplated hereby. The Stockholders will bear their
respective expenses and legal fees and all legal fees and expenses of WeFusion
in excess of the WeFusion Cap.
12.8. Notices. All notices and other communications pursuant to this
Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to WeFusion to:
XxXxxxxx.xxx Inc.
00000 00xx Xxxxxx X., Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: T. Xxxxx Xxxxxx, President
Telecopier: (000) 000-0000
With a copy to:
Piper, Marbury, Xxxxxxx & Xxxxx LLP
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxx, Xx.
Telecopier: (000) 000-0000
41
And if to Symposium to:
Symposium Corporation
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx Xxxxxxx
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Symposium Sub to:
Symposium Corporation
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxx
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopier: (000) 000-0000
If to any Principal Stockholder, at the address specified in the Stockholder's
Questionnaire delivered to Symposium by such Principal Stockholder (or at such
other address as shall be specified by like notice by such Principal
Stockholder).
All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a telecopy, when the party receiving such copy shall have
confirmed receipt of the communication, (c) in the case of delivery by
nationally-recognized overnight courier, on the business day following dispatch,
and (d) in the case of mailing, on the third business day following such
mailing.
12.9. Construction of Agreement. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof will
not be construed for or against either party. A reference to a Section or an
exhibit will mean a Section in, or exhibit to, this Agreement unless otherwise
explicitly set forth. The titles and headings herein are for
42
reference purposes only and will not in any manner limit the construction of
this Agreement which will be considered as a whole.
12.10. No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party will have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party will have any power or authority to bind or
commit any other. No party will hold itself out as having any authority or
relationship in contravention of this Section.
12.11. Further Assurances. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and purposes
of this Agreement.
12.12. Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner or any party hereto or any other
person or entity unless specifically provided otherwise herein, and, expect as
so provided, all provisions hereof will be personal solely between the parties
to this Agreement.
12.13. Public Announcement. The parties shall cooperate with respect to
any public announcement relating to the transactions contemplated hereby; and
neither party will issue any public statement announcing such transaction
without the prior consent of the others, except as such party in good faith
(based upon advice of counsel) believes is required by law and following notice
to the other party.
12.14. Entire Agreement. This Agreement, the exhibits hereto and the
documents referred to herein and therein constitute the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto, other than the Letter of Intent between Symposium
and WeFusion dated September 13, 2000 which shall remain in full force and
effect. The express terms hereof control and supersede any course of performance
or usage of the trade inconsistent with any of the terms hereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SYMPOSIUM CORP. XXXXXXXX.XXX
By:/s/ Xxxxxxx Xxxxxxx By: /s/ T. Xxxxx Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxx Xxxxxx
Title: President Title: President
SYMPOSIUM FUSION, INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
44
The Stockholders:
SERIES A PREFERRED STOCKHOLDER
Xxxxx Xxxxxx & Associates
By: /s/ Xxxx Xxxx
----------------------------------
Name: Xxxx Xxxx
Title: Vice President
SERIES B PREFERRED STOCKHOLDERS
C2, LLC
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
Xxxxx Xxxxxx & Associates
By: /s/ Xxxx Xxxx
----------------------------------
Name: Xxxx Xxxx
Title: Vice President
SERIES C PREFERRED STOCKHOLDERS
C2, LLC
By: /s/ Xxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxx Xxxx
Title:
/s/ Xxxx Xxxxxx
---------------------------------
Xxxx Xxxxxx
/s/ Xxxxx Xxxxxxxx
---------------------------------
Xxxxx Xxxxxxxx
45
/s/ Xxxx X'Xxxxx
--------------------------------
Xxxx X. X'Xxxxx
Xxxxx Xxxxxxxxxx Xxxx Grantor Trust
By: /s/ Xxxxx X. Xxxx
--------------------------------
Name: Xxxxx X. Xxxx
Title:
/s/ Xxxxxxxx Xxxxx
--------------------------------
Xxxxxxxx Xxxxx
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
T. Xxxxx Xxxxxx
--------------------------------
T. Xxxxx Xxxxxx
COMMON STOCKHOLDERS
T. Xxxxx Xxxxxx
--------------------------------
T. Xxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxxx Xxxxx
--------------------------------
Xxxxxxxx Xxxxx
/s/ Xxxx Xxxxxx
--------------------------------
Xxxx Xxxxxx
/s/ Xxxx X'Xxxxx
--------------------------------
Xxxx X. X'Xxxxx
/s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx
46
Xxxxx Xxxxxxxxxx Xxxx Grantor Trust
By: /s/ Xxxxx X. Xxxx
----------------------------------
Name: Xxxxx X. Xxxx
Title:
/s/ Xxxxxxxxxxx Xxxxxxxx
--------------------------------
Xxxxxxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxx
--------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
--------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxxxxx
--------------------------------
Xxxxx Xxxxxxxxxx
/s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx
/s/ Xxxxx Xxxxxxx
--------------------------------
Xxxxx Xxxxxxx
