EXHIBIT 10.5
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is dated as of April
17, 2001 by and among WebToTel, Inc., a Delaware corporation (the "Company"),
Counsel Communications LLC, a Delaware limited liability company ("Counsel"),
I-Link Incorporated, a Florida corporation (the "Purchaser"), I-Link Acquisition
Corp., a Delaware corporation (the "Merger Sub"), and the other shareholders of
the Company as listed on the signature pages hereof.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company, the Purchaser and
Merger Sub have approved and adopted the merger of the Company with and into
Merger Sub on the terms and subject to the conditions set forth herein; and
WHEREAS, pursuant to the Merger, the outstanding shares of the common
stock of the Company, $0.001 par value per share (the "Company Common Stock")
will be converted into the right to receive the consideration described below.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
Section 1.1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the respective meanings set forth below.
"Affiliate" means, with respect to any Person, any other Person who,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"GAAP" means generally accepted accounting principles as in effect in the
United States on the date of this Agreement.
"Governmental Authority" means any national, federal, state, provincial,
county, municipal or local government, foreign or domestic, or the government of
any political subdivision of any of the foregoing, or any entity, authority,
agency, ministry or other similar body exercising executive, legislative,
judicial, regulatory or administrative authority or functions of or pertaining
to government, including any authority or other quasi-governmental entity
established to perform any of such functions.
"Material Adverse Change" means, with respect to any Person, a material
adverse change in the business, financial condition or results of operations of
such Person.
"Person" means an individual, partnership, limited liability company,
corporation, joint stock company, unincorporated organization or association,
trust or joint venture, or a governmental agency or political subdivision
thereof.
"Purchaser Common Stock" means the common stock, par value $0.007 per
share, of the Purchaser.
"RESTRICTED STOCK" MEANS ANY SHARES OF COMMON STOCK OF THE PURCHASER
ISSUED IN CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.
"Securities Act" means the Securities Act of 1933 or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Taxes" means any and all taxes, charges, fees, levies or other like
assessments (and all related interest, additions to tax and penalties),
including, income, transfer, gains, gross receipts, excise, inventory, property
(real, personal or intangible), customs duty, sales, use, license, withholding
(including backup withholding), payroll, employment, capital stock or franchise
taxes and escheat liability, imposed by the United States, or any state, local
or foreign government, or any subdivision or agency of any of the foregoing,
whether computed on a unitary, combined or any other basis.
"Tax Return" means any report, return, information reports or returns or
other information with respect to Taxes (including any attached schedules or any
amendments to such report return or other information) required to be filed with
or supplied to any taxing authority.
Section 1.2. INTERPRETATION. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereto,"
"hereof" and words of similar import refer to this Agreement as a whole and not
to any particular Section or paragraph hereof; (ii) words importing the
masculine gender shall also include the feminine and neutral genders, and vice
versa; and (iii) words importing the singular shall also include the plural, and
vice versa.
ARTICLE II
The Merger
Section 2.1. THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 2.2), the Merger
Sub shall be merged with and into the Company (the "Merger") and the separate
corporate existence of the Merger Sub shall thereupon cease. The Company shall
be the surviving corporation in the Merger and shall continue to be governed by
the Delaware General Corporation Law (the "DGCL"). The separate corporate
existence of the Company with all its rights, privileges, powers and franchises
shall continue unaffected by the Merger. The Merger shall have the effects
specified in the DGCL. From and after the Effective Time, the Company is
sometimes referred to herein as the "Surviving Corporation."
Section 2.2. CERTIFICATE OF MERGER. On the Closing Date (as defined in
Section 2.13), the parties hereto shall cause a certificate of merger (the
"Certificate of Merger"), meeting the requirements of Section 251 of the DGCL,
to be properly executed and filed in accordance with the DGCL. The Merger shall
be effective at the time and on the date of the filing of the Certificate of
Merger in accordance with the DGCL, or at such other time and date specified in
the Certificate of Merger (the "Effective Time").
Section 2.3. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Company in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation until
amended in accordance with applicable law.
Section 2.4. BY-LAWS. The by-laws of the Company in effect immediately
prior to the Effective Time shall be the by-laws of the Surviving Corporation
until amended in accordance with applicable law.
Section 2.5. OFFICERS. The officers of the Surviving Corporation from and
after the Effective Time shall be designated by the Purchaser and will hold
office until their successors are duly elected or appointed and qualify in the
manner provided in the certificate of incorporation or by-laws of the Surviving
Corporation or as otherwise provided by law, or until their earlier death,
resignation or removal.
Section 2.6. DIRECTORS. The directors of the Surviving Corporation from
and after the Effective Time shall be designated by the Purchaser and will serve
until their successors are duly elected or appointed and qualify in the manner
provided in the certificate of incorporation or by-laws of the Surviving
Corporation or as otherwise provided by law, or until their earlier death,
resignation or removal.
Section 2.7. CONVERSION OF SHARES. The aggregate amount of consideration
payable pursuant to this Section 2.7 is hereinafter referred to as the "Merger
Consideration," and is calculated based on a $0.56 per share valuation of
Purchaser Common Stock to be delivered as the Merger Consideration (with the
result that the shareholders of the Company will own 17,454,333 shares of the
outstanding Purchaser Common Stock immediately following the Merger. Subject to
the terms and conditions of this Agreement, as of the Effective Time (and as
elected by each stockholder of the Company prior to the Effective Time), by
virtue of the Merger and without any action on the part of the Merger Sub, the
Company or the holder of any shares of the Company Common Stock, the following
shall occur:
(a) EACH SHARE OF COMPANY COMMON STOCK ISSUED AND OUTSTANDING IMMEDIATELY
PRIOR TO THE EFFECTIVE TIME (OTHER THAN SHARES HELD IN THE COMPANY'S TREASURY),
SHALL, BY VIRTUE OF THE MERGER AND WITHOUT ANY ACTION ON THE PART OF THE HOLDERS
THEREOF, BE CONVERTED INTO THE RIGHT TO RECEIVE 0.1313 (THE "EXCHANGE RATIO") OF
A SHARE OF PURCHASER COMMON STOCK (SUBJECT TO ADJUSTMENT AS PROVIDED HEREIN),
SUCH THAT IMMEDIATELY AFTER THE EFFECTIVE TIME 17,454,333 SHARES OF THE
PURCHASER WILL BE OWNED BY THE COMPANY'S SHAREHOLDERS, AS INDICATED ON EXHIBIT A
ATTACHED HERETO.
(b) All shares of Company Common Stock converted in accordance with
Section 2.7(a) shall, when so converted, no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock (a
"Certificate") shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration payable with respect thereto. Each
share of Company Stock held in the treasury of the Company shall, by virtue of
the Merger and without any action on the part of the holders thereof, be
canceled, retired and cease to exist and no payment shall be made with respect
thereto.
(c) Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of Merger Sub or the Purchaser, be converted into
one share of common stock of the Surviving Corporation.
Section 2.8. PAYMENT OF MERGER CONSIDERATION. On the Closing Date, the
Purchaser shall deliver the Merger Consideration payable to Counsel and the
other Company shareholders registered in their respective names. The Merger
Consideration is subject to adjustment as set forth in Section 2.9.
Section 2.9. ADJUSTMENTS. In the event that, subsequent to the date of
this Agreement and prior to the Effective Time, the outstanding shares of
Purchaser Common Stock or Company Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities through reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other like changes in the
Purchaser's or the Company's capitalization, then an appropriate and
proportionate adjustment shall be made in the terms of the consideration
provided for in this Article II.
Section 2.10 FRACTIONAL SHARES. No fraction of a share of Purchaser Common
Stock will be issued, but in lieu thereof, each holder of shares of Company
Common Stock who would otherwise be entitled to a fraction of a share of
Purchaser Common Stock (after aggregating all fractional shares of Purchaser
Common Stock to be received by such holder) shall be entitled to receive from
Purchaser an amount of cash (rounded down to the nearest whole cent) equal to
the product of (i) such fraction, multiplied by (ii) the value ascribed to each
share of Company Common Stock pursuant to this Agreement.
Section 2.11. EXCHANGE OF CERTIFICATES.
(a) AT THE CLOSING, COUNSEL AND THE OTHER COMPANY SHAREHOLDERS SHALL
SURRENDER ITS CERTIFICATE OR CERTIFICATES, WITH SUCH STOCK POWERS EXECUTED IN
BLANK OR OTHERWISE IN PROPER FORM FOR TRANSFER TO THE PURCHASER AS THE PURCHASER
MAY REASONABLY REQUEST IN EXCHANGE FOR THE PORTION OF THE MERGER CONSIDERATION
INTO WHICH THE SHARES OF COMPANY COMMON STOCK REPRESENTED BY SUCH CERTIFICATE OR
CERTIFICATES SHALL HAVE BEEN CONVERTED PURSUANT TO THIS AGREEMENT. UPON SUCH
SURRENDER, COUNSEL AND THE OTHER COMPANY SHAREHOLDERS SHALL BE ENTITLED TO
RECEIVE IN EXCHANGE THEREFOR THE MERGER CONSIDERATION TO WHICH COUNSEL AND THE
OTHER COMPANY SHAREHOLDERS SHALL HAVE BECOME ENTITLED PURSUANT TO THE PROVISIONS
OF THIS ARTICLE II AND THE CERTIFICATE SO SURRENDERED SHALL FORTHWITH BE
CANCELED. NO INTEREST WILL BE PAID OR ACCRUED ON ANY CASH CONSTITUTING MERGER
CONSIDERATION AND ANY UNPAID DIVIDENDS AND DISTRIBUTIONS, IF ANY, PAYABLE TO
HOLDERS OF CERTIFICATES. UNTIL SURRENDERED IN ACCORDANCE WITH THE PROVISIONS OF
THIS SECTION 2.11, EACH CERTIFICATE (OTHER THAN CERTIFICATES CANCELED PURSUANT
TO SECTION 2.7(b)) SHALL REPRESENT FOR ALL PURPOSES ONLY THE RIGHT TO RECEIVE
THE MERGER CONSIDERATION PROVIDED FOR BY THIS AGREEMENT, WITHOUT INTEREST.
(b) No dividends or other distributions declared after the Effective Time
with respect to the Purchaser Common Stock and payable to the holders of record
thereof shall be paid to the holder of any unsurrendered Certificate until the
holder thereof shall surrender such Certificate in accordance with this Article
II. After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of the Purchaser Common Stock, if any,
represented by such Certificate.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock. If, after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Merger Consideration
as provided for, and in accordance with, the provisions of this Section 2.11.
(d) In the event any Certificate shall have 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
Purchaser, the posting by such person of a bond in such amount as the Purchaser
reasonably may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Purchaser will issue in exchange for such
lost, stolen or destroyed Certificate the cash and shares of Purchaser Common
Stock deliverable in respect thereof pursuant to this Agreement.
Section 2.12. CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place as soon as practicable following the
satisfaction or waiver (to the extent waivable) of the conditions set forth in
Article VI or at such other time and place (including via exchange of facsmile
documents) as the parties may agree. The time and date of the Closing is herein
referred to as the "Closing Date."
ARTICLE III
Representations and Warranties Regarding the Company
The Company hereby represents and warrants to the Purchaser and the Merger Sub
that:
Section 3.1. ORGANIZATION AND GOOD STANDING. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power and authority, corporate and other, to own,
lease and operate its properties and assets and to carry on its business as
currently conducted.
Section 3.2. AUTHORIZATION. The Company has full power and authority
(corporate and other) and legal capacity to execute and deliver this Agreement
and each other agreement, document, instrument or certificate contemplated by
this Agreement or to be executed by the Company in connection with the
consummation of the
transactions contemplated by this Agreement (this Agreement, together with
all such other agreements, documents, instruments and certificates required
to be executed by the Company being referred to herein, collectively, as the
"COMPANY DOCUMENTS"), and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement by the
Company has been duly authorized by the Board of Directors of the Company,
and no further corporate action on the part of the Company or its
shareholders is necessary to authorize this Agreement and the performance of
the transactions contemplated hereby. This Agreement has been, and each of
the other Company Documents will be at or prior to Closing, duly and validly
executed and delivered by the Company and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this
Agreement constitutes, and each of the other Company Documents when so
executed and delivered will constitute, legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding at
law or in equity).
Section 3.3. CAPITALIZATION. (a) As of the date hereof:
(i) all of the issued and outstanding shares of capital stock
of the Company were duly authorized for issuance and are validly issued, fully
paid and non-assessable;
(ii) EXHIBIT A fully and accurately describes the capital
structure of the Company and, except as set forth on EXHIBIT A, there are no
outstanding securities of the Company convertible into or evidencing the right
to purchase or subscribe for any shares of capital stock of the Company, there
are no outstanding or authorized options, warrants, calls, subscription rights,
commitments or other agreements of any character requiring, and there are no
securities outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional shares of capital stock of the
Company or other equity securities of the Company or other securities
convertible into, exchangeable for or evidencing the right to subscribe for or
purchase shares of capital stock of the Company or other equity securities of
the Company, or any stock appreciation rights, phantom stock or similar equity
equivalent rights issued by or binding upon the Company;
(iii) there are no voting trusts or other voting agreements
with respect to the capital stock of the Company or other ownership interests of
the Company or any agreement relating to the issuance, sale, redemption,
transfer or other disposition of any such interests of the Company to which the
Company is a party, or of which the Company has knowledge.; and
(iv) the Company controls the voting capital stock of
Nexbell Communications, Inc. ("Nexbell") and CPT-1 Holdings Inc.
Section 3.4. CORPORATE RECORDS; CONFLICTS; CONSENTS. The execution and
delivery by the Company of this Agreement and the other Company Documents, the
consummation of the transactions contemplated hereby or thereby, or compliance
by the Company with any of the provisions hereof or thereof will not (i)
conflict with, or result in the breach of, any provision of the Articles of
Incorporation or Bylaws of the Company; (ii) conflict with, violate, result in
the breach or termination of, or constitute a default under any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which the Company is a party or by which the Company or its properties or assets
are bound; (iii) violate any statute, rule, regulation, order or decree of any
Governmental Authority by which the Company is bound; or (iv) result in the
creation of any Lien (except as contemplated herein) upon the properties or
assets of the Company except, in case of clauses (ii), (iii) and (iv), for such
violations, breaches or defaults as would not, individually or in the aggregate,
have a Material Adverse Change. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any Person,
including without limitation any Governmental Authority, is required on the part
of the Company in connection with the execution, delivery and performance of
this Agreement or the other Company Documents, or the compliance by the Company
with any of the provisions hereof or thereof.
Section 3.5. REPORTS AND FINANCIAL STATEMENTS. (a) The Company and its
subsidiaries have been and are in compliance with all federal, state and local
laws, statutes, ordinances, rules and regulations (including without limitation
the Securities Act and the Securities Exchange Act of 1934, as amended) as of
the date hereof, the failure to comply with which could materially adversely
affect the business, assets, operations, earnings, prospects or condition
(financial or otherwise) of the Company or which would subject any officer or
director of the Company to civil or criminal penalties or imprisonment. The
Company has materially complied with the rules and regulations of all
governmental agencies having authority over its business or its operations,
including without limitation, agencies concerned with intra-state and interstate
commerce, occupational safety, environmental protection and employment
practices, except where the failure to comply would not have a material adverse
effect on the business, operations, earnings, assets or condition (financial or
otherwise) of the Company. The Company has no knowledge of and has not received
any notice of violation of any such rule or regulation during the two years
prior to the date hereof which could result in any liability of the Company for
penalties of damages or which could subject the Company to any injunction or
government writ, order or decree. To the best of the Company's knowledge, there
are no facts, events or conditions that could interfere with, prevent continued
compliance with or give rise to any material liability under any federal, state
or local governmental laws, statutes, ordinances or regulations applicable to
the business, operations, earnings, assets or condition (financial or otherwise)
of the Company.
(b) The audited financial statements of Nexbell for the year ended
July 31, 2000 and any unaudited interim financial statements of Nexbell through
and including January 31, 2001 (collectively, the "COMPANY FINANCIAL
STATEMENTS") have been prepared in accordance with the United States generally
accepted accounting principles ("GAAP") applied on a basis consistent with prior
periods and fairly presented the consolidated financial position of Nexbell as
of the dates thereof (subject, in the case of unaudited interim statements to
normal year-end adjustments and the absence of certain footnote disclosures).
(c) As of the date of this Agreement, except as set forth in the
Company Financial Statements or as previously disclosed in writing to the
Purchaser and prior to the date of this Agreement, to the Company's knowledge
neither the Company nor any of its subsidiaries is a party to or bound by (i)
any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) or (ii) any non-competition agreement or any other
agreement or arrangement that materially limits the Company or any of its
subsidiaries or any of their respective affiliates, or that would, after the
date hereof similarly limit Nexbell or the Company or any successor thereto,
from engaging or competing in any line of business or in any geographic area
after giving effect to the transactions contemplated hereby.
Section 3.6. ABSENCE OF UNDISCLOSED LIABILITIES; AFFILIATE TRANSACTIONS.
(a) Except for matters reflected or reserved against in the balance
sheet as of July 31, 2000 and January 31, 2001 included in the Company Financial
Statements or as previously disclosed in writing to the Purchaser, neither the
Company nor any of the Company Subsidiaries had at such date or has incurred
since that date any liabilities, obligations (whether absolute, accrued,
contingent or otherwise) or contingencies of any nature, except (i) liabilities,
obligations or contingencies (A) which are accrued or reserved against in the
Company Financial Statements or reflected in the notes thereto or (B) which were
incurred after July 31, 2000 and January 31, 2001 in the ordinary course of
business and consistent with past practices; or (ii) liabilities, obligations or
contingencies which are of a nature not required to be reflected in the
consolidated financial statements of the Company and the Company Subsidiaries
prepared in accordance with GAAP consistently applied and which were incurred in
the ordinary course of business. The Company and its subsidiaries are current in
the payment of all taxes.
(b) There are no other transactions, agreements, arrangements or
understandings between the Company or the Company Subsidiaries, on the one hand,
and the Company's affiliates (other than wholly-owned
subsidiaries of the Company) or other Persons, on the other hand, that would
be required to be disclosed under Item 404 of Regulation S-K promulgated
under the Securities Act.
Section 3.7. INTELLECTUAL PROPERTY. The Company owns, or has the right to
use (or believes, after due inquiry, that it can obtain the right to use on
reasonable commercial terms), all patents, patent applications, trademarks,
service names, trade names, copyrights, licenses, trade secrets or other
proprietary rights necessary to conduct its business as now being conducted and
as proposed to be conducted to the Company's knowledge without any conflict or
infringement of the rights of others and, except as set forth on Schedule 3.7
the Company has not received a notice that it is infringing upon or otherwise
acting adversely to the right or claimed right of any person under or with
respect to any of the foregoing, and to the Company's knowledge there is no
basis for any such claim. The Company has no patents or patent applications
issued, pending or issuable. The Company is not aware of any violation by a
third party of any of the Company's or its subsidiaries' patents, trademarks,
service marks, trade names, copyrights, trade secrets or other proprietary
rights. The Company is not aware that any of its employees is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
that would conflict with the Company's business as now being conducted and as
proposed to be conducted. Neither the execution nor delivery of this Agreement,
nor the conduct of the Company's business will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any employee is now obligated.
Section 3.8. LEGAL PROCEEDINGS. There are no legal proceedings pending or,
to the knowledge of the Company or its Affiliates, threatened that are
reasonably likely to prohibit or restrain the ability of the Company or its
Affiliates to enter into this Agreement or consummate the transactions
contemplated hereby or which otherwise would result in a Material Adverse
Change.
Section 3.9. NO MISREPRESENTATION. This Agreement (including the Exhibits
hereto) as of the date hereof contains no untrue statement of a material fact
nor omits a material fact necessary in order to make the statements contained
herein not misleading.
ARTICLE IV
Representations and Warranties Regarding the Purchaser and the Merger Sub
The Purchaser and the Merger Sub, jointly and severally, hereby represent and
warrant to the Company that:
Section 4.1. ORGANIZATION AND GOOD STANDING. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and the Merger Sub is a corporation duly organized
existing and in good standing under the laws of Delaware. The Purchaser and
Merger Sub have full power and authority (corporate and other) to own, lease and
operate its properties and assets and to carry on their business as currently
conducted.
Section 4.2. AUTHORIZATION. The Purchaser and Merger Sub have full power
and authority (corporate and other) and legal capacity to execute and deliver
this Agreement and each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by the Purchaser and/or the
Merger Sub in connection with the consummation of the transactions contemplated
by this Agreement (this Agreement, together with all such other agreements,
documents, instruments and certificates required to be executed by the Purchaser
and the Merger Sub being referred to herein, collectively, as the "PURCHASER AND
MERGER SUB DOCUMENTS"), and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance of this Agreement by the
Purchaser and the Merger Sub have been duly authorized by the Board of Directors
of the
Purchaser and Merger Sub, and no further corporate action on the part of the
Purchaser and the Merger Sub or its shareholders is necessary to authorize this
Agreement and the performance of the transactions contemplated hereby. This
Agreement has been, and each of the other Purchaser and Merger Sub Documents
will be at or prior to Closing, duly and validly executed and delivered by the
Purchaser and the Merger Sub and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each of the other Purchaser and the Merger Sub Documents when so executed
and delivered will constitute, legal, valid and binding obligations of the
Purchaser and the Merger Sub, enforceable against the Purchaser and the Merger
Sub in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
Section 4.3. CAPITALIZATION. (a) As of the date hereof:
(i) all of the issued and outstanding shares of capital stock
of the Purchaser and the Merger Sub were duly authorized for issuance and are
validly issued, fully paid and non-assessable;
(ii) EXHIBIT B fully and accurately describes the capital
structure of the Purchaser and the Merger Sub and, except as set forth on
EXHIBIT B, there are no outstanding securities of the Purchaser and the Merger
Sub convertible into or evidencing the right to purchase or subscribe for any
shares of capital stock of the Purchaser and the Merger Sub, there are no
outstanding or authorized options, warrants, calls, subscription rights,
commitments or other agreements of any character requiring, and there are no
securities outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional shares of capital stock of the
Purchaser and the Merger Sub or other equity securities of the Purchaser and the
Merger Sub or other securities convertible into, exchangeable for or evidencing
the right to subscribe for or purchase shares of capital stock of the Purchaser
and the Merger Sub or other equity securities of the Purchaser, or any stock
appreciation rights, phantom stock or similar equity equivalent rights issued by
or binding upon the Purchaser and the Merger Sub; and
(ii) there are no voting trusts or other voting agreements
with respect to the capital stock of the Purchaser and/or the Merger Sub or
other ownership interests of the Purchaser and the Merger Sub or any agreement
relating to the issuance, sale, redemption, transfer or other disposition of any
such interests of the Purchaser and/or the Merger Sub to which the Purchaser
and/or the Merger Sub are parties, or of which the Purchaser and the Merger Sub
have knowledge.
(b) Upon the consummation of the transactions contemplated hereby, all of the
Purchaser Common Stock issued as Merger Consideration hereunder will have
been and will be duly authorized, validly issued, fully paid and
nonassessable, and free and clear of all liens. All shares of Purchaser
Common Stock shall have been issued in material compliance with all
applicable federal and state securities laws and regulations.
Section 4.4. CORPORATE RECORDS; CONFLICTS; CONSENTS. Except as set forth
in the attached Schedule 4.4, the execution and delivery by the Purchaser and
the Merger Sub of this Agreement and the other Purchaser and the Merger Sub
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by the Purchaser and the Merger Sub with any of the provisions
hereof or thereof will not (i) conflict with, or result in the breach of, any
provision of the Articles of Incorporation or Bylaws of the Purchaser or the
Merger Sub; (ii) conflict with, violate, result in the breach or termination of,
or constitute a default under any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which the Purchaser or the Merger
Sub is a party or by which the Purchaser or the Merger Sub or their properties
or assets are bound; (iii) violate any statute, rule, regulation, order or
decree of any Governmental Authority by which the Purchaser and/or the Merger
Sub is bound; or (iv) result in the creation of any Lien (except as contemplated
herein) upon the properties or assets of the Purchaser and/or the Merger Sub
except, in case of clauses (ii), (iii) and (iv), for such violations, breaches
or defaults as would not, individually or in the aggregate, have a Material
Adverse Change. No consent, waiver, approval, order, permit or authorization of,
or declaration or filing with, or notification to, any Person, including without
limitation any Governmental Authority, is required on the part of the Purchaser
and/or the Merger Sub in
connection with the execution, delivery and performance of this Agreement or
the other Purchaser and the Merger Sub Documents, or the compliance by the
Purchaser and the Merger Sub with any of the provisions hereof or thereof.
Section 4.5. REPORTS AND FINANCIAL STATEMENTS.
(a) Since January 1, 1996, the Purchaser has filed with the
Securities and Exchange Commission (the "SEC") all forms, statements, reports
and documents (including all exhibits, post-effective amendments and supplements
thereto) required to be filed by it under each of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
respective rules and regulations promulgated thereunder, all of which, as
amended (if applicable), complied in all material respects, when filed with all
applicable requirements of the appropriate act and the rules and regulations
thereunder. The Purchaser has previously delivered or made available to Company
copies (including all exhibits, post-effective amendments and supplements
thereto) of its (i) Annual Reports on Form 10-K for the years ended December 31,
2000, December 31, 1999 and December 31, 1998, as filed with the SEC; (ii)
definitive proxy and information statements relating to all meetings of its
stockholders (whether annual or special) from December 31, 1998 until the date
hereof; and (iii) all other reports, including quarterly reports, and
registration statements filed by the Purchaser with the SEC since December 31,
1998 (other than registration statements filed on Form S-8) (the documents
referred to in clauses (i), (ii) and (iii) being referred to as the "PURCHASER
SEC REPORTS"). As of their respective dates (or to the extent amended or
superseded by a subsequent filing, with respect to the information in such
subsequent filing, or as of the date of the subsequent filing), the Purchaser
SEC Reports did not or will not (as the case may be) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements of the Purchaser included in the Purchaser's
Annual Report on Form 10-K for the years ended December 31, 2000, December 31,
1999 and December 31, 1998 (collectively, the "PURCHASER FINANCIAL STATEMENTS")
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a basis consistent with prior periods
and fairly presented the consolidated financial position of the Purchaser and
the Purchaser Subsidiaries as of the dates thereof and the related consolidated
statement of operations, cash flows and stockholders' equity included in the
Purchaser SEC Reports fairly presented the consolidated results of operations of
the Purchaser and the Purchaser Subsidiaries for the respective periods then
ended (subject, in the case of unaudited interim statements to normal year-end
adjustments and the absence of certain footnote disclosures).
(c) The audited consolidated financial statements of the Purchaser
included in the Purchaser's Annual Report on Form 10-K for the years ended
December 31, 2000, December 31, 1999 and December 31, 1998 and any interim
financial statements of the Purchaser since December 31, 2000 (collectively, the
"PURCHASER FINANCIAL STATEMENTS") have been prepared in accordance with the
United States generally accepted accounting principles ("GAAP") applied on a
basis consistent with prior periods and fairly presented the consolidated
financial position of the Purchaser as of the dates thereof and the related
consolidated statement of operations, cash flows and stockholders' equity
included in the Purchaser SEC Reports fairly presented the consolidated results
of operations of the Purchaser for the respective periods then ended (subject,
in the case of unaudited interim statements to normal year-end adjustments and
the absence of certain footnote disclosures).
(d) As of the date of this Agreement, except as set forth in the
Purchaser's Annual Report for the year ended December 31, 2000 or in any other
Purchaser SEC Report filed since that Annual Report or as previously disclosed
in writing to the Company and prior to the date of this Agreement, neither the
Purchaser nor any of its subsidiaries is a party to or bound by (i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) or (ii) any non-competition agreement or any other agreement or
arrangement that limits the Purchaser or any of its subsidiaries or any of their
respective affiliates, or that would, after the date hereof similarly limit the
Purchaser or the Company or any successor thereto, from engaging or
competing in any line of business or in any geographic area after giving effect
to the transactions contemplated hereby.
Section 4.6. ABSENCE OF UNDISCLOSED LIABILITIES; AFFILIATE TRANSACTIONS.
(a) Except for matters reflected or reserved against in the balance
sheet for the period ended December 31, 2000 included in the Purchaser Financial
Statements or as previously disclosed in writing to the Company, neither the
Purchaser nor any of the Purchaser Subsidiaries (including the Merger Sub) had
at such date or has incurred since that date any liabilities, obligations
(whether absolute, accrued, contingent or otherwise) or contingencies of any
nature, except (i) liabilities, obligations or contingencies (A) which are
accrued or reserved against in the Purchaser Financial Statements or reflected
in the notes thereto or (B) which were incurred after December 31, 2000 in the
ordinary course of business and consistent with past practices; or (ii)
liabilities, obligations or contingencies which are of a nature not required to
be reflected in the consolidated financial statements of the Purchaser and the
Purchaser Subsidiaries prepared in accordance with GAAP consistently applied and
which were incurred in the ordinary course of business. The Purchaser and the
Merger Sub are current in the payment of all taxes.
(e) Except as specifically disclosed in the Purchaser SEC Reports
filed prior to the date of this Agreement or as previously disclosed in writing
to the Company, there are no other transactions, agreements, arrangements or
understandings between the Purchaser or the Purchaser Subsidiaries (including
the Merger Sub), on the one hand, and the Purchaser's affiliates (other than
wholly-owned subsidiaries of the Purchaser) or other Persons, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K
promulgated under the Securities Act.
Section 4.7. INTELLECTUAL PROPERTY. The Purchaser and the Merger Sub own,
or have the right to use (or believes, after due inquiry, that it can obtain the
right to use on reasonable commercial terms), all patents, patent applications,
trademarks, service names, trade names, copyrights, licenses, trade secrets or
other proprietary rights necessary to conduct their business as now being
conducted and as proposed to be conducted to the Purchaser's and Merger Sub's
knowledge without any conflict or infringement of the rights of others and the
Purchaser, except as disclosed on Schedule 4.7, has not received a notice that
it is infringing upon or otherwise acting adversely to the right or claimed
right of any person under or with respect to any of the foregoing, and to the
Purchaser's and the Merger Sub's knowledge there is no basis for any such claim.
The Purchaser and the Merger Sub have disclosed to Counsel a complete list of
patents and pending patent applications of the Purchaser and the Merger Sub.
Neither the Purchaser nor the Merger Sub is aware of any violation by a third
party of any of the Purchaser's or Merger Sub's patents, trademarks, service
marks, trade names, copyrights, trade secrets or other proprietary rights.
Neither the Purchaser nor the Merger Sub is aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
the Purchaser and/or the Merger Sub or that would conflict with the Purchaser's
and the Merger Sub's business as now being conducted and as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the conduct
of the Purchaser's and Merger Sub's businesses will, to the Purchaser's and
Merger Sub's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated.
Section 4.8. LEGAL PROCEEDINGS. Except as set forth in the attached
Schedule 4.8, there are no Legal Proceedings pending or, to the knowledge of the
Purchaser and the Merger Sub, threatened that are reasonably likely to prohibit
or restrain the ability of the Purchaser and the Merger Sub to enter into this
Agreement or consummate the transactions contemplated hereby or which otherwise
would result in a Material Adverse Change.
Section 4.9. NO MISREPRESENTATION. Neither this Agreement (including the
Exhibits hereto), nor (as of the date hereof) any Purchaser SEC Report contains
any untrue statement of a material fact nor omits a material fact necessary in
order to make the statements contained herein or therein not misleading.
ARTICLE V
Covenants and Agreements
Section 5.1. ACCESS AND INFORMATION. Prior to the Closing, each of the
parties shall be entitled to make or cause to be made such investigation of the
other party hereto, and the financial and legal condition thereof, as such
investigating party deems reasonably necessary or advisable, and the other party
hereto shall cooperate with any such investigation. In furtherance of the
foregoing, but not in limitation thereof, each party shall permit the other
party hereto and its agents and representatives or cause them to be permitted to
have full and complete access to its premises, books and records upon reasonable
notice during regular business hours and shall furnish such financial and
operating data, projections, forecasts, business plans, strategic plans and
other data relating to itself and its business as the other party hereto shall
reasonably request from time to time. Prior to the Closing, the parties hereto
agree that except as otherwise required by law, any and all public announcements
or other communications concerning this Agreement and the transactions
contemplated hereby shall be subject to the prior written approval of each of
the parties hereto.
Section 5.2. COMPANY AFFIRMATIVE COVENANTS. Prior to the Closing, except
as otherwise expressly provided herein, the Company shall, except as otherwise
contemplated by this Agreement, conduct its business only in the ordinary and
regular course of business.
Section 5.3. COMPANY NEGATIVE COVENANTS. Prior to the Closing, without the
prior written consent of the Purchaser, except as otherwise expressly provided
herein, the Company shall not enter into any contract, agreement or commitment
(other than in the ordinary course of business) which, if entered into prior to
the date of this Agreement, would cause any representation or warranty of the
Company or Counsel to be untrue in any material respect or be required to be
disclosed on any Schedule delivered pursuant to Article III hereof.
Section 5.4 PURCHASER AND MERGER SUB NEGATIVE COVENANTS. Prior to the
Closing, without the prior written consent of the Company, except as otherwise
expressly provided herein, the Purchaser will conduct its business only in the
ordinary and regular course of business consistent with past practices and the
Merger Sub will not conduct any material business or incur any material
liabilities.
Section 5.5. CLOSING DOCUMENTS. The Company shall, prior to or on the
Closing Date, execute and deliver, or cause to be executed and delivered to the
Purchaser, the documents or instruments described in Section 6.2. The Purchaser
and Merger Sub shall, prior to or on the Closing Date, execute and deliver, or
cause to be executed and delivered, to the Company, the documents or instruments
described in Section 6.3.
Section 5.6. BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms and
conditions herein provided, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement. Each of the parties hereto will use its respective best
efforts to obtain consents of all Governmental Authorities and third parties
necessary to the consummation of the transactions contemplated by this
Agreement. In the event that at any time after Closing any further action is
reasonably necessary to carry out the purposes of this Agreement, each of the
parties hereto shall take all such action without any further consideration
therefor.
Section 5.7. REORGANIZATION TREATMENT. Neither the Purchaser nor the
Company shall intentionally take, or fail to take or cause to be taken or not be
taken, any action within its control, whether before or after the Effective
Time, which it has reason to believe after consultation with its advisors would
disqualify the Merger as a "reorganization" within the meaning of Section 368(a)
of the Code.
Section 5.8. APPROVAL BY PURCHASER. The Purchaser, in its capacity as the
sole stockholder of Merger Sub, shall vote the shares of Merger Sub to approve
and adopt the Merger, this Agreement and the transactions contemplated hereby,
and shall cause Merger Sub to take any and all actions as may be necessary or
appropriate to consummate the Merger and the other transactions contemplated
hereby in accordance with the terms hereof.
Section 5.9. REGISTRATION RIGHT AND OTHER BENEFITS. Counsel shall be
afforded the same registration rights and other benefits with respect to the
Restricted Stock issued by the Purchaser hereunder as are set forth in the
Securities Support Agreement dated as of March ___, 2001 by and among Counsel
and the Purchaser, including the Exhibits attached thereto.
Section 5.10 EXPENSE REIMBURSEMENT. Promptly upon demand, whether prior
to, or subsequent to, the Closing, the Purchaser hereby agrees to reimburse
Counsel and its Affiliates for their expenses in connection with this
transaction and any and all out-of-pocket expenses incurred by Counsel and its
Affiliates with respect to the Company and/or the Purchaser on an ongoing basis
in the course of their activities as Affiliates with the Purchaser, provided
however that amounts related to engagements by Counsel of third party advisors
related to activities of the Company, where such amounts are in excess of
$5,000, shall be pre-approved by the Purchaser.
ARTICLE VI
Conditions to Closing
Section 6.1. MUTUAL CONDITION. The respective obligations of each party to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to Closing of the condition that no Governmental
Authority of competent jurisdiction shall have (i) enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order which is in effect; or (ii) commenced or threatened any action or
proceeding, which in the case of either clause (i) or (ii) would prohibit
consummation of the transactions contemplated by this Agreement.
Section 6.2. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND MERGER SUB.
The obligations of the Purchaser and Merger Sub to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment prior to or
at Closing of each of the following conditions:
(a) All representations and warranties made by the Company and Counsel in
this Agreement and the Schedules hereto shall be true, correct and complete on
the date hereof and as of the Closing Date as though such representations and
warranties were made as of the Closing Date (except for representations and
warranties made as of a specified date, which shall have been true, correct and
complete as of such specified date), and the Company shall have duly performed
or complied with all of the covenants, obligations and conditions to be
performed or complied with by them under the terms of this Agreement on or prior
to or at Closing.
(b) The Purchaser shall have received a certificate from the Secretary or
the Assistant Secretary of the Company in form reasonably satisfactory to the
Purchaser attesting to the matters described in clause (a) above.
(c) The Company shall have delivered such other closing documents as shall
be requested by the Purchaser in form and substance reasonably acceptable to the
Purchaser's counsel, including the following:
(i) a certificate of the Secretary or Assistant Secretary of the
Company, dated the Closing Date, as to the incumbency of any officer of the
Company executing this Agreement or any document related thereto and covering
such other matters as the Purchaser may reasonably request;
(ii) a certified copy of (A) the Certificate of Incorporation and
by-laws of the Company and all amendments thereto, (B) the resolutions of the
Company's Board of Directors
authorizing the execution, delivery and consummation of this Agreement and the
transactions contemplated hereby and thereby and (C) the written consent of a
majority of the holders of Company Common Stock authorizing the execution,
delivery and consummation of this Agreement and the Merger;
(iii) such other documents or instruments as the Purchaser
reasonably requests to effect the authorization and validity of the transactions
contemplated hereby.
Section 6.3. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations
of the Company to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing of each of the
following conditions:
(a) All representations and warranties made by the Purchaser and Merger
Sub in this Agreement shall be true, correct and complete on the date hereof and
as of the Closing Date as though such representations and warranties were made
as of the Closing Date except for representations and warranties as of a
specified date, which shall have been true, correct and complete as of such
specified date), and the Purchaser and Merger Sub shall have duly performed or
complied with all of the covenants, obligations and conditions to be performed
or complied with by it under the terms of this Agreement on or prior to or at
the Closing.
(b) The Company shall have received a certificate from a duly authorized
officer of the Purchaser and the Merger Sub in form reasonably satisfactory to
the Company attesting to the matters described in clause (a) above.
(c) Prior to or at the Closing, the Purchaser and the Merger Sub shall
have delivered to the Company such closing documents as shall be reasonably
requested by the Company in form and substance reasonably acceptable to its
counsel, including the following:
(i) certificates of the Secretary or Assistant Secretary of each of
the Purchaser and Merger Sub, dated the Closing Date, as to the incumbency of
any officer of the Purchaser or Merger Sub, as applicable, executing this
Agreement or any document related thereto and covering such other matters as the
Company may reasonably request;
(ii) certified copies of (1) the Certificate of Incorporation and
by-laws of each of the Purchaser and Merger Sub and all amendments thereto, and
(2) the resolutions of the Board of Directors of each of the Purchaser and
Merger Sub authorizing the execution, delivery and consummation of this
Agreement and the transactions contemplated hereby and thereby; and
(iii)such other documents or instruments as the Company reasonably
requests to effect the transactions contemplated hereby.
ARTICLE VII
Termination
Section 7.1. TERMINATION. This Agreement may be terminated at any
time prior to Closing as follows:
(a) by joint consent of the Company and the Purchaser;
(b) by the Company, if the Purchaser or Merger Sub shall breach in any
material respect any of their respective representations, warranties or
obligations contained in this Agreement;
(c) by the Purchaser if the Company and Counsel shall breach in any
material respect any of their
respective representations, warranties or obligations contained in this
Agreement;
(d) by either the Purchaser or the Company, if any authorization, consent,
waiver or approval required for the consummation of the transactions
contemplated hereby shall impose any condition or requirement, which condition
or requirement such party determines, in its good faith judgment, to be
materially burdensome or to deny to such party in any material respect the
benefits intended to be obtained by such party pursuant to the transactions
contemplated by this Agreement; or
(e) by either the Purchaser or the Company if the transactions contemplated
by this Agreement shall not have been consummated on or before the date that is
ninety (90) days from the date of this Agreement (or such later date as may be
agreed upon in writing by the parties hereto).
Section 7.1. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 7.1 hereof, all rights and obligations of the parties
hereunder shall terminate and no party shall have any liability to the other
party, except for obligations of the parties hereto in Sections 5.1 and 9.2,
which shall survive the termination of this Agreement, and except nothing herein
will relieve any party from liability for any breach of any representation,
warranty, agreement or covenant contained herein prior to such termination.
ARTICLE VIII
Survival of Representations and Warranties; Indemnification
Section 8.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties provided for in this Agreement shall survive the
Closing for a period of three (3) years (the "Survival Period").
Section 8.2. INDEMNIFICATION. (a) Counsel shall indemnify and hold
harmless the Purchaser, its Affiliates, officers, directors, employees, agents,
counsel and representatives, and any Person claiming by or through any of them,
against and in respect of any and all claims, costs, expenses, damages,
liabilities, losses or deficiencies (including, without limitation, counsel's
fees and other costs and expenses incident to any suit, action or proceeding)
(the "Damages") arising out of, resulting from or incurred in connection with
any inaccuracy in any representation or the breach of any warranty made by the
Company in this Agreement for the applicable Survival Period (disregarding, for
this purpose, any materiality limitation contained therein).
(b) The Purchaser shall indemnify and hold harmless, each of the Company
and Counsel and the other holders of Company Common Stock, their respective
Affiliates, agents , counsel and representatives, and any Person claiming by or
through any of them, against and in respect of any and all Damages arising out
of, resulting from or incurred in connection with (i) any inaccuracy in any
representation or the breach of any warranty made by the Purchaser; or the
Merger Sub in this Agreement for the applicable Survival Period, (disregarding,
for this purpose, any materiality limitation contained therein), or (ii) the
breach by the Purchaser or the Merger Sub of any covenant or agreement to be
performed by either of them hereunder.
(c) Any Person providing indemnification pursuant to the provisions of
this Section 8.2 is hereinafter referred to as an "Indemnifying Party" and any
Person entitled to be indemnified pursuant to the provisions of this Section 8.2
is hereinafter referred to as an "Indemnified Party."
Section 8.3. PROCEDURES FOR THIRD PARTY CLAIMS. In the case of any claim
for indemnification arising from a claim of a third party (a "Third Party
Claim"), an Indemnified Party shall give prompt written notice to the
Indemnifying Party of any claim or demand of which such Indemnified Party has
knowledge and as to which it may request indemnification hereunder.
Notwithstanding the provisions of this Section 8.3, the Indemnifying Party's and
its Affiliates' aggregate liability for any such Third Party Claim shall in any
event be limited to the amount set forth in Section 8.4 of this Agreement. The
Indemnifying Party shall have the right to defend and to direct the defense
against any such Third Party Claim, in its name or in the name of the
Indemnified Party, as the case may be, at the expense of the Indemnifying Party,
and with counsel selected by the Indemnifying Party unless (i) such Third Party
Claim seeks an order, injunction or other equitable relief against the
Indemnified Party, or (ii) the Indemnified Party shall have reasonably concluded
that (x) there is a conflict of interest between the Indemnified Party and the
Indemnifying Party in the conduct of the defense of such Third Party Claim or
(y) the Indemnified Party has one or more defenses not available to the
Indemnifying Party. Notwithstanding anything in this Agreement to the contrary,
the Indemnified Party shall, at the expense of the Indemnifying Party, cooperate
with the Indemnifying Party, and keep the Indemnifying Party fully informed, in
the defense of such Third Party Claim. The Indemnified Party shall have the
right to participate in the defense of any Third Party Claim with counsel
employed at its own expense; PROVIDED, HOWEVER, that, in the case of any Third
Party Claim described in clause (i) or (ii) of the second preceding sentence or
as to which the Indemnifying Party shall not in fact have employed counsel to
assume the defense of such Third Party Claim, the reasonable fees and
disbursements of such counsel shall be at the expense of the Indemnifying Party.
The Indemnifying Party shall have no indemnification obligations with respect to
any Third Party Claim which shall be settled by the Indemnified Party without
the prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
Section 8.4. PROCEDURES FOR INTER-PARTY CLAIMS. In the event that an
Indemnified Party determines that it has a claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such claim and any relevant facts
and circumstances relating thereto. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its books and records for the
purpose of allowing the Indemnifying Party a reasonable opportunity to verify
any such claim for Damages. The Indemnified Party and the Indemnifying Party
shall negotiate in good faith regarding the resolution of any disputed claims
for Damages. Promptly following the final determination of the amount of any
Damages claimed by the Indemnified Party, the Indemnifying Party shall pay such
Damages to the Indemnified Party by wire transfer or check made payable to the
order of the Indemnified Party, without interest. In the event that the
Indemnified Party is required to institute legal proceedings in order to recover
Damages hereunder, the cost of such proceedings (including costs of
investigation and reasonable attorneys' fees and disbursements) shall be added
to the amount of Damages payable to the Indemnified Party. No Indemnifying
Party's and its Affiliates' aggregate liability, i.e. the amount of Damages
payable, under this Section 8.4, shall exceed $ (excluding (i) liabilities for
taxes (ii) liabilities arising from knowing misrepresentations or fraud and
(iii) claims for breach of the representations and warranties contained in
Section 3.5).
Section 8.5. PAYMENT OF DAMAGES. To the extent that Counsel is liable for
any Damages as the Indemnifying Party hereunder, such Damages be shall be funded
solely from Merger Shares returned by Counsel in an amount such that the total
Merger Shares so returned by Counsel shall equal the amount of such Damages,
with the value of such shares to be the higher of the fair market value thereof
or $0.56 per share.
ARTICLE IX
Miscellaneous
Section 9.1. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given when so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
If to the Purchaser: I-Link Incorporated
00000 X. Xxxxxxxxx Xxxx Xxxxx Xxxxx 000
Xxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000 0000
Attention: Xxxx Xxxxxxx, President
With a copy to: Xx Xxxxxxx Xxxxxxxxxxx Xxxxx & Xxxxx
Xxxxx 000, 0000 X Xxxxxx, X.X.
Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx 00000
Telephone: (000)000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xx Xxxxxxx
If to the Company: WebToTel Inc.
c/o Counsel Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx, Chairman
With a copy to: Xxxxxxxx Xxxxx & Deutsch LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 9.2. EXPENSES. Except as otherwise specifically provided in this
Agreement (including, without limitation, Section 5.10 hereof, which provides
for payment by the Purchaser of Counsel's and its Affiliates' expenses), each
party will pay its own expenses incident to this Agreement and the transactions
contemplated hereby, including legal and accounting fees and disbursements. Any
payments for sales, transfer or other taxes or fees applicable to the conveyance
and transfer to the holders of Company Common Stock of the Merger Consideration
shall be borne by the Purchaser. The provisions of this Section shall survive
any termination of this Agreement.
Section 9.3. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State
of
Delaware, without reference to the choice of law principles thereof. Each of
the parties hereto irrevocably submits to the non-exclusive jurisdiction of the
courts of the State of
Delaware and the United States District Court for the
District of
Delaware for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this Agreement and the transactions contemplated
hereby. Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this Agreement. Each of
the parties hereto irrevocably consents to the jurisdiction of any such court in
any such suit, action or proceeding and to the laying of venue in such court.
Each party hereto irrevocably waives any objection to the laying of venue of any
such suit, action or proceeding brought in such courts and irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
Section 9.4. ASSIGNMENT; SUCCESSORS AND ASSIGNS; NO THIRD PARTY RIGHTS.
Except as otherwise provided herein, this Agreement may not be assigned by
operation of law or otherwise, and any attempted assignment shall be null and
void. The Purchaser may assign all of its rights under this Agreement to any
Affiliate; PROVIDED such Affiliate assumes all of the obligations of the
Purchaser hereunder; and PROVIDED further that the Purchaser shall remain liable
for such Affiliate's failure to meet any of the obligations of Purchaser
hereunder. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective heirs, successors, assigns and legal
representatives and is not intended, nor shall be construed, to give any Person,
other than the parties hereto and their respective heirs, successors, assigns
and legal
representatives, any legal or equitable right, remedy or claim hereunder.
Section 9.5. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 9.6. TITLES AND HEADINGS. The headings in this Agreement are for
reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 9.7. ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits attached thereto, constitutes the entire agreement among the
parties with respect to the matters covered hereby and supersedes all previous
written, oral or implied understandings among them with respect to such matters.
Section 9.8. AMENDMENT AND MODIFICATION. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 9.9 WAIVER. Any of the terms or conditions of this Agreement may
be waived at any time by the party or parties entitled to the benefit thereof,
but only by a writing signed by the party or parties waiving such terms or
conditions.
Section 9.10. SEVERABILITY. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If
it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, such restriction shall
be enforced to the maximum extent permitted by law.
Section 0.00.XX STRICT CONSTRUCTION. Each party hereto acknowledges that
this Agreement has been prepared jointly by the parties hereto, and shall not
be strictly construed against either party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
I-LINK INCORPORATED
By:______________________________
Title:
I-LINK ACQUISITION CORP.
By:______________________________
Title:
WEBTOTEL INC.
By:______________________________
Title:
COUNSEL COMMUNICATIONS LLC
By:______________________________
Title:
