EXHIBIT 5
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made and entered into on June
26, 2001 (this "AGREEMENT"), among Seneca Investments LLC, a Delaware limited
liability company ("PARENT"), E-Services Investments Agency Sub LLC, a Delaware
limited liability company and a wholly owned Subsidiary of Parent ("MERGER
SUB"), and XXXXXX.XXX Ltd., a Delaware corporation (the "COMPANY").
RECITALS
A. As of the date of this Agreement, Parent and Merger Sub
beneficially own 19,928,278 shares of Common Stock, par value $.001 per share,
of the Company (the "COMPANY SHARES") (assuming exercise of the Warrants), which
Company Shares constitute 45.3% of the outstanding Company Shares (assuming
exercise of the Warrants) (such Company Shares beneficially owned by Parent, the
"PARENT SHARES"), and have entered into an agreement (as from time to time in
effect, the "PURCHASE AGREEMENT", which term shall include any similar
agreements entered into by other parties selling their Company Shares to the
Parent or Merger Sub) to purchase an additional 8,966,715 Company Shares from
certain stockholders of the Company, PROVIDED that the number of Company Shares
subject to the Purchase Agreement may be increased or decreased after the date
hereof;
B. Parent has proposed that Parent acquire the remaining outstanding
Company Shares on the terms and subject to the conditions of this Agreement;
C. A special committee (the "SPECIAL COMMITTEE") of the Board of
Directors of the Company (the "BOARD") (i) has determined that it is fair to the
Company and its stockholders (excluding Parent) to consummate the merger of
Merger Sub with and into the Company, with the Company being the surviving
corporation (the "MERGER"), on the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL") and the Delaware Limited Liability Company Act (the
"DLLCA," and together with the DGCL, "DELAWARE LAW"), (ii) has determined that
this Agreement and the Merger should be approved, and (iii) has resolved to
recommend that the Board approve this Agreement and the Merger;
D. The Board, in reliance on the foregoing determinations of the
Special Committee, has (i) determined that it is fair to and in the best
interests of the Company, its stockholders (excluding Parent) and its
stockholders generally to consummate the Merger on the terms and subject to the
conditions of this Agreement and in accordance with Delaware Law, (ii) approved
and declared the advisability of this Agreement and the Merger, and (iii)
resolved to recommend that the stockholders of the Company adopt this Agreement;
and
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E. The Boards of Directors of Merger Sub and Parent have approved
this Agreement.
Now, therefore, the parties hereto agree as follows:
I. THE MERGER
1.1. THE MERGER. On the terms of this Agreement and subject to the
conditions set forth in ARTICLE VII, and in accordance with Delaware Law, at the
Effective Time, Merger Sub will be merged with and into the Company. As a result
of the Merger, the separate existence of Merger Sub will cease and the Company
will continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION").
1.2. EFFECTIVE TIME; CLOSING. As promptly as practicable and in no
event later than the Business Day following the satisfaction or, if permissible,
waiver of the conditions set forth in ARTICLE VII (or, if such conditions have
been satisfied or waived prior to October 31, 2001, then as promptly as
practicable after October 31, 2001) or such other date as may be agreed in
writing by Parent and the Company ("AGREED"), the parties hereto will cause the
Merger to be consummated by filing a certificate of merger (the "CERTIFICATE OF
MERGER") with the Secretary of State of the State of Delaware, in such form as
is required by, and executed in accordance with, the relevant provisions of
Delaware Law. The term "EFFECTIVE TIME" means the date and time of the filing
with, and the acceptance for filing by, the Secretary of State of the State of
Delaware of the Certificate of Merger (or such later time as may be Agreed and
specified in the Certificate of Merger). Immediately prior to the filing of the
Certificate of Merger, a closing (the "CLOSING") will be held at the offices of
Xxxxx, Day, Xxxxxx & Xxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or such
other place as may be Agreed).
1.3. EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger will be as provided in the applicable provisions of Delaware Law
(including without limitation Sections 259, 260, 261 and 264 of the DGCL and
Section 18.209 of the DLLCA). Without limiting the generality of the foregoing,
at the Effective Time, all of the property, rights, privileges, powers,
franchises and interests of the Company and Merger Sub will vest in the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of the Company and Merger Sub will become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
1.4. CERTIFICATE OF INCORPORATION; BYLAWS. (a) At the Effective
Time, the Certificate of Incorporation attached hereto as EXHIBIT A will be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by Law and such Certificate of Incorporation.
(b) At the Effective Time, the Bylaws of Merger Sub attached hereto
as EXHIBIT B will be the Bylaws of the Surviving Corporation until thereafter
amended as
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provided by Law, the Certificate of Incorporation of the Surviving Corporation
and such Bylaws.
1.5. DIRECTORS AND OFFICERS. The individuals listed on EXHIBIT C
under the heading "Directors" will remain or become, as applicable, the
directors of the Surviving Corporation effective as of the Effective Time and
will each hold office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation until the earlier of their resignation or
removal or until their successors are duly elected or appointed and qualified.
The officers of the Company immediately prior to the Effective Time will be the
initial officers of the Surviving Corporation, and will each hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified.
II. CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1. CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the Company
or the holders of any of the following securities:
(a) Each Company Share issued and outstanding immediately prior to
the Effective Time (other than any Company Shares to be canceled pursuant to
SECTION 2.1(B) and any Dissenting Shares) will be converted, subject to SECTION
2.2, into the right to receive $3.35 in cash (the "MERGER CONSIDERATION"),
without any interest thereon; at the Effective Time, each Company Share issued
and outstanding immediately prior to the Effective Time converted in accordance
with this SECTION 2.1(A) will no longer be outstanding and will automatically be
canceled and retired and cease to exist, and each Certificate evidencing such
Company Shares will evidence only the right to receive upon surrender cash in an
amount equal to the product of (i) the number of Company Shares represented by
such Certificate and (ii) the Merger Consideration, without any interest
thereon;
(b) Each Company Share or Warrant or other right to purchase Company
Shares held in the treasury of the Company or owned, directly or indirectly, by
any of the Company's wholly owned Subsidiaries or by Parent or Merger Sub (which
for purposes of this Section 2.1 will be deemed to include all Company Shares
that Parent and Merger Sub have the right to acquire pursuant to the Purchase
Agreement), in each case immediately prior to the Effective Time, will be
canceled and extinguished without any conversion thereof and no payment or
distribution will be made with respect thereto;
(c) All of the membership interests of Merger Sub issued and
outstanding immediately prior to the Effective Time will be converted into an
aggregate of 100 validly issued, fully paid and nonassessable shares of common
stock, par value $0.001 per share, of the Surviving Corporation, which shares
shall constitute all of the issued capital stock of the Surviving Corporation
immediately after the Effective Time; and
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(d) If between the date of this Agreement and the Effective Time,
there is a reclassification, recapitalization, stock split, split-up, stock
dividend, combination or exchange of shares with respect to, or rights issued in
respect of, Company Shares, the Merger Consideration will be adjusted
accordingly, without duplication, to reflect such reclassification,
recapitalization, stock split, split-up, stock dividend, combination or exchange
of shares in order to provide to the holders of Company Shares the same economic
effect as contemplated by this Agreement prior to such event.
2.2. PAYMENT FOR COMPANY COMMON STOCK. (a) PAYING AGENT. At or prior
to the Closing, Parent will cause to be deposited with a bank or trust company
designated by Parent and having a capital surplus of at least $1.0 billion (the
"PAYING AGENT"), for the benefit of the holders of Company Shares to be
converted in accordance with Section 2.1(a), for payment in accordance with this
ARTICLE II through the Paying Agent, immediately available funds in an aggregate
amount necessary to make the payments pursuant to SECTION 2.1(A) (such funds,
the "PAYMENT FUND").
(b) PAYMENT PROCEDURES. Promptly after the Effective Time, but in no
event later than five Business Days thereafter, Parent will cause the Paying
Agent to mail to each holder of record of a certificate or certificates (other
than certificates evidencing Company Shares to be canceled pursuant to SECTION
2.1(B) and any Dissenting Shares) that immediately prior to the Effective Time
represented outstanding Company Shares (the "CERTIFICATES") (i) a letter of
transmittal and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment therefor. Upon surrender to the Paying
Agent of a Certificate for exchange and cancellation, together with such letter
of transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may be required pursuant to such
instructions, the holder of record of each Certificate will be entitled to
receive in respect thereof cash in an amount equal to the product of (i) the
number of Company Shares represented by such Certificate and (ii) the Merger
Consideration, without any interest thereon, and the Certificate so surrendered
will forthwith be canceled. In the event of a transfer of ownership of Company
Shares that is not registered in the transfer records of the Company, such
payment may be issued to a transferee if the Certificate representing such
Company Shares is presented to the Paying Agent, accompanied by all documents
requested by Parent to evidence and effect such transfer and by evidence
satisfactory to Parent that any applicable share transfer taxes have been paid.
(c) TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund
that remains undistributed to the holders of Company Shares for 90 days after
the Effective Time will be returned to Parent or the Surviving Corporation, as
applicable, upon demand, and any holders of Company Shares that have not
theretofore complied with this ARTICLE II will thereafter look only to Parent
and the Surviving Corporation for payment of the Merger Consideration, without
any interest thereon. Any portion of the Payment Fund remaining unclaimed by
holders of Company Shares as of a date that is immediately prior to such time as
such amounts would otherwise escheat to or become property of any Governmental
Entity will, to the extent permitted by applicable Law, become the property of
the Surviving Corporation free and clear of any claims or interest of any Person
previously entitled thereto. Neither Parent nor the Surviving
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Corporation will be liable to any holder of Company Shares for any Merger
Consideration delivered to a public official pursuant to any abandoned property,
escheat or similar Law.
(d) WITHHOLDING RIGHTS. Each of the Surviving Corporation, Parent
and the Paying Agent will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Company Shares such amounts as is required to be deducted and withheld with
respect to the making of such payment under the United States Internal Revenue
Code of 1986, as amended, or any provision of state or local tax Law. To the
extent that amounts are so withheld by the Surviving Corporation, Parent or the
Paying Agent, as the case may be, such withheld amounts will be treated for all
purposes of this Agreement as having been paid to the holder of the Company
Shares in respect of which such deduction and withholding was made by the
Surviving Corporation, Parent or the Paying Agent, as the case may be.
(e) LOST CERTIFICATES. If any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond, in such reasonable
amount as the Surviving Corporation may direct, as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
will pay in exchange for such lost, stolen or destroyed Certificate, cash, in an
amount equal to the product of (x) the number of Company Shares represented by
such Certificate and (y) the Merger Consideration, without any interest thereon.
2.3. STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer
books of the Company will be closed and there will be no further registration of
transfers of Company Shares thereafter on the records of the Company.
2.4. COMPANY STOCK OPTIONS. (a) At the Effective Time (i) each
unexpired and unexercised option (a "COMPANY STOCK OPTION") granted under any of
the Option Plans to purchase Company Shares that is outstanding immediately
prior to the Effective Time will be automatically converted at the Effective
Time into the right to receive, and each holder of a Company Stock Option will
be paid, an amount in cash per Company Share subject to each such Company Stock
Option equal to the excess, if any, of the Merger Consideration over the
exercise price of such Company Stock Option (less an amount equal to any
required tax withholdings), whereupon such Company Stock Option will be
cancelled and extinguished and (ii) each right under the ESPP ("ESPP PURCHASE
RIGHT") to purchase Company Shares that is outstanding immediately prior to the
Effective Time will be automatically converted at the Effective Time into the
right to receive, and each holder of an ESPP Purchase Right will be paid at the
Effective Time, an amount in cash per Company Share subject to such ESPP
Purchase Right equal to the Merger Consideration less any amount unpaid under
the ESPP Purchase Right (less an amount equal to any required tax withholdings),
whereupon such ESPP Purchase Right will be cancelled and extinguished.
(Page 10 of 33 Pages)
(b) Prior to the Effective Time, the Company shall (i) make any
amendments to, or take such other action in respect of, the terms of such Option
Plans and the ESPP that Parent deems reasonably necessary to give effect to the
transactions contemplated by SECTION 2.4(A), (ii) cause the Option Plans to
terminate as of the Effective Time, (iii) take such actions as are necessary to
ensure that the ESPP shall be suspended for the purchase period beginning
November 1, 2001 and any purchase period thereafter, and (iv) use its reasonable
best efforts to obtain consents to cash out and/or cancel any Company Stock
Options or purchase rights under the ESPP prior to the Effective Time that by
their terms may not be cancelled upon notice or in connection with the Merger.
2.5. DISSENTERS' RIGHTS. Notwithstanding SECTION 2.1 or any other
provision of this Agreement to the contrary, Company Shares that have not been
voted in favor of the adoption of this Agreement with respect to which
dissenters' rights shall have been demanded and perfected in accordance with
Section 262 of the DGCL and not withdrawn ("DISSENTING SHARES") will not be
converted into the right to receive the Merger Consideration at or after the
Effective Time, but such Company Shares will become the right to receive such
consideration as may be determined to be due to holders of Dissenting Shares
pursuant to Delaware Law unless and until the holder of such Dissenting Shares
withdraws his or her demand for such appraisal or becomes ineligible for such
appraisal (through failure to perfect or otherwise), then, as of the Effective
Time or the occurrence of such event, whichever last occurs, such holder's
Dissenting Shares will automatically be converted into and represent the right
to receive the Merger Consideration, without any interest thereon, as provided
in SECTION 2.1(A). The Company will give the Parent (a) prompt notice of any
demands for appraisal of Company Shares received by the Company and (b) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. The Company will not, without the prior written
consent of the Parent, make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
that, except as set forth in a letter delivered by the Company to Parent on the
date hereof in Agreed form (the "COMPANY DISCLOSURE SCHEDULE") or as disclosed
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2000, the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2001 (the "3-31-01 10-Q"), any of the Company's Current Reports
on Form 8-K filed with the SEC since January 1, 2001 or the Company's Proxy
Statement on Schedule 14A dated April 30, 2001, including any amendments to any
of the foregoing, in each case in the form filed by the Company with the SEC no
later than two Business Days prior to the date of this Agreement (collectively,
the "COMPANY FILED SEC REPORTS"):
3.1. ORGANIZATION AND QUALIFICATION. The Company and each of its
Subsidiaries is a corporation or limited liability company duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation or formation and has the requisite corporate or limited liability
company power and authority to own,
(Page 11 of 33 Pages)
lease and operate its properties and to carry on its business as it is now being
conducted, except, in the case of the Subsidiaries of the Company, where the
failure to be duly organized, validly existing or in good standing, or to have
such requisite corporate or limited liability company power and authority, has
not had or resulted in a Company Material Adverse Effect. Each of the Company
and its Subsidiaries has all necessary governmental licenses, permits,
authorizations and approvals to own, lease and operate its properties and to
carry on its business as it is currently being conducted, except where the
failure to have such governmental licenses, permits, authorizations and
approvals has not had or resulted in a Company Material Adverse Effect. Each of
the Company and its Subsidiaries is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business conducted by
it or the character of the properties owned or leased by it makes such
qualification necessary, other than where the failure to be so duly qualified
and in good standing has not had or resulted in a Company Material Adverse
Effect. For purposes of this Agreement, the term "COMPANY MATERIAL ADVERSE
EFFECT" means any change, effect, event, condition or exception that,
individually or when taken together with all other such changes, effects,
events, conditions or exceptions (excluding in each case any change, effect,
event, condition or exception to the extent it occurs, exists or arises due to
general economic or stock market conditions or due to conditions affecting the
internet consultancy market generally, but including in each case any change,
effect, event, condition or exception to the extent it occurs, exists or arises
due to internal Company conditions) has had or could reasonably be expected to
have or result in a material adverse effect on the business, financial condition
or results of operations of the Company and its Subsidiaries, taken as a whole.
3.2. CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and Bylaws, each as amended to date. Such Certificate of
Incorporation and Bylaws are in full force and effect. None of the Company or
any of its Subsidiaries is in violation of any provision of its respective
Certificate of Incorporation or Bylaws (or equivalent organizational documents),
except, in the case of the Subsidiaries of the Company, for violations that have
not had or resulted in a Company Material Adverse Effect.
3.3. CAPITALIZATION. The authorized capital stock of the Company
consists of 200,000,000 Company Shares, and 10,000,000 shares of Preferred
Stock, par value $.001 per share (the "COMPANY PREFERRED SHARES"). As of the
close of business on the last Business Day prior to the date hereof (the
"MEASUREMENT TIME"), (i) 38,710,721 Company Shares (excluding treasury shares)
are issued and outstanding, all of which have been validly issued and are fully
paid and nonassessable, (ii) 150,000 Company Shares and no Company Preferred
Shares were held in the treasury of the Company, (iii) 11,869,469 Company Shares
were reserved for future issuance (with respect to which options to acquire
10,337,068 Company Shares are issued and outstanding) pursuant to stock options
or other rights granted pursuant to the XXXXXX.XXX Ltd. 1999 Stock Option/Stock
Issuance Plan, the XXXXXX.XXX Ltd. 1997 Stock Option Plan, the XXXXXX.XXX Ltd.
1996 Stock Option Plan, the Interactive Solutions 1996 Stock Option Plan, the
Quadris Consulting, Inc. 1998 Equity
(Page 12 of 33 Pages)
Incentive Plan and the Interactive Traffic Inc. 1999 Stock Incentive Plan
(collectively, the "OPTION PLANS") and the XXXXXX.XXX Ltd. 1999 Employee Stock
Purchase Plan (the "ESPP"), (iv) warrants to acquire 5,168,000 Company Shares
are issued and outstanding (collectively, the "WARRANTS"), and (v) no Company
Preferred Shares are issued and outstanding. During the period from March 31,
2001 to the Measurement Time, (x) there have been no issuances by the Company of
shares of capital stock of, or other equity or voting interests in, the Company
other than issuances of Company Shares pursuant to the exercise of employee
stock options or other rights granted pursuant to the Option Plans and the ESPP,
and (y) there have been no issuances by the Company of options, warrants or
other rights to acquire shares of capital stock of, or other equity or voting
interests in, the Company. Except as otherwise specified in this Agreement,
there are no options, warrants or other rights, agreements, arrangements or
other equity interests or commitments of any character relating to the issued or
unissued capital stock or other equity interests of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue or
sell any shares of capital stock of the Company or any of its Subsidiaries. All
shares of capital stock of the Company and any of its Subsidiaries subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except for this Agreement and
agreements pursuant to which the Company guarantees obligations of its wholly
owned Subsidiaries that are either disclosed in the Company Financial Statements
or are not required under GAAP to be disclosed in the Company Financial
Statements, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its Subsidiaries or (ii) to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Person in an amount that exceeds $100,000 in
the aggregate. SCHEDULE 3.3 lists all of the options and other rights to
purchase Company Shares (including under the Stock Option Plans and the ESPP)
which are outstanding as of the Measurement Time.
3.4. AUTHORITY RELATIVE TO THIS AGREEMENT. (a) The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and, subject to the Requisite Stockholder Vote, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the adoption of this Agreement by the affirmative vote of (i) a majority
of the outstanding Company Shares entitled to vote thereon and (ii) 66-2/3% of
the outstanding Company Shares entitled to vote thereon excluding the Parent
Shares and the Company Shares subject to the Purchase Agreement (the "REQUISITE
STOCKHOLDER VOTE") and the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Merger Sub, constitutes a valid and
(Page 13 of 33 Pages)
binding obligation of the Company enforceable against the Company in accordance
with its terms.
(b) (i) The Special Committee has been duly authorized and
constituted, (ii) the Special Committee, at a meeting thereof duly called and
held on June 25, 2001, (A) determined that, as of the date of this Agreement,
this Agreement and the Merger are fair to the Company and its stockholders
(excluding Parent), (B) determined that, as of the date of this Agreement, this
Agreement and the Merger should be approved, and (C) resolved to recommend that
the Agreement and the Merger should be approved, and (iii) the Board at a
meeting thereof duly called and held on June 25, 2001, in reliance on the advice
of the Special Committee, (A) determined that this Agreement and the Merger are
fair to and in the best interests of the Company, its stockholders (excluding
Parent) and its stockholders generally, (B) approved and declared the
advisability of this Agreement and the Merger, and (C) resolved to recommend
that the stockholders of the Company adopt this Agreement.
3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS; NO RESTRICTIONS.
(a) The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with, or
result in a violation of the Certificate of Incorporation or Bylaws of the
Company or equivalent organizational documents of any of its Subsidiaries,
except, in the case of the Subsidiaries of the Company, for violations that have
not had or resulted in, or will not have or result in, a Company Material
Adverse Effect, (ii) conflict with or result in a violation of any law, statute,
ordinance, rule, regulation ("LAW") or any judgment, decree, order, writ,
determination or award ("ORDER") applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, or (iii) result in any violation or breach
of, constitute (with or without notice or lapse of time or both) a default
under, or require the Company or any of its Subsidiaries, to obtain any consent,
approval or action of, make any filing with or give any notice to, or result in
or give to any Person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the creation or
imposition of any lien on any property or asset of the Company or any of its
Subsidiaries, under any of the terms, conditions or provisions of any agreement,
commitment, lease, license, evidence of indebtedness, mortgage, indenture,
security agreement, instrument, note, bond, franchise, permit, concession or
other instrument, obligation or agreement of any kind to which the Company or
any of its Subsidiaries, is a party except for the acceleration of Company Stock
Options issued under the Option Plans and, in the case of clauses (ii) and
(iii), for any thereof that have not had or resulted in, or will not have or
result in, a Company Material Adverse Effect or are not reasonably expected to
prevent or materially delay the consummation of the Merger.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any domestic, foreign or supranational governmental, regulatory or
administrative authority, agency or commission or any court, tribunal or
arbitral body ("GOVERNMENTAL ENTITY"), except (i) for applicable requirements of
the Securities Exchange Act of 1934, as amended
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(together with the rules and regulations promulgated thereunder, the "EXCHANGE
ACT"), Delaware Law and the filing and recordation of appropriate merger
documents as required by Delaware Law and (ii) for such other consents,
approvals, authorizations, permits, filings or notifications that if not
obtained or made will not prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(c) There is no suit, action, claim, investigation or inquiry by any
Governmental Entity, and no legal, administrative or arbitration proceeding
pending or, to the Knowledge of the Company, threatened against the Company,
with respect to the execution, delivery and performance of this Agreement or the
transactions contemplated hereby or any other agreement entered into by the
Company in connection with the transactions contemplated hereby.
3.6. SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company has filed
all forms, reports and documents required to be filed by it with the Securities
and Exchange Commission ("SEC") including (i) its Annual Reports on Form 10-K
for the fiscal years ended December 31, 1999 and 2000, respectively, (ii) the
3-31-01 10-Q, (iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special), and (iv) all other forms, reports and
other registration statements filed by the Company with the SEC (the forms,
reports and other documents referred to in clauses (i), (ii), (iii) and (iv)
above, collectively, as the "COMPANY SEC REPORTS"). The Company SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act of 1933,
as amended and the rules and regulations of the SEC promulgated thereunder, and
the Exchange Act, as applicable, (ii) did not, at the time they were filed,
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 made
therein, in the light of the circumstances under which they were made, not
misleading, and (iii) were filed in a timely manner. No Subsidiary of the
Company was or is required to file any form, report or other document with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Company SEC Reports (the "COMPANY
FINANCIAL STATEMENTS") complied to form, as of their respective dates of filing
with the SEC, in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC, each was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) during the periods involved (except as may be
indicated in the notes thereto) and each presented fairly in all material
respects the consolidated financial position, results of operations and cash
flows of the Company and its Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, and reflects all claims against
and all debts and liabilities of the Company, fixed or contingent, as at the
respective date thereof, required to be shown thereon under GAAP, and the
related statements of income, stockholders' equity and cash flows fairly present
the results of operations for the respective periods indicated, except that any
unaudited interim financial statements were subject to normal and recurring
year-end adjustments that have not had or resulted in a Company Material Adverse
Effect.
(Page 15 of 33 Pages)
(c) The Company has no liabilities or obligations of any nature,
except (i) as and to the extent disclosed on the balance sheet of the Company as
at March 31, 2001, including the notes thereto, or on the balance sheet of the
Company as at December 31, 2000, including the notes thereto, (ii) as disclosed
in the Company SEC Reports, or (iii) as have not had or resulted in a Company
Material Adverse Effect.
(d) Since March 31, 2001, there has not been any Company Material
Adverse Effect.
3.7. BROKERS. No broker, finder or investment banker (other than
Xxxxxxx Xxxxx Xxxxxx Inc., the fees and expenses of which will be paid by the
Company) is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of the
Company. The Company has heretofore furnished to Parent a complete and correct
copy of all agreements between the Company and Xxxxxxx Xxxxx Barney Inc.
pursuant to which such firm would be entitled to any payment relating to the
Merger.
3.8. OPINION OF FINANCIAL ADVISOR. The Special Committee has
received the written opinion of Xxxxxxx Xxxxx Xxxxxx Inc. ("SSB"), dated the
date of this Agreement, to the effect that, as of the date of this Agreement,
the Merger Consideration is fair to the stockholders of the Company (excluding
Parent) from a financial point of view, and such opinion has not been withdrawn.
A copy of such opinion has been delivered to Parent.
3.9. PROXY STATEMENT AND SCHEDULE 13E-3. The information supplied by
the Company for inclusion in the Proxy Statement and the Schedule 13E-3 will
not, at the time the Proxy Statement is first mailed to the stockholders of the
Company and at the Effective Time, contain any untrue statement of a material
fact or omit to state any 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. If, at any time prior
to the Effective Time, any event or circumstance relating to the Company or any
of its Subsidiaries, or their respective officers or directors, should be
discovered by the Company which would cause the Proxy Statement or the Schedule
13E-3 to contain any untrue statement of a material fact or omit to state any
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, the Company will promptly inform Parent thereof. All
documents that the Company is responsible for filing with the SEC in connection
with the Merger will comply as to form and substance in all material respects
with the applicable requirements of the Exchange Act at the time the Proxy
Statement is first mailed to the stockholders of the Company and at the
Effective Time.
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represents and warrants to the
Company that:
(Page 16 of 33 Pages)
4.1. ORGANIZATION AND QUALIFICATION. Each of Parent and Merger Sub
is a limited liability company duly organized, validly existing and in good
standing under the Laws of Delaware and has the requisite limited liability
company power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be duly organized, validly existing or in good standing, or to have such
requisite limited liability company power and authority, has not had or resulted
in a Parent Material Adverse Effect. Each of Parent and Merger Sub has all
necessary governmental licenses, permits, authorizations and approvals to own,
lease and operate its properties and to carry on its business as it is currently
being conducted, except where the failure to have such governmental licenses,
permits, authorizations and approvals have not had or resulted in a Parent
Material Adverse Effect. Each of Parent and Merger Sub is duly qualified and in
good standing to do business in each jurisdiction in which the nature of the
business conducted by it or the character of the properties owned or leased by
it makes such qualification necessary, other than where the failure to be so
duly qualified and in good standing have not had or resulted in a Parent
Material Adverse Effect. For purposes of this Agreement, the term "PARENT
MATERIAL ADVERSE EFFECT," means any change, effect, condition or exception that,
individually or when taken together with all other such changes, effects,
events, conditions or exceptions, has prevented or materially delayed, or could
reasonably be expected to prevent or materially delay, the consummation of the
transactions contemplated by this Agreement, including without limitation the
payment of the Merger Consideration for Company Shares converted in accordance
with Section 2.1(a) or the receipt thereof by the holders of such Company
Shares.
4.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Merger
Sub has all necessary limited liability company power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Merger and the other transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary limited liability company
action, and no other proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by Delaware Law). This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and, assuming the due authorization, execution and delivery by the Company,
constitutes a valid and binding obligation of each of Parent and Merger Sub
enforceable against Parent and Merger Sub in accordance with its terms.
4.3. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution
and delivery of this Agreement by each of Parent and Merger Sub do not, and the
performance of this Agreement by Parent and Merger Sub will not, (i) conflict
with or violate the constituent documents of Parent or Merger Sub, (ii) conflict
with or violate any Law applicable to Parent or Merger Sub or any of their
respective Subsidiaries or by which any property or asset of Parent or Merger
Sub or any of their respective Subsidiaries is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or
(Page 17 of 33 Pages)
give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or Merger Sub or any of
their respective Subsidiaries pursuant to, or trigger any right of first refusal
under, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Merger
Sub or any of their respective Subsidiaries is a party or by which Parent or any
of its Subsidiaries or any of their respective properties is bound, except, in
the case of clauses (ii) and (iii), for any thereof that have not had or
resulted in, and will not have or result in, a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of Parent
and Merger Sub do not, and the performance of this Agreement by Parent and
Merger Sub will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except for (i)
applicable requirements of the Exchange Act, Delaware state takeover Laws, and
the filing and recordation of appropriate merger documents as required by
Delaware Law, (ii) antitrust filings made prior to the date hereof (correct and
complete copies of which have been provided to the Company), and (iii) such
other consents, approvals, authorizations, permits, filings or notifications,
which if not obtained or made have not had or resulted in, and will not have or
result in, a Parent Material Adverse Effect.
4.4. BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission from the Company or any of
its Subsidiaries in connection with the Merger based upon arrangements made by
or on behalf of Parent or Merger Sub.
4.5. OPERATIONS OF MERGER SUB. Merger Sub is a direct wholly owned
Subsidiary of Parent, was formed solely for the purpose of holding Company
Shares and has engaged in no business activities other than in connection with
the holding of Company Shares and the performance of its obligations hereunder.
4.6. FINANCING. Parent has sufficient financial capacity, and will
cause Merger Sub to have sufficient financial capacity, to consummate the Merger
and the transactions contemplated hereby in accordance with the terms of this
Agreement.
4.7. PROXY STATEMENT AND SCHEDULE 13E-3. The information supplied by
Parent for inclusion in the Proxy Statement and the Schedule 13E-3 will not, at
the time the Proxy Statement is first mailed to the stockholders of the Company
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any 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. If, at any time prior to the Effective
Time, any event or circumstance relating to Parent or any of its Subsidiaries,
or their respective officers or directors, should be discovered by Parent which
would cause the Proxy Statement or the Schedule 13E-3 to contain any untrue
statement of a material fact or omit to state any 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, Parent
will promptly inform
(Page 18 of 33 Pages)
the Company thereof. All documents that Parent is responsible for filing with
the SEC in connection with the Merger will comply as to form and substance in
all material respects with the applicable requirements of the Exchange Act at
the time the Proxy Statement is first mailed to the stockholders of the Company
and at the Effective Time.
4.8. OWNERSHIP OF COMPANY SHARES; PARENT SEC FILINGS. As of the date
of this Agreement, Parent is the beneficial owner of 19,928,278 Company Shares
(assuming the exercise of the Warrants but excluding the 8,966,715 Company
Shares that Parent and Merger Sub have the right to acquire pursuant to the
Purchase Agreement). The Schedule 13D filed by Parent with the SEC on May 14,
2001 and each amendment thereto was true and correct in all material respects
when filed, provided, however, that neither Parent nor Merger Sub makes any
representation or warranty as to the number of outstanding Company Shares or the
number of Company Shares issuable upon exercise of outstanding options or
warrants or any percentage derived therefrom.
V. CONDUCT OF BUSINESS PENDING THE MERGER
5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The
Company hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Parent, the Company will and will cause each of its Subsidiaries to (a) operate
its business in the usual and ordinary course consistent with past practice, (b)
use its reasonable best efforts to preserve substantially intact its business
organization, maintain its rights and franchises, retain the services of its
respective principal officers and key employees and maintain its relationships
with its respective principal customers, suppliers and other Persons with which
it or any of its Subsidiaries has significant business relations, and (c) use
its reasonable best efforts to maintain and keep its properties and assets in as
good repair and condition as at present, ordinary wear and tear excepted.
5.2. NOTIFICATION OF CERTAIN MATTERS. (a) Parent will give prompt
notice to the Company, and the Company will give prompt notice to Parent, of (i)
the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be reasonably likely to cause (A) any representation or warranty of
Parent or the Company, as the case may be, contained in this Agreement to be
untrue or inaccurate in any material respect or (B) any material covenant,
condition or agreement of Parent or the Company, as the case may be, contained
in this Agreement not to be complied with or satisfied and (ii) any material
failure of Parent or the Company, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
SECTION 5.2 will not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
(b) Except to the extent that the Company is legally obligated to
keep such information confidential, the Company will give prompt written notice
to Parent of any proposal, offer or other communication from any Person,
including without limitation
(Page 19 of 33 Pages)
any request for information relating to any acquisition or purchase of all or
any material portion of the capital stock of the Company or any of its
Subsidiaries or a material portion of the assets of the Company or any of its
Subsidiaries, any business combination with the Company or any of its
Subsidiaries or any other extraordinary business transaction involving or
otherwise relating to the Company or any of its Subsidiaries. Except to the
extent that the Company is legally obligated to keep such information
confidential, the Company will notify Parent promptly if any such proposal or
offer, or any inquiry or other contact with any Person with respect thereto, is
made and will, in any such notice to Parent, indicate in reasonable detail the
identity of the Person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or other contact.
5.3. CERTAIN PARENT AND MERGER SUB ACTIONS. Each of Parent and
Merger Sub hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement, it will not cause the
Company to take any action that would result in a breach of any of the Company's
obligations under ARTICLE V or VI of this Agreement.
VI. ADDITIONAL AGREEMENTS
6.1. COMPANY STOCKHOLDER APPROVAL. In accordance with Delaware Law
and the Company's Certificate of Incorporation and Bylaws, the Company will
promptly after the date of this Agreement take all action necessary to seek
adoption of this Agreement by the Requisite Stockholder Vote. The Company will
take all action reasonably necessary to call a meeting of its stockholders, to
be held as soon as is reasonably practicable after the date hereof, for the
purpose of considering and voting upon the adoption of this Agreement. Each of
Parent and Merger Sub will vote, or will cause to be voted, all of the Company
Shares beneficially owned by it and all of the Company Shares subject to the
Purchase Agreement in favor of the adoption of this Agreement at any meeting of
the Company's stockholders at which a proposal relating to such adoption is
submitted to a vote of the Company's stockholders.
6.2. PROXY STATEMENT AND SCHEDULE 13E-3. (a) As promptly as
practicable after the execution of this Agreement, Parent and the Company will
cooperate in preparing, and the Company will cause to be filed with the SEC, a
proxy statement (together with any amendments thereof or supplements thereto,
the "PROXY STATEMENT") to solicit proxies from the stockholders of the Company,
in favor of the adoption of this Agreement. Parent will cause to be filed with
the SEC a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "SCHEDULE
13E-3"). Each of Parent and the Company will furnish all information concerning
Parent or the Company as the other party may reasonably request in connection
with such actions and the preparation of the Proxy Statement and the Schedule
13E-3. The Company and Parent will use their respective reasonable best efforts
to respond to all SEC comments with respect to the Proxy Statement and Schedule
13E-3 and, subject to compliance with SEC rules and regulations, the Company
will cause the Proxy Statement to be mailed to the Company's stockholders at the
earliest practicable date.
(Page 20 of 33 Pages)
(b) The Proxy Statement will include the unanimous recommendation of
the Special Committee that this Agreement and the Merger should be approved and
declared advisable and the unanimous recommendation of the Board to the
stockholders of the Company to adopt this Agreement; provided, however, that the
Special Committee and the Board may, at any time prior to the Effective Time,
withdraw, modify or change any such recommendation to the extent that the
Special Committee or the Board determines in good faith, after consultation with
independent legal counsel (who may be the Company's regularly engaged legal
counsel), that the failure to so withdraw, modify or change such recommendation
would result in a breach of its fiduciary duties to the Company's stockholders
(excluding Parent and Merger Sub) under applicable Law; provided further that
nothing in this SECTION 6.2(B) will affect the Company's obligation to seek the
Requisite Stockholder Vote (regardless of whether the recommendation of the
Special Committee or the Board has been withdrawn, modified or changed) unless
this Agreement has previously been terminated in accordance with ARTICLE VIII.
6.3. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the date of
this Agreement to the Effective Time, each of Parent and the Company will (i)
provide to the other (and to the other's officers, directors, employees,
accountants, consultants, legal counsel, agents and other representatives
(collectively, "REPRESENTATIVES")) access at reasonable times upon reasonable
prior notice to its officers, employees, agents, properties, offices and other
facilities and to its books and records and (ii) furnish promptly such
information concerning its business, properties, contracts, assets, liabilities
and personnel as the other party or its Representatives may reasonably request.
(b) Each party agrees to, and will cause its Representatives to: (i)
treat and hold as confidential all information relating to the other party and
its Subsidiaries, (ii) in the event that a party or any of its Representatives
becomes legally compelled to disclose any such information, provide the other
party with prompt written notice of such requirement so that such other party
may seek a protective order or other remedy or waive compliance with this
SECTION 6.3(B), and (iii) in the event that such protective order or other
remedy is not obtained, or such other party waives compliance with this SECTION
6.3(B), furnish only that portion of such confidential information that is
legally required to be provided and exercise its reasonable best efforts to
obtain assurances that confidential treatment will be accorded such information;
provided, however, that this sentence will not apply to any information that, at
the time of disclosure, is available publicly and was not disclosed in breach of
this Agreement by a party or any of its Representatives. The parties agree and
acknowledge that remedies at Law for any breach of their obligations under this
SECTION 6.3 are inadequate and that in addition thereto such parties will be
entitled to seek equitable relief, including injunction and specific
performance, in the event of any such breach.
(c) No investigation pursuant to this SECTION 6.3 will affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto. Without limiting the
foregoing, each party hereby agrees to disclose to other party its Knowledge of
the failure of any of the conditions to
(Page 21 of 33 Pages)
such party's obligations set forth in ARTICLE VII; provided, however, that the
failure by Parent or Merger Sub to so disclose such Knowledge will not result in
a failure of the condition set forth in Section 7.3(b), and the failure of the
Company to so disclose such Knowledge will not result in a failure of the
condition set forth in Section 7.2(b).
6.4. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE. (a) The
Certificate of Incorporation and Bylaws of the Surviving Corporation, and the
certificate of incorporation and bylaws or comparable organizational documents
of each Subsidiary of the Surviving Corporation, will contain provisions with
respect to indemnification that are no less favorable than those set forth in
the Certificate of Incorporation and Bylaws of the Company, or the certificate
of incorporation and bylaws or comparable organizational documents of such
Subsidiary of the Company, as the case may be, in each case on the date of this
Agreement, which provisions will not be amended, repealed or otherwise modified
for a period of six years from and after the Effective Time in any manner that
would affect adversely the rights thereunder of individuals that at the
Effective Time were directors or officers of the Company or any Subsidiary of
the Company, in respect of actions or omissions occurring at or prior to the
Effective Time, unless such modification will be required by Law.
(b) From and after the Effective Time, the Surviving Corporation
will, to the fullest extent required or permitted under Delaware Law, indemnify
and hold harmless each present and former director or officer of the Company
(collectively, the "INDEMNIFIED PARTIES") against all costs and expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), based on the fact that such Person is or was a director or officer of the
Company or any Subsidiary of the Company and arising out of or pertaining to any
action or omission occurring at or before the Effective Time, including without
limitation actions taken in connection with, or pursuant to, the terms of this
Agreement, and will pay any expenses in advance of the final disposition of such
action or proceeding to each Indemnified Party to the fullest extent permitted
under Delaware Law, upon receipt from the Indemnified Party to whom expenses are
advanced of an undertaking to repay such advances if required under Delaware
Law, provided, however, that the foregoing indemnity will not apply to any act
or failure to act which a court of competent jurisdiction determines in an order
or decision not subject to appeal constituted misappropriation of cash or other
property of the Company or any of its Subsidiaries. In the event of any such
claim, action, suit, proceeding or investigation, (i) the Surviving Corporation
will pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel will be reasonably satisfactory to the Surviving
Corporation, promptly after statements therefor are received and (ii) the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that the Surviving Corporation will not be liable for any
settlement effected without its written consent (which consent will not be
unreasonably withheld, delayed or conditioned); and provided further that the
Surviving Corporation will not be obligated pursuant to this SECTION 6.4(b) to
pay the fees and expenses of more than one counsel (plus appropriate local
counsel) for all Indemnified Parties in any single action except to the extent,
as determined by counsel to the Indemnified Parties, that there may be one
(Page 22 of 33 Pages)
or more legal defenses available to one Indemnified Party that are different
from or in addition to those available to the other Indemnified Parties that
would, in the judgment of such counsel, prohibit such counsel from representing
all Indemnified Parties under the rules of professional ethics, in which case
such additional counsel (including local counsel) as may be required to avoid
any such conflict or likely conflict may be retained by the Indemnified Parties
at the expense of the Surviving Corporation. Parent hereby guarantees the
Surviving Corporation's obligations under this Section 6.4(b).
(c) The Surviving Corporation will use its reasonable best efforts
to maintain in effect for a period of six years from and after the Effective
Time directors' and officers' liability insurance covering those Persons that
are covered by the Company's directors' and officers' liability insurance policy
as of the date of this Agreement on terms comparable to such existing insurance
coverage; provided, however, that in no event will the Surviving Corporation be
required to expend pursuant to this SECTION 6.4(C) more than an amount per year
equal to 150% of annual premiums paid by the Company for such insurance as of
the date of this Agreement.
(d) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
will not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision will be made so that the successors and assigns of the Surviving
Corporation or, at Parent's option, Parent, will assume the obligations set
forth in this SECTION 6.4.
6.5. FURTHER ACTION; CONSENTS; FILINGS. On the terms and subject to
the conditions hereof, each of the parties hereto will use its reasonable best
efforts to (a) take, or cause to be taken, all appropriate action and do, or
cause to be done, all things necessary, advisable or appropriate under
applicable Law or otherwise to consummate and make effective the Merger and the
other transactions contemplated by this Agreement as soon as practicable, (b)
obtain from Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by Parent or
the Company or any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Merger, and
(c) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement, the Merger and the other
transactions contemplated by this Agreement that are required under the Exchange
Act and any other applicable federal or state securities Laws, and any other
applicable Law. The parties hereto will cooperate with each other in connection
with the making of all such filings, including by providing copies of all such
documents to the nonfiling party and its advisors prior to filing and, if
requested, by accepting all reasonable additions, deletions or changes suggested
in connection therewith. Subject to the terms and conditions hereof, each party
hereto, at the reasonable request of another party hereto, will execute and
deliver such other instruments and do and perform such other acts and things as
may be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
(Page 23 of 33 Pages)
6.6. PUBLIC ANNOUNCEMENTS. Parent and the Company will consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the Merger and will not issue any
such press release or make any such public statement without the prior consent
of the other (which consent will not be unreasonably withheld or delayed),
except as either such party may determine is required by Law or any listing
agreement with the Nasdaq Stock Market to which the Company is a party, PROVIDED
that statements made by the Company to its employees, customers or suppliers
will not be deemed to be public statements for purposes of this Section 6.6. The
parties have agreed on the text of a press release by which the Company will
announce the execution of this Agreement.
6.7. OBLIGATIONS OF MERGER SUB. Parent will take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and subject to the conditions set
forth in this Agreement.
VII. CONDITIONS TO THE MERGER
7.1. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
the Company, Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following conditions:
(a) STOCKHOLDER APPROVAL. The Requisite Stockholder Vote shall have
been received.
(b) NO ORDER. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) that is then in effect and has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger; provided, however, that each of the parties to this Agreement
shall use its reasonable best efforts to cause any such Order to be
vacated or lifted.
7.2. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company contained in this Agreement that is qualified by
reference to a Company Material Adverse Effect shall be true and correct
as of the Effective Time, as though made on and as of the Effective Time,
except that those representations and warranties that address matters only
as of a particular date shall remain true and correct as of such date.
Each of the representations and warranties of the Company contained in
this Agreement that is not qualified by reference to a Company Material
Adverse Effect will be true and correct as of the Effective Time, as
though made on and as of the Effective Time, except that those
representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date, except in
each case where the failure to be so true and correct has not had or
resulted in a Company
(Page 24 of 33 Pages)
Material Adverse Effect. Parent shall have received a certificate of an
officer of the Company to these effects.
(b) COVENANTS. The Company shall have performed or complied in all
material respects with all covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and
Parent shall have received a certificate of an officer of the Company to
that effect.
(c) CONSENTS. The Company shall have obtained consents to cash out
and/or cancel Company Stock Options to the extent required as set forth in
the Company Disclosure Schedule (provided that this condition will be
declared satisfied if the holders of options to purchase no more than
500,000 of such Company Shares shall not have so consented and all other
conditions to the Closing have been satisfied), it being understood that
the failure to satisfy this condition shall not be deemed to be a breach
of SECTION 2.4 so long as the Company uses its reasonable best efforts to
satisfy this SECTION 7.2(C).
7.3. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company to consummate the Merger are subject to the satisfaction or
waiver (where permissible) of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Parent and Merger Sub contained in this Agreement that is
qualified by reference to a Parent Material Adverse Effect shall be true
and correct as of the Effective Time, as though made on and as of the
Effective Time, except that those representations and warranties that
address matters only as of a particular date shall remain true and correct
as of such date. Each of the representations and warranties of Parent and
Merger Sub contained in this Agreement that is not qualified by reference
to a Parent Material Adverse Effect shall be true and correct as of the
Effective Time, as though made on and as of the Effective Time, except
that those representations and warranties that address matters only as of
a particular date shall remain true and correct as of such date, except in
each case where the failure to be so true and correct has not had or
resulted in a Parent Material Adverse Effect. The Company shall have
received a certificate of an officer of Parent to these effects.
(b) COVENANTS. Parent and Merger Sub shall have performed or
complied in all material respects with all covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time, and the Company shall have received a certificate of an
officer of Parent to that effect.
VIII. TERMINATION, AMENDMENT AND WAIVER
8.1. TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption of this Agreement by the stockholders of the Company, as
follows:
(Page 25 of 33 Pages)
(a) by mutual Agreement duly authorized by the Boards of Directors
of each of Parent and the Company, if such termination is also approved by
the Special Committee;
(b) by Parent or the Company if the Effective Time has not occurred
on or before December 31, 2001, provided, however, that the right to
terminate this Agreement under this SECTION 8.1(B) will not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Effective Time
to occur by such time;
(c) by Parent or the Company if any Governmental Entity has enacted,
issued, promulgated, enforced or entered any Order or taken any other
action restraining, enjoining or otherwise prohibiting the consummation of
the Merger and such Order or other action has become final and
nonappealable;
(d) by (i) Parent if (A) the Special Committee or the Board
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Parent or Merger Sub (or has resolved to do
any of the foregoing) or (B) SSB withdraws, modifies or changes the
opinion referred to in Section 3.8 in a manner adverse to Parent or Merger
Sub or by (ii) the Company if (A) an event in SECTION 8.1(D)(I)(A) or (B)
occurs and (B) the Special Committee or Board determines in good faith,
after consultation with independent legal counsel (who may be the
Company's regularly engaged legal counsel), that the failure to so
terminate would result in a breach of its fiduciary duties to the
Company's stockholders (excluding Parent and Merger Sub) under applicable
Law;
(e) by Parent upon a breach of any representation, warranty or
covenant on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company has become untrue, in either
case such that the conditions set forth either in SECTION 7.2(A) or 7.2(B)
would not be satisfied ("TERMINATING COMPANY BREACH"), provided, however,
that, if, in the reasonable opinion of Parent, such Terminating Company
Breach is curable by the Company through the exercise of its reasonable
efforts and for as long as the Company continues to exercise such
reasonable efforts, Parent may not terminate this Agreement under this
SECTION 8.1(E);
(f) by the Company upon a breach of any representation, warranty or
covenant on the part of Parent or Merger Sub set forth in this Agreement,
or if any representation or warranty of Parent or Merger Sub has become
untrue, in either case such that the conditions set forth either in
SECTION 7.3(A) or 7.3(B) would not be satisfied ("TERMINATING PARENT
BREACH"), provided, however, that, if, in the reasonable opinion of the
Company, such Terminating Parent Breach is curable by Parent or Merger Sub
through the exercise of its reasonable efforts and for as long as Parent
or Merger Sub continues to exercise such reasonable efforts, the Company
may not terminate this Agreement under this SECTION 8.1(F); or
(Page 26 of 33 Pages)
(g) by Parent or the Company if the Requisite Stockholder Vote has
not been obtained by reason of the failure to obtain such vote at the
Company's stockholders' meeting called to adopt this Agreement (or any
adjournment or postponement of such meeting).
8.2. EFFECT OF TERMINATION. Except as provided in SECTION 9.1, in
the event of termination of this Agreement pursuant to SECTION 8.1, this
Agreement will forthwith become void, there will be no liability under this
Agreement on the part of Parent, Merger Sub or the Company or any of their
respective officers or directors, and all rights and obligations of each party
hereto will cease; provided, however, that nothing herein will relieve any party
from liability for the willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
8.3. AMENDMENT. This Agreement may be amended if Agreed to by action
taken by or on behalf of the Boards of Directors of Parent and the Company at
any time prior to the Effective Time; provided, however, that, after the
approval and adoption of this Agreement by the stockholders of the Company, no
amendment may be made that would alter or change the amount or kind of
consideration into which each Company Share will be converted upon consummation
of the Merger or that otherwise cannot be made subsequent to such stockholder
approval under Delaware Law; and provided further that all amendments must also
be approved by the Special Committee. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
8.4. WAIVER. At any time prior to the Effective Time, each of Parent
and the Company may (a) extend the time for the performance of any obligation or
other act of the other party, (b) waive any inaccuracy in the representations
and warranties of the other party contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any agreement of the other party
or condition to its own obligations contained herein; provided, however, that,
if the Company seeks to make such extension or waiver as provided in clause (a),
(b) or (c) above, it must first obtain the approval of the Special Committee.
Any such extension or waiver will be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
8.5. EXPENSES. Except as otherwise set forth herein, all Expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement will be paid by the party incurring such Expenses, whether or not
the Merger or any other transaction is consummated. "EXPENSES" as used in this
Agreement will include all reasonable out-of-pocket expenses (including without
limitation all reasonable fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its Affiliates) incurred
by a party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Proxy Statement and the
Schedule 13E-3, the solicitation of stockholder approvals and all other matters
related to the closing of the Merger and the other transactions contemplated by
this Agreement. Notwithstanding any other provision hereof, (i) if this
Agreement is terminated pursuant to Section 8.1(d) or (e), then all Expenses of
Parent
(Page 27 of 33 Pages)
and Merger Sub will be paid by the Company, (ii) if this Agreement is terminated
pursuant to Section 8.1(f), then all Expenses of the Company will be paid by
Parent, and (iii) if this Agreement is terminated pursuant to Section 8.1(g)
and, at any time prior to such termination, the Company would have been entitled
to terminate this Agreement pursuant to Section 8.1(d), then all Expenses of
Parent and Merger Sub will be paid by the Company, in each case within two
Business Days after submission of a request therefor accompanied by a
certificate of the requesting party's executive officer stating that such
Expenses were paid or have accrued. If there is a dispute as to the payment or
amount of Expenses payable pursuant to this Section 8.5, Parent and the Company
will seek in good faith to resolve any such dispute within 30 calendar days of
the failure of either party to pay Expenses requested to be paid pursuant to
this Section 8.5 within such two Business Day period. If the Company and Parent
are unable to resolve such dispute within such 30 calendar day period, each
party will deliver to the other in writing its last and best offer as to the
amount of Expenses payable pursuant to this Section 8.5 (each, a "LAST OFFER").
If Parent or the Company, as applicable, commences a suit against the other for
the payment of such Expenses, each party expressly acknowledges and agrees that
it is willing to limit its recovery to both parties' Last Offer (and not any
other amount), and the party owing such amount will pay to the other its
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on such amount at
the prime rate of Citibank, N.A. in effect on the date such payment was required
to be paid plus two percent.
IX. GENERAL PROVISIONS
9.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and agreements in this Agreement and in any
certificate delivered pursuant hereto will terminate at the Effective Time or
upon the termination of this Agreement pursuant to SECTION 8.1, as the case may
be, except that this SECTION 9.1 will not limit any covenant or agreement of the
parties that by its terms contemplates performance after the Effective Time or
after termination of this Agreement and any such termination pursuant to SECTION
8.1 will not affect a party's liability for any prior breach of this Agreement.
9.2. NOTICES. All notices, requests, claims, demands and other
communications hereunder will be in writing and will be deemed to have been duly
given (a) when delivered in person or by facsimile or courier service (provided
that such notice was delivered prior to 5:00 p.m., local time, on a Business
Day; otherwise, such notice will be deemed delivered on the next Business Day),
(b) one Business Day after having been dispatched by a nationally recognized
overnight courier service, or (c) on the fifth Business Day after deposit in the
United States mail, if mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case to the respective parties at the
following addresses (or at such other address for a party as will be specified
in a notice given in accordance with this SECTION 9.2):
if to Parent or Merger Sub:
(Page 28 of 33 Pages)
Seneca Investments LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Chief Executive Officer
and Chief Financial Officer
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxx X. Xxxxxx
if to the Company:
XXXXXX.XXX Ltd.
00 Xxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 212-358-2670
Attention: General Counsel
with copies to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxxx X. Xxxxx
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxx Xxxxxxxx
9.3. CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
(a) "AFFILIATE" of a specified Person means a Person that directly
or indirectly through one or more intermediaries controls, is Controlled by, or
is under common Control with such specified Person, provided, however, that as
used in this Agreement with respect to the Company, the term "AFFILIATE" will
only include the Subsidiaries of the Company; provided further that as used in
this Agreement with respect to Parent, the term "AFFILIATE" will not include the
Company or any of the Subsidiaries of the Company;
(Page 29 of 33 Pages)
(b) "BUSINESS DAY" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(c) "CONTROL" (including the terms "Controlled by" and "under common
Control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(d) "TO THE KNOWLEDGE" of any Person means, when referring to an
individual, the actual knowledge of such individual, and when referring to any
other Person, means the actual knowledge of such Person's officers and its board
of directors or managers, as appropriate, in each case without undertaking any
specific investigation for purposes of making any representation or warranty in
this Agreement;
(e) "PERSON" means an individual, corporation, partnership, limited
partnership, syndicate, limited liability company, joint venture, person
(including, without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or Governmental Entity; and
(f) "SUBSIDIARY" or "SUBSIDIARIES" of any Person means any
corporation, partnership, joint venture, limited liability company or other
legal entity of which such Person (either alone or through or together with any
other Subsidiary) owns, directly or indirectly, more than 50% of the stock or
other equity interests, the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity, provided, however, that for purposes of the
representations and the warranties of Parent in ARTICLE IV, and the covenants
and other agreements of Parent in ARTICLES V and VI, except as otherwise
specifically provided therein, the "SUBSIDIARIES" of Parent will not include the
Company or any Subsidiaries of the Company.
9.4. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect as long as the economic or legal substance of
the Merger is not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the Merger be
consummated as originally contemplated to the fullest extent possible.
9.5. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including the
Company Disclosure Schedule and the Exhibits) constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, between the parties,
with respect
(Page 30 of 33 Pages)
to the subject matter hereof, PROVIDED that the indemnity agreements between the
Company and certain of its directors and officers in effect as of the date
hereof (correct and complete copies of which have been provided to Parent) shall
remain in independent full force and effect. This Agreement will not be assigned
by any party without the prior written consent of the other parties hereto,
except that Parent and Merger Sub may assign all or any of their rights and
obligations hereunder to any direct wholly owned subsidiary of Parent; provided,
however, that no such assignment will relieve the assigning party of its
obligations hereunder.
9.6. PARTIES IN INTEREST. This Agreement will be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or will confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than SECTION 6.4 (which is intended to be for the benefit of
the Persons covered thereby and may be enforced by such Persons).
9.7. GOVERNING LAW. This Agreement will be governed by and construed
in accordance with Delaware Law (without giving effect to conflict of laws
principles) as to all matters, including validity, construction, effect,
performance and remedies.
9.8. HEADINGS. The descriptive headings contained in this Agreement
are included for convenience of reference only and will not affect in any way
the meaning or interpretation of this Agreement.
9.9. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by each
party hereto in separate counterparts, each of which when executed and delivered
will be deemed to be an original but all of which taken together will constitute
one and the same agreement.
9.10. CERTAIN INTERPRETIVE MATTERS. (a) Unless the context otherwise
requires, (i) all references to Sections, Schedules or Exhibits are to Sections,
Schedules or Exhibits of or to this Agreement, (ii) each term defined in this
Agreement has the meaning assigned to it, (iii) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with GAAP, (iv) "or" is disjunctive but not necessarily exclusive, (v) words in
the singular include the plural and VICE VERSA, and (vi) all references to "$"
or dollar amounts will be to lawful currency of the United States of America.
9.11. CONSENT TO JURISDICTION. (a) Each party hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the court of the State of Delaware sitting in the County of New
Castle, the court of the State of New York sitting in the Borough of Manhattan,
City of New York, and the United States District Courts for the State of
Delaware and the Southern District of New York (as applicable, the "COURT"), and
any appellate court from any such court, in any suit, action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment resulting from any such suit, action or proceeding, and
(Page 31 of 33 Pages)
each party hereby irrevocably and unconditionally agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined in
the Court.
(b) It will be a condition precedent to each party's right to bring
any such suit, action or proceeding that such suit, action or proceeding, in the
first instance, be brought in the Court (unless such suit, action or proceeding
is brought solely to obtain discovery or to enforce a judgment), and if each
such court refuses to accept jurisdiction with respect thereto, such suit,
action or proceeding may be brought in any other court with jurisdiction.
(c) No party may move to (i) transfer any such suit, action or
proceeding from the Court to another jurisdiction, (ii) consolidate any such
suit, action or proceeding brought in the Court with a suit, action or
proceeding in another jurisdiction unless such motion seeks solely and
exclusively to consolidate such suit, action or proceeding in the Court, or
(iii) dismiss any such suit, action or proceeding brought in the Court for the
purpose of bringing or defending the same in another jurisdiction.
(d) Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, (i) any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in the Court, (ii) the
defense of an inconvenient forum to the maintenance of such suit, action or
proceeding in the Court, and (iii) the right to object, with respect to such
suit, action or proceeding, that such court does not have jurisdiction over such
party. Each party irrevocably consents to service of process in any manner
permitted by law. Notwithstanding the foregoing, this Section 9.11 will not
apply to any suit, action or proceeding by a party seeking indemnification or
contribution pursuant to this Agreement or otherwise in respect of a suit,
action or proceeding against such party by a third party if such suit, action or
proceeding by such party seeking indemnification or contribution is brought in
the same court as the suit, action or proceeding against such party.
9.12. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, MERGER
SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT THEREOF.
(Page 32 of 33 Pages)
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first written above.
SENECA INVESTMENTS LLC
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Chief Executive Officer
E-SERVICES INVESTMENTS AGENCY SUB LLC
By: Communicade LLC, its member
By: Seneca Investments LLC, its member
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Chief Executive Officer
XXXXXX.XXX LTD.
By: /s/ XXXX XXX
--------------------------------------
Chief Executive Officer
(Page 33 of 33 Pages)
