Exhibit 2.02
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of April 15, 1998
between Best Internet Communications, Inc., a California corporation ("Best"),
and Hiway Technologies, Inc., a Florida corporation ("Hiway").
Recitals
A. The Boards of Directors of Best and Hiway have determined that it is
in the best interests of their respective companies and their shareholders to
effect a "merger of equals" of Best and Hiway through the consummation of the
business combination transactions provided for in this Agreement.
B. It is the intent of the respective Boards of Directors of Best and
Hiway that Best be the surviving corporation in such business combination
transaction, and that following the consummation of such business combination
transaction, Best and Hiway be governed and operated on the basis of a "merger
of equals" of Best and Hiway.
C. It is the intent of the parties that after the merger, Best (as the
surviving corporation) will change its name as provided in Section 1.6, and will
merge with and into Hiway Technologies, Inc., a Delaware corporation (the
"Redomestication Merger").
Agreement
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement and
in accordance with the California Corporations Code, as amended (the "CCC"), and
the Florida Business Corporations Act, as amended (the "FBCA"), at the Effective
Time, Hiway shall merge with and into Best (the "Merger"). Best shall be the
surviving corporation in the Merger and shall continue its corporate existence
under the laws of the State of California. Upon consummation of the Merger, the
separate existence (corporate and otherwise) of Hiway shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in
articles of merger (the "Certificate of Merger") filed with the appropriate
authorities of the State of Florida and the State of California on the Closing
Date (as defined in Section 9.1 of this Agreement). The effective date and time
of the Merger specified in the Certificate of Merger shall be no earlier than
the date and time the Certificate of Merger is filed with the appropriate
authorities of the State of Florida and the State of California and shall be as
soon after such filing as is practicable. The term "Effective Time" shall be the
date
and time when the Merger becomes effective, as set forth in the
Certificate of Merger filed in accordance with the CCC and the FBCA.
1.3 Effects of Merger. At and after the Effective Time, the Merger shall
have the effects set forth in this Agreement, the Certificate of Merger, the CCC
and the FBCA. At the Effective Time, (i) all rights, franchises, licenses and
interests of Hiway in and to every type of property, real, personal and mixed,
and all choses in action of Hiway shall continue unaffected and uninterrupted by
the Merger and shall accrue to Best; (ii) all obligations and liabilities of
Hiway then outstanding shall become and be obligations of Best and shall
continue unaffected and uninterrupted by the Merger; and (iii) no action or
proceeding then pending and to which Hiway is a party shall be abated or
discontinued but may be prosecuted to final judgment by Best.
1.4 Conversion of Hiway Shares, Hiway Options and Hiway Warrants;
Dissenters' Rights.
(a) At the Effective Time, and except as otherwise provided in this
Agreement, by virtue of the Merger and without any action on the part of Best,
Hiway, or any shareholder of Best or Hiway, all outstanding shares of Hiway
Class A Common Stock, par value $.01, and Class B Common Stock, par value $.01
(collectively, "Hiway Shares"), shall be converted into 21,853,769 shares, less
any shares not issued due to the requirement that Best not issue any fractional
shares (collectively, the "Aggregate Merger Shares") of common stock, no par
value per share, of Best ("Best Common Stock"), with each outstanding Hiway
Share being converted into 4.14071388479309 (the "Applicable Fraction") shares
of Best Common Stock. No fractional shares of Best Common Stock shall be issued
to any shareholder of Hiway and, in lieu thereof, all fractional shares shall be
paid the cash equivalent value thereof based on a value of $3.00 per share of
Best Common Stock. No shares of Best Common Stock shall be issuable or issued to
any person or entity other than a shareholder of Hiway in connection with the
Merger.
(b) Each outstanding option to acquire a Hiway Share ("Hiway Option")
that is outstanding immediately prior to the Effective Time will, by virtue of
the Merger at the Effective Time and without further action on the part of any
holder thereof, be assumed by Best and converted into an option to purchase that
number of shares of Best Common Stock which equals the number of Hiway Shares
subject to such option at the Effective Time multiplied by the Applicable
Fraction, and the per share exercise price for each such option will equal the
per share exercise price of each such option immediately prior to the Effective
Time divided by the Applicable Fraction. If the foregoing calculation results in
an assumed option being exercisable for a fraction of a share, then the number
of shares of Best Common Stock subject to such option will be rounded down to
the nearest whole number with no cash being payable for such fractional share.
In addition, if the foregoing calculation results in an assumed option having a
per share exercise price that includes a fraction of a cent, then the per share
exercise price for such option shall be rounded up to the nearest whole cent.
The term, exercisability, vesting schedule, status as an "incentive stock
option" under Section 422 of the Internal
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Revenue Code of 1986, as amended (the "Code"), if applicable, and all other
terms of the Hiway Options will otherwise be unchanged. Continuous employment
with Best will be credited to a Hiway optionee based on such optionee's
employment with Hiway for purposes of determining the number of shares subject
to exercise after the Effective Time.
(c) Each outstanding warrant to acquire a Hiway Share ("Hiway Warrant")
that is outstanding immediately prior to the Effective Time will, by virtue of
the Merger at the Effective Time and without further action on the part of any
holder thereof, be assumed by Best and converted into a warrant to purchase that
number of shares of Best Common Stock which equals the number of Hiway Shares
subject to such warrant at the Effective Time multiplied by the Applicable
Fraction, and the per share exercise price for each such warrant will equal the
per share exercise price of each such warrant immediately prior to the Effective
Time divided by the Applicable Fraction. If the foregoing calculation results in
an assumed warrant being exercisable for a fraction of a share, then the number
of shares of Best Common Stock subject to such warrant will be rounded down to
the nearest whole number with no cash being payable for such fractional share.
In addition, if the foregoing calculation results in an assumed warrant having a
per share exercise price that includes a fraction of a cent, then the per share
exercise price for such warrant shall be rounded up to the nearest whole cent.
The term, exercisability and all other terms of the Hiway Warrants will
otherwise be unchanged.
(d) At the Effective Time, and except as otherwise provided in this
Agreement, by virtue of the Merger and without any action on the part of Best,
Hiway, or any shareholder of Best or Hiway: (i) all shareholders of Hiway shall
cease to have any rights as shareholders of Hiway (including the right to elect
directors, the right to vote as to other matters, and all rights with respect to
the distribution of surplus in liquidation); and (ii) all Hiway Shares shall no
longer be outstanding, and shall automatically be canceled and shall cease to
exist; provided, however, that at and after the Effective Time, each individual
Hiway Share shall represent the right to receive a certificate representing a
number of shares of Best Common Stock equal to the Applicable Fraction and cash
in lieu of any fractional share of Best Common Stock into which such Hiway Share
has been converted pursuant to this Agreement.
(e) If, immediately prior to the Effective Time, the number of outstanding
shares of Best Common Stock plus outstanding options or other rights to acquire
Best Common Stock ("Best Options" and, collectively with the outstanding shares
of Best Common Stock, the "Best Share Equivalents") does not equal 14,926,910
and/or the number of outstanding Hiway Shares plus outstanding Hiway Options or
other rights to acquire Hiway Shares (collectively, the "Hiway Share
Equivalents") does not equal 6,008,187, then, notwithstanding anything to the
contrary in this Agreement, (i) the Aggregate Merger Shares shall be revised to
equal (x) the result of (A) Best Share Equivalents divided by 0.375, rounding
down, minus (B) the Best Share Equivalents, divided by (y) the Hiway Share
Equivalents, times (z) the number of outstanding Hiway Shares, rounded down, and
(ii) the Applicable Fraction shall equal (x) the result of (A) Best Share
Equivalents divided by 0.375, rounding down, minus (B) the Best Share
Equivalents, divided by (y) the Hiway Share Equivalents.
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(f) Hiway Shares to which dissenters' rights are perfected under
applicable law shall not be converted into or represent the right to receive any
shares, or any cash payment in lieu of any fractional shares of Best Common
Stock, but shall be converted into the right to receive such consideration as
may be determined to be due with respect to such dissenting Hiway Shares
pursuant to applicable law; provided, however, that if any holder of dissenting
Hiway Shares shall withdraw his or her demand for payment of the fair value of
his or her Hiway Shares or shall fail to perfect his or her dissenters' rights
in accordance with applicable law, then such holder's dissenting Hiway Shares
shall cease to be dissenting Hiway Shares and shall, subject to the terms of
this Agreement, be converted into and represent the right to receive a
certificate representing the number of whole shares of Best Common Stock and
cash in lieu of any fractional share of Best Common Stock into which such Hiway
Shares have been converted pursuant to this Agreement.
(g) Best Shares to which dissenters' rights are perfected under
applicable law shall be converted into the right to receive such consideration
as may be determined to be due with respect to such dissenting Best Share
pursuant to applicable law; provided, however, that if any holder of dissenting
Best Shares shall withdraw his or her demand for payment of the fair value of
his or her Best Shares or shall fail to perfect his or her dissenters' rights in
accordance with applicable law, then such holder's dissenting Best Shares shall
cease to be dissenting Best Shares.
1.5 Best Common Stock, Best Options and Best Warrants. At the Effective
Time: (i) each share of Best Common Stock issued and outstanding shall remain an
issued and outstanding share of Best Common Stock, and shall not be affected by
the Merger; (ii) each outstanding Best Option shall continue to represent a
right to acquire shares of Best Common Stock and shall remain an issued and
outstanding Best Option in the same amount and at the same exercise price
subject to the terms of the Best Benefit Plans (as defined in Section 3.11 of
this Agreement) under which it was issued and the agreement evidencing grant
thereunder, and shall not be affected by the Merger; and (iii) each outstanding
warrant to purchase Best Common Stock ("Best Warrant"), shall remain an issued
and outstanding Best Warrant in the same amount and at the same exercise price
subject to terms of the agreement under which it was issued, and shall not be
affected by the Merger.
1.6 Best Articles of Incorporation; Change of Name. Subject to the terms
and conditions of this Agreement, at the Effective Time, the Articles of
Incorporation of Best then in effect shall be, and shall continue in effect as,
the Articles of Incorporation of Best, as the surviving corporation in the
Merger, until thereafter amended in accordance with this Agreement and
applicable law; provided, however, that in connection with the Redomestication
Merger, Best shall change its name to Hiway Technologies, Inc.
1.7 Best Bylaws. Subject to the terms and conditions of this Agreement, at
the Effective Time, the Bylaws of Best then in effect shall be, and shall
continue in effect
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as, the Bylaws of Best, as the surviving corporation in the Merger, until
thereafter amended in accordance with this Agreement and applicable law.
1.8 Merger Tax Consequences and Accounting Treatment. It is intended that
(i) the Merger shall constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Code, (ii) this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code, and (iii) the
Merger shall qualify for "pooling of interests" accounting treatment under
Accounting Principles Board Opinion No. 16 and SEC Accounting Series Releases
130 and 135, as amended.
1.9 Best Management. At the Effective Time: (i) Xxxxxx X. Xxxxxx shall be
the Chairman of Best as the surviving corporation in the Merger; (ii) Xxxxx X.
Xxxxx shall be the Vice-Chairman of Best; (iii) Xxxxx X. Xxxxx shall be the
President and Chief Executive Officer of Best; (iv) Xxxxxxx X. Xxxxx shall be
the Chief Financial Officer of Best; (v) Xxxxxxx Xxxxxxx shall be the Chief
Technical Officer of Best; and (vi) Xxxxxx X. Xxxxxxx shall be the Secretary of
Best.
1.10 Board of Directors. At the Effective Time, the Board of Directors of
Best, as the surviving corporation in the Merger, shall consist of seven persons
including Xxxxxx X. Xxxxx, Xxxxx Xxxxxx, Xxxxx X. Xxxxx, Xxxxxx X. Xxxxxx, Xxxxx
X. Xxxxx, Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxx.
1.11 Headquarters. At the Effective Time, the registered office of Best, as
the surviving corporation in the Merger, shall be located in Boca Raton,
Florida, provided, however, that Best shall conduct significant corporate
activities from regional executive offices located in Boca Raton, Florida and in
Mountain View, California.
ARTICLE II
EXCHANGE OF HIWAY SHARES
2.1 Exchange of Hiway Shares. As soon as practicable prior to the
Effective Time, and in no event later than 15 days prior to the Effective Time,
(i) Hiway shall prepare a list (which list shall be certified to Best by the
President of Hiway) identifying each shareholder of Hiway and setting forth the
number of whole shares, and cash in lieu of any fractional shares, of Best
Common Stock that each shareholder of Hiway is entitled to receive by virtue of
the consummation of the Merger, and (ii) Hiway shall deliver to Best such list,
as certified by the President of Hiway, and such other information as shall
enable Best to verify the information contained in such list.
2.2 Best to Make Shares Available. At the Effective Time, Best shall
deliver to Hiway, for the benefit of the shareholders of Hiway and for exchange
in accordance with this Article II, certificates representing the whole shares
of Best Common Stock and cash for payment of consideration in lieu of fractional
shares to be issued and paid in exchange for the Hiway Shares pursuant to this
Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BEST
Except as disclosed in the Best Disclosure Letter delivered to Hiway
simultaneously with this Agreement (the "Best Disclosure Schedule"), Best hereby
represents and warrants to Hiway as follows:
3.1 Corporate Organization.
(a) Best is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Best has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such license or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Best. As used in this Agreement, the term "Material
Adverse Effect" means, with respect to Hiway or Best, as the case may be, a
material adverse effect on the business, assets, properties, operations,
condition (financial or otherwise), or (insofar as they can reasonably be
foreseen) prospects of such party and its Subsidiaries (as defined below) taken
as a whole, excluding for this purpose only, however, the payment and/or
incurrence of transactional expenses by Hiway or Best in connection with the
Merger, to the extent having such an effect. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation,
association, partnership, limited liability company, or other organization,
whether incorporated or unincorporated, which is consolidated with such party
for financial reporting purposes. True and complete copies of the Articles of
Incorporation and Bylaws of Best, as in effect as of the date of this Agreement,
have previously been made available by Best to Hiway.
(b) Best has no Subsidiaries.
(c) A record of all corporate action taken by the shareholders and
Board of Directors (including committees thereof) of Best, and complete and
accurate copies of all of their proceedings and actions by written consent, and
all minutes of their meetings, are contained in the minute books of Best. The
minute books and stock ledgers of Best contain an accurate and complete record
of all issuances, transfers and cancellations of shares of capital stock of
Best. Hiway has been given access to and an opportunity to review all such
minutes, minute books and stock ledgers.
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3.2 Capitalization.
(a) The authorized capital stock of Best consists of 30,000,000
shares divided into two classes. One class consists of 10,000,000 shares of
preferred stock ("Best Preferred Stock"), of which 500,000 shares have been
designated Series A Preferred Stock ("Best Series A Stock") and 4,000,000 shares
have been designated Series B Preferred Stock ("Best Series B Stock"), and the
other class of said shares consists of 20,000,000 shares of Best Common Stock.
Prior to the Effective Time, Best will take all corporate action required to
increase the authorized capital stock of Best such that, at the Effective Time,
the authorized capital stock of Best will consist of 70,000,000, divided into
two classes, one of which will consist of 10,000,000 shares of Best Preferred
Stock, of which 500,000 shares will be designated Best Series A Stock and
4,000,000 shares will be designated Best Series B Stock, and the other class of
said shares will consist of 60,000,00 shares of Best Common Stock. As of the
date of this Agreement, there are no shares of Best Series A Stock, 3,462,000
shares of Best Series B Stock, 9,461,069 shares of Best Common Stock and no
other shares of Best Preferred Stock issued and outstanding, and no shares of
Best Common Stock or Best Preferred Stock are held in treasury. All of the
issued and outstanding shares of Best Common Stock and Best Preferred Stock have
been duly authorized and validly issued, are fully paid, nonassessable and free
of preemptive rights with no personal liability attaching to the ownership
thereof, and have been issued in compliance with state and federal securities
laws. Except as contemplated by this Agreement or as described in this Section
3.2(a), Best does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Best Common Stock or any other equity
securities of Best or any securities representing the right to purchase or
otherwise receive any shares of Best Common Stock or any other equity securities
of Best. As of the date of this Agreement, no shares of the capital stock of
Best are reserved for issuance, except for: (a) 4,000,000 shares of Best Common
Stock reserved for issuance upon the exercise of Best Options issued pursuant to
the Best Amended and Restated 1996 Stock Option Plan (the "Best Option Plan")
(of which Best Options representing 1,703,841 shares of Best Common Stock are
outstanding); (b) 300,000 shares of Best Common Stock reserved for issuance upon
the exercise of outstanding Best Warrants, exercisable at $0.50 per share until
January 15, 2001; and (c) 3,462,000 shares of Best Common Stock reserved for
issuance upon the conversion of outstanding Best Series B Stock. Since January
1, 1998, Best has not issued any shares of Best Common Stock or other equity
securities of Best, or any securities convertible into or exercisable for any
shares of Best Common Stock or other equity securities of Best, other than (x)
as contemplated by this Agreement, (y) shares of Best Common Stock issued upon
the exercise of Best Options under the Best Option Plan, which shares are
included in the outstanding capitalization of Best set forth above, or (z) Best
Options issued under the Best Option Plan, which Best Options are included in
the aggregate number of Best Options outstanding set forth above. The shares of
Best Common Stock to be issued pursuant to the Merger will be duly authorized
and validly issued and, at the Effective Time, all such shares will be fully
paid, nonassessable and free of preemptive rights with no personal liability
attaching to the ownership thereof. The information concerning Best Series B
Stock, Best Common Stock, Best Options and
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Best Warrants will be updated at the Closing to reflect Best Option or warrant
exercises and any conversion of Best Series B Stock into Best Common Stock
between the date of this Agreement and the Closing.
(b) The Best Disclosure Schedule sets forth a complete list of (i)
the shareholders of Best, (ii) the holders of all Best Options and the material
terms of such Best Options, (iii) the holders of all Best Warrants and (iv) the
officers and directors of Best. Best does not have any direct or indirect equity
or ownership interest in any other business or entity and does not have any
direct or indirect obligation or any commitment to invest any funds in any
corporation or other business or entity, other than for investment purposes in
the ordinary course of business in accordance with past practices that are
listed in the Best Disclosure Schedule.
3.3 Authority; No Violation.
(a) Best has full corporate power and authority to execute and
deliver this Agreement and, subject to receipt of shareholder approval, to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly and validly approved by the Board of Directors
of Best. The Board of Directors of Best has directed that this Agreement and the
transactions contemplated by this Agreement be submitted to the shareholders of
Best for approval at a meeting of such shareholders and, except for the adoption
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Best Common Stock and two-thirds of the outstanding shares
of Best Preferred Stock, no other corporate proceedings on the part of Best are
necessary to approve this Agreement and to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by Best and, (assuming due authorization, execution and
delivery by Hiway and the receipt of Best shareholder approval and all Requisite
Regulatory Approvals (as defined in Section 7.1(d) of this Agreement)),
constitutes a valid and binding obligation of Best, enforceable against Best in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Best nor
the consummation by Best of the transactions contemplated by this Agreement, nor
compliance by Best with any of the terms or provisions of this Agreement, will
(i) violate any provision of the Articles of Incorporation or Bylaws of Best or
(ii) assuming that all Requisite Regulatory Approvals and all of the consents
and approvals referred to in Section 3.4 of this Agreement are duly obtained,
(x) to the best knowledge of Best, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Best or
any of its properties or assets or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, charge, encumbrance or security
interest (collectively, "Lien"), upon any of the properties or assets of Best
under, any of the terms, conditions or provisions of any note, bond,
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mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Best is a party, or by which it or any of its
properties or assets may be bound or affected, except for such violations,
conflicts, breaches or defaults which, either individually or in the aggregate,
will not have or be reasonably likely to have a Material Adverse Effect on Best.
3.4 Consents and Approvals. Except for (i) the filing of applications by
Best for authorization to do business in the State of Florida, (ii) the filing
of any other required applications, notices and forms with, and the obtaining of
approvals from, each applicable Governmental Entity (as defined in this Section
3.4), (iii) the filing of the Certificate of Merger with the appropriate
authorities of (a) the State of California pursuant to the CCC and (b) of the
State of Florida pursuant to the FBCA, (iv) consents, authorizations, approvals,
filings or exemptions in connection with compliance with the applicable
provisions of federal and state securities laws and the rules and regulations
thereunder and of any applicable self-regulatory organization (each, an "SRO"),
(v) such filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Best Common Stock pursuant to this Agreement, and (vi) the
approval of this Agreement by the requisite votes of the shareholders of Best
and the shareholders of Hiway, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity") or with any
third party are necessary in connection with the execution and delivery by Best
of this Agreement or the consummation by Best of the transactions contemplated
by this Agreement.
3.5 Reports. Best (i) has timely filed all reports, registrations and
statements, together with all amendments required to be made with respect
thereto, that it was required to file with each Governmental Entity having
jurisdiction, (ii) has timely filed all other reports and statements, together
with all amendments required to be made with respect thereto that it was
required to file under all applicable laws, rules or regulations (including any
report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, any state, or any other Governmental Entity)
and (iii) has paid all fees and assessments due and payable in connection
therewith, except where the failure to file such reports, registrations or
statements, or to file any of such other reports, or to pay such fees and
assessments, either individually or in the aggregate, will not have a Material
Adverse Effect on Best. All such reports, registrations and statements, together
with all such amendments, were in substantial compliance with applicable law
when filed and, as of their respective dates, to the best knowledge of Best, did
not contain any false statements or material misstatements of fact or omit to
state any material facts necessary to make the statements set forth therein not
materially misleading in light of the circumstances in which such statements
were made. No material deficiencies have been asserted by any Governmental
Entity with respect to such reports, registrations and statements or any such
amendments thereto. No Governmental Entity has initiated any proceeding or, to
the best knowledge of Best, investigation into the business or operations of
Best, except where such proceedings or investigations are not likely, either
individually or in the aggregate, to have a Material Adverse Effect on Best.
There is no
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unresolved violation, criticism, or exception by any Governmental Entity with
respect to any report or statement relating to any examinations of Best which,
in the reasonable judgment of Best, is likely, either individually or in the
aggregate, to have a Material Adverse Effect on Best.
3.6 Financial Statements. Best has previously made available to Hiway
copies of the balance sheets of Best as of December 31 for the fiscal years
1997, 1996 and 1995, and the related statements of income, changes in
shareholders' equity and cash flows for the fiscal years 1997, 1996 and 1995, in
each case accompanied by the audit reports of Coopers & Xxxxxxx LLP, independent
public accountants with respect to Best (collectively, the "Best Financial
Statements"). The balance sheets of Best as of December 31, 1997, 1996 and 1995
(including the related notes, where applicable) fairly present the financial
position of Best as of the dates thereof, and the other financial statements
referred to in this Section 3.6 (including the related notes, where applicable)
fairly present the results of the operations and changes in shareholders' equity
for the respective fiscal periods; each of the Best Financial Statements
(including the related notes, where applicable) complies in all material
respects with applicable accounting requirements; and each of the Best Financial
Statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except, in
each case, as indicated in such statements or in the notes thereto. The books
and records of Best have been, and are being, maintained in all material
respects in accordance with GAAP and all other applicable legal and accounting
requirements and reflect only actual transactions.
3.7 Broker's Fees. Neither Best nor any of its officers or directors has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
3.8 Absence of Certain Changes or Events.
(a) Except as disclosed in the Best Financial Statements or the Best
Disclosure Schedule, since December 31, 1997 (i) Best has not incurred any
material indebtedness or other liability or obligation (whether absolute,
accrued, contingent or otherwise), other than in the ordinary course of their
business; (ii) Best has not declared or paid any dividend or other distribution
in respect of the capital stock of Best, or any direct or indirect redemption,
purchase or other acquisition by Best of any such stock; (iii) to the best
knowledge of Best, there has been no material adverse change in the business,
assets, properties, operations, or condition (financial or otherwise) of Best,
and (iv) no event has occurred which has had, or is likely to have, individually
or in the aggregate, a Material Adverse Effect on Best.
(b) Since December 31, 1997, Best has carried on its business in all
material respects in the ordinary and usual course theretofore conducted.
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(c) Since December 31, 1997, Best has not (i) except for such actions
as are in the ordinary course of business consistent with past practice or
except as required by applicable law, (A) increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites payable to any
executive officer, employee, or director from the amount thereof in effect as of
December 31, 1997, or (B) granted any severance or termination pay, entered into
any contract to make or grant any severance or termination pay, or paid any
bonuses in excess of its 1997 salary and employee benefits expenses, or (ii)
suffered any strike, work stoppage, slowdown, or other labor disturbance which,
in its reasonable judgment, is likely, either individually or in the aggregate,
to have a Material Adverse Effect on Best. The material terms of all employment
agreements and consulting agreements to which Best is a party are shown on
Schedule 3.8(c) of the Best Disclosure Schedule.
3.9 Legal Proceedings.
(a) Best is not a party to any, and there are no pending (or to the
best of their knowledge threatened) material legal, administrative, arbitral or
other proceedings, claims, actions or, to the best knowledge of Best,
governmental or regulatory investigations of any nature (including
noncontractual claims, bad faith claims and claims against any directors or
officers of Best) against Best, or challenging the validity or propriety of the
transactions contemplated by this Agreement, as to which there is a reasonable
likelihood of an adverse determination and which, if adversely determined would,
either individually or in the aggregate, have a Material Adverse Effect on Best.
(b) There is no injunction, order, judgment, decree, or, to the best
knowledge of Best, regulatory restriction (including noncontractual claims, bad
faith claims and claims against any directors or officers of Best) imposed upon
Best or the assets of Best which had, or might reasonably be expected to have, a
Material Adverse Effect on Best.
3.10 Taxes and Tax Returns.
(a) Best has duly filed all Tax Returns (as defined in Section
3.10(c) of this Agreement) required to be filed by it on or prior to the date of
this Agreement (all such Tax Returns being accurate and complete in all material
respects) and has duly paid or made provisions for the payment of all Taxes (as
defined in Section 3.10(c) of this Agreement) which have been incurred or are
due or claimed to be due from it by federal, state, county, foreign or local
taxing authorities on or prior to the date of this Agreement (including, if and
to the extent applicable, those due in respect of its properties, income,
business, capital stock, premiums, franchises, licenses, sales and payrolls)
other than (i) Taxes or other charges which are not yet delinquent or are being
contested in good faith and have not been finally determined for which adequate
reserves have been made on the Best Financial Statements, or (ii) Tax Returns or
Taxes the failure to file, pay or make provision for, either individually or in
the aggregate, are not likely, in the reasonable judgment of Best, to have a
Material Adverse Effect on Best. There are no material
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disputes pending, or claims asserted for, Taxes or assessments upon Best for
which Best does not have adequate reserves, nor has Best given any currently
effective waivers extending the statutory period of limitations applicable to
any Tax Return for any period. In addition, (A) proper and accurate amounts have
been withheld by Best from its employees' compensations for all prior periods in
compliance in all material respects with the income tax withholding provisions
of applicable federal, state and local laws, except where failure to do so would
not have a Material Adverse Effect on Best, (B) Tax Returns which are accurate
and complete in all material respects have been filed by Best for all periods
for which returns were due with respect to income tax withholding, Social
Security and unemployment taxes, except where failure to do so would not have a
Material Adverse Effect on Best, (C) the amounts shown on such Tax Returns to be
due and payable have been paid in full or adequate provision therefor has been
included by Best in its financial statements as of December 31, 1997, except
where failure to do so would not have a Material Adverse Effect on Best and (D)
there are no Tax Liens upon any property or assets of Best except Liens for
current Taxes not yet due or Liens that would not have a Material Adverse Effect
on Best. Best has not been required to include in income any adjustment pursuant
to Section 481 of the Code by reason of a voluntary change in accounting method
initiated by Best, and the Internal Revenue Service (the "IRS") has not
initiated or proposed any such adjustment or change in accounting method, in
either case which had or is reasonably likely to have a Material Adverse Effect
on Best. Except as set forth in the Best Financial Statements, Best has not
entered into a transaction which is being accounted for as an installment
obligation under Section 453 of the Code, which would be reasonably likely to
have a Material Adverse Effect on Best. Best is not a party to or bound by any
tax indemnity, tax sharing or tax allocation agreement. Best has never been a
member of an affiliated group of corporations within the meaning of Section 1504
of the Code. Best is not liable for the Taxes of any person under Section
1.1502-6 of the Treasury Regulations (or any similar provision of state, local
or foreign Tax law) or by contract, as a successor or otherwise. Best is not a
party to any joint venture, partnership or other arrangement or contract that
could be treated as a partnership for federal income tax purposes.
(b) Any amount that is reasonably likely to be received (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer, director
or trustee of Best or any of its affiliates who is a "Disqualified Individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation
arrangement or Best Benefit Plan (as defined in Section 3.11(a) of this
Agreement) currently in effect will not be characterized as an "excess parachute
payment" (as such term is defined in Section 280G(b)(1) of the Code).
(c) As used in this Agreement, (i) the term "Tax" or "Taxes" means all
taxes, charges, fees, levies and other governmental assessments and impositions
of any kind payable to any governmental authority or agency (including all
federal, state, county, local, and foreign income, excise, gross receipts, gross
income, ad valorem, profits, gains, property, capital, sales, transfer, use,
payroll, employment, severance, withholding, duties, intangibles, franchise,
backup withholding, and other taxes, charges,
12
levies or like assessments together with all penalties and additions to tax and
interest thereon); and (ii) the term "Tax Return" or "Tax Returns" means all
returns, reports, information returns and information statements with respect to
Taxes required to be filed with the IRS or any other Governmental Entity or tax
authority or agency, whether domestic or foreign (including consolidated,
combined and unitary tax returns).
(d) No disallowance of a deduction under Section 162(m) of the Code
for employee remuneration of any amount paid or payable by Best under any
contract, plan, program, arrangement or understanding will have a Material
Adverse Effect on Best.
(e) Best has not made an election under Section 341(f) of the Code.
(f) Best has not applied for any extensions of time on the filing of
any Tax Returns.
(g) Best's tax reserve (not including reserves created for timing)
are sufficient for all unpaid taxes.
3.11 Employee Benefit Plans; Labor Matters.
(a) The Best Disclosure Schedule sets forth a true and complete list of
each employee benefit plan, arrangement or agreement that is maintained as of
the date of this Agreement (the "Best Benefit Plans") by Best or by any
affiliated trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with Best would be deemed a "single employer"
within the meaning of Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(b) Best has heretofore delivered or made available to Hiway true and
complete copies of each of the Best Benefit Plans and related documents,
including (i) the actuarial report for such Best Benefit Plan (if applicable)
for each of the last two years, and (ii) the most recent determination letter
from the IRS (if applicable) for such Best Benefit Plan.
(c) (i) Each of the Best Benefit Plans has been operated and administered
in all material respects in compliance with applicable laws including, but not
limited to, ERISA and the Code, (ii) each of the Best Benefit Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code has received a
determination letter from the IRS that it is so qualified and no event has
occurred that will or is likely to give rise to disqualification of any such
plan or trust created thereunder, (iii) with respect to each Best Benefit Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Best Benefit Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by the actuary for
such Best Benefit Plan with respect to such Best Benefit Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
Best Benefit Plan allocable to such accrued benefits, (iv) no Best Benefit Plan
provides benefits,
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including death or medical benefits (whether or not insured), with respect to
current or former employees of Best or any ERISA Affiliate beyond their
retirement or other termination of service, other than (A) coverage mandated by
applicable law, (B) death benefits or retirement benefits under any "employee
pension plan" (as such term is defined in Section 3(2) of ERISA), (C) deferred
compensation benefits accrued as liabilities on the books of Best or the ERISA
Affiliates, (D) benefits the full cost of which is borne by the current or
former employee (or his or her beneficiary), or (E) disability or severance
plans identified on the Best Disclosure Schedule, (v) no material liability
under Title IV of ERISA has been incurred by Best or any ERISA Affiliate (other
than liability for premiums to the Pension Benefit Guaranty Corporation (the
"PBGC") arising in the ordinary course) that has not been satisfied in full, and
no condition exists that presents a material risk to Best or any ERISA Affiliate
of incurring a material liability thereunder, (vi) no Best Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37) of
ERISA), (vii) all required contributions or other amounts payable by Best as of
the Effective Time with respect to each Best Benefit Plan in respect of current
or prior plan years have been timely paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) to the best knowledge of Best, neither Best nor
any ERISA Affiliate has engaged in a transaction in connection with which Best
or any ERISA Affiliate reasonably could be subject to either a material civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material tax
imposed pursuant to Section 4975 or 4976 of the Code, and (ix) there are no
pending (or to the best knowledge of Best, threatened or anticipated) claims
(other than routine claims for benefits and administrative expenses payable in
the ordinary course) by, on behalf of or against any of the Best Benefit Plans
or any trusts related thereto which are, in the reasonable judgment of Best,
likely, either individually or in the aggregate, to have a Material Adverse
Effect on Best.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will (i) result
in any material payment (including severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or employee of Best or any
of its affiliates from Best or any of its affiliates under any Best Benefit Plan
or otherwise, (ii) materially increase any benefits otherwise payable under any
Best Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits to any material extent.
(e) To the best knowledge of Best, Best is in compliance in all
material respects with all applicable laws and regulations respecting employment
and employment matters, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices (including federal and state wage and hour laws, workplace safety
laws, workers' compensation laws, equal employment opportunity laws, equal pay
laws, civil rights laws, the Americans With Disabilities Act and the Fair Labor
Standards Act of 1938, as amended), and is not engaged in any unfair labor
practice, except where the failure to be in compliance would not, individually
or in the aggregate, have a Material Adverse Effect on Best. Best has complied
with all applicable notice provisions of and have no material obligations under
COBRA with respect to any former employees or qualifying
14
beneficiaries thereunder. There is no action, claim, cause of action, suit or
proceeding pending (or to the best knowledge of Best threatened) on the part of
any employee, independent contractor or applicant for employment, including any
such action, claim, cause of action, suit or proceeding based on allegations of
wrongful termination or discrimination on the basis of age, race, religion, sex,
sexual preference, or mental or physical handicap or disability that could (or
could reasonably be expected to) have a Material Adverse Effect on Best. Best is
not a party to any collective bargaining agreement or other labor union contract
nor does Best know of any activities or proceedings of any labor union to
organize any employees of Best. Best has provided all employees with all
relocation benefits, stock options, bonuses and incentives, and all other
compensation that such employee has earned up through the date of this Agreement
or that such employee was otherwise promised in his or her employment
agreement(s) with Best.
(f) Except as disclosed in the Best Financial Statements, all
material sums due for employee compensation have been paid, accrued or otherwise
provided for, and all employer contributions for employee benefits, including
deferred compensation obligations, and all benefits under each Best Benefit Plan
have been duly and adequately paid or provided for in accordance with plan
documents. To the best knowledge of Best, no person treated as an independent
contractor by Best is an employee as defined in Section 3401(c) of the Code, nor
has any employee been otherwise improperly classified as exempt, nonexempt or
otherwise, for purposes of federal or state income tax withholding or overtime
laws, rules, or regulations, except where such employee status or improper
classification would, either individually or in the aggregate, not have a
Material Adverse Effect on Best. To the best knowledge of Best, no executive or
key employee or group of employees of Best has any plans to terminate his, her
or their employment.
(g) Best has no commitment to (i) create any additional plan or
modify or change any existing Best Benefit Plan or (ii) enter into any contract
to provide compensation or benefits to any individual.
3.12 Compliance with Applicable Law. Best holds all licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business
under and pursuant to, and has complied in all material respects with and is not
in default in any material respect under any, and has maintained and conducted
its business in all material respects in compliance with, all applicable laws,
statutes, orders, rules, regulations, policies and/or guidelines of each
Governmental Entity relating to Best, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
would not, either individually or in the aggregate, have a Material Adverse
Effect on Best.
3.13 Certain Contracts.
(a) Best is not a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) with respect to the
employment of any directors, officers or employees other than in the ordinary
course of
15
business consistent with past practice, (ii) which, upon the consummation of the
transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from Best to any director, officer or
employee thereof, (iii) which materially restricts the conduct of any line of
business by Best, (iv) with or to a labor union or guild (including any
collective bargaining agreement) or (v) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement. Best has previously made available to Hiway true and correct copies
of all employment and deferred compensation agreements which are in writing and
to which Best is a party. Each executory contract, arrangement, commitment or
understanding of the type described in this Section, whether or not set forth in
the Best Disclosure Schedule, is referred to in this Agreement as a "Best
Contract," and Best does not know of, or has not received notice of, any
violation of the above by any of the other parties thereto which, either
individually or in the aggregate, would have a Material Adverse Effect on Best.
(b) Each Best Contract is valid and binding on Best and in full force
and effect. Best has in all material respects performed all obligations required
to be performed by it to date under each Best Contract, except where such
noncompliance, either individually or in the aggregate, would not have a
Material Adverse Effect on Best. No event or condition exists which constitutes
or, after notice or lapse of time or both, would constitute, a material default
on the part of Best under any such Best Contract, except where such default,
either individually or in the aggregate, would not have a Material Adverse
Effect on Best.
3.14 Agreements with Regulatory Agencies. Best is not subject to any cease-
and-desist or other order issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or has adopted any board resolutions at the request of, any
Governmental Entity that currently restricts in any material respect the conduct
of its business or that in any material manner relates to its management or its
business (each, whether or not set forth in the Best Disclosure Schedule, a
"Best Regulatory Agreement"), nor has Best been advised by any Governmental
Entity that it is considering issuing or requesting a Best Regulatory Agreement.
3.15 Undisclosed Liabilities. Except for (i) those liabilities that are
fully reflected or reserved against on the Best Financial Statements at December
31, 1997 and (ii) those liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 1997, Best has not incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either alone or when combined
with all similar liabilities, had or could reasonably be expected to have a
Material Adverse Effect on Best.
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3.16 Intellectual Property.
(a) Best owns or has the right to use pursuant to license,
sublicense, agreement or permission all intellectual property necessary for the
operation of its business as presently conducted and as presently proposed to be
conducted. The term "intellectual property" means all trademarks, service marks,
logos, trade names and corporate names and registrations and applications for
registration thereof, copyrights and registrations and applications for
registration thereof, computer software, data and documentation, trade secrets
and confidential business information (including financial, marketing and
business data, pricing and cost information, business and marketing plans, and
customer and supplier lists and information), other proprietary rights, and
copies and tangible embodiments thereof (in whatever form or medium).
(b) To the best knowledge of Best, Best has not interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
intellectual property rights of third parties and neither Best, nor any of the
directors or officers (and employees with responsibility for intellectual
property matters) of Best has ever received any charge, complaint, claim or
notice alleging any such interference, infringement, misappropriation or
violation. To the best knowledge of Best, no third party has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
intellectual property rights of Best.
(c) The Best Disclosure Schedule identifies each item of material
intellectual property owned by a third party that Best uses pursuant to license,
sublicense, agreement, or permission other than standard off-the-shelf end-user
software products. Best has made correct and complete copies of all such
licenses, sublicenses, agreements and permissions (as amended to date) available
to Hiway. With respect to each such item of such intellectual property: (i) the
license, sublicense, agreement or permission covering the item is legal, valid,
binding, enforceable and in full force and effect; (ii) the license, sublicense,
agreement or permission will continue to be legal, valid, binding and
enforceable and in full force and effect on identical terms on and after the
Closing Date; (iii) Best is not, and to the best knowledge of Best, the other
party to the license, sublicense, agreement or permission is not in breach or
default, and no event of default has occurred which with notice or lapse of
time, or both, would constitute a breach or default or permit termination,
modification or acceleration thereunder; (iv) no party to the license,
sublicense, agreement or permission has repudiated any provision thereof; (v)
with respect to such sublicense, the representations and warranties set forth in
(i) through (iv) above are, to the best knowledge of Best, true and correct with
respect to the underlying license; and (vi) Best has not granted any sublicense
or similar right with respect to the license, sublicense, agreement or
permission.
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3.17 Real Property; Environmental Liability.
(a) Best owns no right, title or interest in any real property except
as described on the Best Disclosure Schedule (collectively, the "Best Real
Property"). The Best Disclosure Schedule sets forth a complete and accurate list
and general description of all material leases for real property ("Best Real
Property Leases") to which Best is a party or by which it is bound. Best owns
all right, title and interest in, and has good and marketable title to, the Best
Real Property. Best has valid leasehold interests in each of the Best Real
Property Leases held by it, free and clear of all mortgages, options to
purchase, covenants, conditions, restrictions, easements, liens, security
interests, charges, claims, assessments and encumbrances, except for (i) rights
of lessors, co-lessees or sublessees that are reflected in each Best Real
Property Lease, (ii) current taxes not yet due and payable; (iii) Liens of
public record; and (iv) such nonmonetary imperfections of title and
encumbrances, if any, as do not materially detract from the value of or
materially interfere with the present use of such property. To the best
knowledge of Best, the activities of Best with respect to Best Real Property and
Best Real Property Leases owned or held by it for use in connection with its
operations are in all material respects permitted and authorized by applicable
zoning laws, ordinances and regulations and all laws, rules and regulations of
court, administrative agency or commission and other governmental authority or
instrumentality affecting such properties. Best enjoys peaceful and undisturbed
possession under all material Best Real Property Leases to which it is a party,
and all of such Best Real Property Leases are valid and in full force and
effect.
(b) There are no legal, administrative, arbitral or other
proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or, to the best knowledge of Best,
governmental investigations of any nature seeking to impose, or that could
reasonably be expected to result in the imposition of, on Best any liability or
obligation arising under common law or under any local, state or federal
environmental statute, regulation or ordinance (including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA")), pending or (to the best knowledge of Best) threatened against Best,
which liability or obligation could reasonably be expected to have a Material
Adverse Effect on Best. To the best knowledge of Best, there is no reasonable
basis for any such proceeding, claim, action or governmental investigation that
would impose any material liability or obligation that could reasonably be
expected to have a Material Adverse Effect on Best. Best is not subject to any
agreement, order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any material
liability or obligation that could reasonably be expected to have a Material
Adverse Effect on Best.
3.18 State Takeover Laws. The Board of Directors of Best has approved the
transactions contemplated by this Agreement and taken such action so that the
provisions of the CCC and all other provisions of each state or local "takeover"
law applicable to Best will not apply to this Agreement or any of the
transactions contemplated by this Agreement.
18
3.19 Pooling of Interests. Best has no reason to believe that the Merger
will not qualify as a "pooling of interests" for accounting purposes.
3.20 Accuracy of Information Supplied. To the best knowledge of Best, none
of the information supplied or to be supplied by Best to Hiway pursuant to this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact 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 misleading.
3.21 Effective Time of Representations, Warranties, Covenants and
Agreements. Each representation, warranty, covenant and agreement of Best set
forth in this Agreement, as updated by any written disclosure schedule delivered
pursuant to Section 6.10 of this Agreement, and except for representations which
speak as of a given date, shall be deemed to be made on and as of the date of
this Agreement, as of the Closing Date, and as of the Effective Time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HIWAY
Except as disclosed in the Hiway Disclosure Letter delivered to Best
simultaneously with this Agreement (the "Hiway Disclosure Schedule"), Hiway
hereby represents and warrants to Best as follows:
4.1 Corporate Organization.
(a) Hiway is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida. Hiway has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such license or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Hiway. True and complete copies of the Articles of
Incorporation and Bylaws of Hiway, as in effect as of the date of this
Agreement, have previously been made available by Hiway to Best.
(b) The only Subsidiary of Hiway is RapidSite, Inc. (the "Hiway
Subsidiary"). The Hiway Subsidiary (i) is duly organized and validly existing as
a corporation under the laws of the State of Florida, (ii) is duly qualified to
do business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Hiway, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted. True and complete
19
copies of the Articles of Incorporation and Bylaws of the Hiway Subsidiary, as
in effect on the date of this Agreement, have previously been made available by
Hiway to Best.
(c) A record of all corporate action taken by the shareholders and
the Board of Directors of Hiway (including committees thereof), and a record of
all corporate action taken by the shareholders and Board of Directors (including
committees thereof) of the Hiway Subsidiary, and complete and accurate copies of
all of their respective proceedings and actions by written consent, and all
minutes of their respective meetings, are contained in the respective minute
books of Hiway and the Hiway Subsidiary. The minute books and stock ledgers of
Hiway contain an accurate and complete record of all issuances, transfers and
cancellations of shares of capital stock of Hiway. The minute books and stock
ledgers of the Hiway Subsidiary taken together contain an accurate and complete
record of all issuances, transfers and cancellations of shares of capital stock
of the Hiway Subsidiary. Best has been given access to and an opportunity to
review all such minutes, minute books, membership records and stock ledgers.
4.2 Capitalization.
(a) The shareholders of Hiway have the full and complete power and
authority to approve and authorize this Agreement and the consummation of all of
the transactions contemplated by this Agreement. The shareholders of Hiway are
the only persons entitled to receive shares of Best Common Stock, and cash in
lieu of fractional shares of Best Common Stock, upon consummation of the Merger,
in exchange for Hiway Shares. The authorized capital stock of Hiway consists of
30,000,000 shares of Common Stock ("Hiway Common Stock"), with such shares
divided into two classes. One class consists of 15,000,000 shares of Class A
Common Stock, par value $0.01, of which 5,277,778 are outstanding as of the date
of this Agreement, and the other class consists of 15,000,000 shares of Class B
Common Stock, par value $0.01, none of which is outstanding as of the date of
this Agreement. All of the issued and outstanding shares of Hiway Common Stock
have been duly authorized and validly issued, are fully paid, nonassessable and
free of preemptive rights with no personal liability attaching to the ownership
thereof, and have been issued in compliance with state and federal securities
laws. Except as described in this Section 4.2(a), as of the date of this
Agreement, Hiway does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character ("Hiway Options") calling for the purchase or issuance of any shares
of capital stock or any other equity securities of Hiway or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity securities of Hiway. As of the date of this Agreement,
no shares of Hiway Common Stock were reserved for issuance except for: (a)
250,000 shares reserved for issuance upon the exercise of the Hiway Options
issued pursuant to the Hiway 1997 Stock Option Plan (the "Hiway Option Plan")
(of which options representing 50,000 shares of Hiway Common Stock are
outstanding); and (b) 680,409 shares of Hiway Common Stock reserved for issuance
upon the exercise of outstanding Hiway Warrants. Since January 1, 1998, Hiway
has not issued any shares of Hiway Common Stock or other equity securities of
Hiway, or any securities convertible into or exercisable for any shares of Hiway
Common Stock or other equity securities of Hiway,
20
other than (x) Hiway Options issued under the Hiway Option Plan, which Hiway
Options are included in the aggregate number of outstanding Hiway Options set
forth above, (y) shares of Hiway Common Stock issued upon the exercise of Hiway
Options under the Hiway Option Plan, which shares are included in the
outstanding capitalization of Hiway set forth above, and (z) 400,000 warrants
issued to debentureholders and 280,409 warrants issued to Xxxxxx X. Xxxxxx, the
material terms of which are set forth on the Hiway Disclosure Schedule. The
information concerning Hiway Common Stock, Hiway Options and Hiway Warrants will
be updated at the Closing to reflect Hiway Option or Hiway Warrant exercises and
Hiway Option grants between the date of this Agreement and the Closing.
(b) The authorized capital stock of the Hiway Subsidiary consists of
1,000 shares, $1.00 par value per share, of common stock ("Hiway Subsidiary
Stock"). As of the date of this Agreement, 100 shares of Hiway Subsidiary Stock
were issued and outstanding and no shares of Hiway Subsidiary Stock were held in
treasury. As of the date of this Agreement, no shares of Hiway Subsidiary Stock
were reserved for issuance. Other than the shares of Hiway Subsidiary Stock
described in the preceding sentence, the Hiway Subsidiary has not issued any
shares of Hiway Subsidiary Stock or other equity securities of the Hiway
Subsidiary, or any securities convertible into or exercisable for any shares of
Hiway Subsidiary Stock or other equity securities of the Hiway Subsidiary. Hiway
owns directly all of the issued and outstanding shares of Hiway Subsidiary
Stock, free and clear of all Liens, and all of such shares are duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights with no personal liability attaching to the ownership thereof. The Hiway
Subsidiary does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other equity
security of the Hiway Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of the Hiway Subsidiary.
(c) The Hiway Disclosure Schedule sets forth a complete list of (i)
the shareholders of Hiway, (ii) the holders of Hiway Options and the material
terms of such Hiway Options, (iii) the officers and directors of Hiway, (iv) the
officers and directors of the Hiway Subsidiary, and (v) the percentage of the
outstanding voting stock of the Hiway Subsidiary owned or controlled, directly
or indirectly, by Hiway. Except for the following specified interests of Hiway
in WWWService GmbH (20%), RapidSite France (25%), RapidSite UK (60%) and
RapidSite Japan (KK) (35%) (collectively, the "Hiway Foreign Affiliates"), Hiway
does not have any direct or indirect equity or ownership interest in any other
business or entity. Hiway does not have any direct or indirect obligation or any
commitment to invest any funds in any corporation or other business or entity,
including any Hiway Foreign Affiliate. Each of the Hiway Foreign Affiliates is a
corporation or similar entity structured to limit Hiway's potential liability as
a partial owner in the Hiway Foreign Affiliate. Hiway has made available to Best
copies of all agreements between Hiway and each of the Hiway Foreign Affiliates,
and each of these agreements, to the best of Hiway's knowledge, (i) constitutes
a valid and binding
21
obligation of Hiway and the Hiway Foreign Affiliate and (ii) complies with all
applicable law.
4.3 Authority; No Violation.
(a) Hiway has full corporate power and authority to execute and
deliver this Agreement and, subject to receipt of shareholder approval, to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly and validly approved by the Board of Directors
of Hiway. The Board of Directors of Hiway has directed that this Agreement and
the transactions contemplated by this Agreement be submitted to the shareholders
of Hiway for approval by written consent of such shareholders and, except for
the adoption of this Agreement by the requisite affirmative vote of the holders
of the outstanding Hiway Shares, no other corporate proceedings on the part of
Hiway are necessary to approve this Agreement and to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by Hiway and (assuming due authorization, execution and
delivery by Best and the receipt of Hiway shareholder approval and all Requisite
Regulatory Approvals) constitutes a valid and binding obligation of Hiway,
enforceable against Hiway in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Hiway nor
the consummation by Hiway of the transactions contemplated by this Agreement,
nor compliance by Hiway with any of the terms or provisions of this Agreement,
will (i) violate any provision of the Hiway Articles of Incorporation or Bylaws,
or (ii) assuming that all Requisite Regulatory Approvals and all of the consents
and approvals referred to in Section 4.4 of this Agreement are duly obtained,
(x) to the best knowledge of Hiway, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Hiway or
any of its properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the properties or assets of Hiway
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Hiway is a party, or by which it or any of its properties or
assets may be bound or affected, except for such violations, conflicts, breaches
or defaults which, either individually or in the aggregate, will not have or be
reasonably likely to have a Material Adverse Effect on Hiway.
4.4 Consents and Approvals. Except for (i) the filing of required
applications, notices and forms with, and the obtaining of approvals from each
applicable Governmental Entity, (ii) the filing of the Certificate of Merger
with the appropriate authorities of (a) the State of California pursuant to the
CCC and (b) the State of Florida pursuant to the FBCA, (iii) consents,
authorizations, approvals, filings or exemptions in connection with compliance
with the applicable provisions of federal and state securities
22
laws and the rules and regulations thereunder and of any applicable SRO and (iv)
the approval of this Agreement by the requisite votes of the shareholders of
Best and the shareholders of Hiway, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
in connection with the execution and delivery by Hiway of this Agreement or the
consummation by Hiway of the transactions contemplated by this Agreement.
4.5 Reports. Hiway and the Hiway Subsidiary (i) have timely filed all
reports, registrations and statements, together with all amendments required to
be made with respect thereto, that they were required to file with each
Governmental Entity having jurisdiction, (ii) have timely filed all other
reports and statements, together with all amendments required to be made with
respect thereto, that they were required to file under all applicable laws,
rules or regulations (including any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, any state, or
any other Governmental Entity) and (iii) have paid all fees and assessments due
and payable in connection therewith, except where the failure to file such
reports, registrations or statements, or to file any of such other reports, or
to pay such fees and assessments, either individually or in the aggregate, will
not have a Material Adverse Effect on Hiway. All such reports, registrations
and statements, together with all such amendments, were in substantial
compliance with applicable law when filed and, as of their respective dates, to
the best knowledge of Hiway, did not contain any false statements or material
misstatements of fact or omit to state any material facts necessary to make the
statements set forth therein not materially misleading in light of the
circumstances in which such statements were made. No material deficiencies have
been asserted by any Governmental Entity with respect to such reports,
registrations and statements or any such amendments thereto. No Governmental
Entity has initiated any proceeding or, to the best knowledge of Hiway,
investigation into the business or operations of Hiway or the Hiway Subsidiary
except where such proceedings or investigations are not likely, either
individually or in the aggregate, to have a Material Adverse Effect on Hiway.
There is no unresolved violation, criticism, or exception by any Governmental
Entity with respect to any report or statement relating to any examinations of
Hiway or the Hiway Subsidiary which, in the reasonable judgment of Hiway, is
likely, either individually or in the aggregate, to have a Material Adverse
Effect on Hiway.
4.6 Financial Statements. Hiway has previously made available to Best
copies of the consolidated balance sheets of Hiway and the Hiway Subsidiary as
of December 31 for the fiscal years 1997, 1996 and 1995, and the related
consolidated statements of income, changes in capital and surplus and cash flows
for the fiscal years 1997, 1996 and 1995 in each case accompanied by the audit
reports of Coopers & Xxxxxxx LLP with respect to fiscal year 1997 and De Meo,
Young, XxXxxxx & Company, P.A. with respect to fiscal years 1996 and 1995,
independent public accountants with respect to Hiway (collectively, the "Hiway
Financial Statements"). The consolidated balance sheets of Hiway as of December
31, 1997, 1996 and 1995 (including the related notes, where
23
applicable) fairly present the consolidated financial position of Hiway and the
Hiway Subsidiary as of the dates thereof, and the other financial statements
referred to in this Section 4.6 (including the related notes, where applicable)
fairly present the results of the consolidated operations and changes in capital
and surplus and consolidated financial position of Hiway and the Hiway
Subsidiary for the respective fiscal periods or as of the respective dates
therein set forth; each of the Hiway Financial Statements (including the related
notes, where applicable) complies in all material respects with applicable
accounting requirements; and each of the Hiway Financial Statements (including
the related notes, where applicable) has been prepared in all material respects
in accordance with GAAP during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of
Hiway and the Hiway Subsidiary have been, and are being, maintained in all
material respects in accordance with GAAP and all other applicable legal and
accounting requirements and reflect only actual transactions.
4.7 Broker's Fees. Neither Hiway nor the Hiway Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement.
4.8 Absence of Certain Changes or Events.
(a) Except as disclosed in the Hiway Financial Statements or the
Hiway Disclosure Schedule, since December 31, 1997 (i) Hiway and the Hiway
Subsidiary taken as a whole have not incurred any material indebtedness or other
liability or obligation (whether absolute, accrued, contingent or otherwise),
other than in the ordinary course of their business, (ii) neither Hiway nor the
Hiway Subsidiary has declared or paid any dividend or other distribution in
respect of the Hiway Shares of Hiway or the capital stock of the Hiway
Subsidiary, or any direct or indirect redemption, purchase or other acquisition
by Hiway or the Hiway Subsidiary of any such Hiway Shares or stock; (iii) to the
best knowledge of Hiway, there has been no material adverse change in the
business, assets, properties, operations, or condition (financial or otherwise)
of Hiway or the Hiway Subsidiary, and (iv) no event has occurred which has had,
or is likely to have, individually or in the aggregate, a Material Adverse
Effect on Hiway.
(b) Since December 31, 1997, Hiway and the Hiway Subsidiary have
carried on their respective businesses in all material respects in the ordinary
and usual course theretofore conducted.
(c) Since December 31, 1997, neither Hiway nor the Hiway Subsidiary
has (i) except for such actions as are in the ordinary course of business
consistent with past practice or except as required by applicable law, (A)
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, director, or trustee
from the amount thereof in effect as of December 31, 1997, or (B) granted any
severance or termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonuses in excess of its 1997 salary
and employee benefits expenses, or (ii) suffered any strike, work stoppage,
slowdown, or other labor disturbance which, in its reasonable judgment, is
likely, either individually or in the aggregate, to have a Material Adverse
Effect on Hiway. The
24
material terms of all employment agreements and consulting agreements to
which Hiway is a party are shown on Schedule 4.8(c) of the Hiway Disclosure
Schedule.
4.9 Legal Proceedings.
-----------------
(a) Neither Hiway nor the Hiway Subsidiary is a party to any, and there are
no pending (or to the best of their knowledge threatened) material legal,
administrative, arbitral or other proceedings, claims, actions or, to the best
knowledge of Hiway, governmental or regulatory investigations of any nature
(including noncontractual claims, bad faith claims and claims against any
directors or officers of Hiway or the Hiway Subsidiary) against Hiway or the
Hiway Subsidiary or challenging the validity or propriety of the transactions
contemplated by this Agreement, as to which there is a reasonable likelihood of
an adverse determination and which, if adversely determined, would, either
individually or in the aggregate, have a Material Adverse Effect on Hiway.
(b) There is no injunction, order, judgment, decree, or, to the best
knowledge of Hiway, regulatory restriction (including noncontractual claims, bad
faith claims and claims against any directors or officers of Hiway or the Hiway
Subsidiary) imposed upon Hiway or the Hiway Subsidiary or the assets of Hiway or
the Hiway Subsidiary which had, or might reasonably be expected to have, a
Material Adverse Effect on Hiway.
4.10 Taxes and Tax Returns.
---------------------
(a) Each of Hiway and the Hiway Subsidiary has duly filed all Tax Returns
required to be filed by them on or prior to the date of this Agreement (all such
returns being accurate and complete in all material respects) and has duly paid
or made provisions for the payment of all Taxes which have been incurred or are
due or claimed to be due from it by federal, state, county, foreign or local
taxing authorities on or prior to the date of this Agreement (including, if and
to the extent applicable, those due in respect of its properties, income,
business, capital stock, premiums, franchises, licenses, sales and payrolls)
other than (i) Taxes or other charges which are not yet delinquent or are being
contested in good faith and have not been finally determined for which adequate
reserves have been made on the Hiway Financial Statements, or (ii) Tax Returns
or Taxes the failure to file, pay or make provision for, either individually or
in the aggregate, are not likely, in the reasonable judgment of Hiway, to have a
Material Adverse Effect on Hiway. There are no material disputes pending, or
claims asserted for, Taxes or assessments upon Hiway or the Hiway Subsidiary for
which Hiway does not have adequate reserves, nor has Hiway or the Hiway
Subsidiary given any currently effective waivers extending the statutory period
of limitations applicable to any Tax Return for any period. In addition, (A)
proper and accurate amounts have been withheld by Hiway and the Hiway Subsidiary
from their employees' compensations for all prior periods in compliance in all
material respects with the income tax withholding provisions of applicable
federal, state and local laws, except where failure to do so would not have a
Material Adverse Effect on Hiway, (B) Tax Returns which are accurate and
complete in all material respects have been filed by Hiway and the Hiway
Subsidiary for all periods for which returns were due with
25
respect to income tax withholding, Social Security and unemployment taxes,
except where failure to do so would not have a Material Adverse Effect on Hiway,
(C) the amounts shown on such Tax Returns to be due and payable have been paid
in full or adequate provision therefor has been included by Hiway in its
consolidated financial statements as of December 31, 1997, except where failure
to do so would not have a Material Adverse Effect on Hiway and (D) there are no
Tax Liens upon any property or assets of Hiway or the Hiway Subsidiary except
Liens for current Taxes not yet due or Liens that would not have a Material
Adverse Effect on Hiway. Neither Hiway nor the Hiway Subsidiary has been
required to include in income any adjustment pursuant to Section 481 of the Code
by reason of a voluntary change in accounting method initiated by Hiway or the
Hiway Subsidiary, and the IRS has not initiated or proposed any such adjustment
or change in accounting method, in either case which had or is reasonably likely
to have a Material Adverse Effect on Hiway. Except as set forth in the Hiway
Financial Statements, neither Hiway nor the Hiway Subsidiary has entered into a
transaction which is being accounted for as an installment obligation under
Section 453 of the Code, which would be reasonably likely to have a Material
Adverse Effect on Hiway. Neither Hiway nor the Hiway Subsidiary is a party to or
bound by any tax indemnity, tax sharing or tax allocation agreement. Neither
Hiway nor the Hiway Subsidiary has ever been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code other than as a
common parent corporation. Neither Hiway nor the Hiway Subsidiary is liable for
the Taxes of any person under Section 1.1502-6 of the Treasury Regulations (or
any similar provision of state, local or foreign Tax law) or by contract, as a
successor or otherwise. Neither Hiway nor the Hiway Subsidiary is a party to any
joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income tax purposes. Hiway's basis and
excess loss account, if any, in the Hiway Subsidiary is set forth in the Hiway
Disclosure Schedule.
(b) Any amount that is reasonably likely to be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer, director or trustee of
Hiway or any of its affiliates who is a "Disqualified Individual" (as such term
is defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or Hiway Benefit Plan (as defined in Section 4.11(a) of this Agreement)
currently in effect will not be characterized as an "excess parachute payment"
(as such term is defined in Section 280G(b)(1) of the Code).
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Hiway or the Hiway
Subsidiary under any contract, plan, program, arrangement or understanding will
have a Material Adverse Effect on Hiway.
(d) Hiway has not made an election under Section 341(f) of the Code.
26
(e) Hiway has not applied for any extensions of time on the filing of any
Tax Returns.
(f) Hiway's tax reserve (not including reserves created for timing) are
sufficient for all unpaid taxes.
4.11 Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) The Hiway Disclosure Schedule sets forth a true and complete list of
each employee benefit plan, arrangement or agreement that is maintained as of
the date of this Agreement (the "Hiway Benefit Plans") by Hiway or its
Subsidiary or by any ERISA Affiliate, all of which together with Hiway would be
deemed a "single employer" within the meaning of Section 4001 of ERISA.
(b) Hiway has heretofore delivered or made available to Best true and
complete copies of each of the Hiway Benefit Plans and related documents,
including (i) the actuarial report for such Hiway Benefit Plan (if applicable)
for each of the last two years, and (ii) the most recent determination letter
from the IRS (if applicable) for such Hiway Benefit Plan.
(c) (i) Each of the Hiway Benefit Plans has been operated and administered
in all material respects in compliance with applicable laws including, but not
limited to, ERISA and the Code, (ii) each of the Hiway Benefit Plans intended to
be "qualified" within the meaning of Section 401(a) of the Code has received a
determination letter from the IRS that it is so qualified and no event has
occurred that will or is likely to give rise to disqualification of any such
plan or trust created thereunder, (iii) with respect to each Hiway Benefit Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Hiway Benefit Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by the actuary for
such Hiway Benefit Plan with respect to such Hiway Benefit Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
Hiway Benefit Plan allocable to such accrued benefits, (iv) no Hiway Benefit
Plan provides benefits, including death or medical benefits (whether or not
insured), with respect to current or former employees of Hiway, the Hiway
Subsidiary or any ERISA Affiliate beyond their retirement or other termination
of service, other than (A) coverage mandated by applicable law, (B) death
benefits or retirement benefits under any "employee pension plan" (as such term
is defined in Section 3(2) of ERISA), (C) deferred compensation benefits accrued
as liabilities on the books of Hiway, the Hiway Subsidiary or the ERISA
Affiliates, (D) benefits the full cost of which is borne by the current or
former employee (or his or her beneficiary), or (E) disability or severance
plans identified on the Hiway Disclosure Schedule, (v) no material liability
under Title IV of ERISA has been incurred by Hiway, the Hiway Subsidiary or any
ERISA Affiliate (other than liability for premiums to the PBGC arising in the
ordinary course) that has not been satisfied in full, and no condition exists
that presents a material risk to Hiway, the Hiway Subsidiary or any ERISA
Affiliate of incurring a material liability thereunder, (vi) no Hiway Benefit
Plan is a "multiemployer pension plan" (as such term is defined in Section
27
3(37) of ERISA), (vii) all required contributions or other amounts payable by
Hiway or the Hiway Subsidiary as of the Effective Time with respect to each
Hiway Benefit Plan in respect of current or prior plan years have been timely
paid or accrued in accordance with GAAP and Section 412 of the Code, (viii) to
the best knowledge of Hiway, neither Hiway, the Hiway Subsidiary nor any ERISA
Affiliate has engaged in a transaction in connection with which Hiway, the Hiway
Subsidiary or any ERISA Affiliate reasonably could be subject to either a
material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
material tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix)
there are no pending (or to the best knowledge of Hiway, threatened or
anticipated) claims (other than routine claims for benefits and administrative
expenses payable in the ordinary course) by, on behalf of or against any of the
Hiway Benefit Plans or any trusts related thereto which are, in the reasonable
judgment of Hiway, likely, either individually or in the aggregate, to have a
Material Adverse Effect on Hiway.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will (i) result
in any material payment (including severance, unemployment compensation, golden
parachute or otherwise) becoming due to any director or employee of Hiway or any
of its affiliates from Hiway or any of its affiliates under any Hiway Benefit
Plan or otherwise, (ii) materially increase any benefits otherwise payable under
any Hiway Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefits to any material extent.
(e) To the best knowledge of Hiway, Hiway and the Hiway Subsidiary are in
compliance in all material respects with all applicable laws and regulations
respecting employment and employment matters, discrimination in employment,
terms and conditions of employment, wages, hours and occupational safety and
health and employment practices (including federal and state wage and hour laws,
workplace safety laws, workers' compensation laws, equal employment opportunity
laws, equal pay laws, civil rights laws, the Americans With Disabilities Act and
the Fair Labor Standards Act of 1938, as amended), and are not engaged in any
unfair labor practice, except where the failure to be in compliance would not,
either individually or in the aggregate, have a Material Adverse Effect on
Hiway. Hiway and the Hiway Subsidiary have complied with all applicable notice
provisions of and have no material obligations under COBRA with respect to any
former employees or qualifying beneficiaries thereunder. There is no action,
claim, cause of action, suit or proceeding pending (or to the best knowledge of
Hiway threatened), on the part of any employee, independent contractor or
applicant for employment, including any such action, claim, cause of action,
suit or proceeding based on allegations of wrongful termination or
discrimination on the basis of age, race, religion, sex, sexual preference, or
mental or physical handicap or disability that could (or could reasonably be
expected to) have a Material Adverse Effect on Hiway. Neither Hiway nor the
Hiway Subsidiary is a party to any collective bargaining agreement or other
labor union contract nor does Hiway know of any activities or proceedings of any
labor union to organize any employees of Hiway or the Hiway Subsidiary. Hiway
and the Hiway Subsidiary have provided all employees with all relocation
benefits, stock options, bonuses and incentives, and all other compensation that
such employee has
28
earned up through the date of this Agreement or that such employee was otherwise
promised in his or her employment agreement(s) with Hiway or the Hiway
Subsidiary, as the case may be.
(f) Except as disclosed in the Hiway Financial Statements, all material
sums due for employee compensation have been paid, accrued or otherwise provided
for, and all employer contributions for employee benefits, including deferred
compensation obligations, and all benefits under each Hiway Benefit Plan have
been duly and adequately paid or provided for in accordance with plan documents.
To the best knowledge of Hiway, no person treated as an independent contractor
by Hiway or the Hiway Subsidiary is an employee as defined in Section 3401(c) of
the Code, nor has any employee been otherwise improperly classified, as exempt,
nonexempt or otherwise, for purposes of federal or state income tax withholding
or overtime laws, rules, or regulations, except where such employee status or
improper classification would not, either individually or in the aggregate, have
a Material Adverse Effect on Hiway. To the best knowledge of Hiway, no
executive or key employee or group of employees of Hiway or the Hiway Subsidiary
has any plans to terminate his, her or their employment.
(g) Neither Hiway nor the Hiway Subsidiary has any commitment to (i) create
any additional plan or modify or change any existing Hiway Benefit Plan or (ii)
enter into any contract to provide compensation or benefits to any individual.
4.12 Compliance with Applicable Law. Hiway and the Hiway Subsidiary hold
all licenses, franchises, permits and authorizations necessary for the lawful
conduct of their respective businesses under and pursuant to, and have complied
in all material respects with and are not in default in any material respect
under any, and have maintained and conducted their respective businesses in all
material respects in compliance with, all applicable laws, statutes, orders,
rules, regulations, policies and/or guidelines of each Governmental Entity
relating to Hiway and the Hiway Subsidiary, except where the failure to hold
such license, franchise, permit or authorization or such noncompliance or
default would not, either individually or in the aggregate, have a Material
Adverse Effect on Hiway.
4.13 Certain Contracts.
-----------------
(a) Neither Hiway nor the Hiway Subsidiary is a party to or bound by any
contract, arrangement, commitment or understanding (whether written or oral) (i)
with respect to the employment of any directors, officers or employees other
than in the ordinary course of business consistent with past practice, (ii)
which, upon the consummation of the transactions contemplated by this Agreement
will (either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) becoming due from
Hiway or its Subsidiary to any director, officer or employee thereof, (iii)
which materially restricts the conduct of any line of business by Hiway, (iv)
with or to a labor union or guild (including any collective bargaining
agreement) or (v) (including any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan) any of the benefits of which
will be
29
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Hiway has previously made
available to Best true and correct copies of all employment and deferred
compensation agreements which are in writing and to which Hiway or the Hiway
Subsidiary is a party. Each executory contract, arrangement, commitment or
understanding of the type described in this Section 4.13(a), whether or not set
forth in the Hiway Disclosure Schedule, is referred to in this Agreement as a
"Hiway Contract", and neither Hiway nor the Hiway Subsidiary knows of, or has
received notice of, any violation of the above by any of the other parties
thereto which, either individually or in the aggregate, would have a Material
Adverse Effect on Hiway.
(b) Each Hiway Contract is valid and binding on Hiway or the Hiway
Subsidiary, as applicable, and in full force and effect. Hiway and the Hiway
Subsidiary have in all material respects performed all obligations required to
be performed by them to date under each Hiway Contract, except where such
noncompliance, either individually or in the aggregate, would not have a
Material Adverse Effect on Hiway. No event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of Hiway or the Hiway Subsidiary under any such
Hiway Contract, except where such default, either individually or in the
aggregate, would not have a Material Adverse Effect on Hiway.
4.14 Agreements with Regulatory Agencies. Neither Hiway nor the Hiway
Subsidiary is subject to any cease-and-desist or other order issued by, or is a
party to any written agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or has adopted any board resolutions at
the request of, any Governmental Entity that currently restricts in any material
respect the conduct of its business or that in any material manner relates to
its management or its business (each, whether or not set forth in the Hiway
Disclosure Schedule, a "Hiway Regulatory Agreement"), nor has Hiway or the Hiway
Subsidiary been advised by any Governmental Entity that it is considering
issuing or requesting a Hiway Regulatory Agreement.
4.15 Undisclosed Liabilities. Except for (i) those liabilities that are
fully reflected or reserved against on the Hiway Financial Statements at
December 31, 1997 and (ii) those liabilities incurred in the ordinary course of
business consistent with past practice since December 31, 1997, neither Hiway
nor the Hiway Subsidiary has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) that, either alone or when combined with all similar liabilities, had or
could reasonably be expected to have a Material Adverse Effect on Hiway.
30
4.16 Intellectual Property.
(a) Hiway owns or has the right to use pursuant to license,
sublicense, agreement or permission all intellectual property necessary for the
operation of its business as presently conducted and as presently proposed to be
conducted.
(b) To the best knowledge of Hiway, Hiway has not interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
intellectual property rights of third parties and neither Hiway, nor any of the
directors or officers (and employees with responsibility for intellectual
property matters) of Hiway has ever received any charge, complaint, claim or
notice alleging any such interference, infringement, misappropriation or
violation. To the best knowledge of Hiway, no third party has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
intellectual property rights of Hiway.
(c) The Hiway Disclosure Schedule identifies each item of material
intellectual property owned by a third party that Hiway uses pursuant to
license, sublicense, agreement, or permission other than standard off-the-shelf
end-user software products. Hiway has made correct and complete copies of all
such licenses, sublicenses, agreements and permissions (as amended to date)
available to Best. With respect to each such item of such intellectual
property: (i) the license, sublicense, agreement or permission covering the
item is legal, valid, binding, enforceable and in full force and effect; (ii)
the license, sublicense, agreement or permission will continue to be legal,
valid, binding and enforceable and in full force and effect on identical terms
on and after the Closing Date; (iii) Hiway is not, and to the best knowledge of
Hiway, the other party to the license, sublicense, agreement or permission is
not in breach or default, and no event of default has occurred which with notice
or lapse of time, or both, would constitute a breach or default or permit
termination, modification or acceleration thereunder; (iv) no party to the
license, sublicense, agreement or permission has repudiated any provision
thereof; (v) with respect to such sublicense, the representations and warranties
set forth in (i) through (iv) above are, to the best knowledge of Hiway, true
and correct with respect to the underlying license; and (vi) Hiway has not
granted any sublicense or similar right with respect to the license, sublicense,
agreement or permission.
4.17 Real Property; Environmental Liability.
(a) Neither Hiway nor the Hiway Subsidiary owns any right, title or
interest in any real property. The Hiway Disclosure Schedule sets forth a
complete and accurate list and general description of all material leases for
real property ("Hiway Real Property Leases") to which Hiway or the Hiway
Subsidiary is a party or by which either of them is bound. Hiway and the Hiway
Subsidiary have valid leasehold interests in each of the Hiway Real Property
Leases held by any of them, free and clear of all mortgages, options to
purchase, covenants, conditions, restrictions, easements, liens, security
interests, charges, claims, assessments and encumbrances, except for (i) rights
of lessors, co-lessees or sublessees that are reflected in each Hiway Real
Property Lease, (ii) current taxes not yet due and payable; (iii) Liens of
public record; and (iv) such nonmonetary
31
imperfections of title and encumbrances, if any, as do not materially detract
from the value of or materially interfere with the present use of such property.
To the best knowledge of Hiway, the activities of Hiway and the Hiway Subsidiary
with respect to all Hiway Real Property Leases held by each of them for use in
connection with their respective operations are in all material respects
permitted and authorized by applicable zoning laws, ordinances and regulations
and all laws, rules and regulations of each court, administrative agency or
commission and other governmental authority or instrumentality affecting such
properties. Hiway and the Hiway Subsidiary enjoy peaceful and undisturbed
possession under all material Hiway Real Property Leases to which they are
parties, and all of such Hiway Real Property Leases are valid and in full force
and effect.
(b) There are no legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, private environmental investigations or
remediation activities or, to the best knowledge of Hiway, governmental
investigations of any nature seeking to impose, or that could reasonably be
expected to result in the imposition of, on Hiway or the Hiway Subsidiary any
liability or obligation arising under common law or under any local, state or
federal environmental statute, regulation or ordinance (including CERCLA),
pending or (to the best knowledge of Hiway) threatened against Hiway or the
Hiway Subsidiary, which liability or obligation could reasonably be expected to
have a Material Adverse Effect on Hiway. To the best knowledge of Hiway, there
is no reasonable basis for any such proceeding, claim, action or governmental
investigation that would impose any material liability or obligation that could
reasonably be expected to have a Material Adverse Effect on Hiway. Neither
Hiway nor the Hiway Subsidiary is subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any material liability or obligation
that could reasonably be expected to have a Material Adverse Effect on Hiway.
4.18 State Takeover Laws. The Board of Directors of Hiway has approved
the transactions contemplated by this Agreement and taken such action so that
the provisions of the FBCA and all other provisions of each state or local
"takeover" law applicable to Hiway will not apply to this Agreement or any of
the transactions contemplated by this Agreement.
4.19 Pooling of Interests. Hiway has no reason to believe that the Merger
will not qualify as a "pooling of interests" for accounting purposes.
4.20 Investment Intent. Each shareholder of Hiway is acquiring the Best
Common Stock for his or her own account, for investment only and not with a view
to the distribution or resale. Any sale, transfer or other disposition of the
Best Common Stock will be made in compliance with all applicable provisions of
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
4.21 Accuracy of Information Supplied. To the best knowledge of Hiway,
none of the information supplied or to be supplied by Hiway or the Hiway
Subsidiary to Best
32
pursuant to this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact 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 misleading.
4.22 Effective Time of Representations, Warranties, Covenants and
Agreements. Each representation, warranty, covenant and agreement of Hiway set
forth in this Agreement, as updated by any written disclosure schedule delivered
pursuant to Section 6.10 of this Agreement, and except for representations which
speak as of a given date, shall be deemed to be made on and as of the date of
this Agreement, as of the Closing Date, and as of the Effective Time.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
5.1 Conduct of Businesses Prior to the Effective Times. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement (including the Best Disclosure
Schedule and the Hiway Disclosure Schedule), each of Best and Hiway shall, and
Hiway shall cause its Subsidiary to (a) conduct its business in the usual,
regular and ordinary course consistent with past practice, (b) use reasonable
best efforts to maintain and preserve intact its business organization,
employees and advantageous business relationships and retain the services of its
key officers and key employees and (c) take no action which would adversely
affect or delay the ability of any party to this Agreement to obtain any
Requisite Regulatory Approval for the transactions contemplated by this
Agreement or to perform its covenants and agreements under this Agreement.
5.2 Forbearances. During the period from the date of this Agreement to
the Effective Time, except as set forth in the Best Disclosure Schedule or the
Hiway Disclosure Schedule, as the case may be, and except as expressly
contemplated or permitted by this Agreement, neither Best nor Hiway shall, and
Hiway shall not permit its Subsidiary to, without the prior written consent of
the other:
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness), assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity, or make any loan or
advance;
(b) (i) adjust, split, combine or reclassify any capital stock; (ii)
make, declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock; (iii) grant any stock appreciation rights or grant
any individual, corporation or other entity any right to acquire any shares of
its capital stock (and no such rights or options shall be granted, except as
otherwise agreed in writing by Best and Hiway); or (iv) issue any additional
33
shares of capital stock except pursuant to the exercise of stock options or
warrants or the conversion of convertible securities outstanding as of the date
of this Agreement or approved hereunder;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets to any individual, corporation or other entity other
than a Subsidiary, or cancel, release or assign any indebtedness to any such
person or any claims held by any such person, except in the ordinary course of
business consistent with past practice or pursuant to contracts or agreements in
force at the date of this Agreement;
(d) except for transactions in the ordinary course of business
consistent with past practice or pursuant to contracts or agreements in force at
the date of this Agreement, make any material investment either by purchase of
stock or securities, contributions to capital, property transfers, or purchase
of any property or assets of any other individual, corporation or other entity
other than a Subsidiary;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or contracts, other
than renewals of contracts and leases without material adverse changes of terms;
(f) increase in any manner the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by any
existing plan or agreement to any such employees, or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or welfare benefit plan
or agreement or employment agreement with or for the benefit of any employee
other than in the ordinary course of business consistent with past practice or
accelerate the vesting of any stock options or other stock-based compensation;
(g) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
(h) take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code;
(i) amend its Articles of Incorporation or its Bylaws, except as
contemplated by this Agreement;
(j) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set forth in Article
VII of this Agreement not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law or
existing contractual obligations; or
34
(k) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
6.1 Regulatory Matters.
(a) In connection with the solicitation of approval of the principal
terms of the Merger by the shareholders of Best and the shareholders of Hiway,
the parties will prepare a Joint Proxy Statement. Best shall mail or deliver the
Joint Proxy Statement to its shareholders and Hiway shall thereafter mail or
deliver the Joint Proxy Statement to its shareholders. The information provided
and to be provided by Best and Hiway for the Joint Proxy Statement will not, on
the date on which approval of the Merger by the shareholders of Best and the
shareholders of Hiway is obtained, contain any untrue statement of material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading. Each of Best and Hiway agree promptly to correct any
information provided by it which becomes false or misleading in any material
respect and to take all steps necessary to amend or supplement the Joint Proxy
Statement to correct the same and to cause the Joint Proxy Statement so
corrected to be distributed to the shareholders of Best and the shareholders of
Hiway to the extent required by applicable law.
(b) Best will prepare and file, and Hiway will cooperate with and
assist Best in preparing and filing, all statements, applications,
correspondence or forms required to be filed with appropriate state securities
law regulatory authorities to register or qualify the shares of Best Common
Stock to be issued upon consummation of the Merger or to establish an exemption
from such registration or qualification (the "Blue Sky Filings").
(c) Each of Best and Hiway shall duly make all other regulatory
filings required to be made by each in respect of this Agreement and the
transactions contemplated by this Agreement. Each party shall use all reasonable
efforts to obtain all permits, approvals and consents required to be obtained
prior to the consummation of the Merger or necessary to carry out the
transactions contemplated by this Agreement under applicable federal, state,
local and foreign laws, rules and regulations.
(d) Each party will furnish all information, including certificates,
consents and opinions of counsel concerning it and the Hiway Subsidiary
reasonably deemed necessary by the other party for the preparation of the Joint
Proxy Statement, the Blue Sky Filings and the applications for all Requisite
Regulatory Approvals. Each party covenants and agrees that all information
furnished by it for inclusion in the Joint Proxy Statement, Blue Sky Filings and
all other documents filed to obtain the Requisite Regulatory Approvals will
comply in all material respects with the provisions of
35
applicable law, and will not contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
(e) Each party shall provide to the other (i) promptly after filing
thereof, copies of all statements, applications, correspondence or forms filed
by such party prior to the Closing Date with state securities law regulatory
authorities and each other Governmental Entity in connection with the
transactions contemplated by this Agreement; and (ii) promptly after delivery
to, or receipt from, such regulatory authorities, all written communications,
letters, reports or other documents relating to the transactions contemplated by
this Agreement.
(f) The parties shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement, and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental Entities. Best
and Hiway shall have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
Best or Hiway, as the case may be, and the Hiway Subsidiary, which appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties agree to consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated by this Agreement.
(g) Best and Hiway shall, upon request, furnish each other with all
information concerning themselves, the Hiway Subsidiary, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Joint Proxy Statement, and each other statement, filing,
notice or application made by or on behalf of Best, Hiway or the Hiway
Subsidiary to any Governmental Entity in connection with the Merger and the
other transactions contemplated by this Agreement.
(h) Best and Hiway shall promptly advise each other upon receiving
each communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any Requisite
36
Regulatory Approval will not be obtained or that the receipt of any such
approval will be materially delayed.
6.2 Access to Information.
(a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, each of Best and Hiway shall, and Hiway shall cause
its Subsidiary to, afford to the officers, employees, accountants, counsel and
other representatives of the other party, access during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records. During such period, each of Best and Hiway
shall, and Hiway shall cause its Subsidiary to, make available to the other
party (i) a copy of each report, schedule, and other document filed or received
by it during such period (other than reports or documents which Best or Hiway,
as the case may be, is not permitted to disclose under applicable law or by
agreement) and (ii) all other information concerning its business, properties
and personnel as such party may reasonably request. Neither Best nor Hiway nor
the Hiway Subsidiary shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of Best's or Hiway's, as the case may be, customers, jeopardize the
attorney-client and work product privileges of the entity in possession or
control of such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) Each of Best and Hiway agrees to keep confidential, and not
divulge to any other party or person (other than employees of, and attorneys,
accountants, financial advisors and other representatives for, Best and Hiway),
all non-public documents, information, records and financial statements received
from the other, and all reports, information and financial information obtained
through audits or other reviews conducted pursuant to this Agreement (unless
readily ascertainable from public or published information, or trade sources, or
already known or subsequently developed by a party independently of any
investigation or received from a third party not under an obligation to the
other party to keep such information confidential), and to use the same only in
connection with the transactions contemplated by this Agreement; and if the
transactions contemplated by this Agreement are not consummated for any reason,
each party agrees to return promptly to the other party all written materials
furnished by the other party, and all copies thereof, in connection with such
investigation, and to destroy all documents and records in its possession
containing extracts or summaries of any such non-public information.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
conditions of the other set forth in this Agreement.
37
6.3 Best Shareholder Approval. Best shall call a meeting of its
shareholders to be held as soon as reasonably practicable for the purpose of
obtaining the requisite shareholder approval required in connection with this
Agreement and the Merger. Best will, through its Board of Directors, subject to
its fiduciary obligations as determined by its Board of Directors, recommend to
its shareholders approval of this Agreement and the Merger.
6.4 Hiway Shareholder Approval. Hiway shall seek the written consent of
its shareholders as soon as reasonably practicable for the purpose of obtaining
the requisite shareholder approval required in connection with this Agreement
and the Merger, and shall use its reasonable best efforts to cause such written
consent to be effective on or before the date of the meeting of the shareholders
of Best called for the purpose of obtaining the requisite Best shareholder
approval required in connection with this Agreement and the Merger. Hiway will,
through its Board of Directors, subject to its fiduciary obligations as
determined by its Board of Directors, recommend to its shareholders approval of
this Agreement and the Merger.
6.5 Legal Conditions to Merger. Each of Best and Hiway shall, and Hiway
shall cause its Subsidiary to, use its reasonable best efforts (a) to take, or
cause to be taken, all actions necessary, proper or advisable to comply promptly
with all legal requirements which may be imposed on such party or the Hiway
Subsidiary with respect to the Merger and, subject to the conditions set forth
in Article VII of this Agreement, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) each consent, authorization, order and approval of, or exemption by,
each Governmental Entity and each other third party which is required to be
obtained by Best or Hiway or the Hiway Subsidiary in connection with the Merger
and the other transactions contemplated by this Agreement.
6.6 Affiliates.
----------
(a) For purposes of qualifying the Merger for "pooling of interests"
accounting treatment, Best and Hiway shall use their respective reasonable best
efforts to cause each director, executive officer and other person who is an
"Affiliate" (as defined below) of such party to deliver, as soon as practicable
after the date of this Agreement, and prior to the date of the meeting of
shareholders called by Best to approve this Agreement, a written agreement, in
the form of Exhibit A to this Agreement in the case of a Hiway Affiliate and
Exhibit B to this Agreement in the case of a Best Affiliate, providing that such
person will not sell, pledge, transfer or otherwise dispose of any shares of the
capital stock of Best held by such Affiliate and, in the case of the Affiliates
of Hiway, the shares of the capital stock of Hiway held by and shares of Best
Common Stock to be received by such Affiliate in the Merger except in compliance
with the applicable provisions of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations thereunder; and (ii) except to
the extent and under the conditions permitted therein, during the period
commencing 30 days prior to the Merger and ending at the time of the publication
of financial results covering at least 30 days of combined operations of Best
and Hiway.
38
(b) For purposes of this Agreement, the term "Affiliate" means any person,
entity or group controlling, controlled by, or under common control with, the
specified person or entity and "control" of a person or entity (including, with
correlative meaning, the terms "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of an entity or individual, whether
through the ownership of voting securities, by contract or otherwise.
6.7 Employee Benefit Plans.
----------------------
(a) Prior to the Closing Date, Best and Hiway shall cooperate in
reviewing, evaluating and analyzing the Best Benefit Plans and Hiway Benefit
Plans with a view towards developing appropriate new benefit plans for the
employees covered thereby subsequent to the Merger in substantial conformance
with the Best Benefit Plans in effect as of the Effective Time, in replacement
and substitution for the Hiway Benefit Plans which shall be canceled, terminated
or frozen to the extent permitted by applicable law. It is the intention of Best
and Hiway to develop such new benefit plans, effective as soon as practicable
after the Effective Time, which, among other things, (i) treat similarly
situated employees on a substantially equivalent basis, taking into account all
relevant factors, including duties, geographic location, tenure, qualifications
and abilities, and (ii) do not discriminate between employees who were covered
by Best Benefit Plans, on the one hand, and those covered by Hiway Benefit
Plans, on the other, prior to the Effective Time, but (iii) with the overall
view that the Hiway Benefit Plans would be canceled, terminated or frozen, and
replaced by the Best Benefit Plans for times following the Effective Time to the
extent permitted by applicable law.
(b) Nothing in this Section shall be interpreted as preventing Best from
amending, modifying or terminating any Best Benefit Plans, Hiway Benefit Plans,
or other contracts, arrangements, commitments or understandings, in accordance
with their terms and applicable law.
6.8 Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including any such claim, action, suit, proceeding or investigation in which any
individual who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer of
Best or of Hiway or the Hiway Subsidiary, including any entity specified in the
Best Disclosure Schedule or the Hiway Disclosure Schedule (the "Indemnified
Parties"), is or is threatened to be, made a party based in whole or in part on,
or arising in whole or in part out of, or pertaining to (i) the fact that he is
or was a director, officer or employee of Best, Hiway, the Hiway Subsidiary or
any entity specified in the Best Disclosure Schedule or the Hiway Disclosure
Schedule, or any of their respective predecessors, or (ii) this Agreement or any
of the transactions contemplated by this Agreement or thereby, whether in any
case asserted or arising
39
before or after the Effective Time, the parties agree to cooperate and use their
reasonable best efforts to defend against and respond thereto. It is understood
and agreed that after the Effective Time, Best shall indemnify and hold
harmless, as and to the fullest extent permitted by law (and, as relates to acts
or times prior to the Effective Time, to the fullest extent permitted under
applicable law at such time, including the provisions of Hiway's Articles of
Incorporation), each such Indemnified Party against all losses, claims, damages,
liabilities, costs, expenses (including reasonable attorneys' fees and expenses
in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), the Indemnified Parties
may retain counsel reasonably satisfactory to them after consultation with Best;
provided, however, that (A) Best shall have the right to assume the defense
thereof and upon such assumption Best shall not be liable to any Indemnified
Party for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if Best elects not to assume such defense, the Indemnified Party may retain
counsel reasonably satisfactory to him after consultation with Best, and Best
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Party, (B) Best shall be obligated pursuant to this paragraph to pay for only
one firm of counsel for all Indemnified Parties except to the extent
representation by a single firm or attorney is, in the absence of an informed
consent by the Indemnified Party, prohibited by ethical rules relating to
lawyers' conflicts of interest, (C) Best shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld), (D) Best shall have no obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and nonappealable,
that indemnification of such Indemnified Party in the manner contemplated by
this Agreement is prohibited by applicable law, and (E) Best shall have no
obligation hereunder to any Indemnified Party for which and to the extent
payment is actually and unqualifiedly made to such Indemnified Party under any
insurance policy, any other agreement for indemnification or otherwise. Any
Indemnified Party intending to claim indemnification under this Section, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify Best thereof, provided that the failure to so notify shall not affect the
obligations of Best under this Section except to the extent such failure to
notify materially prejudices Best. Best's obligations under this Section
continue in full force and effect for a period of six years after the Effective
Time (or the period of the applicable statute of limitations, if longer);
provided, however, that all rights to indemnification in respect of any claim (a
"Claim") asserted or made within such period shall continue until the final
disposition of such Claim.
(b) Best shall use its reasonable best efforts to cause the individuals
serving as officers and directors of (i) Best, (ii) each entity specified in the
Best Disclosure Schedule, (iii) Hiway, (iv) the Hiway Subsidiary or (v) each
entity specified in
40
the Hiway Disclosure Schedule immediately prior to the Effective Time to be
covered for a period of six years after the Effective Time (or the period of the
applicable statute of limitations, if longer) by the directors' and officers'
liability insurance policy maintained by Best with respect to acts or omissions
occurring prior to the Effective Time which were committed by such officers and
directors in their capacity as such; provided, however, that in no event shall
Best be required to expend more than 200% of the current amount expended by
Hiway (the "Insurance Premium Amount") to maintain or procure insurance coverage
pursuant hereto; and provided, further, that if Best is unable to maintain or
obtain the insurance called for by this Section, Best shall use its reasonable
best efforts to obtain as much comparable insurance as available for the
Insurance Premium Amount.
(c) If Best or any of its successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of Best assume the obligations set forth
in this Section.
(d) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.9 Additional Agreements.
---------------------
(a) In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
Best with full title to all properties, assets, rights, approvals, immunities
and franchises of any of the parties to this Agreement, the proper officers and
directors of each party to this Agreement and the Hiway Subsidiary shall take
all such necessary action as may be reasonably requested by, and at the sole
expense of, Best.
(b) Prior to the Effective Time, neither Hiway nor the Hiway Subsidiary
nor any Hiway shareholder shall acquire, directly or indirectly, beneficial or
record ownership of any shares of Best Common Stock or other equity securities
of Best, or any securities convertible into or exercisable for any shares of
Best Common Stock or other equity securities of Best.
(c) In connection with this Agreement and the issuance of shares of Best
Common Stock to shareholders of Hiway hereunder, Hiway will use its reasonable
best efforts to cause its shareholders to become parties to that certain
Shareholder Buy-Sell Agreement with Best in the form attached hereto as Exhibit
E immediately prior to the Effective Time.
6.10 Advice of Changes. Best and Hiway shall give prompt notice to the
other party as soon as practicable after it has actual knowledge of (i) the
occurrence, or failure
41
to occur, of any event which would or would be likely to cause any party's
representations or warranties contained in this Agreement to be untrue or
incorrect in any material respect at any time after the date of this Agreement
to the Effective Time, or (ii) any failure on its part or on the part of any of
the Hiway Subsidiary's officers, directors, employees, representatives or agents
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by such party under this Agreement.
Each party shall have the right to deliver to the other party a written
disclosure schedule as to any matter of which it becomes aware following
execution of this Agreement which would constitute a breach of any
representation, warranty or covenant of this Agreement by such party,
identifying on such disclosure schedule the representation, warranty or covenant
which would be so breached, provided that each such disclosure schedule shall be
delivered as soon as practicable after such party becomes aware of the matter
disclosed therein. The nondisclosing party shall have five business days after
receipt of such disclosure schedule to notify the disclosing party that (x) it
will close notwithstanding the new disclosure, (y) it will not close based on
such new disclosure, or (z) further investigation or negotiation is required for
it to reach a determination whether or not to close based on such new
disclosure. If the parties thereafter are unable to reach agreement on a
mutually satisfactory means of resolving the matter so disclosed, the
nondisclosing party shall have the right in its discretion, to terminate this
Agreement pursuant to Section 8 of this Agreement. Best shall update the Best
Disclosure Schedule (the "Closing Date Best Disclosure Schedule") to a date that
is no earlier than ten business days prior to the Closing Date and no later than
seven business days prior to the Closing Date and shall deliver the Closing Date
Best Disclosure Schedule to Hiway no earlier than six business days prior to the
Closing Date. Hiway shall update the Hiway Disclosure Schedule (the "Closing
Date Hiway Disclosure Schedule") to a date that is no earlier than ten business
days prior to the Closing Date and no later than seven business days prior to
the Closing Date and shall deliver the Closing Date Hiway Disclosure Schedule to
Best no earlier than six business days prior to the Closing Date.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved and adopted by the requisite affirmative vote of the
holders of Best Common Stock and Best Preferred Stock entitled to vote thereon.
(b) This Agreement and the transactions contemplated by this Agreement
shall have been approved and adopted by the requisite affirmative vote of the
shareholders of Hiway entitled to vote thereon.
42
(c) The Certificate of Merger shall have been filed with the
appropriate Governmental Entities immediately prior to the Closing (as defined
in Section 9.1).
(d) All approvals of Governmental Entities required to consummate the
transactions contemplated by this Agreement shall have been obtained and shall
remain in full force and effect, without the imposition of any condition which
in the reasonable judgment of Best and Hiway is materially burdensome upon Best
or Hiway and the Hiway Subsidiary (all such approvals being referred to in this
Agreement as the "Requisite Regulatory Approvals"). Without limiting the
generality of the foregoing, all required Blue Sky Filings shall have been made,
and the issuance of Best Common Stock in the Merger shall have been qualified or
registered with the appropriate state securities law regulatory authorities of
all states in which qualification or registration is required under applicable
state securities laws, and such qualifications or registrations shall not have
been suspended or revoked, or shall be exempt from such qualification or
registration.
(e) No order, injunction or decree issued by any Governmental Entity
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated by this
Agreement shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, materially restricts or makes illegal
consummation of the Merger.
(f) The percentage interests of those Hiway Shareholders perfecting
their dissenters' rights under applicable law, when aggregated, shall not exceed
1% of the percentage interests of all Hiway shareholders as a whole.
7.2 Conditions to Obligation of Best. The obligation of Best to effect
the Merger is also subject to the satisfaction or waiver by Best at or prior to
the Effective Time of the following conditions:
(a) The representations and warranties of Hiway set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and (except (i) to the extent such representations and warranties
speak as of an earlier date and (ii) for any changes to the Hiway Disclosure
Schedule that are disclosed by Hiway to Best in the Closing Date Hiway
Disclosure Schedule) as of the Closing Date as though made on and as of the
Closing Date. Best shall have received a certificate signed on behalf of Hiway
by the Chief Executive Officer and the Chief Financial Officer of Hiway to the
foregoing effect, and to which any Closing Date Hiway Disclosure Schedule shall
be appended.
(b) Hiway shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and Best shall have received a certificate signed on behalf of
Hiway by the Chief Executive Officer and the Chief Financial Officer of Hiway to
such effect.
43
(c) Hiway and the Hiway Subsidiary, taken as a whole, shall not have
suffered a material adverse change in their businesses, assets, properties,
operations or condition (financial or otherwise); and no event or circumstance
shall have occurred which has, or is likely to have, a Materially Adverse Effect
on Hiway or upon the right of Hiway or the Hiway Subsidiary to conduct their
respective businesses as presently conducted.
(d) Hiway shall have delivered to Best an opinion, dated the Closing
Date, of counsel for Hiway, satisfactory to Best and its counsel, to the effect
set forth on Exhibit C to this Agreement. Such opinion shall also cover such
other matters incident to the transactions herein contemplated as Best and its
counsel may reasonably request. In rendering its opinion, counsel to Hiway may
rely on certificates of officers of Hiway, opinions of other counsel, the
authenticity of all signatures on documents believed to be genuine and such
other evidence as they may deem necessary or desirable.
(e) Hiway shall have delivered to Best such other certificates and
instruments as Best and its counsel may reasonably request. The form and
substance of all certificates, instruments, opinions and other documentation
delivered to Best under this Agreement shall be reasonably satisfactory to Best
and its counsel.
(f) The shareholders of Hiway shall have entered into that certain
Shareholder Buy-Sell Agreement with Best in the form attached hereto as Exhibit
E.
7.3 Conditions to Obligation of Hiway. The obligation of Hiway to effect
the Merger is also subject to the satisfaction or waiver by Hiway at or prior to
the Effective Time of the following conditions:
(a) The representations and warranties of Best set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and (except (i) to the extent such representations and warranties
speak as of an earlier date and (ii) for any changes to the Best Disclosure
Schedule that are disclosed by Best to Hiway in the Closing Date Best Disclosure
Schedule) as of the Closing Date as though made on and as of the Closing Date.
Hiway shall have received a certificate signed on behalf of Best by the Chief
Executive Officer and the Chief Financial Officer of Best to the foregoing
effect, and to which any Closing Date Best Disclosure Schedule shall be
appended.
(b) Best shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and Hiway shall have received a certificate signed on behalf of Best by
the Chief Executive Officer and the Chief Financial Officer of Best to such
effect.
(c) Best shall not have suffered a material adverse change in its
financial condition, operations, assets or business prospects; and no event or
circumstance
44
shall have occurred which has, or is likely to have, a Materially
Adverse Effect on Best or upon the right of Best to conduct its business as
presently conducted.
(d) Best shall have delivered to Hiway an opinion, dated the Closing
Date, of counsel for Best, satisfactory to Hiway and its counsel, to the effect
set forth on Exhibit D to this Agreement. Such opinion shall also cover such
other matters incident to the transactions herein contemplated as Hiway and its
counsel may reasonably request. In rendering their opinion, counsel to Best may
rely on certificates of officers of Best, opinions of other counsel, the
authenticity of all signatures on documents believed to be genuine and such
other evidence as they may deem necessary or desirable.
(e) Best shall have delivered to Hiway such other certificates and
instruments as Hiway and its counsel may reasonably request. The form and
substance of all certificates, instruments and other documentation delivered to
Hiway under this Agreement shall be reasonably satisfactory to Hiway and its
counsel.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of Best and the shareholders of
Hiway:
(a) by mutual consent of Best and Hiway in a written instrument, if
the Board of Directors of Best and the Board of Directors of Hiway so determine
to terminate this Agreement by an affirmative vote of a majority of the members
of its entire Board;
(b) by either Best or Hiway if (i) any Governmental Entity which must
grant a Requisite Regulatory Approval has denied approval of the Merger and such
denial has become final and nonappealable or any Governmental Entity of
competent jurisdiction has issued a final nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and (ii) the Board of Directors of Best or the
Board of Directors of Hiway, as the case may be, determines to terminate this
Agreement by an affirmative vote of a majority of the members of its entire
Board;
(c) by either Best or Hiway if (i) the Merger shall not have been
consummated on or before June 1, 1998, unless the failure of the Merger to be
consummated by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth in this Agreement, and (ii) the Board of Directors of Best
or the Board of Directors of Hiway, as the case may be, determines to terminate
this Agreement by an affirmative vote of a majority of the members of its entire
Board;
45
(d) by either Best or Hiway (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained in this Agreement) if (i) there shall have been a material
breach of any of the covenants or agreements or any of the representations or
warranties set forth in this Agreement on the part of the other party, which
breach is not cured within 45 days following written notice to the party
committing such breach, or which breach, by its nature or timing, cannot be
cured prior to the Closing Date, and (ii) the Board of Directors of Best or the
Board of Directors of Hiway, as the case may be, determines to terminate this
Agreement by an affirmative vote of a majority of the members of its entire
Board;
(e) by Best upon written notice to Hiway if the Board of Directors of
Hiway does not, or shall indicate to Best that it is unwilling or unable to,
publicly recommend in the Joint Proxy Statement that its shareholders approve
and adopt this Agreement, or if after recommending in the Joint Proxy Statement
that its shareholders approve and adopt this Agreement, the Board of Directors
of Hiway shall have withdrawn, modified or amended such recommendation in any
respect materially adverse to Best, provided that any such notice of termination
must be given not later than 45 days after the later of the date Best shall have
been advised by Hiway in writing that it is unable or unwilling to so recommend
in the Joint Proxy Statement or that it has withdrawn, modified or amended such
recommendation, or such later date as may be agreed upon by Best and Hiway;
(f) by Hiway upon written notice to Best if the Board of Directors of
Best does not, or shall indicate to Hiway that it is unwilling or unable to,
publicly recommend in the Joint Proxy Statement that its shareholders approve
and adopt this Agreement, or if after recommending in the Joint Proxy Statement
that its shareholders approve and adopt this Agreement, the Board of Directors
of Best shall have withdrawn, modified or amended such recommendation in any
respect materially adverse to Hiway, provided that any such notice of
termination must be given not later than 45 days after the later of the date
Hiway shall have been advised by Best in writing that it is unable or unwilling
to so recommend in the Joint Proxy Statement or that it has withdrawn, modified
or amended such recommendation, or such later date as may be agreed upon by Best
and Hiway;
(g) by either Best or Hiway if any approval of the shareholders of
Best or any approval of the shareholders of Hiway required for the consummation
of the Merger has not been obtained by reason of the failure to obtain (i) the
required vote at a duly held meeting of shareholders of Best or at any
adjournment or postponement thereof, or (ii) the required written consent of the
shareholders of Hiway;
(h) by either Best or Hiway if any of the conditions specified by
Article VII of this Agreement to the obligation of the terminating party have
not been satisfied on the Closing Date; or
46
(i) by Best if the Closing Date Hiway Disclosure Schedule discloses
any change from the Hiway Disclosure Schedule which has, or is likely to have, a
Material Adverse Effect on Hiway; or by Hiway if the Closing Date Best
Disclosure Schedule discloses any change from the Best Disclosure Schedule which
has, or is likely to have, a Material Adverse Effect on Best.
8.2 Effect of Termination. In the event of termination of this Agreement
by either Best or Hiway as provided in Section 8.1 of this Agreement, (i) this
Agreement shall forthwith become void and have no effect, except that Sections
6.2(b), 8.2, 9.2, 9.3, 9.5, 9.13, 9.16 and 9.17 of this Agreement shall survive
any termination of this Agreement, and (ii) none of Best, Hiway, the Hiway
Subsidiary or any of the officers or directors of any of them shall have any
liability of any nature whatsoever under this Agreement, or in connection with
the transactions contemplated by this Agreement, provided, however, that neither
Best nor Hiway shall be relieved or released from any liabilities or damages
arising out of its willful breach of any provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by the Board
of Directors of Best and the Board of Directors of Hiway, at any time before or
after approval of the matters presented in connection with the Merger by the
shareholders of Best or the shareholders of Hiway; provided, however, that after
any approval of the transactions contemplated by this Agreement by the
shareholders of Best or the shareholders of Hiway, there may not be, without
further approval of the shareholders of Best and Hiway, any amendment of this
Agreement which changes the amount or the form of the consideration to be
delivered to the shareholders of Hiway under this Agreement other than as
contemplated by this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties to this Agreement may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts of the other
parties to this Agreement, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or conditions
contained in this Agreement; provided, however, that after any approval of the
transactions contemplated by this Agreement by the shareholders of Best or the
shareholders of Hiway, there may not be, without further approval of the
shareholders of Best or Hiway, as applicable, any extension or waiver of this
Agreement or any portion thereof which reduces the amount or changes the form of
the consideration to be delivered to the shareholders of Hiway under this
Agreement other than as contemplated by this Agreement. Any agreement on the
part of a party to this Agreement to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such party, but
such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
47
ARTICLE IX
GENERAL PROVISIONS
------------------
9.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on June 1,
1998, unless extended by mutual agreement of the parties (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except as otherwise provided in Section 8.2 of this Agreement
and except for those covenants and agreements contained in this Agreement and in
any such instrument which by their terms apply in whole or in part after the
Effective Time.
9.3 Expenses. Except as otherwise expressly provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expense; provided, however, that the costs and expenses of printing and
mailing the Joint Proxy Statement shall be borne by Best.
9.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Best, to:
Best Internet Communications, Inc.
000 Xxxx Xxxxxxxxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx, CFO
Fax: 000-000-0000
Telephone: 000-000-0000
with copies to:
Fenwick & West LLP
Two Xxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxxxxx Xxxxx, Esq.
Fax: 000-000-0000
Telephone: 000-000-0000
and
48
The Xxxxxxx Law Firm
000 Xxxx Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Fax: 000-000-0000
Telephone: 000-000-0000
(b) if to Hiway, to:
Hiway Technologies, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, President
Fax: 000-000-0000
Telephone: 000-000-0000 x 0000
with copies to:
Steel Xxxxxx & Xxxxx LLP
0000 Xxxxxxxx Xxxxx Xxxx
000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. X'Xxxxx III, Esq.
Fax: 000-000-0000
Telephone: 000-000-0000
9.5 Jurisdiction; Service of Process. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the jurisdiction in
which the defendant's principal place of business is located (i.e., the State of
California, County of Santa Xxxxx or the United States District Court for the
Northern District of California for Best, and the State of Florida, County of
Palm Beach or the United States District Court for the Southern District of
Florida for Hiway), and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world.
9.6 Further Assurances. At the request of any party to this Agreement,
the other parties shall execute, acknowledge and deliver such other documents
and/or instruments as may be reasonably required by the requesting party to
carry out the purposes of this Agreement. If any party to this Agreement is
involved in litigation, threatened litigation or government inquiries with
respect to a matter covered by this Agreement, the other party to this Agreement
shall also make available to such party, at reasonable times and subject to the
reasonable requirements of its own businesses, such of its personnel as may have
information relevant to such matters, provided that such party shall reimburse
the providing party for its reasonable costs for employee time
49
incurred in connection therewith if more than one business day is required.
Following the Closing, the parties will cooperate with each other in connection
with tax audits and in the defense of any legal proceedings.
9.7 Remedies Cumulative. Unless expressly made the exclusive remedy by
the terms of this Agreement, all remedies provided for in this Agreement are
cumulative and shall be in addition to any and all other rights and remedies
provided by law and by any other agreements between the parties.
9.8 Presumptions. It is expressly acknowledged and agreed that all
parties have been represented by counsel and have participated in the
negotiation and drafting of this Agreement, and that there shall be no
presumption against any party on the ground that such party was responsible for
preparing this Agreement or any part of it.
9.9 Exhibits and Schedules. Each of the exhibits and schedules referred
to in, or attached to, this Agreement is an integral part of this Agreement and
is incorporated in this Agreement by this reference.
9.10 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." No provision of this
Agreement shall be construed to require Best, Hiway or any of their respective
Subsidiaries or Affiliates to take any action which would violate any applicable
law, rule or regulation.
9.11 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.12 Entire Agreement. This Agreement (including the documents and the
instruments referred to in this Agreement) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement.
9.13 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida, without regard to its
conflicts of law principles.
9.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or
50
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
9.15 Publicity. Except as otherwise required by applicable law, neither
Best nor Hiway shall, and Hiway shall not permit its Subsidiary to, issue or
cause the publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
9.16 Assignment; Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations shall be assigned by any of the
parties to this Agreement (whether by operation of law or otherwise) without the
prior written consent of the other parties to this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
Except as otherwise specifically provided in Section 6.8, this Agreement
(including the documents and instruments referred to in this Agreement) is not
intended to confer upon any person other than the parties to this Agreement any
rights or remedies under this Agreement.
9.17 Attorneys' Fees. If litigation is brought concerning this Agreement,
the prevailing party shall be entitled to receive from the non-prevailing party,
and the non-prevailing party shall upon final judgment and expiration of all
appeals immediately pay upon demand all reasonable attorneys' fees and expenses
of the prevailing party.
51
IN WITNESS WHEREOF, Best and Hiway have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
BEST INTERNET COMMUNICATIONS,
INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------------
Xxxxx Xxxxxx, President and Chief
Executive Officer
HIWAY TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------------------
Xxxxx X. Xxxxx, President
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
52
SCHEDULE OF EXHIBITS
--------------------
Exhibit A - Hiway Affiliate Letter Agreement
Exhibit B - Best Affiliate Letter Agreement
Exhibit C - Opinion of Hiway Counsel
Exhibit D - Opinion of Best Counsel
Exhibit E - Shareholder Buy-Sell Agreement
53
