EXHIBIT 2.04
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
NETSELECT, INC.,
AVENUE ACQUISITION CORPORATION
AND
SPRINGSTREET, INC.
Dated as of May 19, 1999
TABLE OF CONTENTS
Page
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ARTICLE 1. The Merger................................................................................................ 2
1.1 The Merger......................................................................................... 2
1.2 Effective Time..................................................................................... 2
1.3 Effect of the Merger............................................................................... 2
1.4 Articles of Incorporation; Bylaws.................................................................. 2
1.5 Directors and Officers............................................................................. 3
1.6 Merger Consideration............................................................................... 3
1.7 Dissenting Shares for Holders of Street Capital Stock.............................................. 6
1.8 Surrender of Certificates.......................................................................... 7
ARTICLE 2. Representations and Warranties of Street.................................................................. 9
2.1 Organization of Street............................................................................. 10
2.2 Street Capital Structure........................................................................... 10
2.3 Obligations With Respect to Capital Stock.......................................................... 12
2.4 Authority; Non-Contravention....................................................................... 12
2.5 Street Financial Statements........................................................................ 14
2.6 Absence of Certain Changes or Events............................................................... 14
2.7 Taxes.............................................................................................. 14
2.8 Title to Properties; Absence of Liens and Encumbrances............................................. 16
2.9 Intellectual Property.............................................................................. 17
2.10 Compliance; Permits; Restrictions.................................................................. 19
2.11 Litigation......................................................................................... 20
2.12 Brokers' and Finders' Fees......................................................................... 20
2.13 Interested Party Transactions...................................................................... 20
2.14 Employee Benefit Plans............................................................................. 21
2.15 Environmental Matters.............................................................................. 24
2.16 Year 2000 Compliance............................................................................... 25
2.17 Agreements, Contracts and Commitments.............................................................. 26
2.18 Board Approval..................................................................................... 27
2.19 Insurance.......................................................................................... 27
ARTICLE 3. Representations and Warranties of Select and Sub.......................................................... 28
3.1 Organization of Select............................................................................. 28
3.2 Select Capital Structure........................................................................... 28
3.3 Obligations With Respect to Capital Stock.......................................................... 29
3.4 Authority; Non-Contravention....................................................................... 30
3.5 Select Financial Statements........................................................................ 31
3.6 Absence of Certain Changes or Events............................................................... 31
3.7 Taxes.............................................................................................. 32
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TABLE OF CONTENTS
(continued)
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3.8 Title to Properties; Absence of Liens and Encumbrances............................................. 33
3.9 Intellectual Property.............................................................................. 33
3.10 Compliance; Permits; Restrictions.................................................................. 35
3.11 Litigation......................................................................................... 36
3.12 Brokers' and Finders' Fees......................................................................... 36
3.13 Environmental Matters.............................................................................. 36
3.14 Year 2000 Compliance............................................................................... 37
3.15 Agreements, Contracts and Commitments.............................................................. 37
3.16 Employee Benefit Plans............................................................................. 37
3.17 Board Approval..................................................................................... 38
ARTICLE 4. Conduct Prior to the Effective Time....................................................................... 38
4.1 Conduct of Business of Street...................................................................... 38
4.2 Street Non-Solicitation............................................................................ 40
ARTICLE 5. Additional Agreements..................................................................................... 42
5.1 Fairness Hearing; Shareholder Approval............................................................. 42
5.2 Restrictions on Transfer........................................................................... 43
5.3 Access to Information.............................................................................. 44
5.4 Confidentiality.................................................................................... 44
5.5 Expenses........................................................................................... 45
5.6 Public Disclosure.................................................................................. 45
5.7 Consents........................................................................................... 45
5.8 FIRPTA Compliance.................................................................................. 45
5.9 Reasonable Efforts................................................................................. 45
5.10 Notification of Certain Matters.................................................................... 45
5.11 Directors' and Officers' Indemnification........................................................... 46
5.12 Cooperation of Independent Accountants............................................................. 46
5.13 Termination of 401(k) Plan......................................................................... 47
5.14 Information Supplied............................................................................... 47
ARTICLE 6. Conditions to the Merger.................................................................................. 48
6.1 Conditions to Obligations of Each Party to Effect the Merger....................................... 48
6.2 Conditions to Obligations of Select and Sub........................................................ 49
6.3 Conditions to the Obligations of Street............................................................ 50
ARTICLE 7. Survival of Representations and Warranties; Escrow........................................................ 51
7.1 Survival of Representations and Warranties......................................................... 51
7.2 Escrow Arrangements................................................................................ 51
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TABLE OF CONTENTS
(continued)
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ARTICLE 8. Termination, Amendment and Waiver......................................................................... 58
8.1 Termination........................................................................................ 58
8.2 Effect of Termination.............................................................................. 60
8.3 Amendment.......................................................................................... 60
8.4 Extension; Waiver.................................................................................. 60
ARTICLE 9. General Provisions........................................................................................ 60
9.1 Notices............................................................................................ 60
9.2 Interpretation..................................................................................... 62
9.3 Counterparts....................................................................................... 62
9.4 Entire Agreement; Assignment....................................................................... 62
9.5 Severability....................................................................................... 62
9.6 Other Remedies..................................................................................... 62
9.7 Governing Law...................................................................................... 62
9.8 Rules of Construction.............................................................................. 63
9.9 Attorneys'Fees..................................................................................... 63
Exhibit A Form of Non-Competition and Employment Agreement
Exhibit B Form of Restated Certificate of Incorporation
Exhibit C Form of Marcus & Millichap Letter Agreement Amendment
Exhibit D Street Schedules
Exhibit E Select Schedules
Exhibit F Schedules to Merger Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of May 19, 1999 by and among NetSelect, Inc., a Delaware
corporation ("Select"), Avenue Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of Select ("Sub"), SpringStreet, Inc., a
California corporation ("Street") and, with respect to Article 7 only, Xxx Xxxx,
as Securityholder Agent, and U.S. Bank Trust, N.A. as Escrow Agent.
RECITALS
A. The Boards of Directors of each of Select, Sub and Street believe it is
in the best interests of each company and the shareholders of each company that
Select acquire Street through the statutory merger of Sub with and into Street
(the "Merger") with Street being the surviving corporation in the Merger and, in
furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, all of the issued and
outstanding shares of capital stock of Street (other than Dissenting Shares, as
defined in Section 1.7(a) herein and any shares owned by Select) and all
options, warrants and other rights to acquire any shares of capital stock of
Street shall be converted into the right to receive shares of capital stock of
Select.
C. A portion of the shares of capital stock of Select otherwise issuable
by Select in connection with the Merger shall be placed in escrow and held by
the Escrow Agent pursuant to the escrow agreement set forth in Article 7 hereof
and the release of such shares shall be contingent upon certain events and
conditions as set forth in Article 7.
D. It is intended by the parties hereto that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
E. As a material inducement for Select to consummate the Merger, certain
key employees of Street will enter into a non-competition and employment
agreement in the form attached hereto as Exhibit A (the "Non-Competition and
Employment Agreement") with Select, each of which shall become effective as of
the Effective Time (as defined herein).
F. Concurrent with the execution and delivery of this Agreement, as a
material inducement to Select to enter into this Agreement, certain shareholders
of Street are executing and delivering voting agreements (the "Shareholder
Support Agreements") to Select.
G. Street on the one hand, and Select and Sub on the other hand, desire to
make certain representations, warranties, covenants and other agreements in
connection with the Merger.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
ARTICLE 1.
The Merger
The Merger. At the Effective Time (as defined in Section 1.2) and subject
to and upon the terms and conditions of this Agreement and the applicable
provisions of the California Corporations Code ("California Law") and the
Delaware General Corporation Law ("Delaware Law"), Sub shall be merged with and
into Street, the separate corporate existence of Sub shall cease and Street
shall continue as the surviving corporation. The surviving corporation after the
Merger is sometimes referred to hereinafter as the "Surviving Corporation."
Effective Time. Unless this Agreement is earlier terminated pursuant to
Section 8.1, the closing of the Merger (the "Closing") will take place as
promptly as practicable, but no later than two (2) business days following
satisfaction or waiver of the conditions set forth in Article 6, at the offices
of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx,
unless another place or time is agreed to in writing by Select and Street. The
date upon which the Closing actually occurs is herein referred to as the
"Closing Date." On the Closing Date, the parties hereto shall cause the Merger
to be consummated by filing an Agreement of Merger (the "Merger Agreement") and
any other required instruments with the Secretary of State of the State of
California and the Secretary of State of the State of Delaware, in accordance
with the relevant provisions of applicable law (the later of the time of
acceptance of such filing by the Secretary of State of the State of California
or the Secretary of State of the State of Delaware of such filing being referred
to herein as the "Effective Time").
Effect of the Merger. At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of California Law and Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
Street and Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Street and Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
Articles of Incorporation; Bylaws.
(a) Unless otherwise determined by Select prior to the Effective
Time, at the Effective Time, the Certificate of Incorporation (with such changes
as may be required by California Law) of Sub as in effect immediately prior to
the Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with California Law and as
provided in such Articles of Incorporation; provided, however, that at the
Effective Time, Article I of the Articles of Incorporation of the Surviving
Corporation shall be amended and restated in its entirety to read as follows:
"The name of the corporation is SpringStreet, Inc."
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(b) Unless otherwise determined by Select prior to the Effective
Time, the Bylaws of Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation at the Effective Time, until
thereafter amended in accordance with California Law and as provided in the
Articles of Incorporation of the Surviving Corporation and such Bylaws.
Directors and Officers. Unless otherwise determined by Select prior to the
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of Surviving Corporation, each to hold the office of a
director of the Surviving Corporation in accordance with the provisions of
California Law and the Articles of Incorporation and Bylaws of the Surviving
Corporation until their successors are duly elected and qualified. The officers
of Street immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, each to hold office in accordance with the provisions of
the Bylaws of the Surviving Corporation.
1.6 Merger Consideration
(a) Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"Common Exchange Ratio" shall mean a number equal to the quotient
obtained by dividing (x) the Net Consideration Share Number by (y) the Total
Outstanding Shares less the aggregate number of outstanding shares of Street
Series C Preferred Stock immediately prior to the Effective Time (with the
result rounded to four decimal places and .5 being rounded up).
"Consideration Shares" shall mean the number of shares of Select
Common Stock and Select Series H Preferred Stock issuable to the Street
Shareholders pursuant to Section 1.6(b) hereof.
"Escrow Amount" shall mean that number of shares of Select Common
Stock and Select Series H Preferred Stock equal to ten percent (10%) of the
number of shares of Select Common Stock and Select Series H Preferred Stock
otherwise issuable to the Street Shareholders pursuant to Section 1.6(b) hereof.
"Exchange Ratios" shall mean Common Exchange Ratio, Preferred Exchange
Ratio and Series C Exchange Ratio.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Knowledge" shall mean, with respect to Street or Select, what is
within the actual knowledge of any of the officers of Street or Select, as the
case may be.
"Net Consideration Share Number" shall mean 1,538,963.
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"Material Adverse Effect" shall mean any change, event or effect that
is materially adverse to the consolidated business, assets (including intangible
assets), financial condition or results of operations of Street or Select, as
applicable.
"Preferred Exchange Ratio" shall mean a number equal to the quotient
of (x) the Common Exchange Ratio, divided by (y) 2 (with the result rounded to
four decimal places and .5 being rounded up).
"Select Common Stock" shall have the meaning ascribed to it in Section
3.2 hereof.
"Select Series H Preferred Stock" shall mean the Series H Preferred
Stock of Select with the rights, preferences, privileges and restrictions set
forth on Exhibit B hereto (the "Restated Certificate").
"Series C Exchange Ratio" shall mean .0623.
"Street Capital Stock" shall mean shares of Xxxxxx Xxxxxx Xxxxx,
Xxxxxx Preferred Stock and any shares of other capital stock of Street.
"Street Common Stock" shall mean shares of common stock of Street.
"Street Convertible Securities" shall mean the Street Options and
other rights (other than Street Preferred Stock) to acquire or receive shares of
Street Capital Stock.
"Street Options" shall mean all issued and outstanding options to
purchase or otherwise acquire Street Capital Stock (whether or not vested) held
by officers, employees or directors of or consultants to Street (other than
Street Preferred Stock).
"Street Preferred Stock" shall mean shares of Street Series A
Preferred Stock, Street Series B Preferred Stock, Street Series C Preferred
Stock and Street Series D Preferred Stock.
"Street Series A Preferred Stock" shall mean shares of Series A
Preferred Stock of Street.
"Street Series B Preferred Stock" shall mean shares of Series B
Preferred Stock of Street.
"Street Series C Preferred Stock" shall mean shares of Series C
Preferred Stock of Street.
"Street Series D Preferred Stock" shall mean shares of Series D
Preferred Stock of Street.
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"Street Shareholders" shall mean holders of any shares of Street
Capital Stock immediately prior to the Effective Time.
"Total Outstanding Shares" shall mean the aggregate number of shares
of Street Common Stock outstanding immediately prior to the Effective Time,
including Street Common Stock issuable upon the exercise of Street Options plus
the aggregate number of shares of Street Common Stock issuable, with or without
the passage of time or satisfaction of other conditions, upon exercise of or
conversion of all Street Convertible Securities and Street Preferred Stock
outstanding immediately prior to the Effective Time.
(b) Effect on Street Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of Street or the Street
Shareholders, each share of Street Capital Stock issued and outstanding
immediately prior to the Effective Time (other than any Dissenting Shares, as
defined in Section 1.7 hereof and any shares owned by Select, Sub or Street or
any direct or indirect wholly owned subsidiary thereof) shall be canceled and
extinguished and shall be converted automatically into the right to receive,
upon surrender of the certificate representing such shares of Street Capital
Stock and upon the terms and subject to conditions set forth below and
throughout this Agreement, including, without limitation, Sections 1.6(f), (g)
and (h) hereof and the escrow provisions set forth in Article 7 and/or described
in Section 1.8(b) hereof, (i) in the case of each share of Street Common Stock,
a number of shares of Select Common Stock equal to the Common Exchange Ratio,
(ii) and the case of each share of Street Preferred Stock (other than Street
Series C Preferred Stock), a number of shares of Select Series H Preferred Stock
equal to the Preferred Exchange Ratio and (iii) in the case of each share of
Street Series C Preferred Stock, a number of shares of Select Series H Preferred
Stock equal to the Series C Exchange Ratio.
(c) Assumption of Street Options. At the Effective Time, each
outstanding Street Option issued pursuant to Street's 1997 Incentive Stock Plan
(the "Street Option Plan") or otherwise, whether vested or unvested, will be
assumed by Select in connection with the Merger. Each Street Option so assumed
by Select under this Agreement shall continue to have, and be subject to, the
same terms and conditions set forth in the Street Option Plan and/or as provided
in the respective option agreements immediately prior to the Effective Time
(including, without limitation, any vesting schedule or repurchase rights),
except that (i) each Street Option will be exercisable for that number of whole
shares of Select Common Stock equal to the product of the number of shares of
Street Common Stock that were issuable upon exercise of such Street Option
immediately prior to the Effective Time multiplied by the Common Stock Exchange
Ratio, rounded down to the nearest whole number of shares of Select Common Stock
and (ii) the per share exercise price for the shares of Select Common Stock
issuable upon exercise of such assumed Street Option will be equal to the
quotient determined by dividing the exercise price per share of Street Capital
Stock at which such Street Option was exercisable immediately prior to the
Effective Time by the Common Stock Exchange Ratio, rounded up to the nearest
whole cent.
(d) Option Status. It is the intention of the parties hereto that the
Street Options assumed by Select following the Closing pursuant to this Section
1.6 will, to the extent permitted by
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applicable law, qualify as incentive stock options as defined in Section 422 of
the Code, to the extent any such Street Options qualified as incentive stock
options immediately prior to the Effective Time.
(e) Withholding Taxes. Any number of shares of Select Common Stock
and/or Select Series H Preferred Stock issuable pursuant to Section 1.6(b) shall
be subject to, and reduced by, the amount of any state, federal and foreign
withholding taxes incurred (and not previously paid by or on behalf of Street)
in connection with the acquisition of Street Capital Stock upon the exercise of
Street Options, the acceleration of vesting of any Street Capital Stock or
Street Options, or the payment of a bonus in the form of Street Capital Stock,
if any.
(f) Fractional Shares. No fractional share of Select Common Stock or
Select Series H Preferred Stock shall be issued in the Merger. In lieu thereof,
any fractional share shall be rounded to the nearest whole share of Select
Common Stock or Select Series H Preferred Stock (with .5 being rounded up).
(g) Cancellation of Select-owned and Street-owned Stock. At the
Effective Time, by virtue of the Merger and without any action on the part of
any of the parties hereto, each share of Street Capital Stock owned by Select,
Sub, Street or any direct or indirect wholly-owned subsidiary thereof
immediately prior to the Effective Time, shall be cancelled and extinguished
without any conversion thereof.
(h) Capital Stock of Sub. At the Effective Time, by virtue of the
Merger and without any action on the part of any of the parties hereto, each
share of capital stock of Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation.
Each stock certificate of Sub evidencing ownership of any such shares shall
continue to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(a) Adjustment of the Exchange Ratios. In the event that, prior to
the Effective Time, any stock split, combination, reclassification or stock
dividend with respect to the Select Common Stock and/or Select Series H
Preferred Stock, any change or conversion of Select Common Stock and/or Select
Series H Preferred Stock into other securities or any other dividend or
distribution with respect to the Select Common Stock and/or Select Series H
Preferred Stock should occur or, if a record date with respect to any of the
foregoing should occur, appropriate and proportionate adjustments shall be made
to the Common Exchange Ratio, Preferred Exchange Ratio and Series C Exchange
Ratio, as the case may be, and thereafter all references to the affected
Exchange Ratio(s) shall be deemed to be as so adjusted.
Dissenting Shares for Holders of Street Capital Stock.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of Street Capital Stock held by a holder who has demanded and
perfected appraisal rights for such shares in accordance with California Law and
who, as of the Effective Time, has not effectively
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withdrawn or lost such appraisal rights ("Dissenting Shares"), shall not be
converted into or represent a right to receive Select Common Stock and/or Select
Series H Preferred Stock, as the case may be, pursuant to Section 1.6, but the
holder thereof shall only be entitled to such rights as are granted by
California Law.
(b) Notwithstanding the provisions of subsection (a), if any holder
of shares of Street Capital Stock who demands appraisal of such shares under
California Law shall effectively withdraw or lose (through failure to perfect or
otherwise) the right to appraisal, then, as of the later of the Effective Time
and the occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive Select Common Stock
and/or Select Series H Preferred Stock, as the case may be, as provided in
Section 1.6 (and subject to the provisions of Section 7.2 hereof), without
interest thereon, upon surrender of the certificate representing such shares.
(c) Street shall give Select (i) prompt notice of any written demands
for appraisal of any shares of Street Capital Stock, withdrawals of such
demands, and any other instruments served pursuant to California Law and
received by Street and (ii) the opportunity to participate in all negotiations
and proceedings with respect to demands for appraisal under California Law.
Street shall not, except with the prior written consent of Select, voluntarily
make any payment with respect to any demands for appraisal of capital stock of
Street or offer to settle or settle any such demands.
Surrender of Certificates.
(d) Exchange Agent. The Secretary of Select shall serve as exchange
agent (the "Exchange Agent") in the Merger.
(e) Select to Provide Select Common Stock and Select Series H
Preferred Stock. Prior to the Closing, Select shall make available to the
Exchange Agent for exchange in accordance with this Article 1 the shares of
Select Common Stock and Select Series H Preferred Stock issuable to Street
Shareholders pursuant to Section 1.6 in exchange for outstanding shares of
Street Capital Stock, less the Escrow Amount which Select shall deposit into the
Escrow Fund (as defined in Section 7.2(a) hereof) on behalf of the Street
Shareholders. The portion of the Escrow Amount contributed on behalf of each
Street Shareholder shall be in proportion to the aggregate number of shares of
Select Common Stock and/or Select Series H Preferred Stock, as the case may be,
each such Street Shareholder would otherwise be entitled to receive in the
Merger (excluding any shares of Select Common Stock issuable upon exercise of
any assumed Street Options) by virtue of ownership of outstanding shares of
Street Capital Stock immediately prior to the Effective Time.
(f) Exchange Procedures. As soon as practicable following the Closing
Date, Select shall cause to be mailed to each Street Shareholder (i) a letter of
transmittal (which shall be in such form and contain such provisions as Select
may reasonably specify and shall specify that delivery shall be effected, and
risk of loss and title to the certificates (the "Certificates") which
immediately prior to the Effective Time represent outstanding shares of Street
Capital Stock whose shares are
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converted into the right to receive such Street Shareholder's pro rata portion
of the Consideration Shares pursuant to Section 1.6, shall pass, only upon
delivery of the Certificates to the Exchange Agent at the Closing) and (ii)
instructions for use in effecting the surrender at the Closing of the
Certificates in exchange for certificates representing such Street Shareholder's
pro rata portion of the Consideration Shares. Upon surrender of a Certificate at
the Closing for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Select, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the Street Shareholder shall be entitled to receive, and the Exchange Agent
shall promptly deliver in exchange therefor, a certificate bearing the legend
set forth in Section 5.2 hereof representing the number of whole shares equal to
the Consideration Shares (less the number of shares of Select Common Stock
and/or Select Series H Preferred Stock, as the case may be, to be deposited in
the Escrow Fund on such holder's behalf pursuant to Section 1.8(b) and Article 7
hereof) to which such holder is entitled pursuant to Section 1.6, and the
Certificate so surrendered shall forthwith be canceled. As soon as practicable
after the Closing Date, and subject to and in accordance with the provisions of
Article 7 hereof, Select shall cause to be distributed to the Escrow Agent (as
defined in Article 7) a certificate or certificates representing that number of
shares of Select Common Stock and Select Series H Preferred Stock equal to the
Escrow Amount which shares shall be registered in the name of the Escrow Agent.
Such shares shall be beneficially owned by the holders on whose behalf such
shares were deposited in the Escrow Fund and shall be available to compensate
Select as provided in Article 7. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented shares of Street
Capital Stock will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of full shares of Select Common Stock and/or Select
Series H Preferred Stock, as the case may be, into which such shares of Street
Capital Stock shall have been so converted.
(g) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Select Common Stock or the Select Series H Preferred Stock, as the case may be,
with a record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Select Common Stock
and/or Select Series H Preferred Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the record holder of the certificates representing whole shares of Select
Common Stock and/or Select Series H Preferred Stock, as the case may be, issued
in exchange therefor, plus the amount of dividends or other distributions
(without interest) with a record date after the Effective Time theretofore paid
with respect to such whole shares of Select Common Stock and/or Select Series H
Preferred Stock.
(h) Transfers of Ownership. If any certificate for shares of Select
Common Stock and/or Select Series H Preferred Stock is to be issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it will be a condition of the issuance thereof that the Certificate
so surrendered will be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange will have paid to Select
or any agent
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designated by it any transfer or other taxes required by reason of the issuance
of a certificate for shares of Select Common Stock and/or Select Series H
Preferred Stock, as the case may be, in any name other than that of the
registered holder of the Certificate surrendered.
(i) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of Street Capital Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed certificates, upon the delivery by the holder thereof of an
affidavit of that fact by the holder thereof containing customary
indemnification provisions.
(j) No Liability. Notwithstanding anything to the contrary in this
Section 1.8, neither Select nor any party hereto shall be liable to a holder of
shares of Select capital stock and/or Street Capital Stock for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(k) No Further Ownership Rights in Street Capital Stock. The shares
of Select Common Stock and Select Series H Preferred Stock issued in accordance
with the terms hereof shall be deemed to be full satisfaction of all rights
pertaining to shares of Street Capital Stock outstanding prior to the Effective
Time, and there shall be no further registration of transfers on the records of
Select of shares of Street Capital Stock that were outstanding prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
Select for any reason, they shall be canceled and exchanged as provided in this
Article 1.
(l) Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations. Each party has consulted with its own tax advisers with
respect to the tax consequences of the Merger.
(m) Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Street, Select and Sub, the officers and directors of Street,
Select and Sub are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary action.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF STREET
As of the date hereof and as of the Closing Date, Street represents and
warrants to Select and Sub, subject to the exceptions specifically disclosed in
writing in the disclosure letter and supplied
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by Street to Select dated as of the date hereof and certified by a duly
authorized officer of Street (the "Street Schedules"), as follows:
Organization of Street.
(a) Street has no subsidiaries and Street owns no capital stock of,
or any equity interest of any nature in, any other entity, except for passive
investments in equity interests of public companies as part of the cash
management program of Street. Street has not agreed and is not obligated to
make, nor bound by any written, oral or other agreement, contract, subcontract,
lease, binding understanding, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, as in effect as of the date hereof or
as may hereinafter be in effect ("Contract") under which Contract it may become
obligated to make, any future investment in or capital contribution to any other
entity. Street has not, at any time, been a general partner of any general
partnership, limited partnership or other entity.
(b) Street is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Contracts by which it is bound.
(c) Street is qualified to do business as a foreign corporation, and
is in good standing, under the laws of all jurisdictions where the nature of its
business requires such qualification and where the failure to so qualify would
have a Material Adverse Effect (as defined in Section 1.6(a)) on Street.
(d) Street has delivered or made available to Select a true and
correct copy of the Articles of Incorporation and Bylaws of Street, each as
amended to date (collectively, the "Street Charter Documents"), and each such
instrument is in full force and effect. Street is not in violation of any of the
provisions of the Street Charter Documents.
(e) Street has delivered or made available to Select all proposed or
considered amendments to Street Charter Documents.
Street Capital Structure.
(a) The authorized capital stock of Street consists of: (i)
25,000,000 shares of Street Common Stock, of which 1,298,374 shares are
outstanding as of April 22, 1999; and (ii) 15,277,136 shares of Street Preferred
Stock, of which 14,554,062 shares are outstanding as of the date of this
Agreement. The Street Preferred Stock is designated as follows: (i) 3,750,000
shares of Street Series A Preferred Stock, all of which are outstanding as of
the date of this Agreement; (ii) 3,684,210 shares of Street Series B Preferred
Stock, all of which are outstanding as of the date of
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this Agreement; (iii) 4,689,080 shares of Street Series C Preferred Stock, all
of which are outstanding as of the date of this Agreement; and (iv) 3,153,846
shares of Street Series D Preferred Stock, 2,430,772 of which are outstanding as
of the date of this Agreement. All of the outstanding shares of capital stock of
Street have been duly authorized and validly issued, and are fully paid and
nonassessable. As of the date of this Agreement, there are no shares of Street
Common Stock held in treasury by Street. Upon consummation of the Merger, (A)
the shares of Select Common Stock and Select Series H Preferred Stock issued in
exchange for any shares of Street Capital Stock that are subject to a Contract
pursuant to which Street has the right to repurchase, redeem or otherwise
reacquire any shares of Street Capital Stock will, without any further act of
Select, Street or any other person, become subject to the restrictions,
conditions and other provisions contained in such Contract (subject to the
provisions thereof as in effect on the date hereof) and (B) Select will
automatically succeed to and become entitled to exercise Street's rights and
remedies under any such Contract.
(b) As of April 22, 1999: (i) 2,226,279 shares of Street Common Stock
are subject to issuance pursuant to outstanding options to purchase Street
Common Stock under the Street Option Plan or otherwise; and (ii) 150,347 shares
of Street Common Stock are reserved for future issuance under the Street Option
Plan. Part 2.2(b) of the Street Schedules sets forth the following information
with respect to each Street Option outstanding as of the date of this Agreement:
(i) the name and address of the optionee and optionee's position at Street; (ii)
the number of shares of Street Common Stock subject to such Street Option; (iii)
the exercise price of such Street Option; (iv) the date on which such Street
Option was granted; (v) the applicable vesting schedule; (vi) the date on which
such Street Option expires; and (vii) whether the exercisability of such option
will be accelerated in any way by the transactions contemplated by this
Agreement, and indicates the extent of any such acceleration. Street has made
available to Select accurate and complete copies of all stock option plans
pursuant to which Street has granted stock options that are currently
outstanding and the form of all stock option agreements evidencing such options.
All shares of Street Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, would be duly authorized, validly issued, fully paid
and nonassessable. Except as set forth in Part 2.2(b)(i) of the Street
Schedules, there are no commitments or agreements of any character to which
Street is bound obligating Street to accelerate the vesting of any Street Option
as a result of the Merger or the transactions contemplated by this Agreement.
(c) All outstanding shares of Street Capital Stock and all
outstanding Street Options have been issued and granted in compliance with (i)
all applicable securities laws and other applicable Legal Requirements (as
defined below) and (ii) all requirements set forth in applicable Contracts. For
the purposes of this Agreement, "Legal Requirements" means any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity (as defined
below).
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Obligations With Respect to Capital Stock.
Except as set forth Section 2.2(b) hereof and in Part 2.3 of the Street
Schedules, there are no equity securities, partnership interests or similar
ownership interests of any class of any Street equity security, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except for securities Street owns free and
clear of all claims and Encumbrances (as defined below), as of the date of this
Agreement, there are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any subsidiary of Street,
or any security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. For the purposes of this Agreement
"encumbrances" means any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, claim, infringement, interference, option, right of first
refusal, preemptive right, community property interest or restriction of any
nature (including any restriction on the voting of any security, any restriction
on the transfer of any security or other asset, any restriction on the receipt
of any income derived from any asset, any restriction on the use of any asset
and any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset). Except as set forth in Part 2.3 of the
Street Schedules or as set forth in Section 2.2 hereof, there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Street is a party or by
which it is bound obligating Street to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Street or obligating
Street to grant, extend, accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call, right, commitment or
agreement. As of the date of this Agreement, except as contemplated by this
Agreement and as set forth in Part 2.3 of the Street Schedules, there are no
registration rights and there is, except for the Shareholder Support Agreements,
no voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Street is a party or by which it is bound with respect to
any equity security of any class of Street.
Authority; Non-Contravention.
(a) Street has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Street, subject only to the approval and
adoption of this Agreement and the approval of the Merger by Street's
shareholders and the filing of the Merger Agreement pursuant to California Law.
The affirmative vote of the holders of (i) a majority of each series of Street
Preferred Stock, each voting separately as a single class, (ii) sixty percent
(60%) of Street Preferred Stock voting together as a single class, (iii) a
majority of Street Common Stock voting together as a single class and (iv) a
majority of Street Common Stock and
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Street Preferred Stock voting together as a single class, is required to approve
and adopt this Agreement and approve the Merger. The vote of the shares of
Street Capital Stock in accordance with the terms of the Shareholder Support
Agreements, is sufficient for Street Shareholders to approve and adopt this
Agreement and approve the Merger. This Agreement has been duly executed and
delivered by Street and, assuming due execution and delivery by Select and Sub,
constitutes a valid and binding obligation of Street, enforceable against Street
in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity. The
execution and delivery of this Agreement by Street does not, and the performance
of this Agreement by Street will not, (i) conflict with or violate the Street
Charter Documents, subject to obtaining the approval and adoption of this
Agreement and the approval of the Merger by Street's shareholders as
contemplated in Section 5.1, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Street or by which Street or
any of its respective properties is bound or affected, subject to compliance
with the requirements set forth in Section 2.4(b) below or (iii) result in any
material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
impair Street's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a material lien or Encumbrance on
any of the material properties or assets of Street or any of its subsidiaries
pursuant to, any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise, concession, or other instrument or obligation
to which Street or any of its subsidiaries is a party or by which Street or any
of its subsidiaries or its or any of their respective assets are bound or
affected. Part 2.4(b) of the Street Schedules lists all consents, waivers and
approvals under any of Street's or any of its subsidiaries' agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby, which, if individually or
in the aggregate not obtained, would result in a material loss of benefits to
Street, Select or the Surviving Corporation as a result of the Merger.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("Governmental Entity"), is required to be obtained or made by Street in
connection with the execution and delivery of this Agreement or the consummation
of the Merger, except for (i) the filing of the Merger Agreement with the
Secretary of State of the State of California and the Secretary of State of the
State of Delaware, (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable securities laws, including obtaining the California Permit (as
defined in Section 5.1(a)), (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws, and the
securities or antitrust laws of any foreign country, and (iv) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to Select, Sub or Street or have a
material adverse effect on the ability of the parties hereto to consummate the
Merger.
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Street Financial Statements.
Part 2.5 of the Street Schedules sets forth Street's audited balance sheet
as of December 31, 1998 and the related audited statements of income and cash
flow for the period from Street's inception to December 31, 0000 (xxx "Xxxxxx
Audited Financials") and Street's unaudited balance sheet as of March 31, 1999
(the "Street Current Balance Sheet") and the related unaudited statements of
income and cash flow for the three months then ended (the "Street Unaudited
Financials" and, together with the Street Audited Financials, the "Street
Financials"). The Street Financials are correct in all material respects and
have been prepared in accordance with GAAP, applied on a basis consistent
throughout the periods indicated and consistent with each other except as may be
indicated therein. The Street Financials present fairly the financial
condition, operating results and cash flows of Street as of the dates and during
the periods indicated therein, subject in the case of the Street Unaudited
Financials, to normal year-end adjustments, which will not be material in amount
or significance.
Absence of Certain Changes or Events.
Since the date of the Street Current Balance Sheet until the date hereof
there has not been: (i) any Material Adverse Effect on Street, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Street Capital Stock,
or any purchase, redemption or other acquisition by Street of any of Street's
capital stock or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following their
termination pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of Street
Capital Stock, (iv) any granting by Street of any increase in compensation or
fringe benefits, except for normal increases of cash compensation in the
ordinary course of business consistent with past practice, or any payment by
Street of any bonus, except for bonuses made in the ordinary course of business
consistent with past practice, or any granting by Street of any increase in
sever ance or termination pay or any entry by Street into any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Street of the
nature contemplated hereby, (v) entry by Street into any licensing or other
agreement with regard to the acquisition or disposition of any material
Intellectual Property (as defined in Section 2.9) other than licenses in the
ordinary course of business consistent with past practice, (vi) any material
change by Street in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP or (vii) any revaluation by Street of any
of its assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable other than in
the ordinary course of business and consistent with past practice.
Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or
"Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges,
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duties, impositions and liabilities relating to taxes, including taxes based
upon or measured by gross receipts, income, profits, sales, use and occupation,
and value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts and any obligations
under any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) Street has timely filed all federal, state, local and
foreign returns, estimates, information statements and reports ("Returns")
relating to Taxes required to be filed by Street with any Tax authority, except
such Returns which are not material to Street. Street has paid all Taxes shown
to be due on such Returns.
(ii) Street as of the Effective Time will have withheld
all federal and state income taxes, Taxes pursuant to the Federal Insurance
Contribution Act ("FICA"), Taxes pursuant to the Federal Unemployment Tax Act
("FUTA") and other Taxes required to be withheld.
(iii) Street has not been delinquent in the payment of any
Tax nor is there any material Tax deficiency outstanding, proposed or assessed
against Street, nor has Street executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of any
material Tax.
(iv) No audit or other examination of any Return of Street
by any Tax authority is presently in progress, nor has Street been notified of
any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by Street
has been proposed in writing formally or informally by any Tax authority to
Street or any of its representatives.
(vi) Street has no liability for unpaid Taxes which has
not been accrued for or reserved on the Street Current Balance Sheet, whether
asserted or unasserted, contingent or otherwise, which is material to Street,
other than any liability for unpaid Taxes that may have accrued since the date
of the Street Current Balance Sheet in connection with the operation of the
business of Street in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement
to which Street is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Street that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to Sections 280G,
404 or 162(m) of the Code.
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(viii) Street has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by Street.
(ix) Street is not a party to or has any obligation under
any tax-sharing, tax indemnity or tax allocation agreement or arrangement.
(x) Except as may be required as a result of the Merger,
Street has not been and will not be required to include any adjustment in
taxable income for any Tax period (or portion thereof) pursuant to Section 481
or Section 263A of the Code or any comparable provision under state or foreign
Tax laws as a result of transactions, events or accounting methods employed
prior to the Closing.
(xi) None of Street's assets are tax-exempt use property
within the meaning of Section 168(h) of the Code.
(xii) Part 2.7 of Street Schedules lists (A) any foreign
Tax holidays, (B) any inter-Street transfer pricing agreements, or other
arrangements that have been established by Street with any Tax authority and (C)
any expatriate programs or policies affecting Street.
Title to Properties; Absence of Liens and Encumbrances.
(a) Part 2.8(a)(i) of the Street Schedules lists all real property
leases to which Street is a party as of the date of this Agreement and each
amendment thereto that is in effect as of the date of this Agreement. All such
current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) that would give rise to a
material claim. Other than the leaseholds created under the real property leases
identified in Part 2.8(a)(i) of the Xxxxxx Xxxxxxxxx, Xxxxxx owns no interest in
real property.
(b) Street has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("Liens"), except as reflected in
the Street Financials and except for liens for taxes not yet due and payable,
statutory liens and such Liens or other imperfections of title and encumbrances,
if any, which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
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Intellectual Property.
For the purposes of this Agreement, the following terms have the following
definitions:
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United
States, international and foreign patents and applications therefor
and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof; (ii) all inventions
(whether patentable or not), invention disclosures, improvements,
trade secrets, proprietary information, know how, technology,
technical data and customer lists, and all documentation relating to
any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto
throughout the world; (iv) all industrial designs and any
registrations and applications therefor throughout the world; (v) all
trade names, logos, URLs, common law trademarks and service marks,
trademark and service xxxx registrations and applications therefor
throughout the world; (vi) all databases and data collections and all
rights therein throughout the world; (vii) all moral and economic
rights of authors and inventors, however denominated, throughout the
world and (viii) any similar or equivalent rights to any of the
foregoing anywhere in the world.
"Street Intellectual Property" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, Street.
"Registered Intellectual Property" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration; and
(iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other
public legal authority.
"Street Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Street.
(a) No material Street Intellectual Property or product or service of
Street is subject to any proceeding or outstanding decree, order, judgment,
agreement or stipulation restricting in any manner the use, transfer, or
licensing thereof by Street, or which may affect the validity, use or
enforceability of such Street Intellectual Property.
(b) Part 2.9(b) of the Street Schedules is a complete and accurate
list of all Street Registered Intellectual Property as of the date hereof and
specifies, where applicable, the jurisdictions in which each such item of Street
Registered Intellectual Property has been issued or
-17-
registered or in which an application for such issuance and registration has
been filed, including the respective registration or application numbers. Each
material item of Street Registered Intellectual Property is valid and
subsisting, all necessary registration, maintenance and renewal fees currently
due in connection with such Registered Intellectual Property have been made and
all necessary documents, recordations and certificates in connection with such
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
(c) Street owns and has good and exclusive title to, or has license
(sufficient for the conduct of its business as currently conducted and as
currently proposed to be conducted) to, each material item of Street
Intellectual Property or other Intellectual Property used by Street free and
clear of any lien or encumbrance (excluding licenses and related restrictions);
and Street is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Street, including
the sale of any products or the provision of any services by Street.
(d) Street owns exclusively, and has good title to, all copyrighted
works that are Street products or which Street otherwise expressly purports to
own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Street, Street has a written agreement
with such third party with respect thereto and Street thereby either (i) has
obtained ownership of, and is the exclusive owner of or (ii) has obtained a
license (sufficient for the conduct of its business as currently conducted and
as currently proposed to be conducted) to all such third party's Intellectual
Property in such work, material or invention by operation of law or by valid
assignment, to the fullest extent it is legally possible to do so.
(f) Street has not transferred ownership of, or granted any exclusive
license with respect to, any Intellectual Property that is or was material to
Street Intellectual Property, to any third party.
(g) The Street Schedules list all material contracts, licenses and
agreements to which Street is a party as of the date hereof (i) with respect to
Street Intellectual Property licensed or transferred to any third party (other
than end-user licenses in the ordinary course); or (ii) pursuant to which a
third party has licensed or transferred any material Intellectual Property to
Street.
(h) All material contracts, licenses and agreements relating to
Street Intellectual Property are in full force and effect. The consummation of
the transactions contemplated by this Agreement will neither violate nor result
in the breach, modification, cancellation, termination or suspension of such
contracts, licenses and agreements. Street is in material compliance with, and
has not materially breached any term any of such contracts, licenses and
agreements and, to the Knowledge of Street, all other parties to such contracts,
licenses and agreements are in compliance with, and have not materially breached
any term of, such contracts, licenses and agreements.
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Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of Street's rights under such contracts, licenses and agreements to
the same extent Street would have been able to had the transactions contemplated
by this Agreement not occurred and without the payment of any additional amounts
or consideration other than ongoing fees, royalties or payments which Street
would otherwise be required to pay.
(i) The operation of the business of Street as such business
currently is conducted, including Street's design, development, manufacture,
marketing and sale of the products or services of Street (including with respect
to products and services currently under development) has not, does not and will
not infringe or misappropriate the Intellectual Property of any third party in
any respect adverse to such party (including, without limitation, United States
Patent Nos. 5,032,989 and 4,870,576) or constitute unfair competition or trade
practices under the laws of any jurisdiction.
(j) Street has not received notice from any third party that the
operation of the business of Street or any act, product or service of Street,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(k) To the Knowledge of Street, no person has or is infringing or
misappropriating, in any respect materially adverse to Street, any Street
Intellectual Property.
(l) Street has taken reasonable steps to protect Street's rights in
Street's confidential information and trade secrets that it wishes to protect or
any trade secrets or confidential information of third parties provided to
Street, and, without limiting the foregoing, Street has and enforces a policy
requiring each employee and contractor to execute a proprietary
information/confidentiality and invention assignment agreement and all current
and former employees and contractors of Street have executed such an agreement,
except where the failure to do so is not reasonably expected to be material to
Street.
Compliance; Permits; Restrictions.
(a) Street is not in any material respect, in conflict with, or in
default or in violation of (i) any law, rule, regulation, order, judgment or
decree applicable to Street or by which Street or any of its respective
properties is bound or affected or (ii) any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Street is a party or by which Street or any of
its respective properties is bound or affected, except for conflicts, violations
and defaults that (individually or in the aggregate) would not cause Street to
lose any material benefit or incur any material liability. No investigation or
review by any Governmental Entity is pending or, to Street's Knowledge, has been
threatened against Street, nor, to Street's Knowledge, has any Governmental
Entity indicated an intention to conduct an investigation of Street. There is
no material agreement, judgment, injunction, order or decree binding upon Street
which has or would reasonably be expected to have the effect of prohibiting or
materially impairing
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any business practice of Street or Select, any acquisition of material property
by Street or the conduct of business by Street as currently conducted.
(b) Street holds, to the extent legally required, all permits,
licenses, variances, exemptions, orders and approvals from Governmental Entities
that are material to and required for the operation of the business of Street as
currently conducted (collectively, the "STREET PERMITS"). Street is in
compliance in all material respects with the terms of the Street Permits, except
where the failure to be in compliance with the terms of the Street Permits would
not be material to Street or Select.
Litigation.
Except as disclosed in Part 2.11 of the Street Schedules, there are no
claims, suits, actions or proceedings pending or, to the Knowledge of Street,
threatened against, relating to or affecting Street, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or which would reasonably be
expected, either singularly or in the aggregate with all such claims, suits,
actions or proceedings, to be material and adverse to Street. No Governmental
Entity has at any time challenged or questioned in a writing delivered to Street
the legal right of Street to design, manufacture, offer or sell any of its
products or services in the present manner or style thereof. As of the date
hereof, to the Knowledge of Street, no event has occurred, and no claim, dispute
or other condition or circumstance exists, that will, or that would reasonably
be expected to, cause or provide a bona fide basis for a director or executive
officer of Street to seek indemnification from Street.
Brokers' and Finders' Fees.
Street has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
Interested Party Transactions.
Other than as set forth in Part 2.13 of the Street Schedules, no officer or
director of Street (nor, to the Knowledge of Street, any shareholder of Street
or any ancestor (up to once removed), sibling, descendant (up to once removed),
spouse, parent, subsidiary or other affiliate of any officer, director or
shareholder, or any trust, partnership or corporation in which any of such
persons has or has had an interest), has or has had, directly or indirectly, (i)
any material interest in any entity that furnished or sold, or furnishes or
sells, services, products or technology that Street furnishes or sells, or
proposes to furnish or sell, (ii) any material interest in any entity that
purchases from or sells or furnishes to Street any goods or services or (iii) a
material beneficial interest in any Contract other than employment or consulting
agreements with officers of Street and indemnification agreements with directors
and officers of Street, in each case previously provided or made available to
Select;
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provided, however, that ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded corporation and no more than
percent (5%) of the outstanding equity of any other entity shall not be deemed a
material "interest in any entity" for purposes of this Section 2.13.
Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.14(a)(i) below (which definition shall apply only to this
Section 2.14), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity
under common control with Street within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations issued thereunder;
(ii) "Street Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or stock-
related awards, fringe benefits or other employee benefits or remuneration of
any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by Street or any Affiliate for the benefit of any
Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the United States Department of
Labor;
(v) "Employee" shall mean any current, former, or retired
employee, officer, or director of Street or any Affiliate;
(vi) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between Street or any
Affiliate and any Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
(ix) "International Employee Plan" shall mean each Street
Employee Plan that has been adopted or maintained by Street, whether informally
or formally, for the benefit of Employees outside the United States;
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(x) "IRS" shall mean the Internal Revenue Service;
(xi) "Multiemployer Plan" shall mean any multiemployer
plan as defined in Section 4001(a)(3) of ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiii) "Pension Plan" shall mean each Street Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Part 2.14(b) of the Street Schedules contains an
accurate and complete list of each Street Employee Plan and each Employee
Agreement. Street does not have any plan or commitment to establish any new
Street Employee Plan, to modify any Street Employee Plan or Employee Agreement
(except to the extent required by law or to conform any such Street Employee
Plan or Employee Agreement to the requirements of any applicable law, in each
case as previously disclosed to Select in writing, or as required by this
Agreement), or to enter into any Street Employee Plan or Employee Agreement, nor
does it have any intention or commitment to do any of the foregoing.
(c) Documents. Street has provided or made available to Select: (i)
correct and complete copies of all documents embodying to each Street Employee
Plan and each Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Street Employee Plan; (iii) the three (3) most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection with
each Street Employee Plan or related trust; (iv) if Street Employee Plan is
funded, the most recent annual and periodic accounting of Street Employee Plan
assets; (v) the most recent summary plan description together with the summary
of material modifications thereto, if any, required under ERISA with respect to
each Street Employee Plan; (vi) all IRS determination, opinion, notification and
advisory letters, and rulings relating to Street Employee Plans and copies of
all applications and correspondence to or from the IRS or the DOL with respect
to any Street Employee Plan; (vii) all material written agreements and contracts
relating to each Street Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (viii) all communications material to any Employee or Employees
relating to any Street Employee Plan and any proposed Street Employee Plans, in
each case, relating to any amendments, terminations, establishments, increases
or decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability to Street; (ix) all COBRA
forms and related notices; and (x) all registration statements and prospectuses
prepared in connection with each Street Employee Plan.
(d) Employee Plan Compliance. (i) Street has performed in all
material respects all obligations required to be performed by it under, is not
in default or violation of, and has no
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Knowledge of any default or violation by any other party to each Street Employee
Plan, and each Street Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Street Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code has either received a favorable determination letter
from the IRS with respect to each such Plan as to its qualified status under the
Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a determination letter and make any amendments necessary to obtain a favorable
determination; (iii) no "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA or 4975 of the Code, has occurred with respect to any
Street Employee Plan; (iv) there are no actions, suits or claims pending, or, to
the Knowledge of Street, threatened or reasonably anticipated (other than
routine claims for benefits) against any Street Employee Plan or against the
assets of any Street Employee Plan; (v) each Street Employee Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Select, Street or any of its
Affiliates (other than ordinary administration expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings pending
or, to the Knowledge of Street or any Affiliates, threatened by the IRS or DOL
with respect to any Street Employee Plan; and (vii) neither Street nor any
Affiliate is subject to any penalty or tax with respect to any Street Employee
Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) Pension Plans. Street does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Street contributed to or been
requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Street Employee Plan provides,
or has any liability to provide, retiree life insurance, retiree health or other
retiree employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and Street has never represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree life insurance,
retiree health or other retiree employee welfare benefit, except to the extent
required by statute.
(h) Neither Street nor any Affiliate has, prior to the Effective
Time, and in any material respect, violated any of the health care continuation
requirements of COBRA, the requirements of FMLA or any similar provisions of
state law applicable to its Employees.
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(i) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Street Employee Plan or Employee Agreement that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any Employee.
(j) Employment Matters. Street: (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees; (ii)
has withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees; (iii) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any of
the foregoing; and (iv) is not liable for any material payment to any trust or
other fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the normal
course of business and consistent with past practice). There are no pending,
threatened or reasonably anticipated claims or actions against Street under any
worker's compensation policy or long-term disability policy. To Street's
Knowledge, no employee of Street has violated any employment contract,
nondisclosure agreement or noncompetition agreement by which such employee is
bound due to such employee being employed by Street and disclosing to Street or
using trade secrets or proprietary information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Street is
pending, threatened or reasonably anticipated. Street has no Knowledge of any
activities or proceedings of any labor union to organize any Employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
Knowledge of Street, threatened or reasonably anticipated relating to any labor,
safety or discrimination matters involving any Employee, including, without
limitation, charges of unfair labor practices or discrimination complaints,
which, if adversely determined, would, individually or in the aggregate, result
in any material liability to Street. Street has not engaged in any unfair labor
practices within the meaning of the National Labor Relations Act. Street is not
presently, nor has it been in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by Street.
(l) International Employee Plan. Street does not now, nor has it ever
had the obligation to, maintain, establish, sponsor, participate in, or
contribute to any International Employee Plan.
Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Street, no underground storage tanks and no amount of any substance
that has been designated by any
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Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum, urea-
formaldehyde and all substances listed as hazardous substances pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
(a "Hazardous Material") are present, as a result of the actions of Street or
any affiliate of Street, or, to Street's Knowledge, as a result of any actions
of any third party or otherwise, in, on or under any property, including the
land and the improvements, ground water and surface water thereof, that Street
or any of its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to Street (in any individual case or in the aggregate) (i)
Street has not 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 and (ii) Street has not disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively
"Hazardous Materials Activities") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
(c) Permits. Street holds all environmental approvals, permits,
licenses, clearances and consents (the "Street Environmental Permits") necessary
for the conduct of Street's and its subsidiaries' Hazardous Material Activities
and other businesses of Street and its subsidiaries as such activities and
businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to the
Knowledge of Street, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity
against Street or any of its subsidiaries in a writing delivered to Street
concerning any Street Environmental Permit, Hazardous Material or any Hazardous
Materials Activity of Street. Street has no Knowledge of any fact or
circumstance which would involve Street in any environmental litigation or
impose xxxx Xxxxxx any material environmental liability.
Year 2000 Compliance.
Except as disclosed in Part 2.16 of the Street Schedules, Street's products
and internal systems have been designed to ensure date and time entry
recognition, calculations that accommodate same century and multi-century
formulas and date values, leap year recognition and calculations, and date data
interface values that reflect the century. Street's products and internal
systems manage and manipulate data involving dates and times, including single
century formulas
-25-
multi-century formulas, and do not cause an abnormal ending scenario within the
application or generate incorrect values or invalid results involving such
dates.
Agreements, Contracts and Commitments.
Except as otherwise set forth in Part 2.17 of the Street Schedules, as of
the date hereof Street is not a party to or bound by:
(a) any employment or consulting agreement, contract or commitment
currently in force with any officer or director or higher level employee or
member of Street's Board of Directors, other than those that are terminable by
Street or any of its subsidiaries on no more than thirty (30) days' notice
without liability or financial obligation, except to the extent general
principles of wrongful termination law may limit Street's ability to terminate
employees at will;
(b) any agreement of indemnification or any guaranty by Street
currently in force other than any agreement of indemnification entered into in
connection with the sale or license of software products in the ordinary course
of business;
(c) any agreement, contract or commitment containing any covenant
currently in force limiting in any respect the right of Street to engage in any
line of business or to compete with any person or granting any exclusive
distribution rights;
(d) any agreement, contract or commitment currently in force relating
to the disposition or acquisition by Street after the date of this Agreement of
a material amount of assets not in the ordinary course of business or pursuant
to which Street has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Street's
subsidiaries;
(e) any joint marketing or development agreement currently in force
under which Street or any of its subsidiaries have continuing material
obligations to jointly market any product, technology or service and which may
not be canceled without penalty upon notice of ninety (90) days or less, or any
material agreement pursuant to which Street has continuing material obligations
to jointly develop any intellectual property that will not be owned, in whole or
in part, by Street and which may not be canceled without penalty upon notice of
ninety (90) days or less;
(f) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology that is
material to Street;
(g) any agreement or plan currently in force, including, without
limitation, any stock option plan, stock appreciation right plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
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;
-26-
(h) any agreement, contract or commitment currently in force to sell
or distribute any Street products, service or technology except agreements with
distributors or sales representatives in the normal course of business
cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided or made available to Select;
(i) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments currently in force
relating to the borrowing of money or extension of credit;
(j) any settlement agreement entered into within two (2) years prior
to the date of this Agreement; or
(k) any other agreement, contract or commitment that has a value of
$25,000 or more individually.
Neither Street, nor to Street's Knowledge any other party to a material
Contract, is in breach, violation or default under, and Street has not received
written notice that it has breached, violated or defaulted under, any of the
material terms or conditions of any material Contract to which Street is bound,
in such a manner as would permit any other party to cancel or terminate any such
material Contract, or would permit any other party to seek material damages or
other remedies (for any or all of such breaches, violations or defaults, in the
aggregate).
Board Approval.
The Board of Directors of Street has, as of the date of this Agreement, (i)
determined that the Merger is fair to, and in the best interests of Street and
the Street Shareholders, (ii) approved and deemed advisable, subject to
shareholder approval, this Agreement and the transactions contemplated hereby
and (iii) determined to recommend that the Street Shareholders approve and adopt
this Agreement and approve the Merger.
Insurance.
Street maintains insurance policies and fidelity bonds covering the assets,
business, equipment, properties, operations, employees, officers and directors
of Street (collectively, the "Insurance Policies") which are of the type and in
amounts customarily carried by persons conducting businesses similar to those of
Street. There is no material claim by Street pending under any of the material
Insurance Policies as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds.
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ARTICLE 3.
Representations and Warranties of Select and Sub
As of the date hereof and as of the Closing Date, Select and Sub represent
and warrant to Street, subject to the exceptions specifically disclosed in
writing in the disclosure letter and referencing a specific representation
supplied by Select and Sub to Street dated as of the date hereof and certified
by a duly authorized officer of Select (the "SELECT SCHEDULES"), as follows:
Organization of Select.
(a) Except as set forth on Part 3.1(a) of the Select Schedules, Select
does not own any capital stock of, or any equity interest of any nature in, any
other entity, except for passive investments in equity interests of public
companies as part of the cash management program of Select. Select has not
agreed and is not obligated to make, nor bound by any contract under which
contract it may become obligated to make, any future investment in or capital
contribution to any other entity. Select has not, at any time, been a general
partner of any general partnership, limited partnership or other entity.
(b) Select and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Contracts by which it is bound.
(c) Each of Select and its subsidiaries is qualified to do business as
a foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification and
where the failure to so qualify would have a Material Adverse Effect on Select.
(d) Select has delivered or made available to Street a true and
correct copy of the Certificate of Incorporation and Bylaws of Select and
similar governing instruments of each of its subsidiaries, each as amended to
date (collectively, the "Select Charter Documents"), and each such instrument is
in full force and effect. Select is not in violation of any of the provisions
of Select Charter Documents.
(e) Select has delivered or made available to Street all proposed or
considered amendments to Select Charter Documents.
Select Capital Structure.
(a) The authorized capital stock of Select consists of: (i)
90,000,000 shares of Common Stock ("Select Common Stock"), of which 8,479,580
shares have been issued and are
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outstanding as of April 22, 1999; and (ii) 10,000,000 shares of Preferred Stock
("Select Preferred Stock"), of which 5,288,163 shares have been issued and are
outstanding as of the date of this Agreement. The Select Preferred Stock is
designated as follows: (i) 1,378,000 shares of Series A Preferred Stock, all of
which are outstanding as of the date of this Agreement.; (ii) 190,336 shares of
Series B Preferred Stock, all of which are outstanding as of the date of this
Agreement.; (iii) 614,374 shares of Series C Preferred Stock, all of which are
outstanding as of the date of this Agreement.; (iv) 681,201 shares of Series D
Preferred Stock, all of which are outstanding as of the date of this Agreement.;
(v) 325,000 shares of Series E Preferred Stock, all of which are outstanding as
of the date of this Agreement.; (vi) 2,100,000 shares of Series F Preferred
Stock, 1,758,297 of which are outstanding as of the date of this Agreement.; and
(vii) 340,955 shares of Series G Preferred Stock, all of which are outstanding
as of the date of this Agreement. All of the outstanding shares of Select Common
Stock and Select Preferred Stock have been duly authorized and validly issued,
and are fully paid and nonassessable. Part 3.2(b) of the Select Schedules sets
forth information regarding outstanding warrants and other outstanding rights to
purchase Select Common Stock and Select Preferred Stock.
(b) As of April 22, 1999: (i) 1,634,266 shares of Select Common Stock
are subject to issuance pursuant to outstanding options to purchase Common Stock
under Select's stock option plans; and (ii) 541,000 shares of Common Stock are
reserved for future issuance under Select's stock option plans. (Stock options
granted by Select pursuant to Select's stock option plans are referred to in
this Agreement as "Select Options"). Select has made available to Street
accurate and complete copies of all stock option plans pursuant to which Select
has granted stock options that are currently outstanding and the form of all
stock option agreements evidencing such options. All shares of Select Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable.
(c) All outstanding shares of Select Common Stock and Select Preferred
Stock, all outstanding Select Options, and all outstanding shares of capital
stock of each subsidiary of Select have been issued and granted in compliance
with (i) all applicable securities laws and other applicable Legal Requirements
and (ii) all requirements set forth in applicable Contracts.
Obligations With Respect to Capital Stock.
Except as set forth in Section 3.2 above and in Part 3.3 of the Select
Schedules, there are no equity securities, partnership interests or similar
ownership interests of any class of Select equity security, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except for securities Select owns free and clear of
all claims and Encumbrances, directly or indirectly through one or more
subsidiaries, and except for shares of capital stock or other similar ownership
interests of certain subsidiaries of Select that are owned by certain nominee
equity holders as required by the applicable law of the jurisdiction of
organization of such subsidiaries (which shares or other interests do not
materially affect Select's control of such subsidiaries), there are no
-29-
equity securities, partnership interests or similar ownership interests of any
class of equity security of any subsidiary of Select, or any security
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except as set forth in Section 3.2 above and in Part
3.3 of the Select Schedules, there are no subscriptions, options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which Select or any of its subsidiaries is a party or by which it is bound
obligating Select or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Select or any of its
subsidiaries or obligating Select or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such subscription, option, warrant,
equity security, call, right, commitment or agreement. As of the date of this
Agreement, except as contemplated by this Agreement and except as set forth in
Part 3.3 of the Select Schedules, there are no registration rights and there is
no voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Select is a party or by which it is bound with respect to
any equity security of any class of Select or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries.
Authority; Non-Contravention.
(a) Select has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Select and its subsidiaries, subject only to the
filing of the Merger Agreement and Restated Certificate (as defined below)
pursuant to California Law and Delaware Law, as applicable. This Agreement has
been duly executed and delivered by Select and Sub, assuming execution and
delivery by Street, constitutes a valid and binding obligation of Select and
Sub, enforceable against Select and Sub in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and general
principles of equity. The execution and delivery of this Agreement by Select
and Sub do not, and the performance of this Agreement by Select and Sub will
not, (i) conflict with Select Charter Documents or the Charter Documents of its
subsidiaries, subject to obtaining the approval of the Select stockholders of
the Restated Certificate as required by the Select Charter Documents and
applicable law, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Select or any of its subsidiaries or by which
Select or any of its subsidiaries or any of their respective properties are
bound or affected, subject to compliance with the requirements set forth in
Section 3.4(b) below or (iii) result in any material breach of or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or impair Select's rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a material lien or Encumbrance on any of the material properties or
assets of Select or any of its subsidiaries pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease,
-30-
license, permit, franchise, concession, or other instrument or obligation to
which Select or any of its subsidiaries is a party or by which Select or any of
its subsidiaries or its or any of their respective assets are bound or affected.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity, is required to be obtained
or made by Select or any of its subsidiaries in connection with the execution
and delivery of this Agreement or the consummation of the Merger, except for (i)
the filing of the Merger Agreement with the Secretary of State of the State of
California and the Secretary of State of the State of Delaware, (ii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal, foreign and state
securities (or related) laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act") and the securities or antitrust laws of any
foreign country and (iii) such other consents, authorizations, filings,
approvals and registrations which if not obtained or made would not be material
to Select or have a material adverse effect on the ability of the parties hereto
to consummate the Merger.
Select Financial Statements.
Part 3.5 of the Select Schedules sets forth Select's unaudited consolidated
balance sheet as of December 31, 1998 and the related consolidated unaudited
statements of operations and cash flow for the twelve month period ended
December 31, 1998 (the "Select Year-End Financials") and Select's unaudited
balance sheet as of March 31, 1999 (the "Select Current Balance Sheet") and the
related unaudited statements of operations and cash flow for the three months
then ended (together with the Select Year-End Financials, the "Select
Financials"). The Select Financials are correct in all material respects and
have been prepared in accordance with GAAP, applied on a basis consistent
throughout the periods indicated and consistent with each other except as may be
indicated therein. The Select Financials present fairly the financial
condition, operating results and cash flows of Select as of the dates and during
the periods indicated therein, subject to normal year-end adjustments, which
will not be material in amount or significance.
Absence of Certain Changes or Events.
Since the date of Select Current Balance Sheet until the date hereof there
has not been: (i) any Material Adverse Effect on Select , (ii) any declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of Select's or any of its
subsidiaries' capital stock, or any purchase, redemption or other acquisition by
Select of any of Select's capital stock or any other securities of Select or its
subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following their
termination pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of Select's
or any of its subsidiaries' capital stock, (iv) any granting by Select or any of
its subsidiaries of any increase in compensation or fringe benefits, except for
normal increases of cash compensation in the ordinary course of business
consistent with past practice, or any payment by Select or any of its
subsidiaries
-31-
of any bonus, except for bonuses made in the ordinary course of business
consistent with past practice, or any granting by Select or any of its
subsidiaries of any increase in severance or termination pay or any entry by
Select or any of its subsidiaries into any currently effective employment,
severance, termination or indemnification agreement or any agreement the
benefits of which are contingent or the terms of which are materially altered
upon the occurrence of a transaction involving Select of the nature contemplated
hereby, (v) any material change by Select in its accounting methods, principles
or practices, except as required by concurrent changes in GAAP or (vi) any
revaluation by Select or any of its subsidiaries of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable other than in the ordinary course of
business.
Taxes.
(a) Tax Returns and Audits.
(i) Select and each of its subsidiaries have timely filed
all Returns relating to Taxes required to be filed by Select and each of its
subsidiaries with any Tax authority, except such Returns which are not material
to Select, and have paid all Taxes shown to be due on such Returns.
(ii) Select and each of its subsidiaries as of the
Effective Time will have withheld all federal and state income taxes, Taxes
pursuant to FICA, Taxes pursuant to the FUTA and other Taxes required to be
withheld.
(iii) Neither Select nor any of its subsidiaries has been
delinquent in the payment of any Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Select or any of its subsidiaries, nor
has Select or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any material Tax.
(iv) No audit or other examination of any Return of Select
or any of its subsidiaries by any Tax authority is presently in progress, nor
has Select or any of its subsidiaries been notified of any request for such an
audit or other examination.
(v) No adjustment relating to any Returns filed by Select
or any of its subsidiaries has been proposed in writing formally or informally
by any Tax authority to Select or any of its subsidiaries or any representative
thereof.
(vi) Neither Select nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on Select
Balance Sheet, whether asserted or unasserted, contingent or otherwise, which is
material to Select, other than any liability for unpaid Taxes that may have
accrued since the date of Select Balance Sheet in connection with the operation
of the business of Select and its subsidiaries in the ordinary course.
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(vii) There is no contract, agreement, plan or arrangement
to which Select is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Select or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(viii) Neither Select nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Select.
(ix) Neither Select nor any of its subsidiaries is party
to or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) Except as may be required as a result of the Merger,
Select and its subsidiaries have not been and will not be required to include
any adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or Section 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(xi) None of Select's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
Title to Properties; Absence of Liens and Encumbrances.
All of Select's and its subsidiaries' current leases with respect to
real property are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) that would give rise to a
material claim. Other than the leaseholds created under real property leases,
and neither Select nor its subsidiaries owns any interest in real property.
(b) Select and each of its subsidiaries has good and valid title to,
or, in the case of leased properties and assets, valid leasehold interests in,
all of its tangible properties and assets, real, personal and mixed, used or
held for use in its business, free and clear of any Liens, except as reflected
in Select Financials and except for liens for taxes not yet due and payable,
statutory liens and such Liens or other imperfections of title and encumbrances,
if any, which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
Intellectual Property. For the purposes of this Agreement, the following
terms have the following definitions:
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"Select Intellectual Property" means any Intellectual Property that is
----------------------------
owned by, or exclusively licensed to, Select or its subsidiaries.
"Select Registered Intellectual Property" means all of the Registered
---------------------------------------
Intellectual Property owned by, or filed in the name of, Select or its
subsidiaries.
(a) No material Select Intellectual Property or product or service of
Select or its subsidiaries is subject to any proceeding or outstanding decree,
order, judgment, agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by Select or its subsidiaries, or which would
affect the validity, use or enforceability of such Select Intellectual Property.
(b) Each material item of Select Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Registered Intellectual Property have been
made and all necessary documents, recordations and certificates in connection
with such Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
(c) Select or its subsidiaries owns and has good and exclusive title
to, or has license (sufficient for the conduct of its business as currently
conducted and as currently proposed to be conducted) to, each material item of
Select Intellectual Property or Intellectual Property used by Select or its
subsidiaries free and clear of any lien or encumbrance (excluding licenses and
related restrictions); and Select or its subsidiaries is the exclusive owner of
all trademarks and trade names used in connection with the operation or conduct
of the business of Select or its subsidiaries, including the sale of any
products or the provision of any services by Select or its subsidiaries.
(d) To the extent that any material Intellectual Property has been
developed or created by a third party for Select or its subsidiaries, Select or
its subsidiaries has a written agreement with such third party with respect
thereto and Select or its subsidiaries thereby either (i) has obtained ownership
of, and is the exclusive owner of, or (ii) has obtained a license (sufficient
for the conduct of its business as currently conducted and as currently proposed
to be conducted) to all such third party's Intellectual Property in such work,
material or invention by operation of law or by valid assignment, to the fullest
extent it is legally possible to do so.
(e) The operation of the business of Select or its subsidiaries as
such business currently is conducted, including Select's or its subsidiaries'
design, development, manufacture, marketing and sale of the products or services
of Select (including with respect to products currently under development) has
not, does not and will not infringe or misappropriate the Intellectual Property
of any third party in any respect adverse to such party or constitute unfair
competition or trade practices under the laws of any jurisdiction.
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(f) Select and its subsidiaries have not received notice from any
third party that the operation of the business of Select or any act, product or
service of Select or its subsidiaries, infringes or misappropriates the
Intellectual Property of any third party or constitutes unfair competition or
trade practices under the laws of any jurisdiction.
(g) To the Knowledge of Select or its subsidiaries, no person has or
is infringing or misappropriating, in any respect materially adverse to Select
or its subsidiaries, any Select Intellectual Property.
(h) Select and its subsidiaries have taken reasonable steps to protect
Select's or its subsidiaries' rights in Select's or its subsidiaries'
confidential information and trade secrets that it wishes to protect or any
trade secrets or confidential information of third parties provided to Select or
its subsidiaries, and, without limiting the foregoing, Select or its
subsidiaries has and enforces a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement substantially in the
form provided to Street and all current and former employees and contractors of
Select have executed such an agreement, except where the failure to do so is not
reasonably expected to be material to Select.
Compliance; Permits; Restrictions.
(a) Neither Select nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or in violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Select or any of its
subsidiaries or by which Select or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Select or any of its subsidiaries is a
party or by which Select or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for conflicts, violations and
defaults that (individually or in the aggregate) would not cause Select or any
of its subsidiaries to lose any material benefit or incur any material
liability. No investigation or review by any Governmental Entity is pending or,
to Select's Knowledge, has been threatened against Select or any of its
subsidiaries, nor, to Select's Knowledge, has any Governmental Entity indicated
an intention to conduct an investigation of Select or any of its subsidiaries.
There is no material agreement, judgment, injunction, order or decree binding
upon Select or any of its subsidiaries which has or would reasonably be expected
to have the effect of prohibiting or materially impairing any business practice
of Select or any of its subsidiaries, any acquisition of material property by
Select or any of its subsidiaries or the conduct of business by Select as
currently conducted.
(b) Select and its subsidiaries hold, to the extent legally required,
all permits, licenses, variances, exemptions, orders and approvals from
Governmental Entities that are material to and required for the operation of the
business of Select as currently conducted (collectively, the "Select Permits").
Select and its subsidiaries are in compliance in all material respects with the
terms of Select Permits, except where the failure to be in compliance with the
terms of Select Permits would not be material to Select.
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Litigation.
Except as disclosed in Part 3.11 of the Select Schedules, there are no
claims, suits, actions or proceedings pending or, to the Knowledge of Select,
threatened against, relating to or affecting Select or any of its subsidiaries,
before any court, governmental department, commission, agency, instrumentality
or authority, or any arbitrator that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or which would
reasonably be expected, either singularly or in the aggregate with all such
claims, suits, actions or proceedings, to be material and adverse to Select or
its subsidiaries. No Governmental Entity has at any time challenged or
questioned in a writing delivered to Select the legal right of Select to design,
manufacture, offer or sell any of its products or services in the present manner
or style thereof. As of the date hereof, to the Knowledge of Select, no event
has occurred, and no claim, dispute or other condition or circumstance exists,
that will, or that would reasonably be expected to, cause or provide a bona fide
basis for a director or executive officer of Select or its subsidiaries to seek
indemnification from Select.
Brokers' and Finders' Fees.
Neither Select nor its subsidiaries have incurred, nor will they incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Select, no Hazardous Materials are present, as a result of the
actions of Select or any of its subsidiaries or any affiliate of Select, or, to
Select's Knowledge, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements, ground
water and surface water thereof, that Select or any of its subsidiaries has at
any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to Select (in any individual case or in the aggregate) (i)
neither Select 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 and (ii) neither Select nor any of its subsidiaries has disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Select and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "Select
Environmental Permits") necessary for the
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conduct of Select's and its subsidiaries' Hazardous Material Activities and
other businesses of Select and its subsidiaries as such activities and
businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to Select's
Knowledge, no action, proceeding, revocation proceeding, amendment procedure,
writ or injunction has been threatened by any Governmental Entity against Select
or any of its subsidiaries in a writing delivered to Select concerning any
Select Environmental Permit, Hazardous Material or any Hazardous Materials
Activity of Select or any of its subsidiaries. Select is not aware of any fact
or circumstance which would involve Select or any of its subsidiaries in any
environmental litigation or impose upon Select any material environmental
liability.
Year 2000 Compliance.
Except as disclosed in Part 3.14 of the Select Schedules, Select's products
and internal systems have been designed to ensure date and time entry
recognition, calculations that accommodate same century and multi-century
formulas and date values, leap year recognition and calculations, and date data
interface values that reflect the century. Select's products and internal
systems manage and manipulate data involving dates and times, including single
century formulas and multi-century formulas, and do not cause an abnormal ending
scenario within the application or generate incorrect values or invalid results
involving such dates.
Agreements, Contracts and Commitments.
As of the date of this Agreement, neither Select nor any of its
subsidiaries, nor to Select's Knowledge any other party to a material Contract
of Select or its subsidiaries, is in breach, violation or default under, and
neither Select nor any of its subsidiaries has received written notice that such
entity has breached, violated or defaulted under, any of the material terms or
conditions of any material Contract of Select or its subsidiaries in such a
manner as would permit any other party to cancel or terminate any such material
Contract of Select or its subsidiaries, or would permit any other party to seek
material damages or other remedies (for any or all of such breaches, violations
or defaults, in the aggregate).
3.16 Employee Benefit Plans.
Part 3.16 of the Select Schedules contains an accurate and complete list of
each Select Employee Plan. "Select Employee Plan" means any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or stock-
related awards, fringe benefits or other employee benefits or remuneration of
any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by Select.
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Xxxxx Xxxxxxxx.
The Board of Directors of Select has, as of the date of this Agreement,
approved the Merger and transactions contemplated hereby including without
limitation the issuance of shares of Select Common Stock and Select Series H
Preferred Stock in connection with the Merger and the Certificate Amendment.
ARTICLE 4.
Conduct Prior to the Effective Time
Conduct of Business of Street. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Street agrees to carry on Street's business in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted, to pay the debts and Taxes of Street when due, to pay or perform
other obligations when due, and, to the extent consistent with such business,
use all reasonable efforts consistent with past practice and policies to
preserve intact Street's present business organization, keep available the
services of Street's present officers and employees and preserve Street's
relationships with customers, suppliers, distributors, licensors, licensees and
others having business dealings with it, all with the goal of preserving
unimpaired Street's goodwill and ongoing business at the Effective Time. Except
as expressly contemplated by Section 4.1 of the Street Schedules or as otherwise
expressly provided in this Agreement, Street shall not, without the prior
written consent of Select:
(a) other than performing the Contracts listed in the Street Schedules
in accordance with their terms existing on the date hereof, make any expenditure
or enter into any transaction exceeding $50,000 or any commitment or transaction
of the type described in Section 2.17 hereof;
(b) sell, license or transfer to any person or entity of any rights to
any Street Intellectual Property or enter into any agreement with respect to the
Street Intellectual Property with any person or entity other than in the
ordinary course of business consistent with past practice;
(c) amend or change its Articles of Incorporation or Bylaws;
(d) revalue any of its assets, including without limitation writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business consistent with past practice;
(e) issue, sell, grant, contract to issue, grant or sell, or authorize
the issuance, delivery, sale or purchase of any shares of Street Capital Stock
or securities convertible into, or exercisable or exchangeable for, shares of
Street Capital Stock, or any securities, warrants, options or
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rights to purchase any of the foregoing, except for (i) issuances of Street
Capital Stock upon the exercise thereof or upon exercise or conversion of Street
Convertible Securities or Street Preferred Stock outstanding on the date of this
Agreement and (ii) issuances of Street Options in the ordinary course of
business consistent with past practice;
(f) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Street
Capital Stock, or split, combine or reclassify any shares of Street Capital
Stock, or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of Street Capital Stock, or repurchase,
redeem, or otherwise acquire, directly or indirectly, any shares of Street
Capital Stock (or options, warrants or other rights convertible into,
exercisable or exchangeable therefor), except for (i) repurchases of Street
Capital Stock upon the termination of service of any service providers of Street
in accordance with the standard terms set forth in the agreements governing such
repurchases, all of which agreements have been provided or made available to
Select, (ii) conversion of Street Preferred Stock and (iii) exercises or
conversion of Street Convertible Securities;
(g) grant any severance or termination pay (i) to any director or
officer or (ii) to any employee, except payments made pursuant to standard
written agreements outstanding as of the date hereof and disclosed on the Street
Schedules, or increase in the salary or other compensation payable or to become
payable by Street to any of its officers, directors, employees or advisors, or
declare, pay or make any commitment or obligation of any kind for the payment by
Street of a bonus or other additional salary or compensation to any such person,
or adopt or amend any employee benefit plan or enter into any employment
contract other than in the ordinary course of business consistent with past
practice;
(h) sell, lease, license or otherwise dispose of any of the assets or
properties of Street which are not Intellectual Property other than in the
ordinary course of business and consistent with past practices, including but
not limited to the performance of obligations under contractual arrangements
existing as of the date hereof set forth on the Street Schedules, or create any
security interest in such assets or properties;
(i) grant any loan to any person or entity except for accounts
receivable in the ordinary course of business consistent with past practice,
incur any indebtedness or guarantee any indebtedness except for accounts payable
incurred in the ordinary course of business consistent with past practice, issue
or sell any debt securities, guarantee any debt securities of others, purchase
any debt securities of others or amend the terms of any outstanding agreements
related to borrowed money, except for advances to employees for travel and
business expenses in the ordinary course of business consistent with past
practice;
(j) amend in any material respect or otherwise modify (or agree to do
so), or violate the terms of any of the Contracts set forth or described in the
Street Schedules or enter into any material Contract except in the ordinary
course of business consistent with past practice;
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(k) commence or settle any litigation;
(l) acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or equity securities or, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to Street's
business;
(m) pay, discharge or satisfy, in an amount in excess of $25,000 (in
any one case) or $50,000 (in the aggregate), any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of liabilities in the ordinary course of
business and in a manner consistent with past practice;
(n) make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
(o) take any action to accelerate the vesting schedule of any of the
outstanding Street Options or Street Capital Stock except as provided for in
each Street Employee Plan and each Employee Agreement which are in effect on the
date hereof and listed in Part 2.14(b) of the Street Schedules;
(p) terminate any employees other than for cause or encourage any
employees to resign from Street;
(q) enter into any contract, purchase order or other agreement
pursuant to which Street would be required to book any amounts due thereunder as
deferred revenue; or
(r) take or agree in writing or otherwise to take any of the actions
described in the preceding clauses (a) through (q) of this Section 4.1 or any
other action that would prevent Street from performing or cause Street not to
perform its covenants hereunder.
Street Non-Solicitation. Until the earlier of (i) the Effective Time or
(ii) the date of termination of this Agreement pursuant to the provisions of
Section 8.1 hereof, Street shall not (nor shall Street permit any of Street's
officers, directors, agents, representatives or affiliates to) directly or
indirectly, take any of the following actions with any party other than Select
and its designees: (a) solicit, encourage, initiate or participate in any
inquiry, negotiations or discussions or enter into any agreement with respect to
any offer or proposal to acquire any portion of Street's business and properties
or any shares of Street Capital Stock (whether or not outstanding except as
specifically permitted by Section 4.1(e) above) whether by merger, purchase of
assets, tender offer or otherwise, or effect any such transaction, (b) disclose
any information not customarily disclosed to such person concerning Street's
business, technologies, or properties, or afford to any person or entity access
to its properties, technologies, books or records, not customarily afforded such
access, (c) assist or
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cooperate with any person to make any proposal to purchase all or any part of
the Street Capital Stock or Street's assets or (d) solicit, negotiate or enter
into any agreement with any person providing for the acquisition of Street
(whether by way of merger, purchase of assets, tender offer or otherwise). In
the event Street shall receive, prior to the Effective Time or the termination
of this Agreement, any offer or proposal, directly or indirectly, of the type
referred to in clause (a) or (c) above, or any request for disclosure or access
pursuant to clause (b) above, Street shall immediately inform Select as to any
such offer or proposal, including information as to the identity of the offeror
or the party making such offer or proposal and the specific terms of such offer
or proposal, as the case may be. The parties hereto agree that irreparable
damage would occur in the event that the provisions of this Section 4.2 were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed by Street that Select shall be entitled to seek an
injunction or injunctions to prevent breaches of the provisions of this Section
4.2 and to enforce specifically the terms and provisions hereof in any court of
the United States or any state having jurisdiction, this being in addition to
any other remedy to which Select may be entitled at law or in equity. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in this Section 4.2 by any officer, director or employee of Street or
any investment banker, attorney or other advisor or representative of Street
shall be deemed to be a breach of this Section 4.2 by Street.
Conduct of Business of Select 4.4. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
and the Effective Time, Select agrees to use all reasonable efforts consistent
with past practice and policies to preserve intact Select's present business
organization, keep available the services of Select's present officers and
employees and preserve Select's relationships with customers, suppliers,
distributors, licensors, licensees and others having business dealings with it,
all with the goal of preserving unimpaired Select's goodwill and ongoing
business at the Effective Time. Unless otherwise expressly provided in this
Agreement, Street shall not, without the prior consent of Street:
(a) declare, accrue, set aside or pay any extraordinary dividend or
any other extraordinary distribution in respect of any shares of Select's
capital stock;
(b) issue, sell, grant, contract to issue, grant or sell, or authorize
the issuance, delivery, sale or purchase of any shares of Select capital stock
or securities convertible into, or exercisable or exchangeable for, shares of
Select capital stock, or any securities, warrants, options or rights to purchase
any of the foregoing, except for (i) issuances of Select capital stock upon the
exercise of any of the foregoing (including without limitation shares of Select
capital stock issued in connection with a possible combination of Select with
one or more of its subsidiaries before or in connection with an initial public
offering) or upon exercise or conversion of convertible or exchangeable
securities or the conversion of shares of Select Preferred Stock outstanding on
the date of this Agreement; (ii) issuances of options to purchase up to 600,000
shares of Select Common Stock to directors, officers, employees and consultants
of Select in the ordinary course of business consistent with past practice;
(iii) issuances of up to 400,000 shares of Select capital stock in
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mergers, reorganizations, strategic business relationships and similar
transactions; and (iv) issuances of Select capital stock in its initial public
offering; or
(c) take any action with respect to the Select Charter Documents, if
in such case, the action is intended to have the effect of being materially
adverse to the Street Shareholders as compared to the existing Select
stockholders.
In addition, in the event Select enters into negotiations to acquire any
company that is in the same line of business as Street, Select shall, subject to
confidentiality obligations imposed by contract or applicable law, consult with
Street regarding such acquisition.
ARTICLE 5.
Additional Agreements
Fairness Hearing; Shareholder Approval.
(a) As soon as reasonably practicable following the execution of this
Agreement, Select and Street shall prepare the necessary documents and Select
shall apply to obtain a permit (a "California Permit") from the Commissioner of
Corporations of the State of California (after a hearing before such Department)
pursuant to Section 25121 of the California Corporate Securities Law of 1968, so
that the issuance of Select Common Stock in the Merger shall be exempt from
registration under Section 3(a)(10) of the Securities Act of 1933, as amended
(the "Securities Act"). Street and Select will respond to any comments from the
California Department of Corporations and use their commercially reasonable
efforts to have the California Permit granted as soon as practical after such
filing. As promptly as practical after the date of this Agreement, Select and
Street shall prepare and make such filings as are required under applicable Blue
Sky laws relating to the transactions contemplated by this Agreement.
(b) As promptly as practicable after the receipt of a California
Permit, (i) Street shall submit this Agreement and the transactions contemplated
hereby, including without limitation the Merger, to the Street shareholders for
approval and adoption as provided by California Law and the Street Charter
Documents; and (ii) Street shall solicit the consent of the requisite holders of
Street Preferred Stock to validly approve the Rights Termination (as defined in
Section 6.2(i)). The materials submitted to the Street shareholders shall be
subject to review and approval by Select and include information regarding
Street, the terms of the Merger and this Agreement and the unanimous
recommendation of the Board of Directors of Street in favor of the Merger, this
Agreement and the transactions contemplated hereby.
(c) As promptly as practicable, Select shall submit the Certificate
Amendment to its stockholders for approval as provided by the Select Charter
Documents and applicable law.
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Restrictions on Transfer.
(a) All certificates representing Select Common Stock and Select
Series H Preferred Stock deliverable to any Street Shareholder pursuant to the
Merger Agreement and in connection with the Merger and any certificates
subsequently issued with respect thereto or in substitution therefor (including
any shares issued or issuable in respect of any such shares upon any stock split
stock dividend, recapitalization, conversion or similar event) shall be stamped
or otherwise imprinted with legends in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. THE TRANSFER
RESTRICTIONS APPLICABLE TO THESE SHARES ARE BINDING ON
TRANSFEREES OF THESE SHARES.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED DIRECTLY OR
INDIRECTLY FOR SUCH PERIOD OF TIME NOT TO EXCEED ONE HUNDRED
EIGHTY (180) DAYS FOLLOWING THE EFFECTIVE DATE OF ANY
REGISTRATION STATEMENT OF THE ISSUER FILED UNDER THE
SECURITIES ACT IN CONNECTION WITH THE INITIAL PUBLIC
OFFERING OF THE ISSUER'S COMMON STOCK.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO A SHAREHOLDER'S AGREEMENT PURSUANT TO WHICH SUCH SHARES
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH A WRITTEN OPINION
OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933. COPIES OF SUCH AGREEMENT
ARE AVAILABLE FROM THE ISSUER.
(b) The certificates evidencing the Consideration Shares shall also
bear any legend required by the Commissioner of Corporations of the State of
California or such as are required pursuant to any state, local or foreign law
governing such securities.
(c) The Consideration Shares will not be registered under the
Securities Act.
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(d) No Street Shareholder shall be permitted to sell or otherwise
dispose of any Consideration Shares received in the Merger, unless Select
receives an unqualified written opinion of counsel reasonably acceptable to it
stating that the proposed transfer of the Consideration Shares may be effected
without registration under the Securities Act, provided however that such
opinion may not rely on either (A) the exception provided by Section 3(a)(10) of
the Securities Act or (B) upon Rule 145 promulgated under the Securities Act
until one hundred eighty-one (181) days after the effective date of Select's
initial public offering.
(e) Each Street Shareholder agrees to, if requested by Select or an
underwriter of Select Common Stock (or other securities) in connection with
Select's initial registered public stock offering, enter into an agreement not
to sell or otherwise transfer or dispose of any Select Common Stock (or other
securities) of Select held by such holder during a period of time determined by
Select and its underwriters (not to exceed 180 days) following the effective
date of the registration statement of Select filed under the Securities Act
relating to such public offering. If requested by Street or an underwriter of
Select Common Stock (or other securities) of Select in connection with a Select
initial registered public offering, such agreement shall be in writing in a form
reasonably satisfactory to Select and such underwriter. Select may impose stop-
transfer instructions with respect to the Select Common Stock (or securities)
subject to the foregoing restriction until the end of said period.
(f) The restrictions imposed by this Section 5.2 shall terminate
(except for the restrictions contained in paragraph (d) above), without any
action by Select or the Street Shareholders, upon the date one hundred eighty-
one (181) days after the effective date of the initial public offering of Select
Common Stock.
Access to Information. Street and Select shall afford the other party and
its accountants, counsel and other representatives reasonable access during
normal business hours during the period prior to the Effective Time to (a) all
of Select and Street's properties, books, contracts, commitments and records, as
applicable, as reasonably requested by each party, (b) all other information
concerning the business, properties and personnel (subject to restrictions
imposed by applicable law) of Street or Select as applicable, as each party may
reasonably request and (c) all key employees of Street and Select, as reasonably
requested by each party. It is understood that for the purposes of the foregoing
sentence, a reasonable request on the part of Street shall be granted to access
that information, property and personnel as is necessary to evaluate the
investment decision being made by the Street Shareholders in connection with the
Merger. Each of Select and Street agree to provide to the other party and its
accountants, counsel and other representatives copies of internal financial
statements promptly upon request. No information or knowledge obtained in any
investigation pursuant to this Section 5.3 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
Confidentiality. Each of the parties hereto hereby agrees that the
information obtained in any investigation pursuant to Section 5.3 hereof, or
pursuant to the negotiation and execution of this Agreement or the effectuation
of the transactions contemplated hereby, shall be governed by the
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terms of the Confidentiality Agreement, executed effective as of March 5, 1999,
between Street and Select.
Expenses. Whether or not the Merger is consummated, all fees and expenses
incurred in connection with the Merger including, without limitation, all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties incurred by a party hereto in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions
contemplated hereby or thereby, shall be the obligation of the respective party
incurring such fees and expenses.
Public Disclosure. Unless otherwise required by law, no disclosure
(whether or not in response to an inquiry) of the subject matter of this
Agreement shall be made by any party hereto unless approved by the other party
prior to release; provided, however, that such approval shall not be
unreasonably withheld.
Consents. Street shall use commercially reasonable efforts to obtain the
consents, waivers and approvals under any of the Contracts deemed appropriate or
necessary by Select in connection with the Merger, including all such consents,
waivers and approvals set forth in Street Schedules, so as to preserve all
rights of, and benefits to, Select thereunder.
Firpta Compliance. On the Closing Date, Street shall deliver to Select a
properly executed statement in a form reasonably acceptable to Select for
purposes of satisfying Select's obligations under Treasury Regulation Section
1.1445-2(c)(3).
Reasonable Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties hereto shall use commercially reasonable efforts
to take promptly, or cause to be taken, all actions, and to do promptly, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings (including any filings or
registrations necessary to perfect Select's ownership of any Street Registered
Intellectual Property after the Merger) and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement.
Notification of Certain Matters. Street shall give prompt notice to Select
of (i) the occurrence or non-occurrence of any event, the occurrence or non-
occurrence of which would cause any representation or warranty of Street and
Select, respectively, contained in this Agreement to be untrue or inaccurate,
such that the condition set forth in Section 6.2(a) would not be satisfied and
(ii) any failure of Street or Select, as the case may be, to comply with or
satisfy in all material respects any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.10 shall not limit or otherwise affect
any remedies available to the party receiving such notice. No disclosure by
Street
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pursuant to this Section 5.10 shall be deemed to amend or supplement the Street
Schedules or prevent or cure any misrepresentation, breach of warranty or breach
of covenant.
Select shall give prompt notice to Street of (i) the occurrence or non-
occurrence of any event, the occurrence or non-occurrence of would cause any
representation or warranty of Select and Street, respectively, contained in this
Agreement to be untrue or inaccurate, such that the condition set forth in
Section 6.3(a) would not be satisfied and (ii) any failure of Select or Street,
as the case may be, to comply with or satisfy in all material respects any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.10 shall not limit or otherwise affect any remedies available to the
party receiving such notice. No disclosure by Select pursuant to this Section
5.10 shall be deemed to amend or supplement the Select Schedules or prevent or
cure any misrepresentation, breach of warranty or breach of covenant.
Directors' and Officers' Indemnification.
(a) From and after the Effective Time, Select will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of Street
pursuant to any indemnification agreements between Street and its directors and
officers as of the Effective Time. The Articles of Incorporation and Bylaws of
the Surviving Corporation will contain provisions with respect to exculpation
and indemnification that are at least as favorable to the directors and officers
of Street as those contained in the Articles of Incorporation and Bylaws of
Street as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of three years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who, immediately prior to the Effective Time, were directors,
officers, employees or agents of Street, unless such modification is required by
law.
(b) This Section 5.11 shall survive the consummation of the Merger, is
intended to benefit Street, the Surviving Company and each indemnified party,
shall be binding, jointly and severally, on all successors and assigns of
Select, and shall be enforceable by the indemnified parties.
(c) Notwithstanding anything to the contrary in this Section 5.11,
Select shall not be liable for any amounts payable resulting from any claim or
action brought against Street's directors or officers by any officer or director
of Street or any of their affiliates to the extent any of the same result from
willful misconduct.
(d) Select shall have full recourse to the Escrow Fund to recover any
amounts payable by it pursuant to this Section 5.11.
5.12 Cooperation of Independent Accountants. Street shall use its best
efforts to cause its independent accountants, Ernst & Young LLP, to provide
assistance to Select and its affiliates and successors in connection with the
filing of any (i) registration statement under the Securities Act
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(and any amendments or supplements thereto), including but not limited to,
consenting to the inclusion of the Street Audited Financials in the registration
statement as required by Regulation S-X under the Securities Exchange Act of
1934, as amended ("Exchange Act"), and providing a "comfort letter" addressed to
the underwriters containing such representations as the underwriters may
reasonably request and (ii) periodic or current reports required to be filed by
Select pursuant to the Exchange Act.
5.13 Termination of 401(k) Plan.
Street agrees to take all necessary action to terminate its 401(k) plan
immediately prior to the Closing Date, unless Select, in its sole and absolute
discretion, agrees to sponsor and maintain such plans by providing Street with
written notice of such election at least three (3) days before the Effective
Time. Unless Select provides such notice to Street, Select shall receive from
Street evidence that Street's 401(k) plan has been terminated pursuant to
resolution Street's Board of Directors (the form and substance of such
resolutions shall be subject to review and approval of the Select and its
counsel), effective as of the day immediately preceding the Closing Date.
5.14 Information Supplied.
The information relating to Street and the Street shareholders included in
the proxy statement/information statement to be sent to the Street shareholders
and to the Select stockholders in connection with (i) the meeting or action by
written consent of the Street shareholders (the "Street Shareholder Action") to
consider the approval and adoption of this Agreement and approval of the Merger
and any other matters contemplated hereby and (ii) any meeting or action by
written consent of the Select stockholders (the "Select Stockholder Action") to
approve the Certificate Amendment, shall not on the date the proxy/information
statement is first mailed to the Street shareholders or Select stockholders, at
the effective time of the Street Shareholder Action, at the effective time of
the Select Stockholder Action or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false and misleading; or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies or consents for the
Street Shareholder Action or with respect to the Select Stockholder Action which
has become false or misleading.
The information relating to Select and the Select stockholders included in
the proxy/information statement to be sent to the Street shareholders and the
Select stockholders in connection with Street Shareholder Action and the Select
Stockholder Action, shall not on the date the proxy/information statement is
first mailed to the Street shareholders or Select stockholders, at the effective
time of the Street Shareholder Action, at the effective time of the Select
Stockholder Action or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false and misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the
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solicitation of proxies for the Street Shareholder Action or with respect to the
Select Stockholder Action which has become false or misleading.
ARTICLE 6.
Conditions to the Merger
Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. This Agreement and the transactions
contemplated hereby, including without limitation the Merger, shall have been
duly approved, by the requisite vote under applicable law and the Street Charter
Documents by the Street Shareholders. The Certificate Amendment and the issuance
of Select Common Stock and Select Series H Preferred Stock shall have been duly
approved, by the requisite vote under applicable law and the Select Charter
Documents by the Select stockholders.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.
(c) Permits. All approvals from government authorities, including any
requisite Blue Sky approvals or HSR Act approvals, which are appropriate or
necessary for the consummation of the Merger, shall have been obtained.
(d) California Permit. The Commissioner of Corporations for the State
of California shall have approved the terms and conditions of the transactions
contemplated by this Agreement, and the fairness of such terms and conditions
pursuant to Section 25142 of the California Statute following a hearing for such
purpose, and shall have issued a Permit under Section 25121 of the California
Statute.
(e) Tax Opinions. Select and Street shall each have received written
opinions from their respective tax counsel (Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, and Xxxxxx & Xxxxxxx, respectively), in form and
substance reasonably satisfactory to them, to the effect that the Merger will
constitute a tax-free reorganization within the meaning of Section 368(a) of the
Code and such opinions shall not have been withdrawn. The parties to this
Agreement agree
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to make such reasonable representations as requested by such counsel for the
purpose of rendering such opinions.
Conditions to Obligations of Select and Sub. The obligation of Select and
Sub 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,
exclusively by Select and Sub:
(a) Representations and Warranties. Each representation and warranty
of Street contained in this Agreement (i) shall have been true and correct as of
the date of this Agreement and (ii) shall be true and correct on and as of the
Closing Date with the same force and effect as if made on the Closing Date
except, (A) in each case, or in the aggregate, as does not constitute a Material
Adverse Effect on Street; provided, however, such Material Adverse Effect
qualification shall be inapplicable with respect to the representations and
warranties contained in the first two sentences of Section 2.2(a), the first
sentence of Section 2.2(b) and the first five sentences of Section 2.4(a) (which
representations and warranties shall have been, and shall be, true and correct
in all material respects) and (B) for those representations and warranties which
address matters only as of a particular date (which representations shall have
been true and correct (subject to the qualifications set forth in the preceding
clause (A)) as of such particular date) (it being understood that, for purposes
of determining the accuracy of such representations and warranties, any update
of or modification to the Street Schedules made or purported to have been made
after the execution of this Agreement shall be disregarded). Select shall have
received a certificate with respect to the foregoing signed on behalf of Street
by an authorized executive officer of Street.
(b) Agreements and Covenants. Street shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing
Date, and Select shall have received a certificate to such effect signed on
behalf of Street by an authorized executive officer of Street.
(c) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect on Street since the date of this Agreement.
(d) Legal Opinion. Select shall have received a legal opinion from
Xxxxxx & Xxxxxxx, legal counsel to Street, in form and substance mutually agreed
upon with legal counsel to Select.
(e) Non-Competition and Employment Agreements. Each of the employees
of Street listed as Group B Employees and four of seven of the employees of
Street listed as Group A Employees in the table set forth in Schedule 6.2(e)
shall have entered into the Non-Competition and Employment Agreement, and such
agreements shall be in full force and effect.
(f) Third Party Consents. The consents, waivers and approvals listed
in Schedule 6.2(f) shall have been obtained.
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(g) Limit on Dissenting Shareholders. No more than ten percent (10%)
of the shares of Street Capital Stock shall have the continued right to perfect
dissenter's rights under applicable law.
(h) Termination of Investor Rights Agreement. The Amended and
Restated Investor Rights Agreement, dated as of March 8, 1999, by and among
Street and certain holders of Street Preferred Stock listed on Exhibit A
thereto, shall have been validly terminated in its entirety, and the holders of
Street Preferred Stock shall have no further rights accruing to them thereunder
as of the Effective Time (the "Rights Termination").
(i) Letter Agreement Amendment. The Amendment to the Letter
Agreement, dated October 1, 1997, by and between Marcus & Millichap Real Estate
Investment Brokerage Company and SpringStreet, Inc, in substantially the form
attached hereto as Exhibit C, shall be in full force and effect.
(j) California Real Estate Broker Law Compliance. Street shall have
obtained a California real estate broker license in compliance with the Order to
Desist & Refrain (Case No. H-7694 SF filed April 21, 1999 with the California
Department of Real Estate) or otherwise have obtained permanent relief from such
order.
Conditions to the Obligations of Street. The obligations of Street 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, exclusively
by Street:
(a) Representations and Warranties. Each representation and warranty
of Select and Sub contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on the
Closing Date except, (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on Select; provided, however, such Material
Adverse Effect qualification shall be inapplicable with respect to the
representations and warranties contained in the first two sentences of Sections
3.2(a), the first sentence of Section 3.2(b) and the first three sentences of
Section 3.4(a) (which representations and warranties shall have been, and shall
be, true and correct in all material respects) and (B) for those representations
and warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject to the qualifications
set forth in the preceding clause (A)) as of such particular date) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the Select
Schedules made or purported to have been made after the execution of this
Agreement shall be disregarded). Street shall have received a certificate with
respect to the foregoing signed on behalf of Select by an authorized executive
officer of Select.
(b) Agreements and Covenants. Select shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or
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complied with by them on or prior to the Closing Date, and Street shall have
received a certificate to such effect signed on behalf of Select by an
authorized executive officer of Select.
(c) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect on Select since the date of this Agreement.
(d) Legal Opinion. Street shall have received a legal opinion from
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, legal counsel to
Select, in form and substance mutually agreed upon with legal counsel to Select.
ARTICLE 7.
Survival of Representations and Warranties; Escrow
7.1 Survival of Representations and Warranties. All representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Merger and continue until 5:00 p.m., California
time, on the first anniversary of the Effective Time (the "Expiration Date").
7.2 Escrow Arrangements.
(a) Escrow Fund. At the Effective Time, the Street Shareholders will
be deemed to have received and deposited with the Escrow Agent (as defined
below) the Escrow Amount (plus any additional shares as may be issued upon any
stock split, stock dividend or recapitalization effected by Street after the
Effective Time) without any act of any Street Shareholder. As soon as
practicable after the Effective Time, the Escrow Amount, without any act of any
Street Shareholder, will be deposited with U.S. Bank Trust, N.A., (or other
institution acceptable to Street and the Securityholder Agent (as defined in
Section 7.2(g) below)) as Escrow Agent (the "Escrow Agent"), such deposit to
constitute an escrow fund (the "Escrow Fund") to be governed by the terms set
forth herein. The portion of the Escrow Amount contributed on behalf of each
Street Shareholder shall be in proportion to the aggregate Select Common Stock
and/or Select Series H Preferred Stock, as the case may be, which such holder
would otherwise be entitled under Section 1.6(b). The Escrow Fund shall be
available to compensate Select and its affiliates for any claims, losses,
liabilities, deficiencies, costs and expenses, including reasonable attorneys'
fees and expenses and expenses of investigation and defense, net of any benefits
or proceeds of insurance (hereinafter individually a "Loss" and collectively
"Losses") incurred by Select, its officers, directors, or affiliates (including
the Surviving Corporation) as a result of any inaccuracy or breach of a
representation or warranty of Street contained in Article 2 herein (as modified
by Street Schedules), or any failure by Street to perform or comply with any
covenant contained herein. Select and Street each acknowledge that such Losses,
if any, would relate to unresolved contingencies existing at the Effective Time,
which if resolved at the Effective Time would have led to a reduction in the
aggregate Merger consideration. Nothing herein shall limit the liability of
Street for any breach of any representation, warranty or
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covenant if the Merger does not close. Resort to the Escrow Fund shall be the
exclusive contractual remedy of Select for any breach by Street of any
representation or warranty if the Merger does close; provided, however, that
nothing herein shall limit any remedy for fraud. Select may not receive any
shares from the Escrow Fund unless and until Officer's Certificates (as defined
in paragraph (d) below) identifying Losses, the aggregate amount of which exceed
$100,000, have been delivered to the Escrow Agent as provided in paragraph (e);
in such case, Select may recover from the Escrow Fund the total of its Losses,
in excess of $100,000.
(b) Escrow Period; Distribution upon Termination of Escrow Periods.
Subject to the following requirements, the Escrow Fund shall be in existence
immediately following the Effective Time and shall terminate at 5:00 p.m.,
California time, on the Expiration Date (the "Escrow Period"); and, as soon as
practicable (no later than 5 business days), all Escrow Amounts remaining in the
Escrow Fund shall be distributed by the Escrow Agent to Select's transfer agent
for distribution to the former shareholders of Street as set forth in the last
two sentences of this Section 7.2(b); provided, however, that the Escrow Period
shall not terminate with respect to any Escrow Amount (or some portion thereof)
remaining in the Escrow Fund that is necessary in the reasonable judgment of
Select, subject to the objection of the Securityholder Agent and the subsequent
arbitration of the matter in the manner provided in Section 7.2(f) hereof, to
satisfy any unsatisfied claims concerning facts and circumstances existing prior
to the termination of such Escrow Period specified in any Officer's Certificate
delivered to the Escrow Agent prior to termination of such Escrow Period. As
soon as practicable (but no later than 5 business days) after all such claims
(if any) have been resolved, the Escrow Agent shall deliver to Select's transfer
agent for distribution to the former shareholders of Street the remaining Escrow
Amount not required to satisfy such claims. Deliveries of Escrow Amounts to the
former shareholders of Street pursuant to this Section 7.2(b) shall be made in
proportion to their respective original contributions to the Escrow Fund.
(c) Protection of Escrow Fund.
(i) The Escrow Agent shall hold and safeguard the Escrow
Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of Street
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof.
(ii) Any shares of Select Common Stock and/or Select Series
H Preferred Stock, as the case may be, or other equity securities issued or
distributed by Select (including shares issued upon a stock split) ("New
Shares") in respect of Select Common Stock and/or Select Series H Preferred
Stock, as the case may be, in the Escrow Fund which have not been released from
the Escrow Fund shall be added to the Escrow Fund and become a part thereof. New
Shares issued in respect of shares of Street Common Stock and/or Select Series H
Preferred Stock, as the case may be, which have been released from the Escrow
Fund shall not be added to the Escrow Fund but shall be distributed to the
recordholders thereof. Cash dividends on Select Common Stock and/or Select
Series H Preferred Stock, as the case may be, shall not be added to the Escrow
Fund but shall be distributed to the recordholders thereof.
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(iii) Each shareholder shall have voting rights with
respect to the shares of Select Common Stock and/or Select Series H Preferred
Stock, as the case may be, contributed to the Escrow Fund by such shareholder
(and on any voting securities added to the Escrow Fund in respect of such shares
of Select Common Stock and/or Select Series H Preferred Stock, as the case may
be).
(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Escrow Agent at any time on or
before the last day of the Escrow Period of a certificate signed by any officer
of Select (an "OFFICER'S CERTIFICATE"): (A) stating that Select has paid or
properly accrued or reasonably anticipates that it will have to pay or accrue
Losses, and (B) specifying in reasonable detail the individual items of Losses
included in the amount so stated, the date each such item was paid or properly
accrued, or the basis for such anticipated liability, and the nature of the
misrepresentation, breach of warranty or covenant to which such item is related,
the Escrow Agent shall, subject to the provisions of Section 7.2(e) hereof,
deliver to Select out of the Escrow Fund, as promptly as practicable, a number
of shares of Select Common Stock and Select Series H Preferred Stock held in the
Escrow Fund, the aggregate number of which are equal in value to such Losses.
Delivery of shares of Select Common Stock and Select Series H Preferred Stock
from the Escrow Fund shall be made in proportion to the original number of such
shares contributed to the Escrow Fund.
(ii) The fair market value of the shares of Select Common
Stock and Select Series H Preferred Stock to be delivered to Select out of the
Escrow Fund pursuant to Section 7.2(d)(i) hereof shall be determined on the date
the Officer's Certificate is delivered to the Escrow Agent and shall be set
forth in the Officer's Certificate. For purposes of this 7.2(d)(ii), the fair
market value shall be the closing sale price of Select Common Stock (or such
other securities into which Select Common Stock may be reclassified or changed)
as reported on the principal national securities exchange on which the Select
Common Stock is listed or admitted to trading. If the Select Common Stock is not
listed or admitted to trading on a national securities exchange, the fair market
value of the Select Common Stock or Select Series H Preferred Stock (or such
other securities into which Select Common Stock and/or Select Series H Preferred
Stock may be reclassified or changed), as the case may be, shall be determined
in good faith by the Board of Directors of Select; provided, however, in the
event the Securityholder Agent objects to the fair market value of such shares
as determined by the Board of Directors of Select, the conflict shall be
resolved in accordance with Section 7.2(f) hereof.
(e) Objections to Claims. At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such certificate shall be
delivered to the Securityholder Agent and for a period of thirty (30) days after
such delivery, the Escrow Agent shall make no delivery to Select of any Escrow
Amounts pursuant to Section 7.2(d) hereof unless the Escrow Agent shall have
received written authorization from the Securityholder Agent to make such
delivery. After the expiration of such thirty (30) day period, the Escrow Agent
shall make delivery of shares of Select Common Stock and Select Series H
Preferred Stock from the Escrow Fund in accordance with
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Section 7.2(d) hereof, provided that no such payment or delivery may be made if
the Securityholder Agent shall object in a written statement to the claim made
in the Officer's Certificate, and such statement shall have been delivered to
the Escrow Agent prior to the expiration of such thirty (30) day period.
(f) Resolution of Conflicts; Arbitration.
(i) In case the Securityholder Agent shall so object in
writing to any claim or claims made in any Officer's Certificate, the
Securityholder Agent and Select shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Securityholder Agent and Select should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and shall be furnished to
the Escrow Agent. The Escrow Agent shall be entitled to rely on any such
memorandum and distribute shares of Select Common Stock and Select Series H
Preferred Stock from the Escrow Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Select or the Securityholder Agent may demand arbitration of
the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be commenced
until such amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted by three
arbitrators. Select and the Securityholder Agent shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator.
The arbitrators shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrators, to discover
relevant information from the opposing parties about the subject matter of the
dispute. The arbitrators shall rule upon motions to compel or limit discovery
and shall have the authority to impose sanctions, including attorneys' fees and
costs, to the extent as a court of competent law or equity, should the
arbitrators determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim in such Officer's Certificate shall be binding
and conclusive upon the parties to this Agreement, and notwithstanding anything
in Section 7.2(e) hereof, the Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance therewith. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction. Any such arbitration shall be
held in Santa Xxxxx County, California under the rules then in effect of the
American Arbitration Association. For purposes of this Section 7.2(f), in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Select shall be deemed to be the Non-
Prevailing Party in the event that the arbitrators award Select less than the
sum of one-half (1/2) of the disputed amount plus any
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amounts not in dispute; otherwise, the former shareholders of Street as
represented by the Securityholder Agent shall be deemed to be the Non-Prevailing
Party. The Non-Prevailing Party to an arbitration shall pay its own expenses,
the fees of each arbitrator, the administrative costs of the arbitration and the
expenses, including without limitation, reasonable attorneys' fees and costs,
incurred by the other party to the arbitration.
(g) Securityholder Agent of the Shareholders; Power of Attorney.
(i) In the event that the Merger is approved, effective
upon such vote, and without further act of any shareholder, Xxx Xxxx shall be
appointed as agent and attorney-in-fact (the "Securityholder Agent") for each
shareholder of Street (except such shareholders, if any, as shall have perfected
their appraisal or dissenters' rights under California Law), for and on behalf
of shareholders of Street, to give and receive notices and communications, to
authorize delivery to Select of shares of Select Common Stock and Select Series
H Preferred Stock from the Escrow Fund in satisfaction of claims made by Select,
to object to such deliveries, to agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of Securityholder Agent for the
accomplishment of the foregoing. Such agency may be changed by the former
shareholders of Street from time to time upon not less than thirty (30) days
prior written notice to Select; provided that the Securityholder Agent may not
be removed unless holders of a two-thirds interest of the Escrow Fund agree to
such removal and to the identity of the substituted agent. Any vacancy in the
position of Securityholder Agent may be filled by approval of the holders of a
majority in interest of the Escrow Fund. No bond shall be required of the
Securityholder Agent, and the Securityholder Agent shall not receive
compensation for his or her services. Notices or communications to or from the
Securityholder Agent shall constitute notice to or from each of the shareholders
of Street.
(ii) The Securityholder Agent shall not be liable for any
act done or omitted hereunder as Securityholder Agent while acting in good faith
and in the exercise of reasonable judgment. The former shareholders of Street on
whose behalf the Escrow Amount was contributed to the Escrow Fund shall
severally indemnify the Securityholder Agent and hold the Securityholder Agent
harmless against any loss, liability or expense incurred without negligence or
bad faith on the part of the Securityholder Agent and arising out of or in
connection with the acceptance or administration of the Securityholder Agent's
duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by the Securityholder Agent.
(h) Actions of the Securityholder Agent. A decision, act, consent or
instruction of the Securityholder Agent shall constitute a decision of all the
former shareholders of Street for whom a portion of the Escrow Amount otherwise
issuable to them are deposited in the Escrow Fund and shall be final, binding
and conclusive upon each of such former shareholders, and the Escrow Agent and
Select may rely upon any such decision, act, consent or instruction of the
Securityholder Agent as being the decision, act, consent or instruction of each
every such former shareholder of Street.
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The Escrow Agent and Select are hereby relieved from any liability to any person
for any acts done by them in accordance with such decision, act, consent or
instruction of the Securityholder Agent.
(i) Third-Party Claims. In the event Select becomes aware of a third-
party claim which Select believes may result in a demand against the Escrow
Fund, Select shall notify the Securityholder Agent of such claim, and the
Securityholder Agent, as representative for the former shareholders of Street,
shall be entitled, at their expense, to participate in any defense of such
claim. Select shall have the right in its sole discretion to settle any such
claim; provided, however, that except with the consent of the Securityholder
Agent, no settlement of any such claim with third-party claimants shall alone be
determinative of the amount of any claim against the Escrow Fund. In the event
that the Securityholder Agent has consented to any such settlement, the
Securityholder Agent shall have no power or authority to object under any
provision of this Article 7 to the amount of any claim by Select against the
Escrow Fund with respect to such settlement.
(j) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of
Select and the Securityholder Agent, and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed to be
genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall not be liable for any act done or omitted hereunder as Escrow
Agent while acting in good faith and in the exercise of reasonable judgment, and
any act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court of law,
notwithstanding any notices, warnings or other communications from any party or
any other person to the contrary. In case the Escrow Agent obeys or complies
with any such order, judgment or decree of any court, the Escrow Agent shall not
be liable to any of the parties hereto or to any other person by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect
on account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
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(v) In performing any duties under the Agreement, the
Escrow Agent shall not be liable to any party for damages, losses, or expenses,
except for gross negligence or willful misconduct on the part of the Escrow
Agent. The Escrow Agent shall not incur any such liability for (A) any act or
failure to act made or omitted in good faith, or (B) any action taken or omitted
in reliance upon any instrument, including any written statement or affidavit
provided for in this Agreement that the Escrow Agent shall in good faith believe
to be genuine, nor will the Escrow Agent be liable or responsible for forgeries,
fraud, impersonations, or determining the scope of any representative authority.
In addition, the Escrow Agent may consult with the legal counsel in connection
with Escrow Agent's duties under this Agreement and shall be fully protected in
any act taken, suffered, or permitted by him/her in good faith in accordance
with the advice of counsel. The Escrow Agent is not responsible for determining
and verifying the authority of any person acting or purporting to act on behalf
of any party to this Agreement.
(vi) If any controversy arises between the parties to
this Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and shares of Select Common Stock and Select Series H
Preferred Stock and may wait for settlement of any such controversy by final
appropriate legal proceedings or other means as, in the Escrow Agent's
discretion, the Escrow Agent may be required, despite what may be set forth
elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for damage. Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and shares of Select Common Stock and Select Series H
Preferred Stock held in escrow, except all cost, expenses, charges and
reasonable attorney fees incurred by the Escrow Agent due to the interpleader
action and which the parties jointly and severally agree to pay. Upon initiating
such action, the Escrow Agent shall be fully released and discharged of and from
all obligations and liability imposed by the terms of this Agreement.
(vii) Select and its successors and assigns agree to
indemnify and hold Escrow Agent harmless against any and all losses, claims,
damages, liabilities, and expenses, including reasonable costs of investigation,
counsel fees, and disbursements that may be imposed on Escrow Agent or incurred
by Escrow Agent in connection with the performance of his/her duties under this
Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter; provided, however, it is understood
that one-half of any amounts paid by Select and its successors and assigns
pursuant to this paragraph to or on behalf of the Escrow Agent shall constitute
Losses reimbursable from the Escrow Fund.
(viii) The Escrow Agent may resign at any time upon giving
at least thirty (30) days written notice to Select and the Securityholder Agent;
provided, however, that no such resignation shall become effective until the
appointment of a successor escrow agent which shall be accomplished as follows:
Select and the Securityholder Agent shall use their best efforts to
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mutually agree on a successor escrow agent within thirty (30) days after
receiving such notice. If Select and the Securityholder Agent fail to agree upon
a successor escrow agent within such time, the Escrow Agent shall have the right
to appoint a successor escrow agent authorized to do business in the State of
California. The successor escrow agent shall execute and deliver an instrument
accepting such appointment and it shall, without further acts, be vested with
all the estates, properties, rights, powers, and duties of the predecessor
escrow agent as if originally named as escrow agent. The Escrow Agent shall be
discharged from any further duties and liability under this Agreement.
(k) Fees. All fees of the Escrow Agent for performance of its duties
hereunder shall be paid by Select. It is understood that the fees and usual
charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the Escrow Agent renders any service not provided for in this Agreement, or if
the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs, attorney's fees, and expenses occasioned by such default, delay,
controversy or litigation. Select promises to pay these sums upon demand in
accordance with the Escrow Agent's standard fee schedule.
ARTICLE 8.
Termination, Amendment and Waiver
Termination. Except as provided in Section 8.2 below, this Agreement may be
terminated and the Merger abandoned at any time prior to the Effective Time:
(a) by mutual consent of Street and Select;
(b) by Select or Street if: (i) the Effective Time has not occurred
by August 15, 1999 (the "End Date"); provided, however, that the right to
terminate this Agreement under this Section 8.1(b)(i), shall not be available to
any party whose action (or whose shareholders' action) or failure to act (or
whose shareholders' failure to act) has been a principal cause of or resulted in
the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement; (ii) there shall be a
final nonappealable order of a federal or state court in effect preventing
consummation of the Merger; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Merger by any Governmental Entity that would make consummation of the Merger
illegal;
(c) by Select if there shall be any action taken other than by Select
or at Select's behest, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable
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to the Merger by any Governmental Entity, which would: (i) prohibit Select's
ownership or operation of any portion of the business of Street or (ii) compel
Select to dispose of or hold separate all or a portion of the business or assets
of Street or Select as a result of the Merger;
(d) by Select, upon a breach of any representation, warranty,
covenant or agreement on the part of Street set forth in this Agreement, or if
any representation or warranty of Street shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
inaccuracy in Street's representations and warranties or breach by Street is
curable by Street through the exercise of its commercially reasonable efforts,
then Select may not terminate this Agreement under this Section 8.1(d) prior to
the End Date, provided Street continues to exercise commercially reasonable
efforts to cure such breach (it being understood that Select may not terminate
this Agreement pursuant to this Section 8.1(d) if it shall have materially
breached this Agreement or if such breach by Street is cured prior to the End
Date);
(e) by Street, upon a breach of any representation, warranty,
covenant or agreement on the part of Select set forth in this Agreement, or if
any representation or warranty of Select shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
inaccuracy in Select's representations and warranties or breach by Select is
curable by Select through the exercise of its commercially reasonable efforts,
then Street may not terminate this Agreement under this Section 8.1(e) prior to
the End Date, provided Select continues to exercise commercially reasonable
efforts to cure such breach (it being understood that Street may not terminate
this Agreement pursuant to this Section 8.1(e) if it shall have materially
breached this Agreement or if such breach by the Company is cured prior to the
End Date).
(f) by Street, on or after 5:00 p.m., California time, on the date
which is twenty-one (21) calendar days from but not including the date hereof,
if (i) the Select stockholders have not duly and validly approved the
Certificate Amendment and the issuance of Select Common Stock and Select Series
H Preferred Stock in accordance with the terms of the Select Charter Documents
and applicable law or (ii) Select stockholders have not executed Stockholder
Support Agreements in a form reasonably satisfactory to Street which, if the
shares of Select capital stock were voted in accordance with the terms of such
agreements, such vote would be sufficient to approve the Certificate Amendment
in accordance with the terms of the Select Charter Documents and applicable law.
(g) by Street, on or after 5:00 p.m., California time, on the next
day following the filing with the Securities and Exchange Commission of a
registration statement (as amended if applicable) on Form S-1 by Select (or its
subsidiaries) under the Securities Act which does not make reference to Street,
its business and the Merger.
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Where action is taken to terminate this Agreement pursuant to this Section
8.1, it shall be sufficient (and required) for such action to be authorized by
the Board of Directors (as applicable) of the party taking such action.
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 Select, Street, or their
respective officers, directors or shareholders provided, however, that each
party shall remain liable for any breaches of this Agreement prior to its
termination; and provided, further, that the provisions of Sections 5.4, 5.5,
5.6, this Section 8.2 and Article 9 of this Agreement shall remain in full force
and effect and survive any termination of this Agreement.
Amendment. Subject to applicable law, this Agreement may be amended by the
parties hereto at any time by execution of an instrument in writing signed on
behalf of each of the parties hereto; provided, however, execution by the
Securityholder Agent and Escrow Agent shall only be required for amendments
relating to Article 7 hereof.
Extension; Waiver. At any time prior to the Effective Time, Select and
Street may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 9.
General Provisions
Notices. Every notice, consent and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed given if
delivered personally or by commercial messenger or courier service, or mailed by
registered or certified mail (return receipt requested) or sent via facsimile
(with acknowledgment of complete transmission) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice), provided, however, that notices sent by mail will not be deemed
guaranteed received:
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(a) if to Select to:
NetSelect, Inc.
000 Xxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxx, Esq.
Xxx X. Xxxxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to Street or the Securityholder Agent, to:
SpringStreet, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
Xxx X. Xxxxxx, Esq.
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(c) if to the Escrow Agent, to:
U.S. Bank Trust, N.A.
Xxx Xxxxxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone No: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx Xxxx
Interpretation. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that all parties need not
sign the same counterpart.
Entire Agreement; Assignment. This Agreement, the Exhibits hereto, the
Street Schedules and the Select Schedules, and the documents and instruments and
other agreements among the parties hereto referenced herein: (a) constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings both written and oral, among
the parties with respect to the subject matter hereof; (b) are not intended to
confer upon any other person any rights or remedies hereunder; and (c) may not
be assigned unless agreed to by the other parties hereto, except that Select and
Sub may assign their respective rights and delegate their obligations hereunder
to majority-owned subsidiaries of Select provided that Select remains
contingently liable.
Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
Other Remedies. Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
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Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any federal or state court within the Northern District, State of
California, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of California for
such persons and waives and covenants not to assert or plead any objection which
they might otherwise have to such jurisdiction, venue and such process.
Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
Attorneys' Fees. If any action or other proceeding relating to the
enforcement of any provision of this Agreement is brought by any party hereto,
the prevailing party shall be entitled to recover reasonable attorneys' fees,
costs and disbursements (in addition to any other relief to which the prevailing
party may be entitled).
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IN WITNESS WHEREOF, Select, Sub, Street, and with respect to Article 7
only, the Securityholder Agent and the Escrow Agent have caused this Agreement
to be signed by their duly authorized respective officers, all as of the date
first written above.
SPRINGSTREET, INC. NETSELECT, INC.
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxxx Xxxxx
-------------------------- ---------------------------
Title: President and CEO Title:
----------------------- ------------------------
AVENUE ACQUISITION CORPORATION
By: /s/ Xxxxxx Xxxxx
--------------------------
Title:
-----------------------
SECURITYHOLDER AGENT ESCROW AGENT
U.S. Bank Trust, N.A.
/s/ Xxx Xxxx /s/ Xxxxxxx Xxxx
----------------------------- ------------------------------
Xxx Xxxx Xxxxxxx Xxxx
Vice President
***REORGANIZATION AGREEMENT***
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