Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AMONG XXXXXXXXXXXXX.XXX, HCC ACQUISITION CORP.
AND XXXXXXXX.XXX, INC.
This Agreement and Plan of Reorganization and Merger ("Agreement") is made
as of March 15, 2000 among XxxxxxXxxxxxx.xxx, a Delaware corporation ("HCC"),
HCC Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
HCC ("Acquisition Corp."), and Xxxxxxxx.xxx, Inc., a Delaware corporation
("VCI").
RECITAL:
The parties hereto desire that Acquisition Corp. be merged with and into
VCI; that VCI be the surviving corporation and become a wholly-owned
subsidiary of HCC; and that the shares of capital stock of VCI outstanding
immediately prior to the Effective Time of the merger, other than those shares
subject to a demand for appraisal pursuant to Section 262 of the Delaware
General Corporation Law (the "DCL"), be converted as set forth in this
Agreement into shares of common stock of HCC ("HCC common stock").
NOW THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall, for purposes of this Agreement,
have the meanings specified in this Article I unless the context requires
otherwise:
1.1 Acquisition Proposal. "Acquisition Proposal" shall have the meaning set
forth in Section 5.4(a) of this Agreement.
1.2 Affiliate Agreement. "Affiliate Agreement" shall mean the Affiliate
Agreement in the form of Exhibit F attached to this Agreement.
1.3 Affiliates. "Affiliates" of any party to the Agreement shall be persons
that directly or indirectly through one or more intermediaries, control, or
are controlled by, or are under common control with, such party.
1.4 Cause. "Cause" shall mean for purposes of Section 2.10, (i) intentional
failure to perform duties as a director of HCC after written notice thereof
from HCC to the director and the failure to cure within thirty (30) days of
receipt of such notice; (ii) intentional misrepresentation or the commission
of an act of fraud in the performance of duties as a director of HCC; (iii)
breach of fiduciary duty involving personal profit including, without
limitation, embezzlement, misrepresentation or conversion of assets or
opportunities of HCC; (iv) willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) in connection with the
performance of duties as a director; or (v) a director, together with his or
her Affiliates, owns less than fifty percent (50%) of the total number of
shares of HCC Common Stock owned by them immediately following consummation of
the Merger and the related transactions contemplated under this Agreement.
1.5 Certificates. "Certificates" shall have the meaning set forth in
Section 2.6(c) of this Agreement.
1.6 Closing. "Closing" shall mean the delivery by the parties hereto of the
various documents contemplated by this Agreement or otherwise required in
order to consummate the Merger.
1.7 Closing Date. "Closing Date" shall have the meaning set forth in
Section 2.2 of this Agreement.
1.8 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.9 Dissenting VCI Shares. "Dissenting VCI Shares" shall mean all shares,
if any, of the outstanding capital stock of VCI for which appraisal rights
shall be perfected under Section 262 of the DCL.
1.10 Effective Time. "Effective Time" shall mean the time when the Merger
becomes effective under the DCL.
1.11 Effectiveness Period. "Effectiveness Period" shall have the meaning
set forth in Section 6.14(a) of this Agreement.
1.12 Escrow Agreement. "Escrow Agreement" shall mean the Agreement relating
to an escrow of certain shares of HCC common stock pursuant to Section 2.4 of
this Agreement, in the form attached to this Agreement as Exhibit C.
1.13 Escrow Fund. "Escrow Fund" shall have the meaning set forth in Section
2.4 of this Agreement.
1.14 Escrow Holder. "Escrow Holder" shall mean U.S. Bank Trust National
Association.
1.15 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.16 Exchange Agent. "Exchange Agent" shall have the meaning set forth in
Section 2.6(a) of this Agreement.
1.17 Exchange Ratio. "Exchange Ratio" shall have the meaning set forth in
Section 2.3 of this Agreement.
1.18 GAAP. "GAAP" shall mean United States generally accepted accounting
principles.
1.19 Governmental Entity. "Governmental Entity" means any government,
municipality or political subdivision thereof, whether federal, state, local
or foreign, or any governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality or public body, or any
court, arbitrator, administrative tribunal or public utility.
1.20 Hazardous Material. "Hazardous Material" shall have the meaning set
forth in Section 3.18(a) of this Agreement.
1.21 Hazardous Materials Activities. "Hazardous Materials Activities" shall
have the meaning set forth in Section 3.18(b) of this Agreement.
1.22 HCC Disclosure Schedule. "HCC Disclosure Schedule" shall have the
meaning set forth in Article IV of this Agreement.
1.23 HCC Employee Benefit Plans. "HCC Employee Benefit Plans" shall have
the meaning set forth in Section 4.13 of this Agreement.
1.24 HCC ERISA Affiliate. "HCC ERISA Affiliate" shall have the meaning set
forth in Section 4.13(a) of this Agreement.
1.25 HCC Parties. "HCC Parties" shall have the meaning set forth in Section
9.2(a) of this Agreement.
1.26 HCC SEC Reports "HCC SEC Reports" shall have the meaning set forth in
Section 4.5(a) of this Agreement.
1.27 Holders. "Holders" shall mean the holders of VCI capital stock
immediately prior to the Effective Time.
1.28 HSR Act. "HSR Act" means The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
1.29 Indemnified Party. "Indemnified Party" shall mean the HCC Parties or
the VCI Parties, as the case may be, who or which are asserting a claim for
indemnification under Section 9.2 or 9.3 hereof.
1.30 Indemnifying Party. "Indemnifying Party" shall mean the HCC Parties or
the VCI Parties, as the case may be, against whom or which an indemnification
claim has been asserted under Section 9.2 or 9.3 hereof.
1.31 Intellectual Property. "Intellectual Property" shall have the meaning
set forth in Section 3.11(a) of the Agreement.
1.32 Loss or Losses. "Loss" or "Losses" shall have the meaning set forth in
Section 9.2(a) of this Agreement.
1.33 Material Adverse Effect. "Material Adverse Effect" means, with respect
to a party, a material adverse change in the assets, liabilities, business,
financial condition or the results of operations of such party and its
Subsidiaries, taken as a whole. The parties acknowledge and agree that (i) VCI
and HCC are both engaged in Internet-based start-up enterprises that are in
highly competitive and dynamic markets; (ii) because of the volatility in these
markets, VCI and HCC are each subject to a variety of external factors that can
impact their businesses in a very quick time frame with potential significant
effects on their assets, liabilities, business, financial conditions and
results of operations; and (iii) accordingly, changes in the assets,
liabilities, business, financial conditions or results of operations of either
VCI or HCC arising out of external factors or economic conditions that affect
the industry generally shall not be a "Material Adverse Effect" for purposes of
this Agreement.
1.34 Merger. "Merger" shall mean the merger of Acquisition Corp. with and
into VCI.
1.35 Merger Agreement. "Merger Agreement" shall mean the Agreement of Merger
in the form attached to this Agreement as Exhibit A.
1.36 Merger Shares. "Merger Shares" shall have the meaning set forth in
Section 6.14(a) of this Agreement.
1.37 Most Recent VCI Balance Sheet. "Most Recent VCI Balance Sheet" shall
have the meaning set forth in Section 3.6 of this Agreement.
1.38 Most Recent HCC Balance Sheet. "Most Recent HCC Balance Sheet" shall
have the meaning set forth in Section 4.5(b) of this Agreement.
1.39 1933 Act. "1933 Act" shall mean the Securities Act of 1933, as amended.
1.40 Numerator. "Numerator" shall have the meaning set forth in Section
2.3(a) of this Agreement.
1.41 Ordinary Course of Business. "Ordinary Course of Business" shall have
the meaning set forth in Section 3.7 of this Agreement.
1.42 Permits. "Permits" shall have the meaning set forth in Section 3.19 of
this Agreement.
1.43 Proxy Statement. "Proxy Statement" shall mean the proxy statement to be
mailed to the stockholders of HCC in connection with the Merger in order to
obtain the approval of the stockholders of HCC as required by the rules of the
Nasdaq National Market.
1.44 Registrable Securities. "Registrable Securities" shall have the
meaning set forth in Section 6.14(b)(ii) of this Agreement.
1.45 Registration Expenses. "Registration Expenses" shall have the meaning
set forth in Section 6.14(c) of this Agreement.
1.46 Registration Statement. "Registration Statement" shall have the
meaning set forth in Section 6.14(a) of this Agreement.
1.47 Rule 145 Affiliate. "Rule 145 Affiliate" shall have the meaning set
forth in Section 6.8 of this Agreement.
1.48 SEC. "SEC" shall mean the Securities and Exchange Commission.
1.49 Security Interest. "Security Interest" shall have the meaning set
forth in Section 3.10 of this Agreement.
1.50 Selling Expenses. "Selling Expenses" shall have the meaning set forth
in Section 6.14(c) of this Agreement.
1.51 Stockholder Representative. "Stockholder Representative" shall mean
the individual authorized by the stockholders of VCI to act as the
representative of the stockholders of VCI under this Agreement and in
connection with the transactions contemplated herein, and any substitute
representatives selected in accordance with the Written Consent and Agreement.
1.52 Subsidiary. "Subsidiary" shall mean, with respect to a particular
party hereto, any corporation or other organization, whether incorporated or
unincorporated, of which at least a majority of the securities or interests
are directly or indirectly owned by such party or by one or more Subsidiaries
of such party.
1.53 Taxes. "Taxes" means all taxes, charges, fees, levies or other similar
assessments or liabilities, including without limitation income, gross
receipts, ad valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the
United States or any such government, and any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof.
1.54 Tax Returns. "Tax Returns" means all reports, returns, declarations,
statements or other information required to be supplied to a taxing authority
in connection with Taxes.
1.55 Underwritten Offering. "Underwritten Offering" shall mean an offering
of Merger Shares pursuant to a Registration Statement that is effected in the
form of a registration statement pursuant to which the Merger Shares are sold
to an underwriter for reoffering to the public.
1.56 VCI Disclosure Schedule. "VCI Disclosure Schedule" shall have the
meaning set forth in Article III of this Agreement.
1.57 VCI Employee Benefit Plans. "VCI Employee Benefit Plans" shall have
the meaning set forth in Section 3.17 of this Agreement.
1.58 VCI ERISA Affiliate. "VCI ERISA Affiliate" shall have the meaning set
forth in Section 3.17(a) of this Agreement.
1.59 VCI Parties. "VCI Parties" shall have the meaning set forth in Section
9.3 of this Agreement.
1.60 Voting Agreement. "Voting Agreement" shall have the meaning set forth
in Section 2.9 of this Agreement.
1.61 Written Consent and Agreement. "Written Consent and Agreement" shall
mean the Written Consent and Agreement in the form of Exhibit E attached
hereto.
ARTICLE II
MERGER, CLOSING AND CONVERSION OF SHARES
2.1 Merger. Subject to and in accordance with the terms and conditions of
this Agreement and the Merger Agreement, HCC, Acquisition Corp. and VCI shall
execute and file the Merger Agreement with the Secretary of State of Delaware,
and Acquisition Corp. shall, pursuant to the terms thereof, be merged with and
into VCI pursuant to Section 251 of the DCL.
2.2 Closing. The Closing shall take place at the offices of Howard, Rice,
Nemerovski, Canady, Xxxx & Xxxxxx, at 10:00 a.m., within 5 business days
following the date on which the Merger has been approved by the stockholders of
HCC or on such other day and time as shall be agreed to by the parties (the
"Closing Date").
2.3 Conversion of Shares.
(a) In accordance with the Merger Agreement, (i) each share of
Acquisition Corp. common stock issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted at and as of the Effective
Time into one share of common stock of VCI, and (ii) each share of capital
stock of VCI issued and outstanding immediately prior to the Effective Time
(except those shares which are Dissenting VCI Shares) shall, by virtue of
the Merger and without any action on the part of the Holders, be converted
at and as of the Effective Time into the right to receive that number of
shares of HCC common stock, as illustrated on Exhibit B attached hereto,
equal to the amount determined by dividing the (1) lesser of (A)
$103,500,000 (less any adjustments required by Section 6.12 hereof) (the
"Numerator") divided by the average closing price of HCC common stock on
the Nasdaq National Market (or if not so listed, the average closing bid
price on such other market in which such prices are regularly quoted) for
the ten consecutive trading days immediately preceding the business day
prior to the Closing Date as reported in The Wall Street Journal, and (B)
the number of shares that is equal to the number of shares of HCC common
stock outstanding immediately prior to the Effective Time less one share,
by (2) the total number of shares of capital stock of VCI outstanding
immediately prior to the Closing (including for this purpose any capital
stock of VCI issuable under then outstanding options, warrants or other
convertible securities, in each case whether or not vested or exercisable)
and carrying the quotient thereof out to three decimal places (the
"Exchange Ratio"). The Holders shall receive only whole shares of HCC
common stock (or if the provisions of Section 2.3(b)(ii) are applicable,
the surviving corporation's or acquiring corporation's capital stock) and,
in lieu of any fractional share of HCC common stock, Holders shall receive
in cash the fair market value of such fractional share (rounded up or down
to the nearest whole number, with a fractional interest equal to .5 rounded
to the next whole number), valuing HCC common stock (or if the provisions
of Section 2.3(b)(ii) are applicable, the surviving corporation's or
acquiring corporation's capital stock) at the closing price for such stock
on the Nasdaq National Market on the trading day immediately preceding the
Closing Date.
(b) If on or before the Effective Time (i) the issued and outstanding
shares of HCC common stock are changed into a different number of shares by
reason of any recapitalization, stock split or stock dividend, then the
number of shares of HCC common stock received by the Holders pursuant to
Section 2.3(a) above (the "Conversion Stock") shall be adjusted to that
number and class of shares of common stock of HCC, that would have been
issued to the Holders if the Conversion Stock had been
issued to the Holders immediately prior to such recapitalization, stock
split or stock dividend; or (ii) there shall be a merger, share exchange or
consolidation of HCC with or into another corporation or entity, as part of
such merger, share exchange or consolidation, then the Conversion Stock
shall be adjusted to that number and class of shares of stock of the
surviving corporation resulting from such merger or consolidation or the
acquiring corporation in such share exchange, that would have been issued
to the Holders if the Conversion Stock had been issued to the Holders
immediately prior to such merger, share exchange or consolidation. For
purposes of this Section 2.3(b), (i) the determination of the adjustment to
the number and class of shares shall be based on the formula set forth in
Section 2.3(a)(ii), assuming that the Effective Time is the day immediately
prior to the subject recapitalization, stock split, stock dividend, merger,
share exchange or consolidation and (ii) in the event of a merger, share
exchange or consolidation of HCC prior to the Effective Time, the shares of
VCI common stock being converted under Section 2.3(a) shall be converted
into shares of the surviving corporation's or the acquiring corporation's
capital stock.
2.4 Escrow. In order to provide indemnification in accordance with Article
IX of this Agreement and with the Escrow Agreement, at the Effective Time or as
soon thereafter as possible, stock certificates representing in the aggregate
10% of the shares of HCC common stock (rounded to the nearest whole share) into
which the Holders' shares of capital stock of VCI were converted pursuant to
Section 2.3 of this Agreement (the "Escrow Fund") shall be delivered to the
Escrow Holder (which shares shall be withheld from each Holder ratably based on
the number of shares of capital stock of VCI held by such Holder immediately
prior to the Effective Time). The Stockholder Representative is authorized to
act hereunder and under the Escrow Agreement with the powers and authority
provided for herein and therein, as the representative of the Holders and their
successors. Approval of this Agreement and the Merger by the Holders shall
constitute approval of the terms and conditions of the Escrow Agreement and
ratification of the selection of the Stockholder Representative and of his
authority to act hereunder and under the Escrow Agreement on behalf of the
Holders and their successors. Any rights of the Holders to receive any shares
placed in such escrow shall in no circumstances be sold, assigned or otherwise
transferred by them other than by will or pursuant to the laws of descent and
distribution. All certificates representing securities delivered to the Escrow
Holder shall be accompanied by separate stock powers endorsed in blank by the
Stockholder Representative on behalf of the Holders. Subject to the Escrow
Agreement, the Holders shall retain their voting rights with respect to
securities deposited with the Escrow Holder in accordance with this Section
2.4.
2.5 VCI Options.
(a) At the Effective Time, each of the outstanding options to purchase
common stock of VCI shall be assumed by HCC and shall automatically be
converted into options to purchase the number of shares of HCC common stock
determined by multiplying the number of shares of common stock of VCI
covered by the option by the Exchange Ratio, at an exercise price for each
full share of HCC common stock equal to the quotient obtained by dividing
(a) the exercise price per share of VCI common stock with respect to such
option by (b) the Exchange Ratio, which exercise price per share shall be
rounded to the nearest whole cent, as illustrated on Exhibit B attached
hereto. The number of shares of HCC common stock that may be purchased by a
holder under any option assumed by HCC hereunder shall not include any
fractional share of HCC common stock but shall be rounded up to the next
higher whole share of HCC common stock. Notwithstanding the foregoing, VCI
stock options which meet the requirements of Section 422 of the Code will
be converted into HCC stock options in a manner which complies with Section
424(a) of the Code. The assumption by HCC of the options hereunder shall
not terminate or modify (except as required hereunder) (i) the VCI 1999
Stock Incentive Plan, dated August 15, 1999 (the "VCI Plan"), any Stock
Option Agreement issued pursuant to the VCI Plan or the terms of any stock
option agreements issued by VCI other than under the VCI Plan; (ii) any
right, vesting schedule, or other restriction on transferability relating
to the VCI Plan, any Stock Option Agreement issued pursuant to the VCI Plan
or any stock option agreement issued by VCI other than under the VCI Plan;
or (iii) give the holders of such options any additional benefits which
they did not have immediately prior to the Effective Time. Continuous
employment with VCI shall be credited to an optionee for vesting purposes
after the
Effective Time. Nothing contained in this Section 2.5(a) shall require HCC
to offer or sell shares of HCC common stock upon the exercise of options
assumed by HCC hereunder if, in the reasonable judgment of HCC or its
counsel, such offer or sale would not be in accordance with the applicable
federal or state securities laws, provided that HCC shall use its
reasonable best efforts to take such actions, if any, as are necessary for
such offer or sale to be in accordance with such laws, including without
limitation the filing with the SEC within 45 days following the Effective
Time of a registration statement on Form S-8 under the 1933 Act covering
the shares of HCC common stock issuable upon exercise of options assumed
hereunder by HCC.
(b) If on or before the Effective Time (i) the issued and outstanding
shares of HCC common stock are changed into a different number of shares by
reason of any recapitalization, stock split or stock dividend, then the
number of shares of HCC common stock issuable upon exercise of VCI options
assumed and converted pursuant to Section 2.5(a) above shall be
correspondingly adjusted to that number and class of shares of common stock
of HCC, if such options had been converted into options to acquire HCC
common stock immediately before such recapitalization, stock split or stock
dividend and the exercise price thereof shall be correspondingly adjusted;
or (ii) there shall be a merger, share exchange or consolidation of HCC
with or into another corporation or entity, then, as part of such merger,
share exchange or consolidation, the VCI options to be assumed and
converted pursuant to Section 2.3(a) above shall be equitably converted
into options to acquire that number and class of shares of stock of the
surviving corporation resulting from such merger or consolidation or the
acquiring corporation in such share exchange, as if such VCI options had
been converted into options to acquire HCC shares of common stock
immediately prior to such merger, share exchange or consolidation, and the
exercise price thereof shall be correspondingly and equitably adjusted.
2.6 Exchange of Certificates.
(a) Prior to the Closing Date, HCC shall appoint U.S. Stock Transfer
Corporation to act as exchange agent (the "Exchange Agent") in the Merger.
(b) Promptly after the Closing Date, but in no event later than three
business days thereafter, HCC shall give instructions to the Exchange Agent
to make available within three business days thereafter for exchange in
accordance with this Section 2.6, the shares of HCC common stock issuable
pursuant to Section 2.3 in exchange for outstanding shares of capital stock
of VCI, subject to the issuance of 10% of the shares of HCC common stock
issuable to the Holders into escrow pursuant to Section 2.4 hereof.
(c) As soon as practicable after the Effective Time, the Exchange Agent
shall mail to each Holder of record of a stock certificate that,
immediately prior to the Effective Time, represented outstanding shares of
capital stock of VCI (a "Certificate"), whose shares are being converted
into HCC common stock pursuant to Section 2.3, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other customary provisions as HCC may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates evidencing HCC common stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed, the Holder of such Certificate shall
be entitled to receive in exchange therefor and HCC shall cause the
Exchange Agent to deliver to such Holder the number of shares of HCC common
stock and payments in lieu of fractional shares to which the Holder is
entitled pursuant to Section 2.3 hereof, subject to the provisions of
Section 2.4 hereof. Until surrendered as contemplated by this Section
2.6(c), each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender such whole
number of shares of HCC common stock and payments for fractional shares as
is provided for in Section 2.3.
(d) No dividends or distributions payable to holders of record of HCC
common stock after the Effective Time, or cash payable in lieu of
fractional shares, shall be paid to the Holder of any unsurrendered
Certificate until the Holder of the Certificate shall surrender such
Certificate.
2.7 Dissenting VCI Shares. Holders of Dissenting VCI Shares shall have those
rights, but only those rights, of holders who perfect their appraisal rights
under Section 262 of the DCL. VCI shall give HCC prompt notice of any demand,
purported demand, objection, notice, petition, or other communication received
from stockholders or provided to stockholders by VCI with respect to any
Dissenting VCI Shares or shares claimed to be Dissenting VCI Shares, and HCC
shall have the right to participate in all negotiations and proceedings with
respect to such shares. VCI agrees that, without the prior written consent of
HCC, it shall not voluntarily make any payment with respect to, or settle or
offer to settle, any demand or purported demand respecting such shares.
2.8 Tax Free Reorganization. The parties intend to adopt this Agreement as a
plan of reorganization and to consummate the Merger in accordance with the
provisions of Section 368(a) of the Code.
2.9 Voting Agreement. Concurrently with the execution of this Agreement, the
holders of at least forty percent (40%) of the outstanding voting capital stock
of HCC shall enter into Voting Agreements with VCI in the form attached hereto
as Exhibit D, pursuant to which they shall agree, subject to the terms and
conditions of the Voting Agreement, to vote all the shares of capital stock of
HCC or VCI, as applicable, held by them or by the entities they represent in
favor of the Merger. HCC agrees to use its reasonable best efforts to maintain
the percentage of outstanding voting capital stock of HCC subject to the Voting
Agreements at no less than 40% through the date of the HCC stockholders'
meeting for the purpose of approving the Merger. In addition, concurrently with
the execution of this Agreement, Holders of at least ninety-eight percent (98%)
of the outstanding voting capital stock of VCI shall execute and deliver a
Written Consent and Agreement in the form attached hereto as Exhibit E,
pursuant to which the Holders shall authorize and approve the Merger and agree
to certain other terms and conditions. There shall be no amendments or
modifications to the Voting Agreement or the Written Consent and Agreement
without the written consent of VCI and HCC, respectively.
2.10 Representation on HCC Board of Directors. At the Effective Time, HCC
shall take all necessary actions so that, immediately following the Effective
Time, the following persons shall be appointed to three-year terms on the Board
of Directors of HCC: Xxxxxx X. Xxxx and Sage Xxxxxx. The approval by the HCC
stockholders of the Merger shall constitute their vote in favor of the
appointment of Xxxxxx X. Xxxx and Sage Xxxxxx as members of the HCC Board of
Directors. Xxxxxx X. Xxxx and Sage Xxxxxx may not be removed as a member of the
Board of Directors during their three-year terms for any reason other than
Cause.
2.11 Affiliate Agreements. Concurrently with the execution of this
Agreement, each affiliate of VCI, within the meaning of Rule 145 promulgated
under the 1933 Act ("Rule 145 Affiliates"), shall execute and deliver an
Affiliate Agreement, in the form of Exhibit F attached hereto, which shall be
effective as of the Closing Date, under which each Rule 145 Affiliate of VCI
agrees to comply with the applicable requirements of Rule 145 and any
requirements under the rules applicable to pooling of interests accounting
treatment. HCC shall be entitled to place appropriate legends on the
certificates evidencing any HCC common stock to be received by such Rule 145
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for the HCC common stock,
consistent with the terms of the Affiliate Agreements.
2.12 Escrow Agreement. Concurrently with the execution of this Agreement,
HCC, the Stockholder Representative and the Escrow Holder shall have executed
the Escrow Agreement, which shall be effective as of the Closing Date.
2.13 Securities Exemption; Stockholders Letter. Concurrently with the
execution of this Agreement, each stockholder of VCI shall have executed and
delivered a Stockholder's letter in the form of Exhibit G hereto, which shall
be effective no later than the date hereof.
2.14 Employment and Noncompetition Agreement. Concurrently with the
execution of this Agreement, HCC shall have received an Employment Agreement
and a Noncompetition Agreement in the forms of Exhibits H and I hereto executed
by Xxxxxx X. Xxxx and Xxxxx Xxxxxxx, each of which shall be effective as of the
Closing Date.
ARTICLE III
REPRESENTATIONS OF VCI
VCI represents and warrants to HCC that, except as set forth in the
Disclosure Schedule dated as of the date hereof and signed by the Chief
Executive Officer of VCI (the "VCI Disclosure Schedule"), each of which
exceptions shall specifically identify the relevant Section hereof to which it
relates or be specifically enough stated to make it clear that it is also
relevant to such Section:
3.1 Organization. VCI and each of its Subsidiaries are corporations or
limited liability companies duly organized, validly existing and in good
standing under the laws of the jurisdictions of their incorporation or
formation (as the case may be), and have all requisite power and authority to
own their properties and to carry on their businesses as now being conducted.
VCI has all requisite power to execute and deliver this Agreement and the
agreements contemplated herein, and to consummate the transactions contemplated
hereby and thereby. VCI and its Subsidiaries are duly qualified to do business
and in good standing in all jurisdictions in which ownership of property or the
character of their business requires such qualification and where failure to be
so qualified would reasonably be expected to have a Material Adverse Effect.
Copies of the Certificates of Incorporation and Bylaws or Certificate of
Formation and limited liability company agreement (as applicable) of VCI and
its Subsidiaries, as amended to date, have been previously delivered to HCC,
are complete and correct, and no amendments have been made thereto or have been
authorized since the date thereof.
3.2 Capitalization of VCI. VCI's authorized capital stock consists of
66,650,000 shares of common stock, of which 12,974,414 shares are issued and
outstanding on the date hereof, and 49,666,498 shares of Preferred Stock,
classified into three series, as follows: 11,627,573 shares of Series A
Convertible Preferred Stock, of which 11,627,573 shares are issued and
outstanding on the date hereof; 10,038,925 shares of Series B Convertible
Preferred Stock, of which 10,038,925 shares are issued and outstanding as of
the date hereof; and 28,000,000 shares of Series C Convertible Preferred Stock,
of which 23,325,000 shares are issued and outstanding as of the date hereof.
Section 3.2(a) of the VCI Disclosure Schedule sets forth the number of
authorized shares of each class of VCI capital stock and the number of issued
and outstanding shares of each class of capital stock and the record owner
thereof. Shares of Preferred Stock are convertible into shares of Common Stock
on a one share-for-one share basis. All issued and outstanding shares of VCI's
capital stock are duly authorized, validly issued, fully paid and non-
assessable, and were issued in compliance with applicable federal and state
securities laws. There are options outstanding covering 969,016 shares of
common stock of VCI; all of such options, to the extent not exercised prior to
the Effective Time, shall be assumed by HCC and converted into options to
purchase HCC common stock pursuant to the provisions of Section 2.5 hereof and
no consents of optionholders are required with respect to such assumption.
Except for such Preferred Stock and outstanding options and except as set forth
in Section 3.2(b) of the VCI Disclosure Schedule, there are not outstanding (i)
any options, warrants or other rights to purchase from VCI any capital stock of
VCI; (ii) any securities convertible into or exchangeable for shares of capital
stock of VCI; or (iii) any other commitments or rights of any kind for the
issuance by VCI of additional shares of capital stock or options, warrants or
other securities of VCI.
3.3 Subsidiaries. The only Subsidiaries of VCI are those listed in Section
3.3 of the VCI Disclosure Schedule. All of the outstanding shares of capital
stock of each of VCI's Subsidiaries which is a corporation are duly authorized,
validly issued, fully paid and nonassessable and all such shares are owned by
VCI or another Subsidiary of VCI free and clear of all security interests,
liens, claims, pledges, agreements, limitations on VCI's voting rights, charges
or other encumbrances of any nature. VCI owns all of the membership interests
in Xxxxxxxx.xxx, LLC, a Delaware limited liability company, free and clear of
all security interests, liens, claims, pledges, agreements, limitations on
VCI's voting rights, charges or other encumbrances of any nature.
3.4 Authorization. The execution and delivery by VCI of this Agreement and
the agreements provided for herein, and the consummation by VCI of all
transactions contemplated hereunder and thereunder by VCI, have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and
delivered by VCI. This Agreement and all other agreements and obligations
entered into and undertaken in connection with the transactions contemplated
hereby to which VCI is a party constitute the valid and legally binding
obligations of VCI enforceable against it in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws affecting the rights of creditors
generally and subject to equitable remedies.
3.5 Compliance with Laws and Other Instruments. Except as set forth in
Section 3.5 of the VCI Disclosure Schedule, neither VCI nor any of its
Subsidiaries is in violation or default (a) of any provision of its Certificate
of Incorporation or Bylaws or Certificate of Formation or limited liability
company agreement (as the case may be), or of any instrument, judgment, order,
writ or decree, or (b) except for when any such violation or default would not
reasonably be expected to have a Material Adverse Effect, of any lease,
license, permit, contract or other arrangement to which it is a party or by
which it is bound, of any copyright laws with respect to its use and posting of
information on its website or of any other provision of any federal or state
statute, rule or regulation applicable to VCI or any of its Subsidiaries. The
execution, delivery and performance by VCI of this Agreement and the agreements
provided for herein, and the consummation by VCI of the transactions
contemplated hereby and thereby, do not and will not, with or without the
giving of notice or the passage of time or both, (a) violate the provisions of
any law, rule or regulation applicable to VCI (assuming compliance with the
requirements of the HSR Act), and which would reasonably be expected to have a
Material Adverse Effect; (b) violate the provisions of the Certificate of
Incorporation or Bylaws or Certificate of Formation or limited liability
company agreement (as the case may be) of VCI or any of its Subsidiaries;
(c) violate any judgment, decree, order or award of any court, governmental
body or arbitrator applicable to VCI; (d) except as set forth in Section 3.5 of
the VCI Disclosure Schedule, conflict with, contravene, constitute a default or
breach of, result in an acceleration of, or create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any instrument, judgment, order, writ, decree, lease, license,
permit, contract, lease, or other agreement or other arrangement to which VCI
or any of its Subsidiaries is a party or by which VCI or any Subsidiaries is
bound or to which its assets are subject and which would reasonably be expected
to have a Material Adverse Effect; or (e) constitute an event that results in
the creation of any lien, charge or encumbrance upon any assets of VCI or any
of its Subsidiaries or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any permit, license, authorization, or approval applicable to VCI
or any of its Subsidiaries, their businesses or operations or any of their
assets or properties and which would reasonably be expected to have a Material
Adverse Effect.
3.6 VCI Financial Statements. VCI has delivered to HCC the audited
consolidated balance sheets of VCI as of December 31, 1999 ("Most Recent VCI
Balance Sheet") and December 31, 1998 and the related statements of income,
changes in shareholders' equity and cash flows. Such financial statements have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, fairly present in all material respects the
financial condition, results of operations and cash flows of VCI as of the
respective dates thereof and for the periods referred to therein and are
consistent with the books and records of VCI.
3.7 No Undisclosed Liabilities. Except as set forth in Section 3.7 of the
VCI Disclosure Schedule, VCI and its Subsidiaries have no liability (whether
absolute or contingent, whether liquidated or unliquidated and whether due or
to become due), and there is no existing condition, situation or set of
circumstances which would reasonably be expected to result in such a liability,
except for (a) liabilities shown on the Most Recent VCI Balance Sheet, (b)
liabilities which have arisen since December 31, 1999 in the ordinary course of
business consistent with past custom and practice for start up internet e-
commerce enterprises ("Ordinary Course of Business"), (c) contractual
liabilities incurred in the Ordinary Course of Business which are not required
by GAAP to be reflected on a balance sheet or disclosed in the notes thereto
under GAAP, and (d) liabilities for accounting, investment banking and legal
fees incurred in connection with the Merger and the transactions contemplated
thereby; provided that any difference between the adjusted tax basis and the
fair market value of any asset held by VCI or its Subsidiaries on the Closing
Date shall not be treated as an existing condition, situation or set of
circumstances for purposes of this Section 3.7.
3.8 Absence of Certain Changes or Events. Except as contemplated by this
Agreement and as set forth in Section 3.8 of the Disclosure Schedule, since
December 31, 1999, neither VCI nor any of its Subsidiaries has entered into
any transaction that is not in the Ordinary Course of Business or has:
(a) suffered any Material Adverse Effect or had any event occur which
reasonably would be expected to result in a Material Adverse Effect;
(b) incurred any material obligation or liability for borrowed money
other than in the Ordinary Course of Business;
(c) discharged or satisfied any lien or encumbrance or paid any
obligation or liability other than (i) current liabilities reflected in the
Most Recent VCI Balance Sheet or (ii) those incurred in the Ordinary Course
of Business since the date of the Most Recent VCI Balance Sheet;
(d) made any material amendment to or termination of any contract or
lease or done any act or omitted to do any act which would cause a breach
of any contract or lease where such breach would reasonably be expected to
have a Material Adverse Effect;
(e) suffered any loss of personal or real property in excess of $50,000
in the aggregate, or waived any rights of any value;
(f) authorized any declaration or payment of dividends, or paid any such
dividends, or authorized any transfer of assets of any kind whatsoever to
any of its stockholders (other than payments or transfers by any Subsidiary
of VCI to VCI);
(g) made any material change in the terms, status or funding condition
of any VCI Employee Benefit Plan;
(h) made any capital expenditure in excess of $50,000 in any instance or
$500,000 in the aggregate;
(i) acquired or disposed of, or committed to acquire or dispose of, any
asset, or entered or committed to enter into any contract, agreement or
commitment, in any such case which involves the payment in the case of an
acquisition of more than $50,000, or in the case of a disposition of more
than $500,000, except agreements, commitments or transactions involving the
purchase of inventory or supplies in the ordinary course of business
consistent with past practice and which do not have a remaining term
exceeding twelve months;
(j) increased or agreed to increase the compensation or bonuses payable
or to become payable to any employees with annual salaries exceeding
$50,000, or increased any salaries or bonuses payable or to become payable
to any employees in any manner not in the Ordinary Course of Business;
(k) made or agreed to make any loan to any of its employees, officers,
stockholders or directors, other than travel advances made in the Ordinary
Course of Business;
(l) granted or agreed to grant to any person any option, right or
warrant or other commitment calling for the issuance or sale of any shares
of capital stock, bonds or other corporate securities (other than options
granted in the Ordinary Course of Business to employees, consultants and
members of the Board of Directors of VCI and which are being assumed
pursuant to Section 2.5 hereof); or
(m) granted or voluntarily subjected any material asset to a lien or
encumbrance (other than any purchase money security interest, conditional
title retention arrangement, mechanic's lien, lien for taxes not yet due or
lien arising by operation of law).
3.9 Tax Matters.
(a) VCI and its Subsidiaries have filed all Tax Returns that they were
required to file and all such Tax Returns were correct and complete in all
material respects. VCI and its Subsidiaries have paid all Taxes owed in
respect of the periods covered by such Tax Returns whether or not shown as
due on such Tax Return. The unpaid Taxes of VCI and its Subsidiaries for
tax periods through December 31, 1999 do
not exceed the accruals and reserves for Taxes set forth on the Most Recent
VCI Balance Sheet. VCI has no actual or, to its knowledge, potential
liability for any Tax obligation of any taxpayer (including without
limitation any affiliated group of corporations or other entities that
included VCI during a prior period) other than VCI or its Subsidiaries.
Except as set forth in Section 3.9 of the VCI Disclosure Schedule, all
Taxes that VCI is or was required by law to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Entity.
(b) Except as set forth in Section 3.9 of the VCI Disclosure Schedule,
none of VCI and its Subsidiaries has ever had any examination report issued
or statement of deficiencies assessed against it which have not been
resolved or satisfied. For taxable periods ending after December 31, 1994,
except as set forth in Section 3.9 of the VCI Disclosure Schedule, no Tax
Returns of VCI have been audited by any Governmental Entity. Except as set
forth in Section 3.9 of the VCI Disclosure Schedule, no examination or
audit of any Tax Returns of VCI by any Governmental Entity is currently in
progress or, to the knowledge of VCI, threatened or contemplated. None of
VCI and its Subsidiaries has waived any statute of limitations with respect
to Taxes or agreed to an extension of time with respect to a tax assessment
or deficiency, which is currently in effect.
(c) VCI is not a "consenting corporation" within the meaning of Section
341(f) of the Code and none of the assets of VCI are subject to an election
under Section 341(f) of the Code. VCI has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the preceding five (5) years. VCI is not a party to any Tax
allocation or sharing agreement.
(d) VCI is not and has never been a member of an "affiliated group" of
corporations (within the meaning of Section 1504 of the Code) other than
the "affiliated group" of which VCI is the common parent corporation. VCI
has not made an election under Treasury Reg. Section 1.1502-20(g). VCI is
not and has not been required to make a basis reduction pursuant to
Treasury Reg. Section 1.1502-20(b) or Treasury Reg. Section 1.337(d)-2T(b),
except as may be required if VCI does not join in the filing of Federal
consolidated returns with HCC after the Closing Date.
(e) As of the date of this Agreement and as of the Closing Date, VCI has
not, and will not have, taken any action that could reasonably be expected
to cause the Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code.
(f) None of VCI and its Subsidiaries will be required to report any
amount in taxable income in any taxable period ending after the Closing
pursuant to Section 481 of the Code by reason of a change of accounting
method occurring in a taxable period ending on or before the Effective
Time.
(g) Since the date of its incorporation, VCI has been reporting its
income in accordance with the accrual method of accounting.
3.10 Assets. VCI and its Subsidiaries do not own any real property. VCI and
its Subsidiaries have good and defensible title to all of their respective
personal properties, as reflected in the Most Recent VCI Balance Sheet (except
properties sold or otherwise disposed of since December 31, 1999 in the
Ordinary Course of Business) or acquired after December 31, 1999, or with
respect to leased properties and assets, valid leasehold interests in, free and
clear of all Security Interests, except as listed in Section 3.10 of the VCI
Disclosure Schedule. The plants, property and equipment of VCI and its
Subsidiaries that are used in the operations of their respective businesses are
in good operating condition and repair subject to ordinary wear and tear and to
requirements for periodic maintenance. All properties used in the operations of
VCI and its Subsidiaries, except for those acquired after December 31, 1999,
are reflected in the Most Recent VCI Balance Sheet to the extent required by
GAAP. Section 3.10 of the VCI Disclosure Schedule identifies all personal
property leases of VCI and its Subsidiaries. For purposes of this Agreement,
"Security Interest" means any mortgage, pledge, security interest, encumbrance,
charge, or other lien (whether arising by contract or by operation of law),
other than (i) mechanic's, materialmen's, and similar liens, (ii) liens arising
under worker's compensation, unemployment insurance, social security,
retirement, and similar legislation, (iii) liens on goods in transit incurred
pursuant to documentary letters of credit, and (iv) liens for Taxes not yet due
and payable, in each case arising in the
Ordinary Course of Business of VCI or its Subsidiaries and not material to VCI
and its Subsidiaries, as a whole.
3.11 Intellectual Property.
(a) VCI and its Subsidiaries own, or license or otherwise possess
legally enforceable rights to use, all patents, trademarks, trade names,
service marks, Internet domain names, copyrights, and any applications for
such patents, trademarks, trade names, service marks, Internet domain names
and copyrights, schematics, technology, trade secrets, know-how, computer
software programs or applications, processes and other tangible or
intangible proprietary information or material that are used to conduct
their respective businesses as currently conducted, including without
limitation the technology, information, databases, data lists, data
compilations, and all proprietary rights developed or discovered or used in
connection with or contained in all versions and implementations of any
World Wide Web sites, except as set forth in Section 3.11 of the VCI
Disclosure Schedule, free and clear of all liens, claims and encumbrances
(including without limitation licensing and distribution rights), all of
which are "Intellectual Property." Section 3.11 of the VCI Disclosure
Schedule contains an accurate and complete (i) list of all patents and
patent applications and all trademarks (indicating registered and
unregistered trademarks) and applications therefor, registered copyrights,
trade names, service marks and Internet domain names owned or licensed by
VCI, including the jurisdictions in which each such Intellectual Property
right has been issued or registered or in which any such application for
such issuance or registration has been filed, (ii) list of all written
licenses, sublicenses and other agreements to which VCI or any of its
Subsidiaries is a party and pursuant to which any person is authorized to
use any Intellectual Property rights of VCI or any of its Subsidiaries, and
(iii) list of all written licenses, sublicenses and other agreements as to
which VCI or any of its Subsidiaries is a party and pursuant to which VCI
or any of its Subsidiaries is authorized to use any third party
Intellectual Property. Neither VCI nor any of its Subsidiaries is a party
to any oral license, sublicense or agreement which, if reduced to written
form, would be required to be listed in Section 3.11 of the VCI Disclosure
Schedule under the terms of this Section 3.11(a).
(b) All of the patents, copyrights, trademarks, trade names or Internet
domain name registrations of VCI and its Subsidiaries related to their
businesses are valid and in full force and effect and will not be altered
or impaired by the consummation of the transactions contemplated hereby.
Neither VCI nor any of its Subsidiaries is, and will not be as a result of
the execution and delivery of this Agreement or the performance of VCI's
obligations under this Agreement, in breach of any license, sublicense or
other agreement relating to VCI's Intellectual Property or third party
Intellectual Property rights.
(c) Except as set forth in Section 3.11 of the VCI Disclosure Schedule,
neither VCI or any of its Subsidiaries, nor to VCI's knowledge any of the
employees of VCI or any of its Subsidiaries, has received a claim, or is
aware of a reasonable basis for a claim, of infringement or violation of
any Intellectual Property right of any third party. To VCI's knowledge, the
manufacturing, marketing, licensing or sale of the products or performance
of the service offerings of VCI and its Subsidiaries do not infringe or
violate any Intellectual Property right of any third party; and, to the
knowledge of VCI, the Intellectual Property rights of VCI and its
Subsidiaries are not being infringed or violated by activities, products or
services of any third party.
3.12 Contracts. Section 3.12 of the VCI Disclosure Schedule lists all
material written agreements to which VCI or any of its Subsidiaries is a party
or by which it is bound, including but not limited to:
(a) any written arrangement for the provision of products or services to
customers or other third parties;
(b) any written arrangement for the purchase of raw materials,
commodities, supplies, products or other personal property or for the
receipt of consulting or other services;
(c) any written arrangement establishing a partnership, joint venture
development, marketing or distribution arrangement;
(d) any written arrangement under which it has created, incurred,
assumed, or guaranteed (or may create, incur, assume, or guarantee)
indebtedness (including capitalized lease obligations) or under which it
has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(e) any written arrangement concerning confidentiality or noncompetition
(other than standard confidentiality agreements with employees, consultants
or directors);
(f) any written agreement, contract or commitment that calls for fixed
and/or contingent payments or expenditures (including without limitation
any advertising or revenue sharing arrangement);
(g) any written outstanding sales or advertising contract, commitment or
proposal (including, without limitation, insertion orders, slotting
agreements or other agreements under which VCI or any of its Subsidiaries
has allowed third parties to advertise on or otherwise be included in World
Wide Web sites of VCI or any of its Subsidiaries)
(h) any written agreements, contracts or commitments with officers,
employees, agents, consultants, advisors, salesmen, sales representatives,
distributors or dealers that are not cancelable "at will" and without
liability, penalty or premium.
(i) any written employment, independent contractor or similar agreement,
contract or commitment that is not terminable on thirty (30) days' notice
or less without penalty, liability or premium of any type, including,
without limitation, severance or termination pay.
(j) any written arrangement involving any VCI shareholders or their
Affiliates.
Neither VCI nor any of its Subsidiaries is a party to any oral contract,
agreement or other arrangement which, if reduced to written form, would be
required to be listed in Section 3.12 of the VCI Disclosure Schedule. All of
the agreements listed in the VCI Disclosure Schedule to which VCI or any of its
Subsidiaries is a party are valid, binding, in full force and effect and
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefor may
be brought (whether at law or in equity). Except as set forth in Section 3.12
of the VCI Disclosure Schedule, no such contract contains any liquidated
damages, penalty or similar provision. To VCI's knowledge, no party to any such
contract intends to cancel, withdraw, modify or amend such contract, agreement
or arrangement. Except as set forth in Section 3.12 of the VCI Disclosure
Schedule, neither VCI nor any of its Subsidiaries is in default under or in
breach or violation of, nor, to VCI's knowledge, is there any valid basis for
any claim of default by VCI or any of its Subsidiaries under, or breach or
violation by VCI or any of its Subsidiaries of, any material provision of any
contract listed on the VCI Disclosure Schedule. Except as set forth in Section
3.12 of the VCI Disclosure Schedule, to VCI's knowledge no other party is in
default under or in breach or violation of, nor is there any valid basis for
any claim of default by any other party under or any breach or violation by any
other party of, any such contract.
3.13 Accounts Receivable. All accounts receivable reflected on the Most
Recent VCI Balance Sheet are valid receivables, and, to VCI's knowledge, are
subject to no setoffs or counterclaims and are current and collectible (within
90 days after the date on which it first became due and payable), net of the
applicable reserve for bad debts on the Most Recent VCI Balance Sheet. All
accounts receivable reflected in the financial or accounting records of VCI and
its Subsidiaries that have arisen since the Most Recent VCI Balance Sheet Date
are valid receivables, and to VCI's knowledge, subject to no setoffs or
counterclaims and are collectible, net of a reserve for bad debts in an amount
proportionate to the reserve shown on the Most Recent VCI Balance Sheet.
3.14 Insurance. Section 3.14 of the VCI Disclosure Schedule sets forth a
true, correct and complete list of all insurance policies and fidelity bonds
covering the assets, business, equipment, properties, operations, software
errors and omissions, employees, officers and directors of VCI and its
Subsidiaries and all claims made under any insurance policy since January 1,
1998. Except as set forth in Section 3.14 of the VCI
Disclosure Schedule, there is no claim by VCI or any of its Subsidiaries
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds have been paid
and VCI and its Subsidiaries are otherwise in compliance in all material
respects with the terms of such policies and bonds. VCI has no knowledge of any
threatened termination of, or material premium increase with respect to, any of
such policies.
3.15 Litigation. Section 3.15 of the VCI Disclosure Schedule identifies, and
contains a brief description of, (a) any unsatisfied judgment, order, decree,
stipulation or injunction issued by or enforceable by a Governmental Entity,
(b) any written claim, demand, complaint, action, suit, proceeding, or hearing
or, to VCI's knowledge any investigation of or in, any Governmental Entity or
before any arbitrator to which VCI or any of its Subsidiaries or is a party or,
to the knowledge of VCI, is threatened to be made a party, and (c) any written
claims by third persons of which VCI is aware and any reasonable basis for any
third party claims. None of the demands, claims, complaints, actions, suits,
proceedings, hearings, and investigations set forth in Section 3.15 of the VCI
Disclosure Schedule would reasonably be expected to have a Material Adverse
Effect.
3.16 Employees and Consultants. Section 3.16 of the VCI Disclosure Schedule
contains a list of all current employees and consultants of VCI and its
Subsidiaries, along with the position and the annual rate of compensation of
each such person. Except as specified in Section 3.16 of the VCI Disclosure
Schedule, each current management level employee, key employee and consultant
to VCI and its Subsidiaries has entered into a confidentiality and assignment
of inventions agreement with VCI, a copy of each of which has previously been
delivered to HCC. To the knowledge of VCI, no key employee or consultant or
group of employees or consultants has any plans to terminate employment or the
provision of consulting services with VCI or any of its Subsidiaries. Except as
set forth in Section 3.16 of the VCI Disclosure Schedule, neither VCI nor any
of its Subsidiaries is a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, and claims of unfair
labor practices or other collective bargaining disputes. Except as set forth in
Section 3.16 of the VCI Disclosure Schedule, VCI has no knowledge of any
organizational effort made or threatened, either currently or since its
inception, by or on behalf of any labor union with respect to employees of VCI
or any of its Subsidiaries. Neither VCI nor any of its Subsidiaries has any
agreements or arrangements with persons titled as independent contractors or
consultants, as a result of which, by virtue of the control exercised by VCI or
any of its Subsidiaries, the type of work performed by the persons or any other
circumstances, such persons could reasonably be deemed to be employees of VCI
or any of its Subsidiaries. VCI and its Subsidiaries have complied in all
material respects with all record keeping and tax reporting obligations
relating to income and employment taxes due with respect to compensation paid
to employees or independent contractors providing services to VCI or any of its
Subsidiaries.
3.17 Employee Benefits.
(a) Section 3.17 of the VCI Disclosure Schedule contains a complete and
accurate list of all VCI Employee Benefit Plans (as defined below) which
are maintained, or contributed to, by VCI, or any VCI ERISA Affiliate (as
defined below). For purposes of this Agreement, "VCI Employee Benefit Plan"
means any "employee pension benefit plan" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
any "employee welfare benefit plan" (as defined in Section 3(1) of ERISA),
and any other written or oral plan, agreement or arrangement involving
direct or indirect compensation, including without limitation insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation
or other forms of incentive compensation or post-retirement compensation
maintained, or contributed to, by VCI or any VCI ERISA Affiliate. For
purposes of this Agreement, "VCI ERISA Affiliate" means any entity which is
a member of (i) a controlled group of corporations (as defined in Section
414(b) of the Code), (ii) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (iii) an affiliated
service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes VCI.
Complete and accurate copies of (i) all VCI Employee Benefit Plans which
have been reduced to writing, (ii) written summaries, if any, of all
unwritten VCI Employee Benefit Plans, (iii) all related trust agreements,
insurance contracts and summary plan descriptions, if any, and (iv) the
most recent annual report filed, if any, on IRS Form 5500, 5500C or 5500R
for each VCI Employee Benefit Plan, have been delivered to the Buyer. Each
VCI Employee Benefit Plan has been administered in all material respects in
accordance with its terms, and each of VCI and the VCI ERISA Affiliates has
in all material respects met its obligations with respect to such VCI
Employee Benefit Plan and has made all contributions thereto which are
required to be made prior to the date hereof. To the knowledge of VCI, VCI
and all VCI Employee Benefit Plans are in compliance in all material
respects with the currently applicable provisions of ERISA and the Code and
the regulations thereunder.
(b) There are no termination proceedings or other claims (except claims
for benefits payable in the normal operation of VCI Employee Benefit Plans
and proceedings with respect to qualified domestic relations orders) suits
or proceedings and, to VCI's knowledge, there are no investigations by any
Governmental Entity, against or involving any VCI Employee Benefit Plan or
asserting any rights or claims to benefits under any VCI Employee Benefit
Plan that could give rise to any material liability.
(c) All VCI Employee Benefit Plans that are intended to be qualified
under Section 401(a) of the Code have received determination letters from
the Internal Revenue Service to the effect that such VCI Employee Benefit
Plans are qualified and the plans and the trusts related thereto are exempt
from federal income taxes under Sections 401(a) and 501(a), respectively,
of the Code, no such determination letter has been revoked and, revocation
has not been threatened, and no such VCI Employee Benefit Plan has been
amended since the date of its most recent determination letter in any
respect which would adversely affect such letter, and, to VCI's knowledge,
no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost.
(d) Except as set forth in Section 6.17 of the VCI Disclosure Schedule,
neither VCI nor any VCI ERISA Affiliate has ever maintained a VCI Employee
Benefit Plan subject to Section 412 of the Code or Title IV of ERISA.
(e) At no time has VCI or any VCI ERISA Affiliate been obligated to
contribute to any "multi-employer plan" (as defined in Section 4001(a)(3)
of ERISA).
(f) Except as set forth in Section 3.17 of the VCI Disclosure Schedule,
there are no unfunded obligations under any VCI Employee Benefit Plan
providing benefits after termination of employment to any employee of VCI
or any VCI ERISA Affiliate (or to any beneficiary of any such employee),
including but not limited to retiree health coverage and deferred
compensation, but excluding continuation of health coverage required to be
continued under Section 4980B of the Code and insurance conversion
privileges under state law.
(g) To the knowledge of VCI, no act or omission has occurred and no
condition exists with respect to any VCI Employee Benefit Plan that would
subject VCI or any VCI ERISA Affiliate to any material fine, penalty, tax
or fiduciary liability imposed under ERISA or the Code.
(h) No VCI Employee Benefit Plan is funded by, associated with, or
related to a "voluntary employee's beneficiary association" within the
meaning of Section 501(c)(9) of the Code.
(i) Except as set forth in Section 3.17 of the VCI Disclosure Schedule,
no VCI Employee Benefit Plan, plan documentation or agreement, summary plan
description or other written communication distributed generally to
employees by its terms prohibits VCI or any VCI ERISA Affiliate from
amending or terminating any such VCI Employee Benefit Plan.
(j) Section 3.17 or 3.12 of the VCI Disclosure Schedule discloses each:
(i) written, and, to VCI's knowledge, oral, agreement with any director,
officer or other employee of VCI and Affiliates (A) the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving VCI or its Affiliates of the nature
of any of the transactions contemplated by this Agreement, (B) providing
any term of employment or compensation guarantee or (C) providing severance
benefits or other benefits after the termination of employment of such
director, officer or employee; (ii) agreement, plan or arrangement under
which any person may as a result of the Merger receive payments from VCI or
its affiliates that may be subject to the tax imposed by Section 4999 of
the Code or included in the determination of such person's "parachute
payment" under Section 280G of the Code; and (iii) agreement or plan
binding VCI or its affiliates, including without limitation any stock
option plan, stock appreciation right plan, restricted stock plan, stock
purchase plan, severance benefit plan, or any VCI Employee Benefit Plan,
any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
3.18 Environmental and OSHA.
(a) Hazardous Material. Except as set forth in Section 3.18 of the VCI
Disclosure Schedule, no material amount of any substance that is regulated
by any Governmental Entity or that has been designated by any Governmental
Entity to be radioactive, toxic, hazardous or otherwise a danger to health
or the environment, including, without limitation, PCBs, asbestos, urea-
formaldehyde and all substances listed pursuant to the United States
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended from time to time, and the United States Resource Recovery
and Conservation Act of 1976, as amended from time to time, and the
regulations and publications promulgated pursuant to said laws (a
"Hazardous Material"), is, to the knowledge of VCI, present as a result of
the actions of VCI or any of its Subsidiaries (or, to the knowledge of VCI,
as a result of any actions of any third party or otherwise) in violation of
any law in effect on or before the Closing Date, in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that VCI or any of its Subsidiaries has at any time
operated, occupied or leased.
(b) Hazardous Materials Activities. Neither VCI nor any of its
Subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the Closing Date, nor has VCI
or any of its Subsidiaries disposed of, transferred, sold or manufactured
any product containing a Hazardous Material (collectively "Hazardous
Materials Activities") in violation of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Resource
Recovery and Conservation Act of 1976, the Toxic Substances Control Act of
1976, and other applicable state or federal acts (including the rules and
regulations thereunder) as in effect on or before the Closing Date.
(c) Permits. VCI currently holds no environmental approvals, permits,
licenses, clearances and consents and none are necessary for the conduct of
VCI's Hazardous Material Activities, if any, and other business activities
of VCI as such activities are currently being conducted.
3.19 Permits. Section 3.19 of the VCI Disclosure Schedule sets forth a list
of all permits, licenses, registrations, certificates, orders or approvals from
any Governmental Entity (including without limitation those issued or required
under Environmental Laws and those relating to the occupancy or use of owned or
leased real property) ("Permits") issued to or held by VCI that are material to
the operation of its business. Such listed Permits are the only Permits that
are required for VCI to conduct its business as conducted, except for those the
absence of which could not reasonably be expected to have any Material Adverse
Effect. Each such Permit is in full force and effect.
3.20 Certain Business Relationships with Affiliates. Except as set forth in
Section 3.20 of the VCI Disclosure Schedule, no Affiliate of VCI (a) owns any
property or right, tangible or intangible, which is used in the business of
VCI, (b) has any claim or cause of action against VCI, (c) owes any money to
VCI, or (d) has loaned any money to VCI. Section 3.20 of the VCI Disclosure
Schedule describes any transactions or relationships between VCI and any
Affiliate thereof.
3.21 Brokers' Fees. VCI has no liability or obligation to pay any fees or
commissions to any broker, investment banker, finder or agent with respect to
the transactions contemplated by this Agreement other than to Xxxxxxxxx, Xxxxxx
& Xxxxxxxx.
3.22 Minute Books. The minute books and other similar records of VCI and its
Subsidiaries which are corporations contain true and materially complete
records of all actions taken at any meetings of VCI's shareholders, Board of
Directors or any committee thereof and of all written consents executed in lieu
of the holding of any such meeting, and all charter and bylaw documents and
amendments thereto.
3.23 Customers and Suppliers. No material licensor to or supplier of VCI or
any of its Subsidiaries has indicated that it will stop, or decrease the rate
of, licensing intellectual property or supplying materials, products or
services to VCI or any of its Subsidiaries and no material customer of VCI or
any of its Subsidiaries has indicated that it will stop, or decrease the rate
of, buying, leasing or licensing materials, products or services from VCI or
any of its Subsidiaries. Section 3.23 of the VCI Disclosure Schedule sets forth
a list of each supplier of vitamins, nutritional supplements and minerals that
is the sole supplier of any such significant product to VCI or to any of its
Subsidiaries.
3.24 Year 2000. To VCI's knowledge, the systems and facilities operated by
or on behalf of VCI or any of its Subsidiaries in the conduct of their
respective businesses are capable of providing uninterrupted and error-free
recordation, storage, processing, output and presentation of data, including
calendar dates falling before, on or after January 1, 2000. As of the date
hereof, VCI and its Subsidiaries have operated without any material Year 2000
problems.
3.25 Disclosure. No representation or warranty by VCI contained in this
Agreement, and no statement contained in the VCI Disclosure Schedule or in any
other transaction document delivered to or to be delivered by VCI pursuant to
this Agreement, contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading, as a whole.
ARTICLE IV
REPRESENTATIONS OF HCC AND ACQUISITION CORP.
HCC and Acquisition Corp. represent and warrant to VCI and the Holders that,
except as set forth in the Disclosure Schedule dated as of the date hereof and
signed by the Chief Executive Officer of HCC (the "HCC Disclosure Schedule"),
each of which exceptions shall specifically identify the relevant Section
hereof to which it relates or be specifically enough stated to make it clear
that it is also relevant to such Section:
4.1 Organization. HCC and each of its Subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of the
jurisdictions of their incorporation, and have all requisite power and
authority to own their properties and to carry on their business as now being
conducted. HCC has all requisite power to execute and deliver this Agreement
and the agreements contemplated herein, and to consummate the transactions
contemplated hereby and thereby. HCC and its Subsidiaries are duly qualified to
do business and in good standing in all jurisdictions in which their ownership
of property or the character of their business requires such qualification and
where failure to be so qualified would reasonably be expected to have a
Material Adverse Effect. Certified copies of the Certificates of Incorporation
and the Bylaws of HCC and Acquisition Corporation, as amended to date, have
been previously delivered to VCI, are complete and correct, and no amendments
have been made thereto or have been authorized since the date thereof.
4.2 HCC Capital Structure. The authorized capital stock of HCC consists of
100,000,000 shares of common stock and 5,000,000 shares of preferred stock. As
of March 14, 2000, (i) 22,651,630 shares of HCC common stock were issued and
outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable, (ii) no shares of HCC preferred stock were outstanding, and
(iii) 7,637,395 shares of HCC
common stock were reserved for future issuance pursuant to HCC's stock option
plans and outstanding warrants. Section 4.2 of the HCC Disclosure Schedule sets
forth the outstanding shares of common stock that were not covered by the S-1
registration statement that became effective on December 7, 1999 and the record
owners thereof. All of the outstanding shares of capital stock of each of HCC's
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable
and all such shares are owned by HCC free and clear of all security interests,
liens, claims, pledges, agreements, limitations on HCC's voting rights, charges
or other encumbrances of any nature. The shares of HCC common stock issued
pursuant to this Agreement will, when issued, be duly authorized, validly
issued, fully paid and nonassessable. The shares of HCC common stock owned of
record and beneficially by the HCC stockholders executing the Voting Agreement
comprise not less than forty percent (40%) of the total voting power of HCC as
of the date of this Agreement.
4.3 Subsidiaries. The only Subsidiaries of HCC are those listed in the HCC
Disclosure Schedule. All of the outstanding shares of capital stock of each of
HCC's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares are owned by HCC free and clear of all
security interests, liens, claims, pledges, agreements, limitations on HCC's
voting rights, charges or other encumbrances of any nature. Acquisition Corp.
has been formed by HCC for the purpose of effecting the Merger and has no
significant assets or liabilities (other than its obligations under this
Agreement) and has not engaged in any material activities except as are related
to the Merger.
4.4 HCC's Authorization. Subject to the obtaining of the approval of HCC's
stockholders, the execution and delivery by HCC and Acquisition Corp. of this
Agreement, and the agreements provided for herein, and the consummation by HCC
and Acquisition Corp. of the transactions contemplated hereby and thereby, have
been duly authorized by all requisite corporate action. This Agreement has been
duly executed and delivered by HCC and Acquisition Corp. Subject to the
obtaining of approval of HCC's stockholders, this Agreement and all such other
agreements and written obligations entered into and undertaken in connection
with the transactions contemplated hereby constitute the valid and legally
binding obligations of HCC and Acquisition Corp., enforceable against them in
accordance with their respective terms subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or other similar laws
affecting the rights of creditors generally and subject to equitable remedies.
The execution, delivery and performance of this Agreement and the agreements
provided for herein, and the consummation by HCC and Acquisition Corp. of the
transactions contemplated hereby and thereby, do not and will not, with or
without the giving of notice of the passage of time or both, (a) violate the
provisions of any law, rule or regulation applicable to HCC (assuming
compliance with the requirements of the HSR Act) and which would reasonably be
expected to have a Material Adverse Effect; (b) violate the provisions of the
Certificates of Incorporation or Bylaws of HCC or Acquisition Corp.;
(c) violate any judgment, decree, order or award of any court, governmental
body or arbitrator; or (d) conflict with or result in the breach or termination
of any term or provision of, or constitute a default under, or cause any
acceleration under, or cause the creation of any lien, charge or encumbrance
upon the properties or assets of HCC or of any of its Subsidiaries pursuant to,
any indenture, mortgage, deed of trust or other agreement or instrument to
which HCC or any of its Subsidiaries is a party or by which HCC or any of its
Subsidiaries is or may be bound and which would reasonably be expected to have
a Material Adverse Effect.
4.5 SEC Filings; Financial Statements.
(a) HCC has filed and provided to VCI all forms, reports and documents,
including all exhibits thereto, required to be filed by HCC with the SEC
since December 7, 1999 (the date on which its initial public offering
became effective), including its Form 10-K filed for the year ended
December 31, 1999 (collectively, the "HCC SEC Reports"). The HCC SEC
Reports (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such HCC SEC Reports
or necessary in order to make the statements in such HCC SEC Reports, in
the light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the HCC SEC Reports, including HCC's
audited consolidated balance sheet as of December 31, 1999 ("Most Recent
HCC Balance Sheet") complied as to form in all material respects with the
applicable published rules and regulations of the SEC with respect thereto,
was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved and fairly presented in all material
respects the consolidated financial position of HCC as at the respective
dates and the consolidated results of its operations and cash flows for the
periods indicated.
(c) Since December 31, 1999, HCC has not suffered any Material Adverse
Effect, and no event has occurred which reasonably would be expected to
result in a Material Adverse Effect.
4.6 No Undisclosed Liabilities. HCC and its Subsidiaries have no liability
whether absolute or contingent, whether liquidated or unliquidated and whether
due or to become due), and there is no existing condition, situation or set of
circumstances which would reasonably be expected to result in such a liability,
except for (a) liabilities shown on the Most Recent HCC Balance Sheet, (b)
liabilities which have arisen since December 31, 1999 in the Ordinary Course of
Business, (c) contractual liabilities incurred in the Ordinary Course of
Business which are not required by GAAP to be reflected on a balance sheet or
disclosed in the notes thereto under GAAP, and (d) liabilities for accounting,
investment banking and legal fees incurred in connection with the Merger and
the transactions contemplated thereby.
4.7 Tax Matters. Except as disclosed on the HCC Disclosure Schedule:
(a) HCC and each of its Subsidiaries (together the "HCC Group") have
filed all Tax Returns (as defined below) that they were required to file
and all such Tax Returns were correct and complete in all material
respects. The HCC Group has paid all Taxes owed in respect of the periods
covered by such Tax Returns whether or not shown as due on such Tax Return.
The unpaid Taxes of the HCC Group for tax periods through December 31, 1999
do not exceed the accruals and reserves for Taxes set forth on the Most
Recent HCC Balance Sheet. The HCC Group has no actual or, to HCC's
knowledge, potential liability for any Tax obligation of any taxpayer
(including without limitation any affiliated group of corporations or other
entities that included any member of the HCC Group during a prior period)
other than members of the HCC Group. All Taxes that any member of the HCC
Group is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the
proper Governmental Entity.
(b) The HCC Group has never had any examination report issued or
statements of deficiencies assessed against it which have not been resolved
or satisfied. No Tax Returns of the HCC Group have been audited by any
Governmental Entity. No examination or audit of any Tax Returns of the HCC
Group by any Governmental Entity is currently in progress or, to the
knowledge of HCC, threatened or contemplated. The HCC Group has not waived
any statute of limitations with respect to taxes or agreed to an extension
of time with respect to a tax assessment or deficiency.
(c) The HCC Group is not a "consenting corporation" within the meaning
of Section 341(f) of the Code and none of the assets of the HCC Group are
subject to an election under Section 341(f) of the Code. HCC has not been a
United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(l)(A)(ii) of the Code. The HCC Group is not a party to any
Tax allocation or sharing agreement.
(d) The HCC Group is not and has never been a member of an "affiliated
group" of corporations (within the meaning of Section 1504 of the Code)
other than an affiliated group of which HCC was the common parent. The HCC
Group has not made an election under Treasury Reg. Section 1.1502-20(g).
HCC is not and has not been required to make a basis reduction pursuant to
Treasury Reg. Section 1.1502-20(b) or Treasury Reg. Section 1.337(d)-2T(b).
(e) As of the date of this Agreement and as of the Closing Date, HCC and
its Affiliates are not aware of any existing condition or circumstance (and
have not, and will not have, taken any action) that would cause the Merger
to fail to qualify as a reorganization within the meaning of Section 368(a)
of the Code.
4.8 Assets. HCC and its Subsidiaries do not own any real property. HCC and
its Subsidiaries have good and defensible title to all of their respective
properties as reflected in the Most Recent HCC Balance Sheet (except
properties, interests in properties and assets sold or otherwise disposed of
since December 31, 1999 in the Ordinary Course of Business) or acquired after
December 31, 1999, or with respect to leased properties and assets, valid
leasehold interests in, free and clear of all Security Interest, except as
listed in Section 4.8 of the HCC Disclosure Schedule. The plants, property and
equipment of HCC and its Subsidiaries that are used in the operations of their
respective businesses are in good operating condition and repair subject to
ordinary wear and tear and to requirements for periodic maintenance. All
properties used in the operations of HCC and its Subsidiaries, except for those
acquired after the Most Recent Balance Sheet Date, are reflected in HCC's Most
Recent Balance Sheet to the extent required by GAAP. Section 4.8 of the HCC
Disclosure Schedule identifies all personal property leases of HCC.
4.9 Intellectual Property.
(a) HCC and its Subsidiaries own, or license or otherwise possess
legally enforceable rights to use, all Intellectual Property free and clear
of all liens, claims and encumbrances (including, without limitation,
licensing and distribution rights). Section 4.9 of the HCC Disclosure
Schedule contains an accurate and complete (i) list of all patents and
patent applications and all trademarks (indicating registered and
unregistered trademarks) and applications therefor, registered copyrights,
trade names, service marks and Internet domain names owned or licensed by
HCC or any of its Subsidiaries, including the jurisdictions in which each
such Intellectual Property right has been issued or registered or in which
any such application for such issuance or registration has been filed, (ii)
list of all written licenses, sublicenses and other agreements to which HCC
or any of its Subsidiaries is a party and pursuant to which any person is
authorized to use any Intellectual Property rights of HCC or any of its
Subsidiaries, and (iii) list of all written licenses, sublicenses and other
agreements as to which HCC or any of its Subsidiaries is a party and
pursuant to which HCC or any of its subsidiaries is authorized to use any
third party Intellectual Property. Neither HCC nor any of its Subsidiaries
is a party to any oral license, sublicense or agreement which, if reduced
to written form, would be required to be listed in Section 4.9 of the HCC
Disclosure Schedule under the terms of this Section 4.9(a).
(b) All of the patents, copyrights, trademarks, trade names or Internet
domain name registrations of HCC and its Subsidiaries related to their
current or currently proposed businesses are valid and in full force and
effect and will not be altered or impaired by the consummation of the
transactions contemplated hereby. Neither HCC nor any of its Subsidiaries
is, and will not be as a result of the execution and delivery of this
Agreement or the performance of HCC's obligations under this Agreement, in
breach of any license, sublicense or other agreement relating to HCC's
Intellectual Property or third party Intellectual Property rights.
(c) Neither HCC or any of its Subsidiaries, nor to HCC's knowledge any
of the employees of HCC or any of its Subsidiaries has received a claim, or
is aware of a reasonable basis for a claim, of infringement or violation of
any Intellectual Property right of any third party. To HCC's knowledge, the
manufacturing, marketing, licensing or sale of the products or performance
of the service offerings of HCC and its Subsidiaries do not infringe or
violate any Intellectual Property right of any third party and, to the
knowledge of HCC, the Intellectual Property rights of HCC and its
Subsidiaries are not being infringed or violated by activities, products or
services of any third party.
4.10 Contracts. All material written agreements to which HCC or any of its
Subsidiaries is a party or by which it is bound are listed in HCC's Form 10-K
for the year ended December 31, 1999 or set forth in Section 4.10 of the HCC
Disclosure Schedule. All of the agreements so listed are valid, binding, in
full force and effect and enforceable in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which any proceeding
therefor may be brought (whether at law or in equity). No such contract
contains any liquidated damages, penalty or similar provision. To HCC's
knowledge, no party to any such
contract intends to cancel, withdraw, modify or amend such contract, agreement
or arrangement. Neither HCC nor any of its Subsidiaries is in default under or
in breach or violation of, nor, to HCC's knowledge, is there any valid basis
for any claim of default by HCC or any of its Subsidiaries under, or breach or
violation by HCC or any of its Subsidiaries of, any material provision of any
contract so listed. To HCC's knowledge, no other party is in default under or
in breach or violation of, nor is there any valid basis for any claim of
default by any other party under or any breach or violation by any other party
of, any such contract.
4.11 Accounts Receivable. All accounts receivable reflected on the Most
Recent HCC Balance Sheet are valid receivables, and, to HCC's knowledge, are
subject to no setoffs or counterclaims and are current and collectible (within
90 days after the date on which it first became due and payable), net of the
applicable reserve for bad debts on the Most Recent HCC Balance Sheet. All
accounts receivable reflected in the financial or accounting records of HCC and
its Subsidiaries that have arisen since the Most Recent HCC Balance Sheet Date
are valid receivables, and to HCC's knowledge, subject to no setoffs or
counterclaims and are collectible, net of a reserve for bad debts in an amount
proportionate to the reserve shown on the Most Recent HCC Balance Sheet.
4.12 Litigation. Section 4.12 of the HCC Disclosure Schedule identifies, and
contains a brief description of, (a) any unsatisfied judgment, order, decree,
stipulation or injunction issued by or enforceable by a Governmental Entity,
(b) any written claim, demand, complaint, action, suit, proceeding, or hearing
or, to HCC's knowledge any investigation of or in, any Governmental Entity or
before any arbitrator to which HCC or any of its Subsidiaries or is a party or,
to the knowledge of HCC, is threatened to be made a party, and (c) any written
or oral claims by third persons of which HCC is aware and any reasonable basis
for any third party claims. None of the demands, claims, complaints, actions,
suits, proceedings, hearings, and investigations set forth in Section 4.12 of
the HCC Disclosure Schedule would reasonably be expected to have a Material
Adverse Effect.
4.13 Employee Benefits.
(a) Section 4.13 of the HCC Disclosure Schedule contains a complete and
accurate list of all HCC Employee Benefit Plans (as defined below) which
are maintained, or contributed to, by HCC, or any HCC ERISA Affiliate (as
defined below). For purposes of this Agreement, "HCC Employee Benefit Plan"
means any "employee pension benefit plan" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
any "employee welfare benefit plan" (as defined in Section 3(1) of ERISA),
and any other written or oral plan, agreement or arrangement involving
direct or indirect compensation, including without limitation insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation
or other forms of incentive compensation or post-retirement compensation
maintained, or contributed to, by HCC or any HCC ERISA Affiliate. For
purposes of this Agreement, "HCC ERISA Affiliate" means any entity which is
a member of (i) a controlled group of corporations (as defined in Section
414(b) of the Code), (ii) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (iii) an affiliated
service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes HCC.
Complete and accurate copies of (i) all HCC Employee Benefit Plans which
have been reduced to writing, (ii) written summaries, if any, of all
unwritten HCC Employee Benefit Plans, (iii) all related trust agreements,
insurance contracts and summary plan descriptions, if any, and (iv) the
most recent annual report filed, if any, on IRS Form 5500, 5500C or 5500R
since HCC's inception for each HCC Employee Benefit Plan, have been
delivered to the Buyer. Each HCC Employee Benefit Plan has been
administered in all material respects in accordance with its terms, and
each of HCC, and HCC ERISA Affiliates has in all material respects met its
obligations with respect to such HCC Employee Benefit Plan and has made all
contributions thereto which are required to be made prior to the date
hereof. To the knowledge of HCC, HCC and all HCC Employee Benefit Plans are
in compliance in all material respects with the currently applicable
provisions of ERISA and the Code and the regulations thereunder.
(b) There are no termination proceedings or other claims (except claims
for benefits payable in the normal operation of HCC Employee Benefit Plans
and proceedings with respect to qualified domestic relations orders) suits
or proceedings and, to HCC's knowledge, there are no investigations by any
Governmental Entity, against or involving any HCC Employee Benefit Plan or
asserting any rights or claims to benefits under any HCC Employee Benefit
Plan that could give rise to any material liability.
(c) All HCC Employee Benefit Plans that are intended to be qualified
under Section 401(a) of the Code have received determination letters from
the Internal Revenue Service to the effect that such HCC Employee Benefit
Plans are qualified and the plans and the trusts related thereto are exempt
from federal income taxes under Sections 401(a) and 501(a), respectively,
of the Code, no such determination letter has been revoked and, revocation
has not been threatened, and no such HCC Employee Benefit Plan has been
amended since the date of its most recent determination letter in any
respect which would adversely affect such letter, and, to HCC's knowledge,
no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost.
(d) Neither HCC nor any HCC ERISA Affiliate has ever maintained an HCC
Employee Benefit Plan subject to Section 412 of the Code or Title IV of
ERISA.
(e) At no time has HCC or any HCC ERISA Affiliate been obligated to
contribute to any "multi-employer plan" (as defined in Section 4001(a)(3)
of ERISA).
(f) There are no unfunded obligations under any HCC Employee Benefit
Plan providing benefits after termination of employment to any employee of
HCC or any HCC ERISA Affiliate (or to any beneficiary of any such
employee), including but not limited to retiree health coverage and
deferred compensation, but excluding continuation of health coverage
required to be continued under Section 4980B of the Code and insurance
conversion privileges under state law.
(g) To the knowledge of HCC, no act or omission has occurred and no
condition exists with respect to any HCC Employee Benefit Plan that would
subject HCC, or any HCC ERISA Affiliate to any material fine, penalty, tax
or fiduciary liability imposed under ERISA or the Code.
(h) No HCC Employee Benefit Plan is funded by, associated with, or
related to a "voluntary employee's beneficiary association" within the
meaning of Section 501(c)(9) of the Code.
(i) No HCC Employee Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed
generally to employees by its terms prohibits HCC or any HCC ERISA
Affiliate from amending or terminating any such HCC Employee Benefit Plan.
(j) Section 4.13 of the HCC Disclosure Schedule discloses each: (i)
written, and, to HCC's knowledge, oral, agreement with any director,
officer or other employee of HCC and affiliates (A) the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving HCC or its Affiliates of the nature
of any of the transactions contemplated by this Agreement, (B) providing
any term of employment or compensation guarantee or (C) providing severance
benefits or other benefits after the termination of employment of such
director, officer or employee; (ii) agreement, plan or arrangement under
which any person may receive payments from HCC or its Affiliates that may
be subject to the tax imposed by Section 4999 of the Code or included in
the determination of such person's "parachute payment" under Section 280G
of the Code; and (iii) agreement or plan binding HCC or its affiliates,
including without limitation any stock option plan, stock appreciation
right plan, restricted stock plan, stock purchase plan, severance benefit
plan, or any HCC Employee Benefit Plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement
or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
4.14 Environmental and OSHA.
(a) Hazardous Material. No material amount of any Hazardous Material is,
to the knowledge of HCC, present as a result of the actions of HCC or any
of its Subsidiaries (or, to the knowledge of HCC, as a result of any
actions of any third party or otherwise) in violation of any law in effect
on or before the Closing Date, in, on or under any property, including the
land and the improvements, ground water and surface water thereof, that HCC
or any of its Subsidiaries has at any time owned, operated, occupied or
leased.
(b) Hazardous Materials Activities. Neither HCC nor any of its
Subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the Closing Date, nor has HCC
or any of its Subsidiaries engaged in any "Hazardous Materials Activities")
in violation of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Resource Recovery and Conservation
Act of 1976, the Toxic Substances Control Act of 1976, and other applicable
state or federal acts (including the rules and regulations thereunder) as
in effect on or before the Closing Date.
(c) Permits. HCC currently holds no environmental approvals, permits,
licenses, clearances and consents and none are necessary for the conduct of
HCC's Hazardous Material Activities, if any, and other business activities
of HCC as such activities are currently being conducted.
4.15 Brokers' Fees. HCC has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement other than Pacific Growth.
4.16 Customers and Suppliers. No material licensor to or supplier of HCC has
indicated that it will stop, or decrease the rate of, licensing intellectual
property or supplying materials, products or services to HCC and no material
customer of HCC has indicated that it will stop, or decrease the rate of,
buying, leasing or licensing materials, products or services from HCC. Section
4.16 of the HCC Disclosure Schedule sets forth a list of each supplier that is
the sole supplier of any significant product, component or service to HCC.
4.17 Year 2000. To HCC's knowledge, the systems and facilities operated by
or on behalf of HCC or any of its Subsidiaries in the conduct of their
respective businesses are capable of providing uninterrupted and error-free
recordation, storage, processing, output and presentation of data, including
calendar dates falling before, on or after January 1, 2000. As of the date
hereof, HCC and its Subsidiaries have operated without any material Year 2000
problems.
4.18 Disclosure. No representation or warranty by HCC contained in this
Agreement, and no statement contained in the HCC Disclosure Schedule or in any
other transaction document delivered to or to be delivered by HCC pursuant to
this Agreement, contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading, as a whole.
ARTICLE V
CERTAIN COVENANTS OF VCI
From and after the date hereof and until the earlier of the Closing Date or
termination of this Agreement pursuant to Article VIII hereof and subject to
Section 6.17 hereof:
5.1 Conduct of Business and Certain Key Employees. VCI and its Subsidiaries
shall carry on their businesses in the Ordinary Course of Business. All of the
property of VCI and its Subsidiaries shall be used, operated, repaired and
maintained in a manner consistent with past practice. VCI will use its
commercially reasonable efforts to maintain the relationships of VCI and its
Subsidiaries with their employees, customers and suppliers.
5.2 Absence of Material Changes. Without the prior written consent of HCC,
which consent shall not be unreasonably delayed, conditioned or withheld,
neither VCI nor any of its Subsidiaries shall:
(a) take any action to amend its charter documents or bylaws;
(b) issue any stock (except upon the exercise of outstanding options or
warrants to purchase common stock in exchange for full payment), bonds or
other corporate securities or grant any option or issue any warrant to
purchase or subscribe for any of such securities or issue any securities
convertible into such securities;
(c) incur any obligation or liability (absolute or contingent), except
in the Ordinary Course of Business;
(d) declare or make any payment or distribution to its stockholders or
purchase or redeem any shares of its capital stock;
(e) mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of their assets or properties, other than mechanic's liens
or liens arising by operation of law;
(f) sell, assign, or transfer any of their assets, except in the
Ordinary Course of Business;
(g) cancel any material debts or claims, except in the Ordinary Course
of Business;
(h) merge or consolidate with or into any corporation or other entity;
(i) make any election or give any consent under the Code or the tax
statutes of any state or other jurisdiction, except that on or before the
Closing VCI may make an election under Section 1501 of the Code to file a
consolidated tax return without the prior written consent of HCC, or make
any termination, revocation or cancellation of any such election or any
consent or compromise or settle any claim for past or present tax due; or
(j) enter into any lease, contract, agreement or understanding, other
than those entered into in the ordinary course of business calling for
payments by VCI and its Subsidiaries which in the aggregate do not exceed
$50,000 for each such lease, contract, agreement or understanding or extend
for more than one year from the date hereof.
5.3 Reports, Taxes. VCI and its Subsidiaries shall duly and timely file all
reports or returns required to be filed with federal, state, local and foreign
authorities on or prior to the Closing Date and will promptly pay all federal,
state, local and foreign taxes, assessments and governmental charges levied or
assessed upon them or any of their properties (unless contesting such in good
faith and adequate provision has been made therefor).
5.4 Non-Solicitation.
(a) VCI shall not, directly or indirectly, through any officer,
director, employee, representative or agent, (i) solicit, initiate, or
encourage any inquiries or proposals that constitute, or could reasonably
be expected to lead to, a proposal or offer for a merger, consolidation,
business combination, sale of substantial assets, or sale of shares of
capital stock, other than the transactions contemplated by this Agreement
(any of the foregoing inquiries or proposals being referred to in this
Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person
or entity relating to, any Acquisition Proposal, or (iii) agree to, enter
into, accept, approve or recommend any Acquisition Proposal.
(b) VCI shall notify HCC immediately (and no later than 24 hours) after
receipt by VCI (or its advisors), of any Acquisition Proposal or any
request for nonpublic information in connection with an Acquisition
Proposal or for access to the properties, books or records of VCI by any
person or entity that informs VCI that it is considering making an
Acquisition Proposal. Such notice to HCC shall be made orally and in
writing and shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or contact.
5.5 Option Plans. VCI agrees to take all actions necessary to ensure that
all outstanding options to acquire capital stock of VCI can be assumed by HCC
and converted into options to purchase HCC common stock pursuant to Section 2.6
of this Agreement. VCI also agrees not to take any action that would result in
acceleration of vesting of any such options beyond any acceleration that is
presently required by the options.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 Proxy Statement.
(a) As promptly as practical after the execution of this Agreement, HCC
shall prepare, and VCI shall reasonably cooperate with the preparation of,
the Proxy Statement and HCC shall file the Proxy Statement with the SEC.
(b) The information supplied by HCC and VCI for inclusion in the Proxy
Statement shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated in the Proxy Statement or
necessary in order to make the statements in the Proxy Statement, in the
light of the circumstances under which they were made, not misleading.
6.2 Access to Information. Upon reasonable notice, HCC and VCI shall each
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all information concerning its business,
properties and personnel as may reasonably be requested. Unless otherwise
required by law, the parties will hold any such information that is nonpublic
in confidence. No information or knowledge obtained in any investigation
pursuant to this Section 6.2 shall affect or be deemed to modify any
representation or warranty construed in this Agreement or the conditions to the
obligations of the parties to consummate the Merger.
6.3 Stockholders Meetings. HCC shall call a meeting of its stockholders to
be held as promptly as practicable for the purpose of voting upon this
Agreement as required by the rules of the Nasdaq Market. Subject to
satisfaction of the conditions contained in this Agreement, and except as
otherwise required based upon the exercise of applicable fiduciary duties in
reliance upon the advice of counsel, HCC will, through its Board of Directors,
recommend to its stockholders approval of this Agreement and the Merger, and
shall use its commercially reasonable efforts to hold such meeting as soon as
practicable after the date hereof.
6.4 Legal Conditions to Merger. Each of HCC and VCI shall take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on itself with respect to the Merger (which actions shall
include, without limitation, furnishing all information required under the HSR
Act) and in connection with approvals of or filings with any other governmental
entity and will promptly cooperate with and furnish information to each other
in connection with any such requirements imposed in connection with the Merger.
6.5 Public Disclosure. HCC and VCI shall consult with each other before
issuing any press release or otherwise making any public statement with respect
to the Merger or this Agreement and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law.
6.6 Tax-Free Reorganization. HCC and VCI shall each use commercially
reasonable efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code. If HCC or VCI shall at any time
before the Closing become aware of any event, circumstance or other condition
which may cause the Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code, HCC or VCI, as the case may be, shall
immediately give notice thereof to the other. After the Closing, each of HCC
and its Affiliates shall not take any action (or fail to take any action) which
action or failure to act would cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code. HCC, VCI
and each of the Holders agree that they will report in their respective income
Tax Returns that the Merger qualified as a reorganization under Section 368(a)
of the Code (unless there is no reasonable basis for such a reporting
position), and will properly file with their federal income Tax Returns all
information required by Treas. Regs. (S)1.368-3.
6.7 Pooling Accounting. HCC and VCI shall each use their reasonable best
efforts to cause the business combination to be effected by the Merger to be
accounted for as a pooling of interests.
6.8 Nasdaq Quotation. HCC shall use its reasonable best efforts to cause the
shares of HCC common stock to be issued in the Merger to be approved for
quotation on the Nasdaq National Market, subject to official notice of
issuance, prior to the Effective Time.
6.9 Consents. Each of HCC and VCI shall use commercially reasonable efforts
to obtain all necessary consents, waivers and approvals under any of their
material agreements, contracts, licenses or leases in connection with the
Merger.
6.10 FIRPTA. VCI shall, prior to the Closing Date, provide HCC with a
properly executed Foreign Investment and Real Property Tax Act of 1980
("FIRPTA") Notification Letter, which states that shares of capital stock of
VCI do not constitute "United States real property interests" under Section
897(c) of the Code, for purposes of satisfying HCC's obligations under Treasury
Regulation Section 1.1445-2(c)(3). In addition, simultaneously with delivery of
such Notification Letter, VCI shall have provided to HCC, as agent for VCI, a
form of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2), hereto along with
written authorization for HCC to deliver such notice form to the Internal
Revenue Service on behalf of VCI upon the Closing of the Merger.
6.11 Securities Laws. HCC shall take such steps as may be reasonably
necessary to comply with the securities and blue sky laws of all jurisdictions
that are applicable to the issuance of the HCC common stock in connection with
the Merger. VCI shall use its commercially reasonable efforts to assist HCC as
may be necessary to comply with the securities and blue sky laws of all
jurisdictions that are applicable in connection with the issuance of HCC Common
Stock in connection with the Merger. The HCC common stock will be issued under
a Section 4(2) "private placement" exemption from the registration requirements
of federal securities laws.
6.12 Expenses. Whether or not the Merger is consummated, all fees, costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby and thereby shall be paid by the party incurring such fee,
cost or expense; provided, however, that any transaction fees (including but
not limited to legal, accounting, banking, investment banking and other
advisory fees), costs and expenses (including but not limited to all filing
fees and other non-fee disbursements and expenses such as copy, fax and word
processing charges) in excess of $100,000 incurred in connection with the
consummation of this Agreement on behalf of VCI (other than those that are paid
directly by VCI stockholders or any of their affiliates or are reimbursed to
VCI by VCI stockholders or any of their affiliates) shall reduce dollar for
dollar the Numerator.
6.13 Commercially Reasonable Efforts and Further Assurances. Each of the
parties to this Agreement shall use its commercially reasonable efforts to
effectuate the transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to closing under this Agreement. Each party hereto, at
the reasonable request of another party hereto, shall 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.
6.14 Registration of Shares issued to VCI Shareholders.
(a) Shelf Registration. Within thirty (30) days after the expiration of
the 180 day period commencing as of the Effective Time (but in no event
prior to December 7, 2000), HCC shall prepare and
file with the SEC a "Shelf" registration statement (such registration
statement including the prospectus, amendments and supplements to such
registration statement or prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement, a "Registration Statement") covering all of the shares of HCC
common stock into which VCI's shares of common stock are converted as a
result of the Merger (including any shares of HCC capital stock issued or
issuable as a dividend on or in exchange for or otherwise with respect to
such shares of HCC common stock, the "Merger Shares") for an offering to be
made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (except if HCC is not then eligible to register for
resale the Merger Shares on Form S-3, in which case such registration shall
be on Form S-1 or another appropriate form in accordance herewith as the
Holders, by vote of the Holders of a majority of the Merger Shares, may
consent). HCC shall use its reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, and shall use its reasonable
best efforts to keep such Registration Statement continuously effective
under the Securities Act until the date which is two (2) years after the
date that such Registration Statement is declared effective by the SEC or
such earlier date when all Merger Shares covered by such Registration
Statement have been sold or may be sold without volume restrictions
pursuant to Rule 144(k) as determined by the counsel to HCC pursuant to a
written opinion letter to such effect (the "Effectiveness Period").
Anything to the contrary contained herein notwithstanding, HCC shall not
voluntarily take any action that would result in the Holders not being able
to sell the Merger Shares during the Effectiveness Period, unless such
action is required under applicable law, as evidenced by an opinion of
counsel to HCC or such other evidence as the Holders may deem acceptable,
or HCC has, upon written advice of counsel, filed a post-effective
amendment to the Registration Statement and the SEC has not declared it
effective.
(b) Piggyback Registration Rights. If at any time beginning after 180
days after the Effective Time and expiring on the third anniversary
thereof, HCC shall determine to register any of its securities either for
its own account or the account of a security holder or holders exercising
demand registration rights, other than a registration relating solely to
employee benefit plans, or a registration relating solely to a Rule 145
transaction, or a registration on any registration form which does not
permit secondary sales, HCC will:
(i) promptly give to the Holders written notice thereof; and
(ii) include in such registration the (A) the Merger Shares and (B)
any other shares of HCC common stock held by HCC stockholders who have
the right to and elect to sell shares in such offering ("Registrable
Securities") specified in a written request made by the Holders within
ten (10) days after receipt of the written notice from HCC described in
clause (i) above, except as set forth in Section 6.14(b) below.
Notwithstanding the foregoing, HCC shall not be required to include in any
such registration shares a Holder requests be included in the registration
if all of such shares could then be sold by such Holder pursuant to Rule
144 under the Securities Act or, if such registration will not cover an
Underwritten Offering, pursuant to the "Shelf" registration statement
provided for in Section 6.14(a) hereof.
If the registration of which HCC gives notice is for a registered public
offering involving an underwriting, HCC shall so advise the Holders as a
part of the written notice given pursuant to this Section 6.14(b). In such
event the right of the Holders to registration pursuant to this Section
6.14(b) shall be conditioned upon the Holders participation in such
underwriting and the inclusion of the Holder's Registrable Securities in
the underwriting to the extent provided herein. The Holder shall, if it
proposes to distribute its securities through such underwriting (together
with HCC and other shareholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected by HCC.
Notwithstanding any other provision of this Section 6.14(b), if the
representative of the underwriters advises HCC that marketing factors
require a limitation or elimination on the number of shares to be
underwritten, the representative
may limit the number of Registrable Securities to be included in the
registration and underwriting. HCC shall so advise all holders of
securities that are entitled to be included in the registration and
underwriting and participation shall be allocated first to HCC for
securities being sold for its own account, and the balance, if any, of the
number of shares that may be included in the registration statement and
underwriting shall be allocated among the Holders and other shareholders in
proportion, as nearly as practicable, to the respective amounts of shares
which they had requested to be included in such registration at the time of
filing the registration statement.
(c) Expenses of Registration. HCC shall pay all Registration Expenses
(as hereafter defined) in connection with any registration, qualification
or compliance pursuant to this Section 6.14, and each Holder shall pay all
Selling Expenses (as hereafter defined) and other expenses that are not
Registration Expenses relating to the Registrable Securities resold by him
or her. For purposes of this Section 6.14, "Registration Expenses" shall
mean all expenses, except as otherwise stated below, incurred by HCC in
complying with Sections 6.14(a), 6.14(b) and 6.14(d), including, without
limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for HCC, blue sky
fees and expenses and the expense of any special audits incident to or
required by any such registration and the reasonable fees and expenses of
one counsel for all of the selling Holders up to a maximum of $25,000. For
purposes of this Section 6.14(c), "Selling Expenses" shall mean all selling
discounts, commissions and stock transfer or other Taxes applicable to the
Registrable Securities and all fees and disbursements of counsel for any
Holder.
(d) Registration Procedures. In the case of any registration effected by
HCC pursuant to this Section 6.14, HCC will keep each Holder advised in
writing as to the initiation of each registration and as to the completion
thereof. HCC will:
(i) Not less than ten (10) days prior to the filing of a
Registration Statement or any related prospectus or any amendment or
supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), (A) furnish to the
Holders and their designated counsel, and any managing underwriters,
copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders, their counsel
and such managing underwriters, and (B) cause its officers and
directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable
opinion of respective counsel to such Holders and such underwriters, to
conduct a reasonable investigation within the meaning of the Securities
Act.
(ii) (A) Prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective for the Effectiveness
Period; (B) cause the related prospectus to be amended or supplemented
by any required prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424 (or any similar provisions
then in force); (C) respond as promptly as reasonably possible to any
comments received from the SEC with respect to the Registration
Statement or any amendment thereto and as promptly as reasonably
possible provide the Holders true and complete copies of all
correspondence from and to the SEC relating to the Registration
Statement; and (D) comply in all material respects with the provisions
of the Securities Act and the Exchange Act with respect to the
disposition of all Merger Shares covered by the Registration Statement
during the Effectiveness Period.
(iii) File such supplements or attach "stickers" to the Registration
Statement or prospectus as and when required by the SEC to evidence a
material amount of resales by a Holder pursuant to a prospectus.
(iv) Notify the Holders of Merger Shares to be sold, their
designated counsel and any managing underwriters as promptly as
reasonably possible (and, in the case of (A)(1) below, not less than
five (5) days (or, in the case of a supplement or "sticker" required to
be filed or attached, within
two (2) days) prior to such filing) and (if requested by any such
person) confirm such notice in writing no later than two (2) days
following the day (A)(1) when a prospectus or any prospectus supplement
or post-effective amendment to the Registration Statement is proposed
to be filed; (2) when the SEC notifies HCC whether there will be a
"review" of such Registration Statement and whenever the SEC comments
in writing on such Registration Statement (HCC shall provide true and
complete copies thereof and all written responses thereto to each of
the Holders and to their designated counsel); and (3) with respect to
the Registration Statement or any post-effective amendment, when the
same has become effective; (B) of any request by the SEC or any other
Governmental Entity for amendments or supplements to the Registration
Statement or prospectus or for additional information; (C) of the
issuance by the SEC of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Merger Shares or
the initiation of any proceedings for that purpose; and (D) in the case
of Underwritten Offerings, if at any time any of the representations
and warranties of HCC contained in any agreement (including any
underwriting agreement) contemplated hereby ceases to be true and
correct in all material respects; (E) of the receipt by HCC of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Merger Shares for sale in
any jurisdiction, or the initiation or threatening of any proceeding
for such purpose; and (F) of the occurrence of any event or passage of
time that makes the financial statements included in the Registration
Statement ineligible for inclusion therein or any statement made in the
Registration Statement or prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material
respect or that requires any revisions to the Registration Statement,
prospectus or other documents so that, in the case of the Registration
Statement or the prospectus, as the case may be, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(v) Use its reasonable best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (A) any order suspending the
effectiveness of the Registration Statement, or (B) any suspension of
the qualification (or exemption from qualification) of any of the
Merger Shares for sale in any jurisdiction, at the earliest practicable
moment.
(vi) If requested by any managing underwriter or the Holders of a
majority of the Merger Shares to be sold in connection with an
Underwritten Offering, (A) promptly incorporate in a prospectus
supplement or post-effective amendment to the Registration Statement
such information as such managing underwriters and such Holders
reasonably agree should be included therein, and (B) make all required
filings of such prospectus supplement or such post-effective amendment
as soon as practicable after HCC has received notification of the
matters to be incorporated in such prospectus supplement or post-
effective amendment; provided, however, that HCC shall not be required
to take any action pursuant to this subsection (vi) that would, in the
opinion of counsel for HCC, violate applicable law or be materially
detrimental to the business prospects of HCC.
(vii) Furnish to each Holder, their designated counsel and any
managing underwriters, without charge, at least one (1) conformed copy
of each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the
extent requested by such person (including those previously furnished
or incorporated by reference) promptly after the filing of such
documents with the SEC.
(viii) Promptly deliver to each Holder, their designated counsel,
and any underwriters, without charge, as many copies of the prospectus
or prospectuses (including each form of prospectus) and each amendment
or supplement thereto as such persons may reasonably request; and HCC
hereby consents to the use of such prospectus and each amendment or
supplement thereto by each of the selling Holders and any underwriters
in connection with the offering and sale of the Merger Shares covered
by such prospectus and any amendment or supplement thereto.
(ix) Prior to any public offering of Merger Shares, use its
commercially reasonable efforts to register or qualify or cooperate
with the selling Holders, any underwriters and their designated counsel
in connection with the registration or qualification (or exemption from
such registration or qualification) of such Merger Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder or underwriter requests in writing, to
keep each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Merger Shares covered by a Registration Statement;
provided, however, that HCC shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or
to take any action that would subject it to general service of process
in any such jurisdiction where it is not then so subject or subject HCC
to any material tax in any such jurisdiction where it is not then so
subject.
(x) Cooperate with the Holders and any managing underwriters to
facilitate the timely preparation and delivery of certificates
representing Merger Shares to be delivered to a transferee pursuant to
a Registration Statement, which certificates shall be free of all
restrictive legends, and to enable such Merger Shares to be in such
denominations and registered in such names as any such managing
underwriters or Holders may request.
(xi) Upon the occurrence of any event contemplated by Section
(iv)(F) hereof, as promptly as reasonably possible, prepare a
supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related prospectus or any
document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such prospectus will
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(xii) Use its reasonable best efforts to cause all Merger Shares
relating to such Registration Statement to be listed on each securities
exchange or quotation system on which similar securities issued by HCC
are then listed or quoted, and in connection therewith to file with the
Nasdaq National Market (or such other exchange or quotation system as
is then the principal trading market for HCC's common stock) an
application for listing of additional shares with respect to the Merger
Shares.
(xiii) Provide a transfer agent and registrar for all Merger Shares
registered pursuant to the Registration Statement and a CUSIP number
for all such Merger Shares, in each case not later than the effective
date of the Registration Statement.
(xiv) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other reasonable actions in connection
therewith (including those reasonably requested by any managing
underwriters and the Holders of a majority of the Merger Shares being
sold) in order to expedite or facilitate the disposition of such Merger
Shares, and whether or not an underwriting agreement is entered into,
(A) make such representations and warranties to such Holders and such
underwriters as are customarily made by issuers to underwriters in
underwritten public offerings (subject to the scheduling of appropriate
exceptions to insure such representations and warranties are accurate),
and confirm the same if and when requested; (B) in the case of an
Underwritten Offering obtain and deliver copies thereof to each Holder
and the managing underwriters, if any, of opinions of counsel to HCC
and updates thereof addressed to each Holder and each such underwriter,
in form, scope and substance reasonably satisfactory to any such
managing underwriters and the designated counsel of the selling Holders
covering the matters customarily covered in opinions requested in
Underwritten Offerings and such other matters as may be reasonably
requested by such designated counsel and underwriters; (C) use its
reasonable best efforts immediately prior to the effectiveness of the
Registration Statement, and, in the case of an Underwritten Offering,
at the time of delivery of any Merger Shares sold pursuant thereto,
deliver copies to the Holders and the managing underwriters, if
any, of "cold comfort" letters and updates thereof obtained from the
independent certified public accountants of HCC (and, if necessary, any
other independent certified public accountants of any subsidiary of HCC
or of any business acquired by HCC for which financial statements and
financial data is, or is required to be, included in the Registration
Statement); (D) if an underwriting agreement is entered into, the same
shall contain customary indemnification provisions and procedures
acceptable to the managing underwriters, if any, and holders of a
majority of Merger Shares participating in such Underwritten Offering);
and (E) deliver such documents and certificates as may be reasonably
requested by the Holders of a majority of the Merger Shares being sold,
their designated counsel and any managing underwriters to evidence the
continued validity of the representations and warranties made pursuant
to clause (A) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement
entered into by HCC.
(xv) Make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any
disposition of Merger Shares, and any attorney or accountant retained
by such selling Holders or underwriters, at the offices where normally
kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of HCC and its
subsidiaries, and cause the officers, directors, agents and employees
of HCC and its subsidiaries to supply all information in each case
reasonably requested by any such Holder, representative, underwriter,
attorney or accountant in connection with the Registration Statement;
provided, however, that any information that is determined in good
faith by HCC in writing to be of a confidential nature at the time of
delivery of such information shall be kept confidential by such
Persons, unless (W) disclosure of such information is required by court
or administrative order or is necessary to respond to inquiries of
regulatory authorities; (X) disclosure of such information, in the
opinion of counsel to such person, is required by law; (Y) such
information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by such person; or (Z)
such information becomes available to such person from a source other
than HCC and such source is not known by such person to be bound by a
confidentiality agreement with HCC.
(xvi) Comply with all applicable rules and regulations of the SEC.
(e) Information by Holder. Each Holder of Registrable Securities shall
furnish to HCC such information regarding such Holder and the distribution
proposed by such Holder as HCC may reasonably request in connection with
any registration, qualification or compliance referred to in this Section
6.14, but only to the extent that such information is required in order for
HCC to comply with its obligations under all applicable securities and
other laws and to ensure that the Registration Statement relating to such
Registrable Securities conforms to the applicable requirements of the
Securities Act and the rules and regulations thereunder. Each Holder
covenants that it will promptly notify HCC of any changes in the
information set forth in the Registration Statement or otherwise provided
by such Holder to HCC regarding such Holder or such Holder's plan of
distribution as a result of which the Registration Statement or any
prospectus relating to the Registrable Securities contains or would contain
an untrue statement of a material fact regarding such Holder or its
intended method of distribution of such Registrable Securities or omits to
state any material fact regarding such Holder or its intended method of
distribution of such Registrable Securities required to be stated therein
or necessary to make the statements therein, not misleading.
(f) Indemnification and Contribution.
(i) HCC agrees to indemnify and hold harmless each Holder from and
against any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) to which such Holder may become subject
(under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement, alleged untrue
statement, omission or alleged omission of a material fact in the
Registration Statement, any prospectus included in the Registration
Statement, or any amendment or supplement to the Registration Statement
or any such prospectus, or any violation or alleged violation by HCC of
the Securities Act, the Exchange Act, any state law, rule or regulation
promulgated thereunder, and HCC will, as incurred, reimburse such
Holder for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that the indemnity contained in
this Section 6.14(f)(1) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of HCC (which consent shall
not be unreasonably withheld), nor shall HCC be liable in any such case
to the extent that such loss, claim, damage or liability arises out of,
or is based upon (A) an untrue statement or alleged untrue statement
made in such Registration Statement in reliance upon and in conformity
with written information furnished to HCC by such Holder specifically
furnished for use in preparation of the Registration Statement, (B) the
failure of such Holder to comply with any of the covenants and
agreements contained in this Section 6.14, or (C) any untrue statement
in any prospectus that is corrected in any subsequent prospectus that
was delivered to the Holder prior to the pertinent sale or sales by the
Holder.
(ii) Each Holder, severally and not jointly, agrees to indemnify and
hold harmless HCC from and against any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) to which HCC
may become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) arise out of, or are based upon (A) an untrue
statement, alleged untrue statement, omission or alleged omission of a
material fact in the Registration Statement, any prospectus included in
the Registration Statement, or any amendment or supplement to the
Registration Statement or any such prospectus in reliance upon and in
conformity with written information furnished to HCC by such Holder in
an instrument executed by such Holder and specifically stated to be for
use in preparation of the Registration Statement, or any violation or
alleged violation by Holder of the Securities Act, the Exchange Act,
any state law, rule or regulation promulgated thereunder, provided,
however, the indemnity contained in this Section 6.14(f)(ii) shall not
apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent
of Holder (which consent shall not be unreasonably withheld), and
provided that no Holder shall be liable in any such case for any untrue
statement included in any Prospectus which statement has been corrected
in a writing delivered to HCC at least two business days before the
sale from which such loss arose, (B) the failure of such Holder to
comply with any of the covenants and agreements contained in Section
6.14, or (C) any untrue statement in any Prospectus that is corrected
in any subsequent Prospectus that was delivered to the Holder prior to
the pertinent sale or sales by the Holder; and each Holder, severally
and not jointly, will, as incurred, reimburse HCC for any legal or
other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim. In no event
shall the amount payable by any Holder to HCC pursuant to this Section
6.14(f) by reason of a sale of HCC Common Stock by such Holder exceed
the amount of the net proceeds to such Holder from the sale of HCC
Common Stock from which such liability arose.
(iii) Promptly after receipt by any indemnified person under
subsections (i) or (ii) above of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 6.14(f), such indemnified
person shall notify the indemnifying person in writing of such claim or
of the commencement of such action (provided, however, that no failure
to provide such notice shall relieve any indemnifying person of any
liability hereunder except to the extent that such indemnifying person
is prejudiced thereby), and, subject to the provisions hereinafter
stated, in case any such action shall be brought against an indemnified
person and the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and,
to the extent that it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to the indemnified person. After notice
from the indemnifying person to such indemnified person of the
indemnifying person's election to assume the defense thereof, the
indemnifying person shall not be liable to such indemnified person for
any legal expenses
subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that, if the indemnifying person
shall propose that the same counsel represent it and the indemnified
person, and if counsel for the indemnified person shall reasonably have
concluded that there is an actual conflict of interest posed by the
representation proposed by the indemnifying person, the indemnified
person shall be entitled to retain its own counsel reasonably
satisfactory to the indemnifying person at the expense of such
indemnifying person; provided, however that if more than one
indemnified person makes a claim against an indemnifying person based
on substantially similar facts, the indemnifying person shall not be
responsible for the fees of more than one counsel for all indemnified
persons whose claims are based on substantially similar facts.
(iv) if the indemnification provided for in this Section 6.14(f) is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect
thereof), in such proportion as is appropriate to reflect the relative
fault of each such party, as well as any other relevant equitable
considerations, provided, however, that any contribution by a Holder
shall not exceed the net proceeds to such Holder for the sale of HCC
Common Stock from which such liability arose, except in the case of
willful fraud by such Holder. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by HCC on the one
hand or a Holder on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. HCC and the Holders agree that it would not
be just and equitable if contribution pursuant to this Section 6.14(f)
were determined by any method of allocation which does not take account
of the equitable considerations referred to above in this Section
6.14(f)(iv). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in
respect thereof) referred to above in this Section 6.14(f)(iv) shall be
deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending
any such action, proceeding or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(v) The obligations of the HCC and the Holders under this Section
6.14(f) shall be in addition to any liability which HCC and the
respective Holders may otherwise have and shall extend, upon the same
terms and conditions, to each director and officer of HCC or any
Holder, and to each person, if any, who controls HCC or any Holder
within the meaning of the Securities Act or the Exchange Act.
(g) Restrictive Legend. Each certificate representing Merger Shares
shall bear substantially the following legend (in addition to any legends
required under applicable securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
And with respect to Affiliates of VCI, shall bear the following additional
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
APPLIES, AND MAY ONLY BE TRANSFERRED (1) IN CONFORMITY WITH RULE
145, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (3) IN
ACCORDANCE WITH A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE
TO THE ISSUER, IN FORM AND SUBSTANCE TO THE EFFECT THAT
SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933.
The legends contained in this Section 6.14(g) shall be removed from a
certificate in connection with any sale in compliance with the terms of
this Agreement and pursuant to the Resale Registration Statement or a
registration statement covered by Section 6.14(b), or pursuant to Rule 144
(if accompanied by any legal opinion reasonably required by the HCC), but
shall not be removed in any other circumstance without HCC's prior written
consent (which consent shall not be unreasonably withheld or delayed and
shall be granted if such legend is no longer appropriate).
(h) Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities to the public without registration, HCC
agrees to use its reasonable best efforts to:
(i) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all
times after the Merger;
(ii) File with the SEC in a timely manner all reports and other
documents required of HCC under the Securities Act and the Exchange
Act; and
(iii) So long as a Holder owns any Registrable Securities, to
furnish to that Holder forthwith upon request a written statement by
HCC as to its compliance with the reporting requirements of said
Rule 144, and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of HCC, and such other reports
and documents of HCC as such Holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing such Holder to
sell any such Registrable Securities without registration.
6.15 Tax Matters.
(a) HCC shall cause to be prepared and filed any required Tax Returns
due to be filed by VCI or any of its Subsidiaries after the Closing Date.
The Stockholder Representative shall be responsible for preparation and
filing of Tax Returns of Xxxxxxxx.xxx, LLC for its final taxable year ended
August 15, 1999. HCC shall timely pay or cause to be paid all Taxes shown
to be due on such Tax Returns, without prejudice to any right to indemnity
which the HCC Parties may have pursuant to Section 9.2 of this Agreement
with respect to such Taxes.
(b) For each Tax Return that HCC shall prepare (or cause to be prepared)
with respect to VCI or any Subsidiary for any taxable period which includes
any period ending on or prior to the Closing Date, HCC shall, not less than
30 days prior to the date on which each such Tax Return is required to be
filed, provide a copy of such Tax Return to the Stockholder Representative
for comment and review. The Stockholder Representative shall have the right
to direct HCC to adopt any filing position in such Tax Return if (i) such
position is supported by a "more likely than not" opinion of reputable tax
counsel and (ii) the reporting position initially proposed by HCC on such
Tax Return would result in Holders' liability for indemnification pursuant
to Section 9.2 hereof. HCC shall cause all such Tax Returns to be prepared
in a manner consistent with the methodology of VCI and its Subsidiaries
used in prior taxable years, except as otherwise required by applicable law
or regulations.
(c) HCC shall not file, nor cause to be filed, on behalf of VCI or any
Subsidiary any amended Tax Return with respect to a taxable period (or
portion of a period) ending on or prior to the Closing Date without the
prior written consent of the Stockholder Representative (which consent
shall not be unreasonably withheld or delayed), unless (i) HCC agrees to
release the Holders from liability for indemnification pursuant to Section
9.2 hereof, if any, which results from such amended Tax Return, or
(ii) such amendment is compelled by the relevant taxing authority.
(d) HCC and VCI and the Stockholder Representative agree to cooperate
with one another in the preparation of any Tax Return pursuant to this
Section 6.15 and amendment of any Tax Return for periods
referred to in Section 6.15(c) hereof, and to negotiate in good faith
regarding the Tax reporting positions to be taken on such Tax Returns. Any
costs of preparing an amended Tax Return at the request of the Stockholder
Representative shall be subject to reimbursement or indemnification out of
the Escrow Fund. VCI shall be entitled to direct an election to file
consolidated, combined or unitary returns with its Subsidiaries for the
taxable period ending on or before the Closing Date by notice to HCC on or
before the Closing Date, unless HCC agrees to release the Holders from
liability for indemnification pursuant to Section 9.2 hereof for any
increase in tax liability attributable to the failure to file on a
consolidated basis as requested by VCI.
6.16 Interim Operations of VCI. HCC agrees that during the period commencing
on the date of this Agreement and ending on the Closing Date it shall advance
to or on behalf of VCI such amounts in cash, up to a maximum of $3,000,000, as
may be reasonably requested by VCI from time to time in writing to allow VCI to
operate in the Ordinary Course of Business. Each amount advanced by HCC to VCI
shall be represented by a promissory note providing for interest at the rate of
the Xxxxx Fargo Bank prime rate plus 3% per annum and payment on the earlier of
(i) one year after the date thereof, or (ii) the closing by VCI of any
financing that raises $10,000,000 or more.
6.17 Issuance of Additional Shares by HCC. Commencing on the date of this
Agreement and continuing through Closing, if HCC shall issue or sell any shares
of its capital stock which, in the aggregate, exceeds two percent (2%) of the
total issued and outstanding shares of HCC capital stock, as determined on the
date of this Agreement, HCC shall use commercially reasonable efforts to obtain
Voting Agreements with respect to such excess shares issued.
6.18 Payment of Dividends by HCC. Between the date of this Agreement and the
Closing Date, HCC agrees not to, without the consent of VCI (such consent not
to be unreasonably withheld), declare or pay any dividend or otherwise make a
distribution with respect to its capital stock, other than a stock dividend of
shares of HCC common stock, or to repurchase or offer to repurchase any shares
of HCC capital stock (other than repurchases of HCC capital stock pursuant to
written agreements with its employees which were in existence on the date of
this Agreement).
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order or prohibition
issued by any Governmental Entity shall be in effect, nor shall any action
or proceeding seeking any of the foregoing be pending, that would prevent
the consummation of the Merger or restrict the operation of the business of
VCI.
(b) Governmental Approval. HCC, VCI and Acquisition Corporation and
their respective subsidiaries shall have timely obtained from each
Governmental Entity all approvals, waivers and consents necessary for
consummation of or in connection with the Merger and the several
transactions contemplated hereby, including such approvals, waivers and
consents as may be required under the Securities Act under state blue sky
laws and DCL.
(c) HSR Act Compliance. All waiting, review and investigation periods
(and any extensions thereof) applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
7.2 Additional Conditions to Obligations of HCC and Acquisition Corp. The
obligations of HCC and Acquisition Corp. to consummate the Merger are subject
to the fulfillment, at or before the Closing of all the following conditions,
any one or more of which may be waived by HCC.
(a) Representations and Warranties. The representations and warranties
of VCI contained in this Agreement shall be true in all material respects
(except for such representations and warranties as are qualified by their
terms by a reference to materiality, which representations and warranties
as so qualified shall be true in all respects) as of the Closing as though
such representations were made on and as of such time; provided, however,
that if as of the Closing Date the sum of (1) reasonably anticipated Losses
arising out of the failure of the representations and warranties to be true
and correct in all material respects as of the date of this Agreement and
(2) reasonably anticipated Losses arising out of the failure of the
representations and warranties that were true and correct in all material
respects as of the date of this Agreement to be true and correct as of the
Closing Date is no more than 10% of the Numerator, then in such event HCC
shall not have the right to terminate this Agreement based upon the non-
satisfaction of this condition but rather shall have recourse for such
Losses against the Escrow Fund in accordance with the terms and procedures
of the Escrow Agreement.
(b) Covenants Performed. All of the obligations of VCI to be performed
at or before the Closing pursuant to the terms of this Agreement shall have
been duly performed in all material respects.
(c) Certificate. At the Closing, HCC shall have received a certificate
signed by the Chief Executive Officer of VCI to the effect that the
conditions set forth in Sections 7.2(a) and 7.2(b) have been satisfied.
(d) Stockholder Approval. The stockholders of HCC shall have duly
approved this Agreement and the Merger Agreement in accordance with the
rules of the Nasdaq National Market.
(e) Dissenting VCI Shares. The aggregate number of Dissenting VCI Shares
shall not exceed 2 percent of the aggregate of the outstanding shares of
capital stock of VCI.
(f) Opinion of Counsel to VCI. Counsel to VCI, shall have issued an
opinion in favor of HCC in the form of Exhibit J hereto.
(g) Resignations. VCI shall have delivered to HCC signed resignations
from the Board of Directors of VCI and its Subsidiaries.
(h) Merger Agreement. The Merger Agreement shall have been filed with
the Secretary of State of the State of Delaware and shall have become
effective.
7.3 Additional Conditions to Obligations of VCI. The obligations of VCI to
consummate the Merger are subject to the fulfillment, at or before the Closing,
of all of the following conditions, any one or more of which may be waived by
VCI:
(a) Representations and Warranties True at Closing. The representations
and warranties of HCC and Acquisition Corp. contained in this Agreement
shall be true in all material respects except for such representations and
warranties as are qualified by their terms by a reference to materiality,
which representations and warranties as so qualified shall be true in all
respects as of the Closing, as though such representations were made on and
as of such time.
(b) Covenants Performed. All of the obligations of HCC and Acquisition
Corp. to be performed at or before the Closing pursuant to the terms of
this Agreement shall have been duly performed in all material respects.
(c) Certificate. At the Closing, VCI shall have received a certificate
signed by the Chief Executive Officer of each of HCC and Acquisition Corp.
to the effect that the conditions set forth in Sections 7.3(a) and 7.3(b)
have been satisfied.
(d) Stockholder Approval. The stockholders of Acquisition Corp. and HCC
shall have duly approved this Agreement and the Merger Agreement.
(e) Opinion of Counsel to HCC. Counsel to HCC, shall have issued an
opinion in favor of VCI in the form of Exhibit K.
(f) Nasdaq Notification. HCC shall have notified Nasdaq of the proposed
issuance of HCC common stock pursuant to the Merger and upon exercise of
the stock options of VCI assumed by HCC pursuant to the Merger and such
stock shall have been approved for quotation on the Nasdaq National Market.
(g) Merger Agreement. The Merger Agreement shall have been filed with
the Secretary of State of the State of Delaware and shall have become
effective.
ARTICLE VIII
TERMINATION
8.1 Termination. At any time prior to the Effective Time, whether before or
after approval of the matters presented in connection with the Merger by the
shareholders of HCC or VCI, this Agreement be terminated:
(a) by mutual consent of HCC and VCI;
(b) by VCI, by giving written notice to HCC that HCC is in material
breach of any representation, warranty, or covenant of HCC contained in
this Agreement, which breach shall not have been cured, if subject to cure,
within 15 calendar days following receipt by HCC of written notice of such
breach;
(c) by HCC, by giving written notice to the Stockholder Representative
that VCI is in material breach of any representation or warranty (unless,
the Stockholder Representative has exercised its option pursuant to Section
7.2(a) hereof to increase the Escrow Fund) or covenant contained in this
Agreement, which breach shall not have been cured, if subject to cure,
within 15 calendar days following receipt by the Stockholder Representative
of written notice of such breach.
(d) by HCC, by giving written notice to VCI, if the Closing shall not
have occurred on or before September 30, 2000, or such later date as is
agreed to by the Boards of Directors of both VCI and HCC, by reason of the
failure of any condition precedent under Section 7.1 or 7.2 (unless the
failure results primarily from a breach by HCC of any representation,
warranty, or covenant of HCC contained in this Agreement or HCC's failure
to fulfill a condition precedent to closing or other default); or
(e) by VCI, by giving written notice to HCC, of the Closing shall not
have occurred on or before September 30, 2000, or such later date as is
agreed to by the Boards of Directors of both VCI and HCC, by reason of the
failure of any condition precedent under Section 7.1 or 7.3 (unless the
failure results primarily from a breach by VCI of any representation,
warranty, or covenant of VCI contained in this Agreement or VCI's failure
to fulfill a condition precedent to closing or other default).
8.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of HCC or VCI or their
respective officers, directors, shareholders or affiliates, except to the
extent that such termination results from the material breach by a party hereto
of any of its representations, warranties or covenants set fort in this
Agreement; provided that, the provisions of Section 6.2 relating to
confidentiality this Section 8.2, Section 8.3 and Section 9.2 shall remain in
full force and effect and survive any termination of this Agreement.
8.3 HCC Obligation to Purchase VCI Shares. In the event that Closing does
not occur for any reason whatsoever, other than as the direct result of VCI's
breach of any of its representations, warranties and covenants hereunder, HCC
shall upon written demand promptly given by VCI purchase from VCI for $1.00 per
share the number of shares of VCI's Series C Preferred Stock determined by
subtracting from $6,000,000 the amount owed to HCC as a result of loans made
pursuant to Section 6.16 hereof and dividing the result thereof by $1.00.
Closing on such purchase shall occur at VCI's principal office within 15
calendar days after any such
demand. At the closing of such purchase, HCC shall tender by wire transfer to
VCI's designated account the purchase price so determined, and VCI shall tender
to HCC a stock certificate representing the shares purchased. The dollar and
share amounts provided for herein shall be appropriately adjusted in the event
of any stock dividend, stock split or other similar change in the
capitalization of VCI.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 Survival of Representations and Warranties. All statements contained in
any exhibit, certificate, schedule or other instrument delivered or to be
delivered by or on behalf of the parties hereto, or in connection with the
transactions contemplated hereby, shall be deemed representations and
warranties hereunder. All such representations, warranties, and indemnification
rights contained herein shall survive the Closing and any audit or
investigation made by or on behalf of the parties, but shall expire on the
earlier of the date that is twelve (12) months after the Effective Time or the
date on which HCC issues its first independent audit report for the combined
entities, and no claims for indemnification hereunder may be made after such
date.
9.2 Indemnification by Holders.
(a) The Holders, by their approval of this Agreement and the Merger,
shall be deemed to have agreed jointly, but only to the extent of the
Escrow Fund, to indemnify and hold HCC and its directors, officers,
employees, fiduciaries, agents and Affiliates, and each other person, if
any, who controls such persons (collectively, the "HCC Parties") harmless
against any claims, actions, suits, proceedings, investigations, losses,
expenses, damages, obligations, liabilities, judgments, fines, fees, costs
and expenses (including costs and reasonable attorneys' fees) and amounts
paid in settlement of any pending, threatened or completed claim, action,
suit, proceeding or investigation (collectively "Loss" or "Losses") which
arise out of or result from or are related to (i) any breach by or failure
of VCI to perform any of its covenants or agreements set forth herein, (ii)
the inaccuracy of any representation or warranty made by VCI herein, or
(iii) any amounts paid, in settlement or otherwise, of the matters
described in Sections 3.2(b) and 3.15 of the VCI Disclosure Schedule.
(b) If the HCC Parties are entitled to indemnification under this
Agreement, they shall be entitled to recover shares of HCC common stock
pursuant to the Escrow Agreement (subject to each Holder's right under the
Escrow Agreement to satisfy all or any part of any indemnification
obligation by paying cash in lieu of HCC common stock) having an aggregate
value, based on the average closing price used to calculate the Exchange
Ratio, equal to the amount of its Loss or Losses. The aggregate liability
of the Holders for indemnification under this Article IX shall not exceed
the Escrow Fund and the HCC Parties sole and exclusive remedy for
indemnification claims under this Article IX shall be to seek recovery
against the Escrow Fund.
9.3 Indemnification by HCC. HCC agrees to indemnify and hold VCI, the
Holders and VCI's directors, officers, employees, fiduciaries, agents and
Affiliates and each other person, if any, who controls such persons (the "VCI
Parties") harmless against any Loss or Losses which arise out of or result from
or are related to (a) any breach by or failure of HCC to perform any of its
covenants or agreements set forth herein, or (b) the inaccuracy of any
representation or warranty made by HCC herein.
9.4 Limitation.
(a) Notwithstanding the foregoing, the Holders shall be liable for
Losses incurred as a result of any breach, failure or inaccuracy of any
representation, warranty, covenant or agreement made by VCI herein only if
the aggregate of such Losses exceeds $300,000, and HCC shall be liable for
Losses incurred as a result of any breach, failure or inaccuracy of any
representation, warranty, covenant or agreement made by it herein only if
the aggregate of such Losses exceeds $300,000; provided, however, that the
$300,000 limitation shall not apply with respect to any breach, failure or
inaccuracy of any representation and
warranty contained in Section 3.2 hereof or the covenant contained in
Section 5.5 hereof or as to the matters described in Section 3.2(b) of the
VCI Disclosure Schedule. The aggregate liability of the Holders for Losses
incurred as a result of any breach, failure or inaccuracy of any
representation, warranty, covenant or agreement made by VCI herein shall
not exceed the Escrow Fund and the aggregate liability of HCC for Losses
incurred as a result of any breach, failure or inaccuracy of any
representation, warranty, covenant or agreement made by it herein shall not
exceed 10% of the Numerator. The liability of the Holders for Losses
incurred as a result of any breach, failure or inaccuracy of any
representation, warranty, covenant or agreement of VCI shall be limited to
the return of the HCC Common Stock in the Escrow Fund, as provided in the
Escrow Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, any
amounts payable by the Holders pursuant to Section 9.1(a) or by HCC
pursuant to Section 9.2(b) hereof, shall be appropriately adjusted to take
into account (i) the amount of any insurance proceeds received by VCI and
Holders or HCC, as the case may be, in connection with the indemnification
claim, (ii) the income tax consequences associated with the tax treatment
of the Loss item in question and any related indemnity payment and (iii)
any recovery under third party indemnification of VCI.
9.5 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the Indemnified Party shall notify in writing within
30 days (or such earlier time as might be required to avoid prejudicing the
Indemnifying Party's position) of receiving notice of or obtaining actual
knowledge of facts constituting the basis of such claim (whichever occurs
first), the Indemnifying Party of the claim and, when known, the facts
constituting the basis for such claim. The failure to notify the Indemnifying
Party will not vitiate the right of the Indemnified Party to indemnity to the
extent the Indemnifying Party is not prejudiced as a result of such failure. In
the event of any claim for indemnification, the Indemnified Party shall be
entitled to full indemnification in the amount claimed unless, within 30 days
after receipt of written notice of a claim for indemnification, the
Indemnifying Party delivers a written notice to the Indemnified Party objecting
to the claim for indemnification, which notice specifies in reasonable detail
the basis for the objection. If the parties are unable to resolve the dispute
within 30 days, the claim for indemnification shall be settled pursuant to
Section 9.7 hereof. In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings
by a third party, the notice to the Indemnifying Party shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
delayed, conditioned or withheld, unless suit shall have been instituted
against the Indemnified Party and the Indemnifying Party shall not have taken
control of such suit after notification thereof as provided in Section 9.6
below.
9.6 Defense by Indemnifying Party. In connection with any claims giving rise
to indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the Indemnifying
Party at its sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceedings; provided
that, if by reason of the claim of such third party a lien, attachment,
garnishment or execution has been placed on any material portion of the
property or assets of the Indemnified Party at the time of such election, the
Indemnifying Party, if it desires to exercise the right to assume the defense,
shall furnish a satisfactory indemnity bond to obtain the release of such lien,
attachment, garnishment or execution. The Indemnified Party shall be entitled
to participate in (but not control) the defense of any such action, with its
counsel and at its own expense. If the Indemnifying Party assumes the defense,
it shall take all actions and steps reasonably necessary to defend or settle
any claim against the Indemnified Party. The Indemnified Party shall reasonably
cooperate with the Indemnifying Party in such defense. In the event that the
Indemnifying Party proposes a settlement to any such claim or legal proceeding,
which settlement is satisfactory to the party instituting such claim or legal
proceeding and includes (i) an unconditional release of the Indemnified Party,
from all liability with respect to such claim or litigation, to the extent that
it is reasonably necessary to provide assurance to the Indemnified Party that
the claim will be finally settled without further liability to the Indemnified
Party or the dismissal of such claim or litigation against the Indemnified
Party with prejudice and (ii) provision that all damages and settlement
payments are to be made by the Indemnifying Party (subject to the limitations
in Section 9.4 hereof), and the Indemnified Party withholds its consent to such
settlement, then in any such case the Indemnifying Party shall have no
obligation to indemnify the Indemnified Party under this Agreement against and
in respect of the amount by which the damages resulting from a final judgment
relating to such claim or legal proceeding exceeds the amount of the proposed
settlement. In the event that the Indemnifying Party shall assume the defense
of any such claim or legal proceeding and it is later determined that such
claim was not a claim for which the Indemnifying Party is required to indemnify
the Indemnified Party under this Article IX, the Indemnified Party shall
reimburse the Indemnifying Party for all its reasonable costs and expenses with
respect to such defense, including reasonable attorneys' fees and
disbursements. If the Indemnifying Party does not assume the defense of any
such claim or legal proceeding resulting therefrom within 30 days after the
date of receipt of the notice referred to in Section 9.5 above (or, if earlier,
by the tenth day preceding the day on which an answer or other pleading must be
served in order to prevent judgment by default in favor of the person asserting
such claim), (a) the Indemnified Party may defend against such claim or legal
proceeding, in such manner as it may deem appropriate, including, but not
limited to, settling such claim or legal proceeding on such terms as the
Indemnified Party may deem appropriate, and (b) the Indemnifying Party shall be
entitled to participate in (but not control) the defense of such action, with
its counsel and at its own expense. Notwithstanding the foregoing, (i) the
Holders may not control any matter involving the consolidated, or combined or
unitary Tax Returns of HCC or any Affiliate of HCC for any taxable period
ending after the Closing Date and (ii) in any such case, HCC agrees to keep the
Stockholder Representative fully informed with respect to such matter which may
be the subject to indemnification hereunder and not to settle or resolve any
such matter without the consent of the Stockholder Representative (which
consent may not be unreasonably withheld or delayed).
9.7 Arbitration.
(a) Either HCC or the Stockholders Representative may submit a dispute
that has not been resolved pursuant to the provisions of Section 9.5 above
to arbitration by filing a written demand for arbitration with the American
Arbitration Association ("AAA") in Wilmington, Delaware with written notice
to the other party. The arbitration shall be conducted in accordance with
the Commercial Dispute Resolution procedures of the AAA, and shall be
conducted by a single arbitrator who shall be qualified by experience in
complex commercial disputes and chosen in accordance with the procedures of
the AAA. The arbitrator so designated shall not be a current or former
employee, consultant, officer, director or stockholder of any party hereto
or any Affiliate of any party to this Agreement.
(b) The determination of the arbitrator as to the resolution of any
dispute shall be binding and conclusive upon all parties hereto. All
rulings of the arbitrator shall be in writing and shall be delivered to the
parties hereto. The arbitrator shall have full discretion to award to
either party or allocate between them the costs of the arbitration
proceedings, including reasonable attorneys fees.
(c) Any arbitration pursuant to this Section 9.7 shall be conducted in
Wilmington, Delaware. Any arbitration award may be entered in and enforced
by any court having jurisdiction and the parties hereby consent and commit
themselves to the jurisdiction of the courts of the State of Delaware and
the United States District Court for the District of Delaware for purposes
of the enforcement of any arbitration award.
9.8 Subrogation. In the event VCI or the Holders shall be required to
provide indemnification under this Article IX, then, to the extent of any such
indemnification, VCI and/or the Holders shall subrogate to, assume and enjoy
the benefit of all of the rights and claims (including cross-claims and
counter-claims) of the HCC Parties in connection with the Loss for which
indemnification is provided, including, without limitation, any rights of the
HCC Parties to any surety, indemnification, reimbursement or contribution
against or from other parties.
9.9 Section 6.14(f) Indemnification. Nothing in this Article 9, shall affect
the provisions in Section 6.14(f) of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Amendment. This Agreement shall not be amended except by a writing duly
executed by both parties and shall not be amended after it has been approved by
the stockholders of HCC or VCI, without further stockholder approval, if the
amendment would alter or change the Exchange Ratio or have a material adverse
effect on the stockholders of HCC or VCI.
10.2 Entire Agreement. This Agreement, including the Exhibits, Schedules,
and other documents delivered pursuant to this Agreement, contains all the
terms and conditions agreed upon by the parties relating to the subject matter
of this Agreement and supersedes all prior agreements, negotiations,
correspondence, undertakings, and communications of the parties, whether oral
or written, respecting that subject matter.
10.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to principles
of conflicts of law.
10.4 Headings. The headings contained in this Agreement are intended for
convenience and shall not be used to determine the rights of the parties.
10.5 Notices. All notices, requests, demands, and other communications made
in connection with this Agreement shall be in writing and shall be deemed to
have been duly given on the date of delivery if delivered by hand delivery or
by facsimile to the persons identified below or two days after mailing by air
courier addressed as follows:
If to HCC or Acquisition Corp.:
XxxxxxXxxxxxx.xxx
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: C. Xxxx Xxxxx
Tel. No. (000) 000-0000
Facsimile No. (000) 000-0000
With a copy to:
Howard, Rice, Nemerovski, Canady,Xxxx & Rabkin
A Professional Corporation
Three Xxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Tel. No. (000) 000-0000
Facsimile No. (000) 000-0000
If to VCI (prior to Closing) or Stockholder Representative (after the
Closing):
Xxxxxxxx.xxx, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx
Tel. No. (000) 000-0000
Facsimile No. (000) 000-0000
With a copy to:
Venable, Baetjer, Xxxxxx and Xxxxxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx
Tel. No. (000) 000-0000
Facsimile No. (000) 000-0000
Such addresses may be changed, from time to time by means of a notice given
in the manner provided in this section.
10.6 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent.
10.7 Waiver. Waiver of any term or condition of this Agreement by any party
shall not be construed as a waiver of a subsequent breach or failure of the
same term or condition, or a waiver of any other term or condition in this
Agreement.
10.8 Assignment. Neither party may assign, by operation of law or otherwise,
all or any portion of its rights or duties under this Agreement without the
prior written consent of the other party, which consent may be withheld in the
absolute discretion of the party asked to give consent; provided, however, that
Holders may assign their rights under Section 6.14 hereof to any transferee of
their shares of HCC common stock without the requirement of such consent.
10.9 Counterparts. This Agreement may be signed in counterparts with the
same effect as if the signatures to each party were upon a single instrument.
All counterparts shall be deemed an original of this Agreement.
10.10 Third Party Beneficiaries. The Holders shall be third party
beneficiaries of this Agreement.
10.11 Attorneys' Fees. In the event any dispute arises hereunder, the
arbitrator or the court, as the case may be, shall have the authority to award
costs and attorneys' fees to the prevailing party.
IN WITNESS WHEREOF, HCC, Acquisition Corp. and VCI have executed this
Agreement as of the date first above written.
XXXXXXXXXXXXX.XXX
By: /s/ Xxxxxx Xxxxxx
___________________________________
Title: President and Chief Executive
Officer
HCC ACQUISITION CORP.
By: /s/ C. Xxxx Xxxxx
___________________________________
Title: President
XXXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxx
___________________________________
Title: President
