AGREEMENT AND PLAN OF MERGER BY AND AMONG CONVERA CORPORATION B2BNETSEARCH, INC. AND FIRSTLIGHT ONLINE LIMITED Dated as of May 29, 2009
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Exhibit
2.1
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EXECUTION
VERSION
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AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
CONVERA
CORPORATION
B2BNETSEARCH,
INC.
AND
FIRSTLIGHT
ONLINE LIMITED
Dated
as of May 29, 2009
LIBNY/4821565.24 06/03/2009
EXECUTION
VERSION
AGREEMENT
AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER, dated as of May 29, 2009 (this “Agreement”), by and
among Convera Corporation, a Delaware corporation (“Convera”),
B2BNetSearch, Inc., a Delaware corporation and a wholly-owned subsidiary of
Convera (“B2B”), and Firstlight
Online Limited (“FL”).
RECITALS
WHEREAS, Convera (and certain
of its subsidiaries) will contribute prior to the Closing (as defined in Section 1.10) its
entire operating business to B2B by assignment of all of the operating assets
(other than cash, certain Intellectual Property (as defined in Section 3.17(l))
unrelated to its business and security deposits in connection with real estate
leases) and businesses of Convera (and certain of its subsidiaries), plus an
amount of cash as described in Section 2.2(a) hereof
to B2B, and B2B’s assumption of all of the liabilities from Convera (and certain
of its subsidiaries) pursuant to a contribution agreement to be entered into
between Convera (and certain of its subsidiaries) and B2B prior to the Closing
(the “Convera
Contribution Agreement”);
WHEREAS, FL, its parent
corporation Global News Net Ltd., a United Kingdom corporation (“GNN”), the
shareholders of GNN, and corporations being organized by FL, GNN or the
shareholders of GNN are restructuring their business and operations as provided
below in this Agreement as the “First Restructuring” (Section 1.4) and the
“Second Restructuring” (Section
1.5).
WHEREAS, the respective Boards
of Directors of the parties to this Agreement have each determined that it is
advisable and in the best interests of their respective stockholders that B2B
and Merger Sub (as defined in Section 1.5) merge
with each other pursuant to the terms and conditions of this Agreement, and, in
furtherance of such merger, such Boards of Directors have approved the merger of
B2B with and into Merger Sub (the “Merger”) in
accordance with the terms of this Agreement and the applicable provisions of the
General Corporation Law of the State of Delaware (the “DGCL”);
and
WHEREAS, the parties intend
for the Merger to be treated for U.S. federal income tax purposes as a taxable
transfer of assets by B2B to Merger Sub in a transaction not qualifying under
Section 368 of the Internal Revenue Code of 1986 (the “Code”), followed by a
liquidation of B2B into Convera (or subsidiary of Convera), with Convera (or
such subsidiary) retaining the tax attributes of B2B and the Convera affiliated
group (including any net operating carryovers)..
NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth below, the parties hereto agree as
follows:
ARTICLE
I.
THE
MERGER
1.1 The Merger. Subject
to the terms and conditions of this Agreement, at the Effective Time (as defined
in Section
1.2), B2B shall merge with and into Merger Sub in accordance with the
DGCL, the separate corporate existence of B2B shall cease, and Merger Sub shall
continue as the surviving corporation. Merger Sub, in its capacity as
the corporation surviving the Merger, is hereinafter sometimes referred to as
the “Surviving
Corporation.”
1.2 Effective Time. On
the Closing Date (as defined in Section 1.10), the
parties shall cause the Merger to be consummated by filing a duly executed and
delivered certificate of merger as required by the DGCL (the “Certificate of
Merger”) with the Secretary of State of the State of Delaware, in such
form as required by, and executed in accordance with the relevant provisions of,
the DGCL (the time of such filing being the “Effective
Time”).
1.3 Effect of the
Merger. At the Effective Time, the effect of the Merger shall
be as provided in this Agreement, the Certificate of Merger and Section 259 of
the DGCL.
1.4 First
Restructuring. FL is entering into, executing and delivering
this Agreement. GNN owns a majority of the issued and outstanding
shares of FL. GNN, FL, the shareholders of GNN, and entities being
organized by FL, GNN or GNN’s shareholders (any such entity so organized, the
“UK Surviving
Company”) are restructuring their business and operations under the laws
of the United Kingdom through the transfer and assignment of all their
businesses and assets and assumption of all the liabilities of FL or GNN or the
exchange of shares of stock of FL, GNN and the UK Surviving
Company. Upon the completion of the restructuring, the UK Surviving
Company will own all of the business and assets or all of the shares of the
capital stock of FL (the “UK
Restructuring”). The closing of the UK Restructuring will
occur on or before the Closing Date. Simultaneously with or prior to
the closing of the UK Restructuring, the UK Surviving Company will deliver to
Convera and B2B copies of the UK Restructuring agreements, assignments,
assumptions and other documents together with a joinder agreement in the form
attached hereto as Exhibit 1.4 under
which the UK Surviving Company will agree to be bound by all of FL’s duties and
obligations under the Agreement (the “Joinder
Agreement”). From and after the execution date of the Joinder
Agreement, the UK Surviving Company will be deemed to make, agree to and be
bound by all of the representations, warranties, covenants and agreements of FL
and receive the benefit of the representations, warranties, covenants and
agreements made by Convera and B2B contained in this Agreement and assume and be
responsible for all of the duties and obligations of FL under this Agreements as
if UK Surviving Company had been a party to this Agreement. For the
avoidance of any doubt, however, FL shall still be a party to this Agreement
after the date of the Joinder Agreement and remain jointly and severally liable
under this Agreement together with the UK Surviving Company.
1.5 Second
Restructuring. On or before the Closing, the UK Surviving
Company shall organize a wholly-owned subsidiary as a Delaware corporation or
under the laws of another jurisdiction to the extent mutually agreed upon by the
parties in writing (the “Company”) and
transfer and assign all of its business and assets to Company and Company shall
assume all of the liabilities and obligations of the UK Surviving Company or
exchange shares of stock of the UK Surviving Company for shares of
Company. Furthermore, the UK Surviving Company shall form a
wholly-owned direct subsidiary of Company as a Delaware corporation or under the
laws of another jurisdiction to the extent mutually agreed upon by the parties
(“Intermediary
Sub”) and a wholly-owned direct subsidiary of the Intermediary Sub as a
Delaware corporation or under the laws of another jurisdiction to the extent
mutually agreed upon by the parties (“Merger Sub”, together
with Company and Intermediary Sub, “FL
Subs”). Upon completion of the restructuring, Company directly
and/or through Merger Sub and Intermediary Sub will own all of the business and
assets or all of the shares of the capital stock of the UK Surviving Company
(the “Second
Restructuring”). The closing of the Second Restructuring will
occur on or before the Closing Date. Simultaneously with or prior to
the closing of the Second Restructuring, the UK Surviving Company and FL Subs
will deliver to Convera and B2B copies of the Second Restructuring agreements,
assignments, assumptions and other documents together with a Joinder Agreement
under which each of FL Subs will agree to be bound by all of the UK Surviving
Company’s duties and obligations under the Agreement. From and after
the date of the execution of such Joinder Agreement, each of FL Subs will be
deemed to make, agree to, be bound by all of the representations, warranties,
covenants and agreements of the UK Surviving Company and receive the benefit of
the representations, warranties, covenants and agreements made by Convera and
B2B contained in this Agreement and assume and be responsible for all of the
duties and obligations of UK Surviving Company under this Agreement as if each
of FL Subs has been a party to this Agreement. For the avoidance of
any doubt, however, the UK Surviving Company shall still be a party to this
Agreement after the date of the FL Subs sign the Joinder Agreement and remain
jointly and severally liable under this Agreement together with each of FL
Subs. The direct owners of Company Common Stock prior to the Merger
shall be collectively referred to herein as “Parent”.
1.6 Modification to
Structure. The parties agree that Convera shall have the right
to elect to modify the structure of the Merger so as to merge an additional or
alternate wholly-owned subsidiary of Convera into Merger Sub (and to amend such
provisions of this Agreement as appropriate in connection with such
modification). In addition, the parties agree, in the event that a
party reasonably determines that it is in the best interest of such party or of
those benefiting directly or indirectly from ownership of any part of its equity
capital, to modify the structuring of the transaction contemplated in this
Agreement (and to amend such other provisions of this Agreement as appropriate
in connection with such modification, including so as to maintain the same
commercial arrangements regarding liability assumption and indemnification) for
purposes of tax or financial efficiencies, taking into account all relevant
factors, and to cooperate with each other on the implementation of the
modification, so long as such modification is at least in aggregate not
materially adverse to the other party from the perspective of tax, financial and
liquidity of Company Common Stock.
1.7 Certificate of Incorporation of the
Surviving Corporation. At and after the Effective Time, the
Certificate of Incorporation of Merger Sub, as in effect immediately prior to
the Effective Time and with provisions to be mutually agreed upon by the
parties, shall be the Certificate of Incorporation of the Surviving Corporation,
until amended in accordance with the DGCL. The name of the Surviving
Corporation shall be mutually agreed upon by the parties in writing prior to the
Closing.
1.8 By-Laws of the Surviving
Corporation. At and after the Effective Time, the By-Laws of
Merger Sub, as in effect immediately prior to the Effective Time and with
provisions to be mutually agreed upon by the parties, shall be the By-Laws of
the Surviving Corporation, until amended in accordance with the Certificate of
Incorporation of the Surviving Corporation and the DGCL.
1.9 Directors
and Officers of Company and the Surviving Corporation.
(a) The
directors of Company and the Surviving Corporation immediately subsequent to the
Effective Time shall be as set forth on Exhibit 1.9(a)
and shall hold office from the Effective Time until their respective successors
are duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or By-Laws of Company and Surviving Corporation or
as otherwise provided by law.
(b) The
officers of Company and the Surviving Corporation immediately subsequent to the
Effective Time shall be as set forth on Exhibit 1.9(b)
and shall hold office from the Effective Time until their respective successors
are duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or By-Laws of Company and the Surviving Corporation
or as otherwise provided by law.
1.10 Closing. Subject to
the provisions of this Agreement, the closing of the Merger (the “Closing”) shall take
place at 10:00 a.m. New York time, at the New York offices of Xxxxxxx Procter
LLP, counsel to Convera and B2B, on a date to be specified by the parties which
shall be no later than the second business day after satisfaction or waiver of
each of the conditions set forth in Article VII (other
than the delivery of items to be delivered at Closing and other than those
conditions that by their nature are to be satisfied at the Closing, it being
understood that the occurrence of the Closing shall remain subject to the
delivery of such items and the satisfaction or waiver of such conditions at the
Closing) or on such other date and such other time and place as the parties
shall agree. The date on which the Closing shall occur is referred to
herein as the “Closing
Date.”
ARTICLE
II.
CONVERSION
AND EXCHANGE OF SECURITIES; ADDITIONAL MERGER CONSIDERATIONS
2.1 Conversion of Capital
Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder of any shares of common stock of
Company (“Company
Common Stock”) or any holder of any shares of common stock of B2B (“B2B Common
Stock”):
(a) B2B Common
Stock. Subject to this Article II, every two
shares of B2B Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive one (1) fully paid
and non-assessable share of Company Common Stock, at a par value per share to be
mutually agreed upon by the parties in writing, payable upon the surrender for
cancellation of a certificate or certificates which immediately prior to the
Elective Time represented all of the outstanding shares of B2B Common
Stock. All such shares of B2B Common Stock, when so converted, shall
no longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the shares of Company Common Stock pursuant to this Section 2.1(a),
neither B2B nor Company shall effect any stock split, reverse split,
reclassification, stock dividend, reorganization, recapitalization or other like
change with respect to B2B Common Stock or Company Common Stock after the date
of this Agreement and prior to the Effective Time.
(b) Company Common
Stock. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall be one (1) fully paid and nonassessable share of Company
Common Stock at a par value to be mutually agreed upon by the parties in
writing, immediately after the Effective Time.
(c) Conversion Ratio
Adjustment. The parties agree that their intent is,
immediately after the Closing, Convera will own one-third (1/3) of the total
issued and outstanding Company Common Stock and Parent will own two-thirds (2/3)
of the total issued and outstanding Company Common Stock. In the
event the Company does not have 1,000 shares of Company Common Stock issued and
outstanding immediately before the Effective Time, the parties agree that they
will adjust the conversion ratio in Sections 2.1(a) and
2.1(b) above to
carry out the intent of the parties as specified in this Section
2.1(c). The parties agree that in connection with the
distribution of Company Common Stock to Convera stockholders as contemplated in
Section 6.10,
if any, the Company will effect a stock split or another appropriate form of
recapitalization to allow a pro rata distribution of Company Common Stock to
Convera stockholders without fractional shares.
2.2 Additional
Transactions. In addition the conversion and exchange of stock
as set forth in Section 2.1, Convera
will take the following actions:
(a) Convera
covenants and agrees to fund B2B with $3,000,000 in cash prior to the Closing,
less $340,000 for the purpose of covering the potential liability described in
Section 4.12(e)
of Convera Disclosure Schedule, which amount will be subject to an escrow or
similar arrangement agreed upon by the parties and will be released upon the
extinguishment of Convera’s potential obligations (“Cash Funding”), which
Cash Funding shall remain assets of B2B at the Closing; provided, however, that in
the event that the Closing occurs later than sixty (60) days from the date of
this Agreement (the “Target Date”) for
reasons other than any delay of Convera stockholders to approve the Merger,
delay of the Closing as a result of review and comment by the SEC of the Merger
Proxy (as defined in Section 5.5(a)), and
due to no breach of any representation, warranties, covenant or other
obligations under this Agreement by Convera or B2B, the Cash Funding to be
provided by Convera will be reduced on a dollar-for-dollar basis by the amount
of the operating expenses of Convera and its Subsidiaries in connection with
business incurred subsequent to the Target Date, which will be no more than
$14,000 per day.
(b) Convera
covenants and agrees to provide Company with a $1,000,000 line of credit (the
“Line of
Credit”) effective immediately upon the Closing, subject to the following
terms and conditions. Company will be entitled to draw down the Line
of Credit, in whole at any time or in part from time to time, during a period
that is six (6) months following the Closing Date (the “Credit
Term”). Any portion of the Line of Credit that has been drawn
down (the “Draw-down
Amount”) by Company will accrue interest at an interest rate of ten
percent (10%) per annum (interest not to be compounded) and will become due and
payable by Company to Convera on the date that is one (1) year anniversary of
the date of the Closing Date; provided, however, that if
the principal and interest are not repaid in full by Company when due, the
interest rate will increase to fourteen percent (14%) per annum after the due
date. Company may pre-pay the Draw-down Amount in full or in part
upon a ten (10) days prior written notice to Convera. Convera will
have the right to convert all or any portion of the Draw-down Amount into
Company Common Stock at the following ratio at any time before the repayment of
the outstanding principal and interest in full:
(i) If
Convera chooses to convert the entire Line of Credit, Company will issue such
additional amount of shares of Company Common Stock to Convera so that as a
result of such issuance, Convera will own 42.5% of the total outstanding Company
Common Stock; provided,
however, that Convera’s
and Parent’s ownership percentage in Company will be subject to change upon a
private placement or other issuance of Company Common Stock or options to
purchase Company Common Stock; or
(ii) If
Convera chooses to convert less than the entire Line of Credit, Company will
issue such additional amount of shares of Company Common Stock that equals to
0.0000092% of the total outstanding Company Common Stock for each dollar of Line
of Credit that Convera chooses to convert; provided, however, that Convera’s and
Parent’s ownership percentage in Company will be subject to change upon a
private placement or other issuance of Company Common Stock or options to
purchase Company Common Stock.
(c) The
parties agree to treat the conversion of the Line of Credit into Company Common
Stock as a transaction on which no gain or loss is recognized for U.S. federal
income tax purposes.
2.3 Taking of Necessary Action; Further
Action. Each party will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If, at any
time after the Effective Time, any such further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Merger Sub and B2B, the officers
and directors of Merger Sub and B2B immediately prior to the Effective Time are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
2.4 Valuation.
(a) The
parties hereby agree as to the valuation of shares of Company Common Stock to be
received by Convera from Merger Sub as consideration for the Merger set forth
hereto as Schedule
2.4(a).
(b) The
parties hereby agree as to the valuation of shares of Company Common Stock to be
received by Parent from Merger Sub in exchange for the contribution of all of
the Parent’s business and assets to Company set forth hereto as Schedule
2.4(b).
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF FL
FL
represents and warrants to Convera and B2B that, except as set forth in the
written disclosure schedule prepared by FL which is dated as of the date of this
Agreement and arranged in sections corresponding to the numbered and lettered
sections contained in this Article III and was
previously delivered to Convera in connection herewith (the “FL Disclosure
Schedule”) (disclosure in any Section of the FL Disclosure Schedule shall
qualify only the corresponding Section in this Article III), as of
the date of this Agreement and as of the Closing Date, except where another date
is specified:
3.1 Organization and Qualification;
Subsidiaries. FL and each of its Subsidiaries is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority necessary to own, lease and operate the properties it owns, leases or
operates and the properties that is used for its business and to carry on its
business as it is now being conducted or presently proposed to be
conducted. FL and each of its Subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not reasonably be expected to have a
Material Adverse Effect. A true, complete and correct list of all of
FL’s Subsidiaries, together with the jurisdiction of incorporation of each
Subsidiary, the authorized capitalization of each Subsidiary, and the percentage
of each Subsidiary’s outstanding capital stock owned by the FL or another
Subsidiary or affiliate, is set forth in Section 3.1 of the FL
Disclosure Schedule. Except as set forth in Section 3.1 of the FL
Disclosure Schedule, neither FL nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity, excluding securities in any publicly traded
company held for investment by FL and any of its Subsidiaries and comprising
less than one percent (1%) of the outstanding stock of such
company.
3.2 Certificate of Incorporation and
By-Laws. FL has heretofore made available to Convera a true,
complete and correct copy of FL’s Articles of Association, as amended to date
(the “FL
Charter”), and By-Laws (or equivalent organizational documents), as
amended to date (the “FL By-Laws”), and has
made available to Convera true, complete and correct copies of the charter and
By-Laws (or equivalent organizational documents), each as amended to date, of
each of FL’s Subsidiaries (the “FL Subsidiary
Documents”). The FL Charter, FL By-Laws and the FL Subsidiary
Documents are in full force and effect. FL is not in violation of any
of the provisions of the FL Charter or FL By-Laws and FL’s Subsidiaries are not
in violation of their respective FL Subsidiary Documents.
3.3 Capitalization.
(a) The
authorized capital stock of FL consists of 100 ordinary shares, par value £1.0
per share, of FL (“FL
Ordinary Shares”). As of the date hereof, 100 FL Ordinary
Shares are issued and outstanding, of which 90 shares are owned by Global News
Net Ltd and 10 shares are owned by Jamara Holdings Limited. FL does
not have any stock purchase right or stock option plan and no FL Ordinary Shares
are reserved for issuance upon exercise of such rights or options; no shares of
FL Ordinary Shares are issued and held in the treasury of FL. Between
December 31, 2008 and the date of this Agreement, FL has not issued any
securities (including derivative securities). Immediately before the
Closing, 1,000 shares of Company Common Stock will be issued and outstanding,
unless otherwise mutually agreed upon the parties in writing. Neither
FL or any of its Subsidiaries has any stock purchase right or stock option plan
and no share of their capital stock are reserved for issuance upon exercise of
such rights or options; no shares of capital stock of FL or any of its
Subsidiaries are issued and held in its treasury. Between December
31, 2008 and the date of this Agreement, neither FL nor any of its Subsidiaries
have issued any securities (including derivative securities).
(b) Except as
described in Section
3.3(a) of this Agreement, no capital stock of FL or any of its
Subsidiaries or any security convertible or exchangeable into or exercisable for
such capital stock, is issued, reserved for issuance or outstanding as of the
date of this Agreement. There are, or at the Closing there will be,
no options, preemptive rights, warrants, calls, rights, commitments or
agreements of any kind to which FL or any of its Subsidiaries is a party, or by
which FL or any of its Subsidiaries is bound, obligating FL or any of it
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of FL or any of its Subsidiaries or
obligating FL or any of its Subsidiaries to grant, extend or accelerate the
vesting of or enter into any such option, warrant, call, right, commitment or
agreement. There are no stockholder agreements, voting trusts,
proxies or other similar agreements or understandings to which FL or any of its
Subsidiaries is a party or by which it or they are bound with respect to the
shares of capital stock of FL or any of its Subsidiaries. Except as
set forth in Section
3.3(b) of the FL Disclosure Schedule, there are no rights or obligations,
contingent or otherwise (including without limitation rights of first refusal in
favor of FL or any of its Subsidiaries), of FL or any of its Subsidiaries, to
repurchase, redeem or otherwise acquire any shares of capital stock of FL or any
of its Subsidiaries or to provide funds to or make any investment (in the form
of a loan, capital contribution or otherwise) in any such Subsidiary or any
other entity. There are no registration rights or other agreements or
understandings to which FL or any of its Subsidiaries is a party or by which it
or they are bound with respect to any capital stock of FL or any of its
Subsidiaries.
(c) All
outstanding shares of capital stock of FL and each of its Subsidiaries, are duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first refusal,
pre-emptive right, subscription right or any similar right under any provision
of the applicable law, its respective charter or bylaw documents or any
agreement to which it is a party or otherwise bound; free and clear of all
security interests, liens, claims, pledges, agreements, limitations in voting
rights, charges or other encumbrances of any nature whatsoever (collectively,
“Liens”). None
of the outstanding shares of capital stock of FL or any of its Subsidiaries have
been issued in violation of any federal, state or foreign securities
laws. No material change in the capitalization of FL or any of its
Subsidiaries has occurred since its inception. All of the outstanding
shares of capital stock of each of FL’s Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable, and all such shares are owned by
FL or a Subsidiary of FL free and clear of all Liens. There are no
accrued and unpaid dividends with respect to any outstanding shares of capital
stock of FL or any of its Subsidiaries.
3.4 Authority Relative to this
Agreement. FL has all necessary corporate power and authority
to execute and deliver this Agreement and each instrument required hereby to be
executed and delivered by it at the Closing and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery by FL of this Agreement and each instrument required
hereby to be executed and delivered at the Closing and the consummation by FL of
the transactions contemplated hereby have, or will have been upon the Closing,
duly and validly authorized by all necessary corporate action on its
part. This Agreement has been duly and validly executed and delivered
by FL and, assuming the due authorization, execution and delivery of this
Agreement by Convera and B2B, constitutes the legal, valid and binding
obligation of FL, enforceable against FL in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors’ rights generally and by general equitable
principles (regardless of whether enforceability is considered in a proceeding
in equity or at law). As of the date of this Agreement, the Board of
Directors of FL has unanimously determined that it is fair to, advisable and in
the best interests of their respective stockholders for them to enter into a
business combination with B2B upon the terms and subject to the conditions of
this Agreement, and FL’s stockholders have approved and adopted this Agreement
and the Merger, and none of the aforesaid actions by FL’s Board of Directors and
FL’s stockholders has been amended, rescinded or modified.
3.5 Anti-Takeover Statute Not
Applicable. No “business combination,” “price,” “moratorium,”
“control share acquisition” or other similar anti-takeover statute or regulation
under the laws of the State of Delaware (each a “Takeover Statute”) is
applicable to Company, the shares of Company Common Stock, the Merger or any of
the other transactions contemplated by this Agreement.
3.6 Agreements,
Contracts and Commitments.
(a) Except as
set forth in Section
3.6(a) of the FL Disclosure Schedule, neither FL nor any of its
Subsidiaries has any agreements, contracts or commitments (including but not
limited to end user license agreements) that (i) resulted in or will result
in (A) payments by FL or its Subsidiaries during fiscal years 2007, 2008 or
2009 (up to the date of this Agreement) or (B) payments to FL or its
Subsidiaries during the period beginning in fiscal year 2007 and ending as of
the date of this Agreement, in either case in excess of $25,000; or
(ii) which require the making of any charitable contribution in excess of
$25,000;
(b) No
purchase contracts or commitments of FL or any of its Subsidiaries continue for
a period of more than ninety (90) days or are in excess of its normal, ordinary
and usual requirements of the business;
(c) Except
for agreements: (i) for the purchase, sale, license,
distribution, maintenance or support of products of FL or any of its
Subsidiaries entered into in the ordinary course; (ii) under which FL or
any of its Subsidiaries made or received payments of less than $25,000 during
any 12 months period; or (iii) which do not provide for any term extension
or expansion of the rights granted with respect to FL Intellectual Property as a
result of the Merger, there are no contracts or agreements to which FL or any of
its Subsidiaries is a party that (a) do not expire or that FL or any
Subsidiary of FL may not terminate within one year after the date of this
Agreement or (b) may be renewed at the option of any person other than FL
or any of its Subsidiaries so as to expire more than one year after the date of
this Agreement.
(d) Neither
FL nor any of its Subsidiaries has any outstanding contract (i) with any
officer, employee, agent, consultant, advisor, salesman or sales representative
(other than the employment agreements in the ordinary course of business), or
(ii) other than with respect to any reseller, distribution, OEM or end user
license agreement for its products entered into in the ordinary course of
business, with any distributor or dealer that is not cancelable by it on notice
of 30 days or less and without material liability, penalty or
premium;
(e) Neither
FL nor any of its Subsidiaries is in default, nor is there any known basis for
any valid claim of default, under any contract made or obligation owed by it
except for such defaults that would not reasonably be likely to have a Material
Adverse Effect;
(f) Except as
set forth in Section
3.6(f) of the FL Disclosure Schedule, neither FL nor any of its
Subsidiaries has any employee to whom it is paying compensation at an annual
rate of more than $100,000 for services rendered;
(g) Neither
FL nor any of its Subsidiaries is restricted from carrying on its business in
any material respect anywhere in the world by any material agreement under which
it (i) is restricted from selling, licensing or otherwise distributing any
of its technology or products or providing services to customers or potential
customers or any class of customers, including without limitation resellers or
other distributors, in any geographic area, during any period of time, or in
segment of any market or line of business, (ii) is required to give favored
pricing to any customers or potential customers or any class of customers or to
provide exclusive or favored access to any product features to any customers or
potential customers or any class of customers, or (iii) has agreed to
purchase a minimum amount of goods or services or has agreed to purchase goods
or services exclusively from a certain party;
(h) Neither
FL nor any of its Subsidiaries has any liability or obligation with respect to
the return of inventory or merchandise in the possession of wholesalers,
distributors, resellers, retailers or other customers or cancellation of
services already prescribed and paid for by customers, except for such
obligations or liabilities that would not reasonably be likely to have a
Material Adverse Effect;
(i) Except as
set forth in Section
3.6(i) of the FL Disclosure Schedule, neither FL nor any of its
Subsidiaries has any debt obligation for borrowed money, including guarantees of
or agreements to acquire any such debt obligation of others;
(j) All the
indebtednesses, if any, from a shareholder of or otherwise an affiliate to FL or
any of its Subsidiaries have been converted into equity of FL or any of its
Subsidiaries, as the case may be, and each of FL and its Subsidiaries is free of
such indebtedness;
(k) Except as
set forth in Section
3.6(k) of the FL Disclosure Schedule, neither FL nor any of its
Subsidiaries has any contract for capital expenditures in excess of $25,000,
individually, or such contracts representing in excess of $100,000 in the
aggregate;
(l) Neither
FL nor any of its Subsidiaries has any contract, agreement or commitment
currently in force relating to the disposition or acquisition of assets not in
the ordinary course of business other than in connection with the UK
Restructuring or the Second Restructuring;
(m) Neither
FL nor any of its Subsidiaries has any contract, agreement or commitment for the
purchase of any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(n) Neither
FL nor any of its Subsidiaries has any outstanding loan to any person other than
to FL or a wholly owned Subsidiary of FL;
(o) Neither
FL nor any of its Subsidiaries has any power of attorney outstanding or any
obligations or liabilities (whether absolute, accrued, contingent or otherwise),
as guarantor, surety, co-signer, endorser, co-maker, indemnitor (other than
indemnities contained in agreements for the purchase, sale, license,
distribution, maintenance or support of products entered into in the ordinary
course of business) or otherwise in respect of any obligation of any person,
corporation, partnership, joint venture, association, organization or other
entity, or any capital maintenance, keep-well or similar agreements or
arrangements;
(p) Neither
FL nor any of its Subsidiaries has any agreements, contracts or arrangements
containing any provision requiring it to indemnify another party (other than
indemnities contained in agreements for the purchase, sale, license,
distribution, maintenance or support of products entered into in the ordinary
course of business) or containing any covenant not to bring legal action against
any third party;
(q) FL has
made available to Convera true, complete and correct copies of each contract
listed in Section
3.6(a) of the FL Disclosure Schedule (collectively, the “FL Material
Contracts”); and
(r) (i) Neither
FL nor any of its Subsidiaries has materially breached, is in material default
under, or has received written notice of any material breach of or material
default under, any FL Material Contract and such breach or default remains
uncured, (ii) to the knowledge FL, no other party to any FL Material
Contract has materially breached or is in material default of any of its
obligations thereunder which breach or default remains uncured, (iii) each
FL Material Contract is in full force and effect and (iv) each FL Material
Contract is a legal, valid and binding obligation of FL or any of its
Subsidiaries and, to the knowledge of FL, each of the other parties thereto,
enforceable in accordance with its terms, except that the enforcement thereof
may be limited by (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights generally and (B) general equitable
principles (regardless of whether enforceability is considered in a proceeding
in equity or at law).
3.7 No
Conflict; Required Filings and Consents.
(a) The
execution and delivery by FL of this Agreement do not, the execution and
delivery by FL of any instrument required hereby to be executed and delivered by
it at the Closing will not, and the performance of its agreements and
obligations under this Agreement by FL will not, (i) conflict with or
violate the FL Charter or FL By-Laws or any FL Subsidiary Documents,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to FL or any of its Subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default), or impair FL’s or any of its Subsidiaries’
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien on any of the properties or assets (including
intangible assets) of FL or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which FL or any of its Subsidiaries is a party
or by which FL or any of its Subsidiaries or its or any of their respective
properties is bound or affected, other than, in the case of (iii) above, such
conflict, violation, breach, default, impairment, rights of termination,
amendment, acceleration or cancellation, or Liens that would not be reasonably
expected to have a Material Adverse Effect.
(b) The
execution and delivery by FL of this Agreement do not, the execution and
delivery by FL of any instrument required hereby to be executed and delivered by
FL at the Closing will not, and the performance of agreements and obligations
under this Agreement by FL will not, require any consent, approval, order,
license, authorization, registration, declaration or permit of, or filing with
or notification to, any court, arbitrational tribunal, administrative or
regulatory agency or commission or other governmental authority or
instrumentality (whether domestic or foreign, a “Governmental
Entity”), except (i) the filing of the Certificate of Merger or
other documents as required by the DGCL, (ii) the consent as set forth in Section 3.7(b) of FL
Disclosure Schedule and (iii) such other consents, approvals, orders,
licenses, authorizations, registrations, declarations, permits, filings and
notifications which, if not obtained or made, would not reasonably be expected
to have a Material Adverse Effect.
3.8 Compliance;
Permits.
(a) FL and
its Subsidiaries are and have been in compliance with and are not in default or
violation of (and have not received any notice of non-compliance, default or
violation with respect to) any law, rule, regulation, order, judgment or decree
applicable to FL or any of its Subsidiaries or by which any of their respective
properties is bound or affected, and FL is not aware of any such non-compliance,
default or violation thereunder, where such non-compliance, default or violation
would be reasonably expected to have a Material Adverse Effect.
(b) Each of
FL and its Subsidiaries holds all permits, licenses, easements, variances,
exemptions, consents, certificates, authorizations, registrations, orders and
other approvals from Governmental Entities that are material to the operation of
the respective business of FL and its Subsidiaries taken as a whole as currently
conducted (collectively, the “FL Permits”) where
the failure to hold such FL Permits would be reasonably be expected to have a
Material Adverse Effect. The FL Permits are in full force and effect
and, to the best knowledge of FL, have not been violated in any material respect
and no suspension, revocation or cancellation thereof has been threatened, and
there is no action, proceeding or investigation pending or, to the knowledge of
FL, threatened, seeking the suspension, revocation or cancellation of any FL
Permits. No FL Permit shall cease to be effective as a result of the
consummation of the transactions contemplated by this Agreement.
3.9 Financial
Statements. Each of the unconsolidated financial statements of
FL and its Subsidiaries (including, in each case, any related notes and
schedules) provided by FL and audited by Hedley Dunk Limited, UK chartered
accountants and registered auditors, complies in all material respects with all
applicable accounting requirements and the published rules and regulations of
the relevant government authorities in their jurisdictions of organization, and
fairly presents the unconsolidated financial position of FL and its Subsidiaries
as of the dates thereof and the unconsolidated results of its operations and
cash flows for the periods indicated, except that any interim financial
statements are subject to normal and recurring year-end adjustments which have
not been and are not expected to be material in amount, individually or in the
aggregate. The unconsolidated balance sheets of FL and its
Subsidiaries for the fiscal year ended December 31, 2008, as audited by
Hedley Dunk Limited is referred to herein as the “FL Balance
Sheet.”
3.10 Absence of Certain Changes or
Events. From the December 31, 2008 to the Closing, FL and its
Subsidiaries (including all the UK Surviving Company and FL Subs after the
transactions contemplated in or by the UK Restructuring and the Second
Restructuring become effective) have and will have upon the Closing, conducted
their business in the ordinary course consistent with past practice and, since
such date, there has not occurred: (i) any change, development,
event or other circumstance, situation or state of affairs that has had or would
reasonably be expected to have a Material Adverse Effect; (ii) any
amendments to or changes in the FL Charter, FL By-Laws or FL Subsidiary
Documents; (iii) any damage to, destruction or loss of any asset of FL or
any of its Subsidiaries (whether or not covered by insurance) that would
reasonably be expected to have Material Adverse Effect; (iv) any sale or
disposal of a material amount of assets (tangible or intangible) of FL or any of
its Subsidiaries except as contemplated in or by the UK Restructuring or the
Second Restructuring; or (v) any other action or event that would have
required the consent of Convera and B2B pursuant to Section 5.1 had such
action or event occurred after the date of this Agreement.
3.11 No
Undisclosed Liabilities.
(a) Except as
reflected in the FL Balance Sheet, neither FL nor any of its Subsidiaries has
any liabilities (absolute, accrued, contingent or otherwise) which would be
required by the generally accepted accounting principles of United States
(“GAAP”) to be
set forth on a consolidated balance sheet of FL and its consolidated
subsidiaries or in the notes thereto, other than (i) any liabilities and
obligations incurred since fiscal year 2008 in the ordinary course of business
consistent with past practice, and (ii) liabilities that would not
reasonably be expected to have a Material Adverse Effect.
(b) Neither
FL nor any of its Subsidiaries is a party to, or has any commitment to become a
party to, any joint venture, partnership agreement or any similar contract
(including without limitation any contract relating to any transaction,
arrangement or relationship between or among FL or any of its Subsidiaries, on
the one hand, and any unconsolidated affiliate, including without limitation any
structured finance, special purpose or limited purpose entity or person, on the
other hand) where the purpose or intended effect of such arrangement is to avoid
disclosure of any material transaction involving FL or any of its Subsidiaries
in the FL Balance Sheet.
3.12 Absence of
Litigation. Except set forth in Section 3.12 of the
FL Disclosure Schedule, there are no claims, actions, suits, proceedings or, to
the knowledge of FL, governmental investigations, inquiries or subpoenas (other
than any actions, suits, proceedings, investigations, inquiries or subpoenas
challenging or otherwise arising from or relating to the Merger or any of the
other transactions contemplated by this Agreement) (a) pending against FL
or any of its Subsidiaries or any properties or assets of FL or of any of its
Subsidiaries, (b) to the knowledge of FL, threatened against FL or any of
its Subsidiaries, or any properties or assets of FL or of any of its
Subsidiaries, or (c) whether filed or threatened, that have been settled or
compromised by FL or any of its Subsidiaries within the three (3) years prior to
the date of this Agreement and at the time of such settlement or compromise were
material, other than, in the case of (i) through (iii) above, such claims,
actions, suits, proceedings, investigations, inquiries or subpoenas that would
not be reasonably likely to have a Material Adverse Effect. Neither
FL nor any Subsidiary of FL is subject to any outstanding order, writ,
injunction or decree that would reasonably be expected to be material or would
reasonably be expected to prevent or delay the consummation of the transactions
contemplated by this Agreement.
3.13 Employee
Benefit Plans, Options and Employment Agreements
(a) Section 3.13(a) of
the FL Disclosure Schedule sets forth a complete and accurate list of all
Employee Benefit Plans maintained, or contributed to, by FL or any of FL’s
Subsidiaries or to which FL or any of FL’s Subsidiaries is obligated to
contribute, or under which any of them has or may have any liability for
premiums or benefits (collectively, the “FL Employee
Plans”). For purposes of this Agreement, “Employee
Benefit Plan” means any employee benefit plan, employee pension plan or employee
welfare benefit plan, and any other written or oral plan, agreement or
arrangement involving direct or indirect compensation, including insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation and all
severance agreements, written or otherwise, for the benefit of, or relating to,
any current or former employee of an entity or any of its
subsidiaries.
(b) With
respect to each FL Employee Plan, FL has made available to Convera complete and
accurate copies of such FL Employee Plan (or a written summary of any
unwritten plan) together with all amendments and related documents.
(c) Each FL
Employee Plan has been administered in all material respects in accordance with
applicable laws and the regulations thereunder and in accordance with
its terms and each of the FL and FL’s Subsidiaries have in all material respects
met their obligations with respect to each FL Employee Plan and have timely made
all required contributions thereto.
(d) With
respect to FL Employee Plans, there are no material benefit obligations for
which contributions have not been made or properly accrued and there are no
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with the applicable accounting rules and
standards, on the financial statements of FL. Neither FL or any of
its Subsidiaries has any liability for benefits (contingent or otherwise) under
any FL Employee Plan, except as set forth in FL Balance Sheet. The
assets of each FL Employee Plan which is funded are reported at their fair
market value on the books and records of such Employee Benefit
Plan.
(e) No FL
Employee Plan has assets that include securities issued by the FL or any of FL’s
Subsidiaries.
(f) Each FL
Employee Plan is amendable and terminable unilaterally by FL and any of FL’s
Subsidiaries party thereto or covered thereby at any time without liability to
FL or any of its Subsidiaries as a result thereof, and no FL Employee Plan or
related plan documentation or agreement, summary plan description or other
written communication distributed generally to employees by its terms prohibits
FL or any of FL’s Subsidiaries party thereto or covered thereby from amending or
terminating any such FL Employee Plan, or in any way limits such
action.
(g) There is
no action, suit, proceeding, claim, arbitration, audit or, to the knowledge of
FL, investigation pending or, to the knowledge of FL, threatened, with respect
to any FL Employee Plan, other than claims for benefits in the ordinary course,
that would reasonably be expected to result in material liability to FL, to any
of its Subsidiaries, or to such FL Employee Plan. No FL Employee Plan
is or, to the knowledge of Entities, within the last three calendar years has
been, the subject of, examination by a government agency or a participant in a
government sponsored amnesty, voluntary compliance or similar program, nor has
FL or any of its Subsidiaries received notice that it is the subject of,
examination by a government agency or a participant in a government sponsored
amnesty, voluntary compliance or similar program.
(h) Section 3.13(h) of
the FL Disclosure Schedule contains (i) a true, complete and current list
of all independent contractors, and (ii) a description of the services each
independent contractor performs, and a copy of the agreement between each
independent contractor and FL and its Subsidiaries. To the knowledge
of FL, after due inquiry of the appropriate individuals, each individual who has
received compensation for the performance of services on behalf of FL or any of
FL’s Subsidiaries has been properly classified as an employee or independent
contractor in accordance with applicable law.
(i) Each FL
Employee Plan maintained in and outside the United States is in compliance, and
the books and records thereof are maintained in compliance, with all applicable
laws, rules and regulations of the jurisdiction in which such FL Employee Plan
is maintained. Section 3.13(i) of
the FL Disclosure Schedule lists each country in which FL or any of its
affiliates has operations and the number of employees in each such
country.
(j) Section 3.13(j) of
the FL Disclosure Schedule sets forth a true, complete and correct list of
(i) all employment or consulting agreements with employees of FL or any of
its Subsidiaries obligating FL or any of its Subsidiaries to make annual cash
payments in an amount equal to or exceeding $100,000 on an annual basis or
$25,000 in any one payment; (ii) all employees of FL or any of its
Subsidiaries who have executed a non-competition agreement with FL or any of its
Subsidiaries; (iii) all severance agreements, programs and policies of FL
or any of its Subsidiaries with or relating to its employees, in each case with
potential outstanding obligations equal to or exceeding $100,000 on an annual
basis or $25,000 in any one payment, excluding programs and policies required to
be maintained by law; and (iv) all plans, programs, agreements and other
arrangements of FL or any of its Subsidiaries with or relating to its employees
which contain change in control provisions including any such plans or
agreements providing for an increase in vesting of benefits by reason of the
transactions contemplated by this Agreement. True, complete and
correct copies of each of the foregoing agreements to which any employee of FL
or any of FL’s Subsidiaries is a party have been furnished to
Convera.
(k) Section 3.13(k) of
the FL Disclosure Schedule sets forth a true, complete and correct list of all
agreements pursuant to which the consummation of the transactions contemplated
by this Agreement will, either alone or in combination with another event,
(i) entitle any current or former employee or officer of FL or any
Subsidiary of FL to severance pay, unemployment compensation or any other
payment to which such employee or officer would not otherwise be or have been
entitled, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
3.14 Labor Matters. (a) FL and
each of its Subsidiaries are in compliance in all material respects with all
applicable laws respecting employment, employment practices and occupational
safety and health, terms and conditions of employment and wages and hours, and
are not engaged in any unfair labor practices; (b) there are no
controversies pending or, to the knowledge of FL, threatened, between FL or any
of its Subsidiaries and any of their respective employees, consultants or
independent contractors, which controversies would reasonably be expected to
have a Material Adverse Effect; (c) neither FL nor any of its Subsidiaries
is a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by FL or its Subsidiaries, nor does FL or any of
its Subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (d) there are no and neither FL nor any of
its Subsidiaries has any knowledge of any labor disputes, strikes, slowdowns,
work stoppages, lockouts, or threats thereof, by or with respect to any
employees of, or consultants or independent contractors to, FL or any of its
Subsidiaries. To the knowledge of FL, no employee of FL or any of its
Subsidiaries is in violation of any term of any patent disclosure agreement,
non-competition agreement, or any restrictive covenant to a former employer
relating to the right of any such employee to be employed by FL or any of its
Subsidiaries because of the nature of the business conducted or presently
proposed to be conducted by FL or any of its Subsidiaries or to the use of trade
secrets or proprietary information of others or, in the case of any key employee
or group of key employees, has given notice as of the date of this Agreement to
FL or any of its Subsidiaries that such employee or any employee in a group of
key employees intends to terminate his or her employment.
3.15 Properties;
Encumbrances. Except as set forth in Section 3.15 of the
FL Disclosure Schedule, each of FL and each of its Subsidiaries has good, valid
and marketable title to, or a valid leasehold interest in, all the properties
and assets which it purports to own or lease and all the properties and assets
which are used for the business of FL or any of its Subsidiaries (real, personal
and mixed, tangible and intangible), including, without limitation, all the
properties and assets reflected in FL Balance Sheet (except for personal
property sold since the date of the FL Balance Sheet in the ordinary course of
business consistent with past practice). All properties and assets
reflected in the FL Balance Sheet are free and clear of all Liens, except for
Liens reflected on the FL Balance Sheet and Liens for current taxes not yet due
and other Liens that do not materially detract from the value or impair the use
of the property or assets subject thereto. Section 3.15 of the
FL Disclosure Schedule sets forth a true, complete and correct list of all real
property owned, leased, subleased or licensed by FL and the location of such
premises. Each of FL and each of its Subsidiaries is and has been in
compliance with the material provisions of each lease or sublease for the real
property which is set forth in Section 3.15 of the
FL Disclosure Schedule.
3.16 Taxes.
(a) For
purposes of this Agreement, “Tax” or “Taxes” shall mean taxes, fees,
assessments, liabilities, levies, duties, tariffs, imposts and governmental
impositions or charges of any kind in the nature of (or similar to) taxes,
payable to any federal, state, local or foreign taxing authority, or any agency
or subdivision thereof, including without limitation (i) income, franchise,
profits, gross receipts, ad valorem, net worth, value added, sales, use,
service, real or personal property, special assessments, capital stock, license,
payroll, withholding, employment, social security, workers’ compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, and
(ii) interest, penalties, fines, additional taxes and additions to tax
imposed with respect thereto; and “Tax Returns” shall mean returns, reports and
information statements with respect to Taxes required to be filed with a taxing
authority, domestic or foreign, including without limitation, consolidated,
combined or unitary tax returns and any amendments to any of the
foregoing.
(b) FL and
each of its Subsidiaries have filed with the appropriate taxing authorities all
Tax Returns required to be filed by them. All Taxes due and owing by
FL and its Subsidiaries have been timely paid. There are no Tax Liens
on any assets of FL or any Subsidiary thereof other than liens relating to Taxes
not yet due and payable. Neither FL nor any of its Subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The accruals
and reserves for Taxes (exclusive of any accruals for “deferred taxes” or
similar items that reflect timing differences between tax and financial
accounting principles) reflected in the FL Balance Sheet are adequate to cover
all Taxes accruable through the date thereof (including interest and penalties,
if any, thereon and Taxes being contested). All liabilities for Taxes
attributable to the period commencing on the date following the date of the FL
Balance Sheet were incurred in the ordinary course of business and are
consistent in type and amount with Taxes attributable to similar prior
periods.
(c) FL and
each of its Subsidiaries have withheld with respect to its employees all Taxes
required to be withheld by applicable law, and neither FL nor any of its
Subsidiaries has been delinquent in the payment of any Tax. Neither
FL nor any of its Subsidiaries has received any written notice of any Tax
deficiency outstanding, proposed or assessed against FL or any of its
Subsidiaries. Neither FL nor any of its Subsidiaries has received any
written notice of any audit examination, deficiency, refund litigation, proposed
adjustment or matter in controversy with respect to any Tax Return of FL or any
of its Subsidiaries. Neither FL nor any of its Subsidiaries is a
party to or bound by any tax indemnity, tax sharing or tax allocation
agreements. Neither FL nor any of its Subsidiaries is liable for the
Taxes of any person (other than those of FL and its Subsidiaries) by contract or
otherwise.
(d) FL has
made available to Convera (i) complete and correct copies of all Tax
Returns, examination reports and statements of deficiencies assessed against or
agreed to by FL or any of its Subsidiaries with respect to the prior five (5)
taxable years, and (ii) written schedules of (A) the taxable years of
FL and each Subsidiary for which the statute of limitations with respect to
income Taxes have not expired, (B) with respect to income Taxes of FL and
each Subsidiary, those years for which examinations have been completed, those
years for which examinations are presently being conducted, those years for
which examinations have not yet been initiated and those years for which
required Tax Returns have not yet been filed, and (C) the foreign countries
in which FL or any of its Subsidiaries is subject to income tax.
3.17 Intellectual
Property.
(a) Section 3.17(a) of
the FL Disclosure Schedule sets forth a true, complete and correct list of all
U.S. and foreign (i) patents and pending patent applications, including any
utility models and similar patents, owned by FL or any of its Subsidiaries as of
the date of this Agreement (ii) trademark registrations (including internet
domain registrations) and pending trademark applications owned by FL or any of
its Subsidiaries as of the date of this Agreement; and (iii) copyright
registrations and pending copyright applications owned by FL or any of its
Subsidiaries as of the date of this Agreement (collectively the “Registered FL Intellectual
Property”).
(b) Immediately
before the Closing, Company or one or more of its Subsidiaries will own, or will
have a valid right to use, all of the Intellectual Property that is used in the
business of FL and its Subsidiaries as currently conducted (the “FL Intellectual
Property”). The FL Intellectual Property is all the
intellectual property that is used and useful in the business of FL or any of
its Subsidiaries, and all the FL Intellectual Property is owned solely by FL or
one of its Subsidiaries and will be solely owned by Company or one of its
Subsidiaries at the Closing.
(c) The
Registered FL Intellectual Property is valid and subsisting (except with respect
to applications), and has not expired or been cancelled, or
abandoned.
(d) There is
no pending or, to the knowledge of FL, threatened (and at no time within the
three (3) years prior to the date of this Agreement has there been pending any)
material suit, arbitration or other adversarial proceeding before any court,
government agency or arbitral tribunal or in any jurisdiction alleging that the
activities or the conduct of FL’s or any of its Subsidiaries’ business infringe
or misappropriate any Intellectual Property owned by any third party (“Third Party Intellectual
Property”), or challenging the ownership, validity, enforceability or
registerability of any FL Intellectual Property. Neither FL nor any
of its Subsidiaries is, as a result of any suits, actions or similar legal
proceedings, a party to any settlements, covenants not to xxx, consents,
decrees, stipulations, judgments, or orders which (i) materially restrict
FL’s or any of its Subsidiaries’ rights to use any FL Intellectual Property,
(ii) materially restrict FL or any of its Subsidiaries from conducting its
business as currently conducted in order to avoid infringement of any Third
Party Intellectual Property, or (iii) permit third parties to use any FL
Intellectual Property.
(e) The
conduct of the business of FL and its Subsidiaries as currently conducted does
not infringe in any material respect upon any Third Party Intellectual
Property. To the knowledge of FL, no third party is misappropriating,
infringing, diluting or violating any FL Intellectual Property that is material
to the conduct of the business of FL and its Subsidiaries as currently
conducted, and no intellectual property misappropriation, infringement dilution
or violation suits, arbitrations or other adversarial proceedings have been
brought before any court, government agency or arbitral tribunal against any
third party by FL or any of its Subsidiaries which remain
unresolved.
(f) FL and
its Subsidiaries have taken reasonable measures to protect the proprietary
nature of FL Intellectual Property that is material to the business of FL or any
of its Subsidiaries as currently conducted. To the knowledge of FL,
there has been no disclosure to any third party by FL or any of its Subsidiaries
of material confidential information or trade secrets of FL or any of its
Subsidiaries related to any material proprietary product currently being
marketed, sold, licensed or developed by FL or any of its Subsidiaries (each
such product, a “FL
Proprietary Product”) other than disclosures made pursuant to
nondisclosure or confidentiality agreements entered into by FL or any of its
Subsidiaries in the ordinary course of business.
(g) All
employees of FL and its Subsidiaries who have made material contributions to the
development of any FL Proprietary Product (including without limitation all
employees who have designed, written, tested or worked on any software code
contained in any FL Proprietary Product) have signed confidentiality,
non-competition (unless prohibited by applicable law) and assignment of
proprietary rights agreements substantially in one of the forms attached to
Section 3.17(g)
of the FL Disclosure Schedule, or will make such assignment as of the Closing
Date. All consultants and independent contractors who have made
material contributions to the development of any FL Proprietary Product
(including without limitation all consultants and independent contractors who
have designed, written, tested or worked on any software code contained in any
FL Proprietary Product) have assigned to FL or one or more of its Subsidiaries
(or a third party that previously conducted any business currently conducted by
FL or one or more of its Subsidiaries and that has assigned its rights in such
FL Proprietary Product to FL or one or more of its Subsidiaries) all of their
right, title and interest (other than moral rights, if any) in and to the
portions of such FL Proprietary Product developed by them in the course of their
work for FL or one or more of its Subsidiaries (or applicable third party) or
will make such assignment as of the Closing Date. Assignments of the
patents and patent applications listed in Section 3.17(a) of
the FL Disclosure Schedule to FL or one or more of its Subsidiaries have been
duly executed and filed with the United States Patent and Trademark Office or
will be duly executed and filed with the United States Patent and Trademark
Office as of the Closing Date.
(h) Neither
FL nor any of its Subsidiaries has granted or is obligated to grant access to
any of its source code (including without limitation in any such case any
conditional right to access or under which FL or any of its Subsidiaries has
established any escrow arrangement for the storage and conditional release of
any of its source code).
(i) None of
the FL Proprietary Products contains any software code that is, in whole or in
part, subject to the provisions of any license to software that is made
generally available to the public without requiring the payment of any fees or
royalties (including but not limited to the GNU General Public License (“GPL”), GNU Lesser
General Public License (“LGPL”), Mozilla
Public License (“MPL”, BSD licenses,
and any other similar “free software” or “open source” licenses), including but
not limited to any such license under which FL or any of its Subsidiaries is
obligated to make the source code for such FL Proprietary Product generally
available to the public free of charge.
(j) Except as
set forth in Section
3.17(j) of the FL Disclosure Schedule, neither FL nor any of its
Subsidiaries has any obligation to pay any third party any royalties or other
fees in excess of $25,000 in one payment or for any three-month period for the
use of FL Intellectual Property or otherwise and no obligation to pay such
royalties or other fees will result from the consummation of the transactions
contemplated by this Agreement.
(k) (i) Neither
FL nor any of its Subsidiaries is in violation of any license, sublicense or
other agreement or instrument related to the FL Intellectual Property to which
FL or any of its Subsidiaries is a party or is otherwise bound; (ii) the
consummation by FL of the transactions contemplated hereby will not result in
any loss or impairment of ownership by FL or any of its Subsidiaries of, or the
right of any of them to use (or result in any term extension or expansion of the
rights granted to any third party in or to), any FL Intellectual Property that
is material to the business FL or any of its Subsidiaries as currently
conducted; (iii) the consummation by FL of the transactions contemplated
hereby will not require the consent of any third party or any Governmental
Entity, with respect to any such Intellectual Property.
(l) For
purposes of this Agreement, “Intellectual
Property” shall mean trademarks, service marks, trade names, and internet
domain names, together with all goodwill, registrations and applications related
to the foregoing; patentable inventions, patents and industrial design
registrations or applications (including any continuations, divisionals,
continuations-in-part, renewals, reissues, re-examinations and applications for
any of the foregoing); works of authorship protected by copyright; copyrights
(including any registrations and applications for any of the foregoing);
proprietary data and databases; mask works rights and trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, and methodologies.
3.18 Insurance. All fire
and casualty, general liability, business interruption, product liability,
sprinkler and water damage insurance policies and other forms of insurance
maintained by FL or any of its Subsidiaries, provide adequate coverage for all
normal risks incident to the business of FL and its Subsidiaries and their
respective properties and assets and are in character and amount and with such
deductibles and retained amounts as are generally carried by persons engaged in
similar businesses and subject to the same or similar perils or
hazards. Each such policy is in full force and effect and all
premiums due thereon have been paid in full. None of such policies
shall terminate or lapse (or be affected in any other materially adverse manner)
by reason of the consummation of the transactions contemplated by this
Agreement.
3.19 Restrictions on
Business. Except for this Agreement, there is no agreement,
judgment, injunction, order or decree binding upon FL or any of its Subsidiaries
which has or could reasonably be expected to have the effect of prohibiting or
impairing any business practice of FL or any of its Subsidiaries, acquisition of
property by FL or any of its Subsidiaries or the conduct of business by FL or
any of its Subsidiaries as currently conducted or as proposed to be conducted by
FL or any of its Subsidiaries.
3.20 SEC Reports. The
information supplied or to be supplied by FL or any of its Subsidiaries for
inclusion in the SEC Reports (as defined in Section 4.9(a))
and the information supplied or to be supplied by FL or any of its Subsidiaries
for inclusion or incorporation by reference in the information statement or
proxy materials which shall constitute the proxy statement (such information
statement, proxy statement, and any amendments or supplements thereto, the
“Proxy
Statement”) to be sent to the stockholders of Convera in connection with
a meeting of stockholders of Convera (“Convera Stockholders’
Meeting”) to consider the Merger shall not at the time the SEC Reports
are filed with the SEC or the Proxy Statement is sent to the stockholders
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time prior to Convera Stockholders’ Meeting,
any event relating to FL, any of FL’s Subsidiaries or any of its respective
affiliates, officers or directors should be discovered FL which should be set
forth in an amendment to the SEC Reports or a supplement to the Proxy Statement,
FL shall promptly inform Convera and B2B. Notwithstanding the
foregoing, FL make no representation or warranty with respect to any information
supplied by Convera which is contained in any of the foregoing
documents.
3.21 Interested Party
Transactions. Except as set forth in Section 3.21 of the
FL Disclosure Schedule, no event relating to FL or any of its Subsidiaries has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction pursuant to Statement of Financial Accounting Standards No.
57.
3.22 Change of Control
Payments. Except as set forth in Section 3.22 of the
FL Disclosure Schedule, neither FL nor any of its Subsidiaries has any plans,
programs or agreements to which FL or any Subsidiary is party, or to which
either is subject, pursuant to which payments (or acceleration of benefits or
vesting of options or lapse of repurchase rights) may be required upon, or may
become payable directly or indirectly as a result of, the transactions
contemplated by this Agreement or any other change of control of FL or any of
its Subsidiaries.
3.23 No Existing
Discussions. Neither FL nor any of its Subsidiaries or
affiliates is engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to any inquiry, proposal or offer
from any person relating to any direct or indirect acquisition or purchase of a
business that constitutes 50% or more of the net revenues, net income or the
non-cash assets of FL or any of its Subsidiaries and affiliates, taken as a
whole, or 50% or more of any class of equity securities of any of the above
entities, any tender offer or exchange offer that, if consummated, would result
in any person beneficially owning 50% or more of any class of equity securities
of any of the above entities, or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving any of the above entities, other than the transactions contemplated by
this Agreement.
3.24 Firstlight Restructuring
Documents. At the time of execution of the documents to affect
the UK Restructuring and the Second Restructuring, the Joinder Agreement and
each instrument required thereby to be executed and delivered by FL, the UK
Surviving Company and FL Subs at the closing of the transaction contemplated
thereby (the “Firstlight Restructuring
Documents”), each of FL, the UK Surviving Company and FL Subs will have
all necessary corporate power and authority to execute and deliver the
Firstlight Restructuring Documents and to perform their respective obligations
hereunder and to consummate the transactions contemplated
thereby. Upon its execution and delivery, the execution and delivery
by FL, the UK Surviving Company and the Firstlight Restructuring Documents and
the consummation by them of the transactions contemplated thereby will have been
duly and validly authorized by all necessary corporate action on the part of FL,
the UK Surviving Company and FL Subs. Upon their execution and
delivery, the Firstlight Restructuring Documents will have been duly and validly
executed and delivered by FL, the UK Surviving Company and FL Subs and execution
and delivery of the Firstlight Restructuring Documents will constitute the
legal, valid and binding obligation of FL, the UK Surviving Company and FL Subs,
enforceable against FL, the UK Surviving Company and FL Subs in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights generally and by
general equitable principles (regardless of whether enforceability is considered
in a proceeding in equity or at law).
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES
OF
CONVERA AND B2B
Each of
Convera and B2B jointly and severally represents and warrants to FL that, except
as set forth in the written disclosure schedule prepared by Convera and B2B
which is dated as of the date of this Agreement and arranged in sections
corresponding to the numbered and lettered sections contained in this Article IV and was
previously delivered to FL in connection herewith (the “Convera Disclosure
Schedule”) (disclosure in any Section of the Convera Disclosure Schedule
shall qualify only the corresponding Section in this Article IV) and the
SEC Reports, as of the date of this Agreement and as of the Closing Date, except
where another date is specified:
4.1 Organization and Qualification;
Subsidiaries. Convera and each of its Subsidiaries is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has the requisite corporate power and
authority necessary to own, lease and operate the properties it owns, leases or
operates and the properties that are used in its business and to carry on its
business as it is now being conducted or presently proposed to be
conducted. Convera and each of its Subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not reasonably be expected to have a
Material Adverse Effect. A true, complete and correct list of all of
Convera’s Subsidiaries, together with the jurisdiction of incorporation of each
Subsidiary, the authorized capitalization of each Subsidiary, and the percentage
of each Subsidiary’s outstanding capital stock owned by Convera or another
Subsidiary or affiliate, is set forth in Section 4.1 of the
Convera Disclosure Schedule. Except as set forth in the SEC Reports,
neither B2B nor any of its Subsidiaries directly or indirectly owns any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
limited liability company, joint venture or other business association or
entity, excluding securities in any publicly traded company held for investment
by B2B or any of its Subsidiaries and comprising less than one percent (1%) of
the outstanding stock of such company.
4.2 Certificate of Incorporation and
By-Laws. Convera has heretofore made available to FL a true,
complete and correct copy of Convera’s Certificate of Incorporation, as amended
to date (the “Convera
Charter”), and By-Laws, as amended to date (the “Convera By-Laws”),
and has made available to FL true, complete and correct copies of the charter
and By-Laws (or equivalent organizational documents), each as amended to date,
of each of Convera’s Subsidiaries (the “Convera Subsidiary
Documents”). The Convera Charter, Convera By-Laws and the
Subsidiary Documents are in full force and effect. Convera is not in
violation of any of the provisions of Convera Charter or Convera By-Laws and
Convera’s Subsidiaries are not in violation of their respective Convera
Subsidiary Documents.
4.3 Capitalization.
(a) The
authorized capital stock of Convera consists of 100,000,000 shares of Class A
common stock, par value $0.01 per share, 40,000,000 shares of Class B non-voting
common stock, par value $0.01 per share, and 5,000,000 shares of cumulative
convertible preferred stock, par value $0.01 per share. As of the
date hereof, 53,157,738 shares of Class A common stock are issued and
outstanding, and no shares of Class B non-voting common stock or cumulative
convertible preferred stock are issued or outstanding. Other than as
disclosed in the SEC Reports, Convera does not have any stock purchase right or
stock option plan and 3,594,151 shares of Class A common
stock are reserved for issuance upon exercise of such rights or options; 656,555
shares of Class A common stock are issued and held in the treasury of
Convera. Between December 31, 2008 and the date of this Agreement,
neither Convera nor any of its Subsidiaries have issued any securities
(including derivative securities).
(b) The
authorized capital stock of B2B consists of 1,000 shares of B2B Common
Stock. As of the Closing Date, 1,000 shares of B2B Common Stock will
be issued and outstanding unless otherwise mutually agreed by the parties in
writing. B2B does not have any stock purchase right or stock option
plan and no share of B2B Common Stock are reserved for issuance upon exercise of
such rights or options; no shares of B2B Common Stock are issued and held in the
treasury of B2B. Between December 31, 2008 and the date of this
Agreement, B2B has not issued any securities (including derivative
securities).
(c) Except as
described in Sections
4.3(a) and 4.3(b) of this
Agreement, no capital stock of Convera or any of its Subsidiaries or any
security convertible or exchangeable into or exercisable for such capital stock,
is issued, reserved for issuance or outstanding as of the date of this
Agreement. At the Closing Date, there will be no options, preemptive
rights, warrants, calls, rights, commitments or agreements of any kind to which
Convera or any of its Subsidiaries is a party, or by which Convera or any of its
Subsidiaries is bound, obligating Convera or any of it Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of Convera or any of its Subsidiaries or obligating Convera or any
of its Subsidiaries to grant, extend or accelerate the vesting of or enter into
any such option, warrant, call, right, commitment or agreement. There
are no stockholder agreements, voting trusts, proxies or other similar
agreements or understandings to which Convera or any of its Subsidiaries is a
party or by which it or they are bound with respect to the shares of capital
stock of Convera or any of its Subsidiaries. Except as set forth in
Section 4.3(c)
of the Convera Disclosure Schedule, there are no rights or obligations,
contingent or otherwise (including without limitation rights of first refusal in
favor of Convera or any of its Subsidiaries), of Convera or any of its
Subsidiaries, to repurchase, redeem or otherwise acquire any shares of capital
stock of Convera or any of its Subsidiaries or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such Subsidiary or any other entity. There are no registration rights
or other agreements or understandings to which Convera or any of its
Subsidiaries is a party or by which it or they are bound with respect to any
capital stock of Convera or any of its Subsidiaries.
(d) All
outstanding shares of capital stock of Convera and each of its Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable and not subject to
or issued in violation of any purchase option, call option, right of first
refusal, pre-emptive right, subscription right or any similar right under any
provision of the DGCL, Convera Charter, Convera By-Laws or any Convera
Subsidiary Documents or any agreement to which Convera or any of its
Subsidiaries is a party or otherwise bound. None of the outstanding
shares of capital stock of Convera or any of its Subsidiaries have been issued
in violation of any federal or state securities laws. Other than
disclosed in the SEC Reports, no material change in capitalization of Convera or
any of its Subsidiaries has occurred since its inception. All of the
outstanding shares of capital stock of each of Convera’s Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and all such shares
are owned by Convera or a Subsidiary of Convera free and clear of all
Liens. There are no accrued and unpaid dividends with respect to any
outstanding shares of capital stock of Convera or any of its
Subsidiaries.
4.4 Authority Relative to this
Agreement. Subject only to the approval of Convera’s
stockholders as described below, Convera and B2B have all necessary corporate
power and authority to execute and deliver this Agreement and each instrument
required hereby to be executed and delivered by Convera and B2B at the Closing
and to perform their respective obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery by
Convera and B2B of this Agreement and each instrument required hereby to be
executed and delivered at the Closing by Convera and B2B and the consummation by
Convera and B2B of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Convera and
B2B, subject only to the approval of this Agreement and the Merger by Convera’s
stockholders by the affirmative vote of the holders of a majority of outstanding
shares of Convera’s common stock, par value $0.01 per share (“Convera Common
Stock”) as required by the DGCL and Convera’s Amended and Restated
Certificate of Incorporation. This Agreement has been duly and
validly executed and delivered by Convera and B2B and, assuming the due
authorization, execution and delivery of this Agreement and the Joinder
Agreement by FL, the UK Surviving Company and FL Subs, constitutes the legal,
valid and binding obligation of Convera and B2B, enforceable against Convera and
B2B in accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors’ rights
generally and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law). As
of the date of this Agreement, the Board of Directors of Convera has unanimously
determined that it is fair to, advisable and in the best interests of Convera’s
stockholders for B2B to enter into a business combination with Merger Sub upon
the terms and subject to the conditions of this Agreement, and has unanimously
recommended that Convera’s stockholders approve and adopt this Agreement and the
Merger, and, unless notice thereof has been given to FL in the manner required
by this Agreement, none of the aforesaid actions by Convera’s Board of Directors
has been amended, rescinded or modified.
4.5 Anti-Takeover Statute Not
Applicable. No Takeover Statute is applicable to Convera, the
shares of Convera’s Class A common xxxxx, X0X, the shares of B2B Common Stock,
the Merger or any of the other transactions contemplated by this
Agreement.
4.6 Agreements,
Contracts and Commitments.
(a) Except as
set forth in Section
4.6(a) of the Convera Disclosure Schedule, neither Convera nor any of its
Subsidiaries has any material agreements, contracts or commitments (including
but not limited to end user license agreements) that are not disclosed in the
SEC Reports;
(b) Except as
set forth in Section
4.6 of the Convera Disclosure Schedule, no purchase contracts or
commitments of Convera or any of its Subsidiaries continue for a period of more
than ninety (90) days or are in excess of the normal, ordinary and usual
requirements of its business;
(c) Except
for agreements: (i) for the purchase, sale, license,
distribution, maintenance or support of the products of Convera or any of its
Subsidiaries entered into in the ordinary course under which Convera or any
of its Subsidiaries made or received payments of less than $25,000 during any 12
months period; or (ii) which do not provide for any term extension or
expansion of the rights granted with respect to Convera Intellectual Property as
a result of the Merger, there are no contracts or agreements to which Convera or
any of its Subsidiaries is a party that (a) do not expire or
that Convera or any of its Subsidiaries may not terminate within one year after
the date of this Agreement or (b) may be renewed at the option of any
person other than Convera or any of its Subsidiaries so as to expire more than
one year after the date of this Agreement.
(d) Neither
Convera nor any of its Subsidiaries has any outstanding contract (i) with
any officer, employee, agent, consultant, advisor, salesman or sales
representative (other than employment agreement in the ordinary course of
business or disclosed in SEC Reports), or (ii) other than with respect to
any reseller, distribution, OEM or end user license agreement for the products
of Convera or any of its Subsidiaries entered into in the ordinary course of
business, with any distributor or dealer that is not cancelable by it on notice
of 30 days or less and without material liability, penalty or
premium;
(e) Except as
disclosed in SEC Reports, neither Convera nor any of its Subsidiaries is in
default, nor is there any known basis for any valid claim of default, under any
contract made or obligation owed by it except for such defaults that would not
reasonably be likely to have a Material Adverse Effect;
(f) Except as
disclosed in the SEC Reports and Section 4.6(f) of
Convera Disclosure Schedule, neither Convera nor any of its Subsidiaries has any
employee to whom it is paying compensation at an annual rate of more than
$100,000 for services rendered;
(g) Neither
Convera nor any of its Subsidiaries is restricted from carrying on its business
in any material respect anywhere in the world by any material agreement under
which Convera or any of its Subsidiaries (i) is restricted from selling,
licensing or otherwise distributing any of its technology or products or
providing services to customers or potential customers or any class of
customers, including without limitation resellers or other distributors, in any
geographic area, during any period of time, or in segment of any market or line
of business, (ii) is required to give favored pricing to any customers or
potential customers or any class of customers or to provide exclusive or favored
access to any product features to any customers or potential customers or any
class of customers, or (iii) has agreed to purchase a minimum amount of
goods or services or has agreed to purchase goods or services exclusively from a
certain party;
(h) Neither
Convera nor any of its Subsidiaries has any liability or obligation with respect
to the return of inventory or merchandise in the possession of wholesalers,
distributors, resellers, retailers or other customers, except for such
obligations or liabilities that would not reasonably be likely to have a
Material Adverse Effect;
(i) Except as
disclosed in the SEC Reports, neither Convera nor any of its Subsidiaries has
any debt obligation for borrowed money, including guarantees of or agreements to
acquire any such debt obligation of others;
(j) Neither
Convera nor any of its Subsidiaries has any contract for capital expenditures in
excess of $25,000 individually, or such contracts representing in excess of
$100,000 in the aggregate;
(k) At the
Closing, neither Convera nor any of its Subsidiaries has any contract, agreement
or commitment currently in force relating to the disposition or acquisition of
assets not in the ordinary course of business other than the Convera
Contribution Agreement;
(l) Neither
Convera nor any of its Subsidiaries has any contract, agreement or commitment
for the purchase of any ownership interest in any corporation, partnership,
joint venture or other business enterprise;
(m) Except as
disclosed in the SEC Reports, neither Convera nor any of its Subsidiaries has
any outstanding loan to any person other than to Convera or a wholly owned
Subsidiary of Convera;
(n) Neither
Convera nor any of its Subsidiaries has any power of attorney outstanding or any
obligations or liabilities (whether absolute, accrued, contingent or otherwise),
as guarantor, surety, co-signer, endorser, co-maker, indemnitor (other than
indemnities contained in agreements for the purchase, sale, license,
distribution, maintenance or support of products entered into in the ordinary
course of business) or otherwise in respect of any obligation of any person,
corporation, partnership, joint venture, association, organization or other
entity, or any capital maintenance, keep-well or similar agreements or
arrangements;
(o) Neither
Convera nor any of its Subsidiaries has any agreements, contracts or
arrangements containing any provision requiring Convera to indemnify another
party (other than indemnities contained in agreements for the purchase, sale,
license, distribution, maintenance or support of products entered into in the
ordinary course of business) or containing any covenant not to bring legal
action against any third party;
(p) Convera
has made available to FL true, complete and correct copies of each contract
listed in Section
4.6(a) of the Convera Disclosure Schedule (together with the material
contracts filed in the SEC Reports that relate to Section 4.6 of this
Agreement and any material agreements, contracts or commitments (including but
not limited to end user license agreements) that (i) resulted in or will result
in (A) payments by Convera or its Subsidiaries during fiscal years 2007, 2008 or
2009 (up to the date of this Agreement) or (B) payments to Convera or any of its
Subsidiaries during the period beginning fiscal year 2007 and ending as of the
date of this Agreement, in either case in excess of $25,000 or (ii) which
require the making of any charitable contribution in excess of $25,000, the
“Convera Material
Contracts”); and
(q) (i) Neither
Convera nor any of its Subsidiaries has materially breached, is in material
default under, or has received written notice of any material breach of or
material default under, any Convera Material Contract and such breach or default
remains uncured, (ii) to B2B’s knowledge, no other party to any Convera
Material Contract has materially breached or is in material default of any of
its obligations thereunder which breach or default remains uncured,
(iii) each Convera Material Contract is in full force and effect and
(iv) each Convera Material Contract is a legal, valid and binding
obligation of Convera or any of its Subsidiaries and, to Convera’s or B2B’s
knowledge, each of the other parties thereto, enforceable in accordance with its
terms, except that the enforcement thereof may be limited by
(A) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally and (B) general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
4.7 No
Conflict; Required Filings and Consents.
(a) The
execution and delivery by Convera and B2B of this Agreement does not, the
execution and delivery by Convera and B2B of any instrument required hereby to
be executed and delivered by Convera and B2B at the Closing will not, and the
performance of their respective agreements and obligations under this Agreement
by Convera and B2B will not, (i) conflict with or violate the Convera
Charter or Convera By-Laws or any Convera Subsidiary Documents,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Convera or any of its Subsidiaries or by which its or any
of their respective properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default), or impair Convera’s or any of its Subsidiaries’
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien on any of the properties or assets (including
intangible assets) of Convera or any of its Subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Convera or any of its
Subsidiaries is a party or by which Convera or any of its Subsidiaries or its or
any of their respective properties is bound or affected, other than, in the case
of (iii) above, such conflict, violation, breach, default, impairment, rights of
termination, amendment, acceleration or cancellation, or Liens that would not be
reasonably expected to have a Material Adverse Effect.
(b) The
execution and delivery by Convera and B2B of this Agreement does not, the
execution and delivery by Convera and B2B of any instrument required hereby to
be executed and delivered by Convera and B2B at the Closing will not, and the
performance of their respective agreements and obligations under this Agreement
by Convera and B2B will not, require any consent, approval, order, license,
authorization, registration, declaration or permit of, or filing with or
notification to, any Governmental Entity, except (i) the filing by Convera
of current reports on Forms 8-K (the “Forms 8-K”) with the
SEC in accordance with the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), and the filing by Convera of the Proxy Statement with the SEC
under the Exchange Act, (ii) such consents, approvals, orders, licenses,
authorizations, registrations, declarations, permits, filings, and notifications
as may be required under applicable federal and state securities laws or the
laws of any foreign country, (iii) the filing of the Certificate of Merger
or other documents as required by the DGCL and (iv) such other consents,
approvals, orders, licenses, authorizations, registrations, declarations,
permits, filings and notifications which, if not obtained or made, would not
reasonably be expected to have a Material Adverse Effect.
4.8 Compliance;
Permits.
(a) Convera
and its Subsidiaries are and have been in compliance with and are not in default
or violation of (and have not received any notice of non-compliance, default or
violation with respect to) any law, rule, regulation, order, judgment or decree
applicable to Convera or any of its Subsidiaries or by which any of their
respective properties is bound or affected, and Convera is not aware of any such
non-compliance, default or violation thereunder, where such non-compliance,
default or violation would reasonably be expected to have a Material Adverse
Effect.
(b) Each of
Convera and its Subsidiaries holds all permits, licenses, easements, variances,
exemptions, consents, certificates, authorizations, registrations, orders and
other approvals from Governmental Entities that are material to the operation of
the respective business of B2B and its Subsidiaries taken as a whole as
currently conducted (collectively, the “Convera Permits”),
where the failure to hold the Convera Permits would be reasonably be expected to
have a Material Adverse Effect. The Convera Permits are in full force
and effect and, to the best knowledge of Convera or B2B, have not been violated
in any material respect and no suspension, revocation or cancellation thereof
has been threatened, and there is no action, proceeding or investigation pending
or, to Convera’s or B2B’s knowledge, threatened, seeking the suspension,
revocation or cancellation of any Convera Permits. No Convera Permit
shall cease to be effective as a result of the consummation of the transactions
contemplated by this Agreement.
4.9 SEC
Filings; Financial Statements.
(a) Convera
has timely filed all forms, reports, schedules, statements and other documents,
including any exhibits thereto, required to be filed by Convera with the SEC
(collectively, the “SEC
Reports”). The SEC Reports, including all forms, reports and
documents to be filed by Convera with the SEC after the date hereof and prior to
the Effective Time, (i) were and, in the case of the SEC Reports filed
after the date hereof, will be prepared in all material respects in accordance
with the applicable requirements of the Securities Act of 1933, as amended (the
“Securities
Act”), and the Exchange Act, as the case may be, and the rules and
regulations thereunder, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing), and in the case of such forms, reports and documents
filed by Convera with the SEC after the date of this Agreement, will not as of
the time they are filed, contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such SEC Reports or necessary
in order to make the statements in such SEC Reports, in light of the
circumstances under which they were and will be made, not
misleading.
(b) Each of
the consolidated financial statements (including, in each case, any related
notes and schedules), contained in the SEC Reports, including any SEC Reports
filed after the date of this Agreement, complied or will comply, as of its
respective date, in all material respects with all applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, was or will be prepared in accordance with GAAP (except as may be
indicated in the notes thereto) applied on a consistent basis throughout the
periods involved and fairly presented or will fairly present the consolidated
financial position of Convera and its Subsidiaries as of the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that any unaudited interim financial statements are
subject to normal and recurring year-end adjustments which have not been and are
not expected to be material in amount, individually or in the
aggregate. The audited balance sheet of Convera contained in the SEC
Report on Form 10-K for the fiscal year ended January 31, 2009 is referred to
herein as the “Convera
Balance Sheet.”
4.10 Absence of Certain Changes or
Events. From the date of Convera Balance Sheet to the Closing,
other than as reflected in the interim financial statements filed with the SEC
for the interim periods subsequent to January 1, 2009, Convera and each of its
Subsidiaries (including B2B after the date the transaction contemplated in the
Convera Contribution Agreement becomes effective) have or will have conducted
their business in the ordinary course consistent with past practice and, since
such date, there has not occurred: (i) any change, development,
event or other circumstance, situation or state of affairs that has had or would
reasonably be expected to have a Material Adverse Effect; (ii) any
amendments to or changes in its or any of its Subsidiaries’ charter or By-Laws;
(iii) any damage to, destruction or loss of any asset of Convera or any of
its Subsidiaries (whether or not covered by insurance) that would reasonably be
expected to have a Material Adverse Effect; (iv) any sale or disposal of a
material amount of assets (tangible or intangible) of Convera except as
contemplated in or by the Convera Contribution Agreement; or (v) any other
action or event that would have required the consent of FL pursuant to Section 5.1 had such
action or event occurred after the date of this Agreement.
4.11 No
Undisclosed Liabilities.
(a) Except as
reflected in Convera Balance Sheet, neither Convera nor any of its Subsidiaries
has any liabilities (absolute, accrued, contingent or otherwise) which are
required by GAAP to be set forth on a consolidated balance sheet of Convera and
its consolidated subsidiaries or in the notes thereto, other than (i) any
liabilities and obligations incurred since January 31, 2009 in the ordinary
course of business consistent with past practice, and (ii) liabilities that
would not reasonably be expected to have a Material Adverse Effect.
(b) Neither
Convera nor any of its Subsidiaries is a party to, or has any commitment to
become a party to, any joint venture, partnership agreement or any similar
contract (including without limitation any contract relating to any transaction,
arrangement or relationship between or among Convera or any of its Subsidiaries,
on the one hand, and any unconsolidated affiliate, including without limitation
any structured finance, special purpose or limited purpose entity or person, on
the other hand) where the purpose or intended effect of such arrangement is to
avoid disclosure of any material transaction involving Convera or any of its
Subsidiaries in Convera Balance Sheet.
4.12 Absence of
Litigation. Except as disclosed in the SEC Reports and Section 4.12 of the
Convera Disclosure Schedule, there are no claims, actions, suits, proceedings
or, to the knowledge of Convera or B2B, governmental investigations, inquiries
or subpoenas (other than any actions, suits, proceedings, investigations,
inquiries or subpoenas challenging or otherwise arising from or relating to the
Merger or any of the other transactions contemplated by this Agreement)
(a) pending against Convera or any of its Subsidiaries or any properties or
assets of Convera or of any of its Subsidiaries, (b) to the knowledge of
Convera or B2B, threatened against Convera or any of its Subsidiaries, or any
properties or assets of Convera or of any of its Subsidiaries, or
(c) whether filed or threatened, that have been settled or compromised by
Convera or any Subsidiary within the three (3) years prior to the date of this
Agreement and at the time of such settlement or compromise were material, other
than, in the case of (i) through (iii) above, such claims, actions, suits,
proceedings, investigations, inquiries or subpoenas that would not be reasonably
likely to have a Material Adverse Effect. Neither Convera nor any
Subsidiary of Convera is subject to any outstanding order, writ, injunction or
decree that would reasonably be expected to be material or would reasonably be
expected to prevent or delay the consummation of the transactions contemplated
by this Agreement.
4.13 Employee
Benefit Plans, Options and Employment Agreements.
(a) Section 4.13(a) of
the Convera Disclosure Schedule sets forth a complete and accurate list of all
Employee Benefit Plans maintained, or contributed to, by Convera or any of its
Subsidiaries or to which Convera or any of Convera’s Subsidiaries is obligated
to contribute, or under which any of them has or may have any liability for
premiums or benefits (collectively, the “Convera Employee
Plans”).
(b) With
respect to each Convera Employee Plan, Convera has made available to FL complete
and accurate copies of such Convera Employee Plan (or a written summary of any
unwritten plan) together with all amendments and related documents.
(c) Each
Convera Employee Plan has been administered in all material respects in
accordance with applicable laws and the regulations thereunder and in accordance
with its terms and each of Convera and Convera’s Subsidiaries have in all
material respects met their obligations with respect to each Convera Employee
Plan and have timely made all required contributions thereto.
(d) With
respect to Convera Employee Plans, there are no material benefit obligations for
which contributions have not been made or properly accrued and there are no
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with GAAP, on the Convera Balance
Sheet. Convera and its Subsidiaries have no liability for benefits
(contingent or otherwise) under any Convera Employee Plan, except as set forth
in Convera Balance Sheet. The assets of each Convera Employee Plan
which is funded are reported at their fair market value on the books and records
of such Employee Benefit Plan.
(e) No
Convera Employee Plan has assets that include securities issued by Convera or
any of Convera’s Subsidiaries.
(f) Each
Convera Employee Plan is amendable and terminable unilaterally by Convera or any
of Convera’s Subsidiaries party thereto or covered thereby at any time without
liability to Convera or any of its Subsidiaries as a result thereof, and no
Convera Employee Plan or related plan documentation or agreement, summary plan
description or other written communication distributed generally to employees by
its terms prohibits Convera or any of Convera’s Subsidiaries party thereto or
covered thereby from amending or terminating any such Convera Employee Plan, or
in any way limits such action.
(g) There is
no action, suit, proceeding, claim, arbitration, audit or, to the knowledge of
Convera or B2B, investigation pending or, to the knowledge of Convera or B2B,
threatened, with respect to any Convera Employee Plan, other than claims for
benefits in the ordinary course, that would reasonably be expected to result in
material liability to Convera or any of its Subsidiaries or to such Convera
Employee Plan. No Convera Employee Plan is or, to the knowledge of
Convera or B2B, within the last three (3) calendar years has been, the subject
of, examination by a government agency or a participant in a government
sponsored amnesty, voluntary compliance or similar program, nor has Convera
received notice that it is the subject of, examination by a government agency or
a participant in a government sponsored amnesty, voluntary compliance or similar
program.
(h) Section 4.13(h) of
the Convera Disclosure Schedule contains (i) a true, complete and current
list of all independent contractors, and (ii) a description of the services
each independent contractor performs, and a copy of the agreement between each
independent contractor and Convera. To the knowledge of Convera or
B2B, after due inquiry of the appropriate individuals, each individual who has
received compensation for the performance of services on behalf of Convera or
any of Convera’s Subsidiaries has been properly classified as an employee or
independent contractor in accordance with applicable law.
(i) Each
Convera Employee Plan maintained in and outside the United States is in
compliance, and the books and records thereof are maintained in compliance, with
all applicable laws, rules and regulations of the jurisdiction in which such
Convera Employee Plan is maintained. Section 4.13(i) of
the Convera Disclosure Schedule lists each country in which Convera or any of
its Subsidiaries has operations and the number of employees in each such
country.
(j) Section 4.13(j) of
the Convera Disclosure Schedule sets forth a true, complete and correct list of
(i) all employment or consulting agreements with employees of Convera or
any of its Subsidiaries obligating Convera or any of its Subsidiaries to make
annual cash payments in an amount equal to or exceeding $100,000 on an annual
basis or $25,000 in any one payment; (ii) all employees of Convera or any
of its Subsidiaries who have executed a non-competition agreement with Convera
or any of its Subsidiaries; (iii) all severance agreements, programs and
policies of Convera or any of its Subsidiaries with or relating to its
employees, in each case with potential outstanding obligations equal to or
exceeding $100,000 on an annual basis or $25,000 in any one payment, excluding
programs and policies required to be maintained by law; and (iv) all plans,
programs, agreements and other arrangements of Convera or any of its
Subsidiaries with or relating to its employees which contain change in control
provisions including any such plans or agreements providing for an increase in
vesting of benefits by reason of the transactions contemplated by this
Agreement. True, complete and correct copies of each of the foregoing
agreements to which any employee of Convera and any of its Subsidiaries is a
party have been furnished to FL.
(k) Section 4.13(k) of
the Convera Disclosure Schedule sets forth a true, complete and correct list of
all agreements pursuant to which the consummation of the transactions
contemplated by this Agreement will, either alone or in combination with another
event, (i) entitle any current or former employee or officer of Convera or
any Subsidiary of Convera to severance pay, unemployment compensation or any
other payment to which such employee or officer would not otherwise be or have
been entitled, or (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee or
officer.
4.14 Labor
Matters. (a) Convera and each of its Subsidiaries are in
compliance in all material respects with all applicable laws respecting
employment, employment practices and occupational safety and health, terms and
conditions of employment and wages and hours, and are not engaged in any unfair
labor practices; (b) there are no controversies pending or, to the
knowledge of either Convera or B2B, threatened, between Convera or any of its
Subsidiaries and any of their respective employees, consultants or independent
contractors, which controversies would reasonably be expected to have a Material
Adverse Effect; (c) neither Convera nor any of its Subsidiaries is a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by Convera or its Subsidiaries, nor does Convera or any of
its Subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (d) there are no and neither Convera nor
any of its Subsidiaries has any knowledge of any labor disputes, strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of, or consultants or independent contractors to, Convera or any
of its Subsidiaries. To the knowledge of Convera, no employee of
Convera or any of its Subsidiaries is in violation of any term of any patent
disclosure agreement, non-competition agreement, or any restrictive covenant to
a former employer relating to the right of any such employee to be employed by
Convera or any of its Subsidiaries because of the nature of the business
conducted or presently proposed to be conducted by Convera or any of its
Subsidiaries or to the use of trade secrets or proprietary information of others
or, in the case of any key employee or group of key employees, has given notice
as of the date of this Agreement to Convera or any of its Subsidiaries that such
employee or any employee in a group of key employees intends to terminate his or
her employment with Convera.
4.15 Properties;
Encumbrances. Except as set forth in Section 4.15(a) of
the Convera Disclosure Schedule, each of Convera and its Subsidiaries has good,
valid and marketable title to, or a valid leasehold interest in, all the
properties and assets which it purports to own or lease and all the properties
and assets which are used or useful for the business of Convera or any of its
Subsidiaries (real, personal and mixed, tangible and intangible), including,
without limitation, all the properties and assets reflected in Convera Balance
Sheet (except for personal property sold since the date of Convera Balance Sheet
in the ordinary course of business consistent with past
practice). All properties and assets reflected in Convera Balance
Sheet are free and clear of all Liens, except for Liens reflected on Convera
Balance Sheet and Liens for current taxes not yet due and other Liens that do
not materially detract from the value or impair the use of the property or
assets subject thereto. Section 4.15(b) of
the Convera Disclosure Schedule sets forth a true, complete and correct list of
all real property owned, leased, subleased or licensed by Convera and the
location of such premises. Each of Convera and its Subsidiaries is
and has been in compliance with the material provisions of each lease or
sublease for the real property which is set forth in Section 4.15(b) of
the Convera Disclosure Schedule.
4.16 Taxes.
(a) Convera
and each of its Subsidiaries have filed with the appropriate taxing authorities
all Tax Returns required to be filed by them. All Taxes due and owing
by Convera and its Subsidiaries have been timely paid. There are no
Tax Liens on any assets of Convera or any Subsidiary thereof other than liens
relating to Taxes not yet due and payable. Except as set forth in
Section 4.16 of
the Convera Disclosure Schedule, neither Convera nor any of its Subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The accruals
and reserves for Taxes (exclusive of any accruals for “deferred taxes” or
similar items that reflect timing differences between tax and financial
accounting principles) reflected in Convera Balance Sheet are adequate to cover
all Taxes accruable through the date thereof (including interest and penalties,
if any, thereon and Taxes being contested). All liabilities for Taxes
attributable to the period commencing on the date following the date of Convera
Balance Sheet were incurred in the ordinary course of business and are
consistent in type and amount with Taxes attributable to similar prior
periods.
(b) Convera
and each of its Subsidiaries have withheld with respect to its employees all
Taxes required to be withheld by applicable law, and neither Convera nor any of
its Subsidiaries has been delinquent in the payment of any
Tax. Neither Convera nor any of its Subsidiaries has received any
written notice of any Tax deficiency outstanding, proposed or assessed against
Convera or any of its Subsidiaries. Neither Convera nor any of its
Subsidiaries has received any written notice of any audit examination,
deficiency, refund litigation, proposed adjustment or matter in controversy with
respect to any Tax Return of Convera or any of its
Subsidiaries. Neither Convera nor any of its Subsidiaries is a party
to or bound by any tax indemnity, tax sharing or tax allocation
agreements. Neither Convera nor any of its Subsidiaries is liable for
the Taxes of any person (other than those of Convera and its Subsidiaries) by
contract or otherwise.
(c) Convera
has made available to FL (i) complete and correct copies of all Tax
Returns, examination reports and statements of deficiencies assessed against or
agreed to by Convera or any of its Subsidiaries with respect to the prior five
(5) taxable years, and (ii) written schedules of (A) the taxable years
of Convera and each Subsidiary for which the statute of limitations with respect
to income Taxes have not expired, (B) with respect to income Taxes of
Convera and each Subsidiary, those years for which examinations have been
completed, those years for which examinations are presently being conducted,
those years for which examinations have not yet been initiated and those years
for which required Tax Returns have not yet been filed, and (F) the foreign
countries in which Convera or its Subsidiaries is subject to income
tax.
4.17 Intellectual
Property.
(a) Section 4.17(a) of
the Convera Disclosure Schedule sets forth a true, complete and correct list of
all U.S. and foreign (i) patents and pending patent applications, including
any utility models and similar patents, owned by Convera or any of its
Subsidiaries as of the date of this Agreement (ii) trademark registrations
(including internet domain registrations) and pending trademark applications
owned by Convera or any of its Subsidiaries as of the date of this Agreement;
and (iii) copyright registrations and pending copyright applications owned
by Convera or any of its Subsidiaries as of the date of this Agreement
(collectively the “Registered Convera
Intellectual Property”).
(b) Immediately
before the Closing, B2B or one or more of its Subsidiaries owns, or has a valid
right to use, all of the Intellectual Property that is used in the business of
Convera and its Subsidiaries as currently conducted (the “Convera Intellectual
Property”). The Convera Intellectual Property is all the
intellectual property used in the business of Convera or any of its
Subsidiaries, and all of the Convera Intellectual Property is owned solely by
Convera or one of its Subsidiaries and, except as otherwise specified on Section 4.17(b) of
the Convera Disclosure Schedule, will be solely owned by B2B or one of its
Subsidiaries at the Closing.
(c) The
Registered Convera Intellectual Property is valid and subsisting (except with
respect to applications), and has not expired or been cancelled, or
abandoned.
(d) Except as
disclosed in the SEC Reports, there is no pending or, to Convera’s and B2B’s
knowledge, threatened (and at no time within the three years prior to the date
of this Agreement has there been pending any) material suit, arbitration or
other adversarial proceeding before any court, government agency or arbitral
tribunal or in any jurisdiction alleging that the activities or the conduct of
Convera’s or any of their Subsidiaries’ business infringe or misappropriate any
Intellectual Property owned by any third party (“Third Party Intellectual
Property”), or challenging the ownership, validity, enforceability or
registerability of any Convera Intellectual Property. Neither Convera
nor any of its Subsidiaries is, as a result of any suits, actions or similar
legal proceedings, a party to any settlements, covenants not to xxx, consents,
decrees, stipulations, judgments, or orders which (i) materially restrict
Convera’s or any of its Subsidiaries’ rights to use any Convera Intellectual
Property, (ii) materially restrict Convera or any of its Subsidiaries from
conducting its business as currently conducted in order to avoid infringement of
any Third Party Intellectual Property, or (iii) permit third parties to use
any Convera Intellectual Property.
(e) The
conduct of the business of Convera and any of their Subsidiaries as currently
conducted does not infringe in any material respect upon any Third Party
Intellectual Property. To Convera’s and B2B’s
knowledge, no third party is misappropriating, infringing, diluting or violating
any Convera Intellectual Property that is material to the conduct of the
business of Convera and its Subsidiaries as currently conducted, and no
intellectual property misappropriation, infringement dilution or violation
suits, arbitrations or other adversarial proceedings have been brought before
any court, government agency or arbitral tribunal against any third party by
Convera or any of its Subsidiaries which remain unresolved.
(f) Convera
and its Subsidiaries have taken reasonable measures to protect the proprietary
nature of Convera Intellectual Property that is material to the business of
Convera or any of its Subsidiaries as currently conducted. To
Convera’s and B2B’s knowledge, there has been no disclosure to any third party
by Convera or any of its Subsidiaries of material confidential information or
trade secrets of Convera, B2B or any of its Subsidiaries related to any material
proprietary product currently being marketed, sold, licensed or developed by
Convera or any of its Subsidiaries (each such product, a “Convera Proprietary
Product”) other than disclosures made pursuant to nondisclosure or
confidentiality agreements entered into by Convera or any of its Subsidiaries in
the ordinary course of business.
(g) All
employees of Convera and its Subsidiaries who have made material contributions
to the development of any Convera Proprietary Product (including without
limitation all employees who have designed, written, tested or worked on any
software code contained in any Convera Proprietary Product) have signed
confidentiality, non-competition (unless prohibited by applicable law) and
assignment of proprietary rights agreements substantially in one of the forms
attached to Section
4.17(g) of the Convera Disclosure Schedule, or will make such assignment
prior to Closing. All consultants and independent contractors who
have made material contributions to the development of any Convera Proprietary
Product (including without limitation all consultants and independent
contractors who have designed, written, tested or worked on any software code
contained in any Convera Proprietary Product) have assigned to Convera or one or
more of its Subsidiaries (or a third party that previously conducted any
business currently conducted by Convera or one or more of its Subsidiaries and
that has assigned its rights in such Convera Proprietary Product to Convera or
one or more of its Subsidiaries) all of their right, title and interest (other
than moral rights, if any) in and to the portions of such Convera Proprietary
Product developed by them in the course of their work for Convera or one or more
of its Subsidiaries (or applicable third party) or will make such assignment
prior to Closing. Assignments of the patents and patent applications
listed in Section
4.17(a) of the Convera Disclosure Schedule to Convera or one or more of
its Subsidiaries have been duly executed and filed with the United States Patent
and Trademark Office or will be duly executed and filed with the United States
Patent and Trademark Office prior to the Closing Date.
(h) Neither
Convera nor any of its Subsidiaries has granted or is obligated to grant access
to any of its source code (including without limitation in any such case any
conditional right to access or under which Convera or any of its Subsidiaries
has established any escrow arrangement for the storage and conditional release
of any of its source code).
(i) None of
the Convera Proprietary Products contains any software code that is, in whole or
in part, subject to the provisions of any license to software that is made
generally available to the public without requiring the payment of any fees or
royalties (including but not limited to the GPL, LGPL, MPL, BSD licenses, and
any other similar “free software” or “open source” licenses), including but not
limited to any such license under which Convera or any of its Subsidiaries is
obligated to make the source code for such Convera Proprietary Product generally
available to the public free of charge.
(j) Except as
disclosed in the SEC Reports, neither Convera nor any of its Subsidiaries have
any obligation to pay any third party any royalties or other fees in the excess
of $25,000 in one payment or for any three-month period for the use of Convera
Intellectual Property or otherwise and no obligation to pay such royalties or
other fees will result from the consummation of the transactions contemplated by
this Agreement.
(k) (i) Neither
Convera nor any of its Subsidiaries is in violation of any license, sublicense
or other agreement or instrument related to Convera Intellectual Property to
which Convera, Convera or any of their Subsidiaries is a party or is otherwise
bound; (ii) the consummation by Convera and B2B of the transactions
contemplated hereby will not result in any loss or impairment of ownership by
Convera or any of its Subsidiaries of, or the right of any of them to use (or
result in any term extension or expansion of the rights granted to any third
party in or to), any Convera Intellectual Property that is material to the
business of Convera and its Subsidiaries as currently conducted; (iii) the
consummation by Convera and B2B of the transactions contemplated hereby will not
require the consent of any third party or any Governmental Entity, with respect
to any such Intellectual Property.
4.18 Insurance. All fire
and casualty, general liability, business interruption, product liability,
sprinkler and water damage insurance policies and other forms of insurance
maintained by Convera or any of its Subsidiaries, provide adequate coverage for
all normal risks incident to the business of Convera and its Subsidiaries and
their respective properties and assets and are in character and amount and with
such deductibles and retained amounts as are generally carried by persons
engaged in similar businesses and subject to the same or similar perils or
hazards. Each such policy is in full force and effect and all
premiums due thereon have been paid in full. None of such policies
shall terminate or lapse (or be affected in any other materially adverse manner)
by reason of the consummation of the transactions contemplated by this
Agreement.
4.19 Restrictions on
Business. Except for this Agreement, there is no agreement,
judgment, injunction, order or decree binding upon Convera or any of its
Subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or impairing any business practice of Convera or any of its
Subsidiaries, acquisition of property by Convera or any of its Subsidiaries or
the conduct of business by Convera or any of its Subsidiaries as currently
conducted or as proposed to be conducted by Convera.
4.20 Interested Party
Transactions. Except as disclosed the SEC Reports, no event
has occurred in the three-year period prior to the date of this Agreement that
would be required to be reported as a Certain Relationship or Related
Transaction pursuant to Statement of Financial Accounting Standards No.
57.
4.21 Change of Control
Payments. Except as disclosed in the SEC Reports, neither
Convera nor any of its Subsidiaries has any plans, programs or agreements to
which Convera or any Subsidiary is party, or to which either is subject,
pursuant to which payments (or acceleration of benefits or vesting of options or
lapse of repurchase rights) may be required upon, or may become payable directly
or indirectly as a result of, the transactions contemplated by this Agreement or
any other change of control of Convera or any of its Subsidiaries.
4.22 No Existing
Discussions. Neither Convera nor B2B is engaged, directly or
indirectly, in any discussions or negotiations with any other party with respect
to an Acquisition Proposal (as defined in Section 6.2(a)) or
any other substantially similar proposal.
4.23 Convera Contribution
Agreement. At the time of the execution of the Convera
Contribution Agreement, Convera and B2B will have all necessary corporate power
and authority to execute and deliver the Convera Contribution Agreement and each
instrument required thereby to be executed and delivered by Convera and B2B at
the closing of the transaction contemplated thereby and to perform their
respective obligations hereunder and to consummate the transactions contemplated
thereby. Upon its execution and delivery, the execution and delivery
by Convera and B2B of the Convera Contribution Agreement and each instrument
required thereby to be executed and delivered at the Closing by Convera and B2B
and the consummation by Convera and B2B of the transactions contemplated thereby
will have been duly and validly authorized by all necessary corporate action on
the part of Convera and B2B. Upon its execution and delivery, the
Convera Contribution Agreement will have been duly and validly executed and
delivered by Convera and B2B and execution and delivery of the Convera
Contribution Agreement will constitute the legal, valid and binding obligation
of Convera and B2B, enforceable against Convera and B2B in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors’ rights generally and by general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at law).
ARTICLE
V.
CONDUCT
OF BUSINESS
5.1 Conduct of Business Pending the
Merger. Each party covenants and agrees that, except for the
transactions contemplated in or by this Agreement, the Convera Contribution
Agreement, the Merger Proxy, and the UK Restructuring and the Second
Restructuring, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
unless the other parties shall otherwise agree in writing, it shall conduct its
business and shall cause the businesses of its Subsidiaries to be conducted only
in, and such party and its Subsidiaries shall not take any action except in, and
shall cause its Subsidiaries not to take any action except in, the ordinary
course of business and in a manner consistent with past practice and in
compliance in all material respects with all applicable laws and regulations;
and each party and its Subsidiaries shall use reasonable best efforts to
preserve substantially intact the business organization of such party and its
Subsidiaries, to keep available the services of the current officers, employees
and consultants of such party and its Subsidiaries and to preserve the present
relationships of such party and its Subsidiaries with customers, suppliers and
other persons with which such party or any of its Subsidiaries has significant
business relations. The parties agree that the individuals identified
in Section
5.1(a) of the FL Disclosure Schedule and Section 5.1(a) of the
Convera Disclosure Schedule shall be authorized to provide the agreement of such
respective party to the various acts of such party contemplated by this Section 5.1 during
the period from the date of this Agreement until the earlier of the termination
of this Agreement or the Effective Time. By way of amplification and
not limitation, (a) except as contemplated in or by this Agreement, the
Convera Contribution Agreement, the Merger Proxy and the UK Restructuring and
the Second Restructuring, and (b) as set forth in Section 5.1(b) of the
FL Disclosure Schedule and Section 5.1(b) of the
Convera Disclosure Schedule, each not shall not and shall not permit its
Subsidiaries to, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of the other parties:
(a) amend or
otherwise change such party’s charter, By-Laws or the charter or bylaws of its
Subsidiaries;
(b) issue,
sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge,
disposition or encumbrance of, any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of capital stock, or any other ownership interest (including, without
limitation, any phantom interest) in such party or any of its Subsidiaries or
affiliates;
(c) sell,
pledge, dispose of or encumber any assets of such party or any of its
Subsidiaries (other than (i) sales of assets in the ordinary course of
business and in a manner consistent with past practice, not to exceed $25,000 in
the aggregate, (ii) dispositions of obsolete or worthless assets or
(iii) sales of immaterial assets not in excess of $25,000); provided that for the
avoidance of doubt the foregoing shall not apply to sales of the products or
services of such party or any of its Subsidiaries in the ordinary
course;
(d) (i) declare,
set aside, make or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of any of its capital
stock, except that a direct or indirect wholly owned Subsidiary of such party
may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or otherwise acquire,
or permit any Subsidiary to purchase, repurchase, redeem or otherwise acquire,
any of its securities or any securities of its Subsidiaries, or any option,
warrant or right, directly or indirectly, to acquire any such securities, or
propose to do any of the foregoing;
(e) (i) acquire
(by merger, consolidation or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division thereof;
(ii) incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or advances or
capital contributions to or investments in any other person, except in the
ordinary course of business and consistent with past practice; (iii) enter
into, amend (including without limitation with respect to any rights in or to
any intellectual property of any person) in any material respect or waive
(including without limitation with respect to any rights in or to any
intellectual property of any person) any material right under any contract or
agreement of any type referred to in Sections 3.6 and
4.6 hereof
(other than any agreement for the purchase, sale, license, distribution,
maintenance or support of the products of such party or its Subsidiaries or the
provision of consulting services related thereto entered into in the ordinary
course of such party ’s business), any joint venture or development or marketing
agreement with any of the entities listed in Section
5.1(e)(iii) of the FL Disclosure Schedule and Section 5.1(e)(iii)
of the Convera Disclosure Schedule, or any contract or agreement not entered
into in the ordinary course of business consistent with past practices, or enter
into, renew, amend or terminate any lease relating to real property, or open or
close any facility; (iv) adopt or implement any stockholder rights plan;
(v) authorize any capital expenditures or purchase of fixed assets which
are in excess of $25,000 for any individual expenditure or purchase or in excess
of $100,000 in the aggregate for all such expenditures or purchases for such
party and its Subsidiaries taken as a whole; (vi) modify its standard
warranty terms for its products or amend or modify any product warranties in
effect as of the date of this Agreement in any manner that is adverse to such
party or any of its Subsidiary; (vii) pledge or otherwise encumber shares
of capital stock of such party or any of its Subsidiary; (viii) mortgage or
pledge any of its assets, tangible or intangible, or create or suffer to exist
any Lien thereupon; or (ix) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by this Section
5.1(e);
(f) increase
the compensation payable or to become payable to its directors, officers or
employees (other than increases payable to non-officer employees made in the
ordinary course of business consistent with past practice), make any loan,
advance or capital contribution, or grant any severance or termination pay to,
or enter into or amend any employment or severance agreement with, any director,
officer or other employee of such party or any of its Subsidiaries (other than
the granting of severance pay in connection with the involuntary termination of
any non-officer or non-director employee of such party or any of its
Subsidiaries, other than any individual identified in Section 5.1(f) of the
FL Disclosure Schedule and Section 5.1(f) of the
Convera Disclosure Schedule, in an amount consistent with its written practices
or in connection with agreements that were in effect prior to the date of this
Agreement and are listed in Section 5.1(f) of the
FL Disclosure Schedule and Section 5.1(f) of the
Convera Disclosure Schedule, establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any current or former directors, officers or
employees of such party or any of its Subsidiaries, pay any discretionary
bonuses to any officer of such party, materially change any actuarial assumption
or other assumption used to calculate funding obligations with respect to any
pension or retirement plan, or change the manner in which contributions to any
such plan are made or the basis on which such contributions are determined,
except, in each case, as may be required by law or contractual commitments which
are existing as of the date of this Agreement and listed in Section 3.13 of the
FL Disclosure Schedule and Section 4.13 of the
Convera Disclosure Schedule;
(g) take any
action to change accounting policies or procedures (including, without
limitation, procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable), except as required by GAAP or,
except as so required, change any assumption underlying, or method of
calculating, any bad debt contingency or other reserve;
(h) make any
material Tax election inconsistent with past practice or settle or compromise
any material federal, state, local or foreign Tax liability or agree to an
extension of a statute of limitations, fail to file any Tax Return when due (or,
alternatively, fail to file for available extensions) or fail to cause such Tax
Returns when filed to be complete and accurate; or fail to pay any Taxes when
due;
(i) pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), in an amount that does not
exceed $25,000 for any single claim, liability or obligation, or $50,000 in the
aggregate, other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the FL Balance Sheet or Convera Balance Sheet or incurred in
the ordinary course of business and consistent with past practice;
(j) fail to
pay accounts payable and other obligations in the ordinary course of
business;
(k) accelerate
the collection of receivables or modify the payment terms of any
receivables;
(l) sell,
securitize, factor or otherwise transfer any accounts receivable;
(m) adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of Convera, FL or any of
their respective Subsidiaries or successors (other than the Merger and the
restructuring transactions contemplated in the UK Restructuring and the Second
Restructuring and the Convera Contribution Agreement);
(n) revalue
in any material respect any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable;
(o) take, or
agree in writing or otherwise to take, any of the actions described in Sections 5.1 (a)
through (n)
above, or any action which would make any of the representations or warranties
of such party contained in this Agreement untrue or incorrect or prevent such
party from performing or cause them not to perform its covenants hereunder, in
each case, such that the conditions set forth in Sections 7.2 or 7.3, as the case may
be, would not be satisfied.
5.2 Cooperation. Subject
to compliance with applicable law, from the date of this Agreement until the
earlier of the termination of this Agreement in accordance with its terms or the
Effective Time, (a) each party shall confer on a regular basis with one or
more representatives of the other parties to report operational matters that are
material and the general status of ongoing operations and (b) each party
shall promptly provide the other parties or their counsel with copies of all
filings made by such party with any Governmental Entity in connection with this
Agreement, the Merger and the transactions contemplated hereby.
5.3 Employee Stock Option
Plan. Employees of FL, B2B, Convera and their respective
Subsidiaries who continue in the employ of Company or any Subsidiaries of
Company after the Effective Time shall be eligible for participation in
Company’s employee stock option Plan established from time to time in accordance
with the terms, provisions and policies thereof.
5.4 Additional Employee
Agreements. Prior to the Effective Time, Company shall (i) enter into an
employment agreement with key employees of Convera and its Subsidiaries set
forth on Schedule
5.4(a) hereto (“Convera Key
Employees”) and key employees of FL and its Subsidiaries set forth on
Schedule 5.4(b)
(“FL Key
Employees”), and (ii) reach employment arrangements with other employees
of Convera (and its Subsidiaries’) and FL (and its Subsidiaries); with such
terms and conditions to be agreed upon by the parties prior to the Closing, such
agreements and arrangements to be effective at the Effective Time.
5.5 Merger
Proxy.
(a) As
promptly as reasonably practicable following the date of this Agreement, Convera
shall prepare and file with the SEC the Proxy Statement seeking Convera
stockholders’ approval of the Merger (the “Merger
Proxy”). The Merger Proxy shall comply as to form in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
(b) Convera
shall, as promptly as practicable following the receipt thereof, provide B2B and
FL copies of any written comments and advise them of any oral comments, with
respect to the Merger Proxy received from the SEC.
(c) Convera
shall use its reasonable best efforts to ensure the Merger Proxy to be mailed to
Convera’s stockholders following clearance by the SEC.
5.6 SEC
Information. Following the Effective Time, Company and its
subsidiaries shall at their own cost, timely prepare and provide Convera with
all information, forms, reports, exhibits and other documents required or needed
by Convera (the “SEC
Information”) so that Convera can timely file or furnish all the reports
and documents with the SEC and Convera’s stockholders. Company and
its Subsidiaries shall prepare such SEC Information if applicable in all
material respects in accordance with the applicable requirements of the
Securities Act, and the Exchange Act, and the rules and regulations
thereunder. Company and its Subsidiaries shall ensure that the SEC
Information shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated in such SEC Information or necessary
in order to make the statements in such SEC Information, in light of the
circumstances under which they were and will be made, not
misleading. Company and its Subsidiaries shall ensure that each of
the consolidated financial statements (including, in each case, any related
notes and schedules) contained in the SEC Information comply, as of its
respective date, in all material respects with all applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, was or will be prepared in accordance with the generally accepted
accounting principles (except as may be indicated in the notes thereto) applied
on a consistent basis throughout the periods involved and fairly presented or
will fairly present the consolidated financial position of Company and its
Subsidiaries as of the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that any
unaudited interim financial statements are subject to normal and recurring
year-end adjustments which have not been and are not expected to be material in
amount, individually or in the aggregate.
5.7 Stockholders’ Approval. Convera shall
duly call and hold a Convera Stockholders’ Meeting as promptly as reasonably
practicable in accordance with applicable law following the date the Merger
Proxy is cleared by the SEC for the purpose of voting upon the matters that are
subject to Convera stockholders’ approval. In connection with the
Convera Stockholders’ Meeting and the transactions contemplated hereby, Convera
shall (i) subject to applicable law, use its reasonable best efforts to obtain
the approvals by its stockholders of the matters that are subject to Convera
stockholders’ approval, and (ii) otherwise comply with all legal requirements
applicable to the Convera Stockholders’ Meeting.
5.8 Capitalization of
Company. FL shall cause Company to have sufficient authorized
but unissued shares for the new issuance in connection with the share conversion
under Section
2.1 hereof prior to the Closing, and to have the same number of issued
and outstanding common stock as B2B prior to the share conversion set forth in
Section 2.1
hereof unless otherwise mutually agreed upon by the parties in
writing.
ARTICLE
VI.
ADDITIONAL
AGREEMENTS
6.1 Access to Information;
Confidentiality. Each party shall (and shall cause its
Subsidiaries and its and their respective officers, directors, employees,
auditors and agents to) afford to the other parties’ officers, employees,
financial advisors, legal counsel, accountants, consultants and other
representatives reasonable access during normal business hours throughout the
period prior to the Effective Time to all of its books and records (other than
privileged documents) and its properties, plants and personnel; provided that no
investigation by a party pursuant to this Section 6.1 shall
affect any representations, warranties covenants or agreements of the parties
(or remedies with respect thereto) or any matter set forth in the FL Disclosure
Schedule and Convera Disclosure Schedule or the conditions to the obligations of
the parties under this Agreement. Unless otherwise required by law,
each party agrees that it (and its Subsidiaries and its and their respective
representatives) shall hold in confidence all non-public information acquired
from the other party or the other party’s representatives in accordance with the
terms of the Confidential Agreement among the parties (the “Confidentiality
Agreement”).
6.2 No
Solicitation.
(a) Neither
any party nor any of its Subsidiaries and affiliates shall, directly or
indirectly, through any officer, director, employee, representative or agent of
it or any of its Subsidiaries (and it shall cause such officers, directors,
employees, representatives and agents not to, directly or indirectly),
(i) solicit, initiate, resume, facilitate or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, an
Acquisition Proposal or (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity
relating to, any Acquisition Proposal; provided, however, that if,
at any time prior to the date of the Convera Stockholders’ Meeting (the “Applicable Period”),
the Board of Directors of Convera determines in good faith, after receiving the
advice of outside counsel, that it is required to do so in order to comply with
its fiduciary duties to its respective stockholders under applicable law,
Convera and B2B may, in response to a Superior Proposal (as defined in Section 6.2(b)) which
was not solicited by it and which did not otherwise result from a breach of this
Section 6.2(a),
and subject to providing prior written notice of its decision to take such
action to the other parties (a “Section 6.2 Notice”)
and compliance with Section 6.2(c),
(x) furnish information with respect to Convera and its Subsidiaries to any
person making a Superior Proposal pursuant to a confidentiality agreement
containing terms no less favorable to it (including with respect to standstill
and other provisions) than the Confidentiality Agreement and permitting the
disclosure contemplated by this Section 6.2 and
(y) participate in discussions or negotiations regarding such Superior
Proposal. For purposes of this Agreement, “Acquisition Proposal”
means any inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of a business that constitutes 50% or more of
the net revenues, net income or the non-cash assets of Convera and its
Subsidiaries, taken as a whole, or 50% or more of any class of equity securities
of Convera or any of its Subsidiaries, any tender offer or exchange offer that,
if consummated, would result in any person beneficially owning 50% or more of
any class of equity securities of Convera or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Convera or any of its Subsidiaries,
other than the transactions contemplated by this Agreement and as currently
planned by Convera.
(b) Convera
shall ensure that neither the Board of Directors of Convera nor any committee
thereof shall:
(i) except as
set forth in this Section 6.2, withdraw
or modify, or publicly propose to withdraw or modify, in a manner adverse to
each other, the approval or recommendation by such party’s Board of Directors or
any such committee of this Agreement or the Merger;
(ii) cause or
permit such party to enter into any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement, merger agreement
or similar agreement constituting or relating to any Acquisition Proposal (other
than a confidentiality agreement referred to in Section 6.2(a)
entered into in the circumstances referred to in and consistent with the
provisions of Section
6.2(a)); or
(iii) adopt,
approve or recommend, or publicly propose to adopt, approve or recommend, any
Acquisition Proposal other than the Merger.
Notwithstanding
the foregoing, the Board of Directors of Convera may, in response to a Superior
Proposal that did not result from a breach by Convera of this Section 6.2, withdraw
or modify the recommendation by its Board of Directors or any committee thereof
of this Agreement and the Merger, if the Board of Directors determines in good
faith, after receiving the written advice of independent outside counsel, that
it is necessary to do so in order to comply with its fiduciary obligations to
its stockholders under applicable law, but only at a time that is prior to the
adoption of this Agreement at the Convera Stockholders’
Meeting. Nothing in this Section 6.2 shall be
deemed to (A) permit a party to take any action described in clauses (ii)
or (iii) of the first sentence of this Section 6.2(b) other
than in connection with a termination of this Agreement in accordance with Section 8.1(e), or
(B) affect any other obligation of the party under this Agreement or
(C) limit a party’s obligation to call, give notice of, convene and hold
the Convera Stockholders’ Meeting, regardless of whether Convera’s Board of
Directors has withdrawn or modified its recommendation of this Agreement and the
Merger. For purposes of this Agreement, a “Superior Proposal”
means any bona fide, written proposal made by a third party to acquire, directly
or indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of Convera Common
Stock, as the case may be, then outstanding or all or substantially all the
assets of Convera and its Subsidiaries taken together as a whole and otherwise
on terms which the Board of Directors of Convera determines in its good faith
judgment (after receiving written advice of an independent financial advisor of
nationally recognized reputation), taking into account all of the terms and
conditions of such proposal and this Agreement (including any proposal by FL to
amend the terms of this Agreement) to be more favorable to Convera’s
stockholders than the Merger, to have a reasonable likelihood of closing, and
for which financing, to the extent required, is then committed by a nationally
recognized financial institution.
(c) Nothing
contained in this Section 6.2 shall
prohibit Convera from taking any action or disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
from making any disclosure to Convera’s stockholders if, in the good faith
judgment of the Board of Directors of Convera, after receiving the advice of
outside counsel, failure so to disclose would be inconsistent with its
obligations under applicable law; provided, however, that
except as specifically permitted in this Section 6.2 or in
connection with the termination of this Agreement by the party pursuant to Section 8.1(e),
neither any party nor its Board of Directors nor any committee thereof shall
withdraw or modify, or publicly propose to withdraw or modify, its position with
respect to this Agreement or the Merger or approve or recommend, or publicly
propose to approve or recommend, an Acquisition Proposal.
6.3 Legal Conditions to
Merger. FL and, subject to Section 6.2, Convera
and B2B will use all reasonable best efforts to comply promptly with all legal
requirements which may be imposed with respect to the Merger (which efforts
shall include, without limitation, furnishing all information required in
connection with approvals of or filings with any other Governmental Entity and
stock exchange) and will promptly cooperate with and furnish information to each
other in connection with any such requirements imposed upon any of them or any
of their Subsidiaries in connection with the Merger. Each party will,
and will cause its Subsidiaries to, take all reasonable actions necessary to
obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity required to be obtained or made by such party or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement. Notwithstanding the
foregoing, no party shall be required to sell or dispose of or hold separately
(through a trust or otherwise) any material assets or businesses of such party,
its affiliates or Subsidiaries, or make any other material change in any portion
of its business or incur any other material limitation on its conduct of its
business to obtain such authorizations, approvals, consents and
waivers.
6.4 Public
Announcements. Each party shall consult with the other parties
before issuing any press release or making any public statement with respect to
the Merger or this Agreement and shall not issue any such press release or make
any such public statement without the prior written consent of the other party,
which shall not be unreasonably withheld or delayed; provided, however, that a
party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the written advice of counsel
be required by law or the rules and regulations of the applicable stock exchange
if it has used all reasonable efforts to consult with the other party prior
thereto.
6.5 Consents. Each
party shall use all reasonable best efforts to obtain all necessary consents,
waivers and approvals under any of its and its Subsidiaries’ material
agreements, contracts, licenses or leases in connection with the Merger,
including without limitation each of the consents listed in Section 6.5 of the FL
Disclosure Schedule and Section 6.5 of the
Convera Disclosure Schedule or required to prevent the occurrence of an event
that could reasonably be expected to have a Material Adverse Effect on such
party prior to the Effective Time or after the Effective Time. In the
event that a consent, waiver or approval is not obtained by a party, such party
shall use its reasonably best efforts preserve all rights of, and benefits to,
Company under the relevant contract, license or lease so that Company will
obtain the benefit of the bargain as if it is a party to such contract, license
or lease. FL shall solicit Convera’s stockholders for approval of the
transactions contemplated by or in this Agreement.
6.6 Commercially Reasonable
Efforts. Subject to the terms and conditions of this
Agreement, each of the parties agrees to use all commercially reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement.
6.7 Notification of Certain
Matters. Each party shall give prompt notice to the other
parties of the occurrence, or failure to occur, of any event, which occurrence
or failure to occur would be reasonably likely to cause (a)(i) any
representation or warranty of such party contained in this Agreement that is
qualified as to materiality to be untrue or inaccurate in any respect or
(ii) any other representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect, in each case at
any time from and after the date of this Agreement until the Effective Time, or
(b) any material failure of a party, or of any officer, director, employee
or agent thereof, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement. In
addition, each party shall give prompt notice to the other parties of any change
or event having, or which could reasonably be expected to have, a Material
Adverse Effect on such party or materially affect the ability for the conditions
set forth in Article
VII to be satisfied. Notwithstanding the above, the delivery
of any notice pursuant to this Section 6.7 will not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice or the conditions to such party’s obligation to consummate
the Merger.
6.8 Audit of FL Financial
Statements. FL shall cause the financial statements of FL and
its Subsidiaries for the fiscal years of 2007 and 2008 to be audited by a public
accounting firm registered with Public Company Accounting Oversight Board and
qualified to audit public company financial statements according to SEC rules
and regulations (the “Audited FL Financial
Statements”) as promptly as possible, each of the Audited FL Financial
Statements (including, in each case, any related notes and schedules) of FL and
any of its Subsidiaries shall comply in all material respects with all
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, shall prepared in accordance with GAAP (except as
may be indicated in the notes thereto) applied on a consistent basis throughout
the periods involved and fairly presents the consolidated financial position of
FL and its Subsidiaries as of the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
any unaudited interim financial statements are subject to normal and recurring
year-end adjustments which have not been and are not expected to be material in
amount, individually or in the aggregate.
6.9 Sufficient
Reserve. Convera shall hold as cash reserves of no less than
an aggregate amount of $3,000,000 for a period of six months following the
Closing.
6.10 Distribution to Convera Stockholders. Convera
shall not distribute Company Common Stock or any other interests of Company held
by Convera or any of its affiliates to any of Convera’s stockholders prior to
April 30, 2010; thereafter, Convera may distribute Company Common Stock or any
other interest of the Company by Convera or any of its affiliates to any of
Convera’s stockholders at any time so far as a written notice of such
distribution is delivered to Company no later than forty-five (45) days prior to
such distribution. Upon the receipt of such notice, Company shall use
its bests efforts to prepare and file, at Company’s own cost, a registration
statement on Form 10 with the SEC prior to the date of such distribution,
registering Company Common Stock under the Exchange Act and to cause such
Company Common Stock to be listed on NASDAQ Stock Market or such other exchange
approved by Convera.
6.11 Tax Treatment. The
parties hereto intend for the Merger to be treated for U.S. federal income tax
purposes as a taxable transfer of assets by B2B to Merger Sub in a transaction
not qualifying under Section 368 of the Code, followed by a liquidation of B2B
into Convera (or a subsidiary of Convera), with Convera (or such subsidiary)
retaining the tax attributes of B2B and the Convera affiliated group (including
any net operating loss carryovers). The parties shall report, act and
file all Tax Returns consistent with the foregoing treatment and shall not take
any action or position (whether in audits, Tax Returns or otherwise) that is
inconsistent with such treatment, unless required to do so by applicable
law.
ARTICLE
VII.
CONDITIONS
TO THE MERGER
7.1 Conditions to Obligation of Each
Party to Effect the Merger. The respective obligations 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) Convera Stockholder
Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of
Convera;
(b) Government
Approvals. Any requirements of other jurisdictions applicable
to the consummation of the Merger shall have been satisfied, unless the failure
of such requirements to be satisfied would not reasonably be expected to result
in a Material Adverse Effect on any party;
(c) No Injunctions or Restraints;
Illegality. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Merger shall be in effect, nor shall any proceeding brought by any
administrative agency or commission or other Governmental Entity seeking any of
the foregoing be pending; and there shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger which makes the consummation of the Merger illegal;
and
(d) Governmental
Actions. There shall not be pending or threatened any action
or proceeding (or any investigation or other inquiry that might result in such
an action or proceeding) by any Governmental Entity or administrative agency
before any Governmental Entity, administrative agency or court of competent
jurisdiction, nor shall there be in effect any judgment, decree or order of any
Governmental Entity, administrative agency or court of competent jurisdiction,
in either case, that result in a Material Adverse Effect on any
party.
7.2 Additional Conditions to Obligations
of Convera and B2B. The obligations of Convera and B2B to
effect the Merger are also subject to the following conditions:
(a) Representations and
Warranties. Disregarding all “Material Adverse Effect”
qualifications and other qualifications based on the word “material” or similar
phrases contained herein, each of the representations and warranties of FL (and
the UK Surviving Company and FL Subs upon their execution and delivery of the
Joinder Agreement) contained in this Agreement shall be true, complete and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date (except to the extent such representations and
warranties speak as of a different date) as though made on and as of the Closing
Date, except for changes contemplated by this Agreement and breaches or
inaccuracies of such representations and warranties which have neither had nor
reasonably would be expected to have a Material Adverse Effect; and Convera
shall have received a certificate signed on behalf of FL, the UK Surviving
Company and FL Subs by their respective chief executive officer and chief
financial officer to such effect;
(b) Agreements and
Covenants. FL (and the UK Surviving Company and FL Subs upon
their execution and delivery of the Joinder Agreement) shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it; and Convera shall have
received a certificate signed by the respective chief executive officer and the
chief financial officer of FL, the UK Surviving Company and FL Subs to such
effect;
(c) Consents
Obtained. All consents, approvals, orders, licenses,
authorizations, registrations, declarations, permits or waivers required to be
obtained, and all filings required to be made, by FL (and the UK Surviving
Company and FL Subs upon their execution and delivery of the Joinder Agreement)
for the authorization, execution and delivery of this Agreement and the
consummation by it of the transactions contemplated hereby shall have been
obtained and made by it (them) except where the failure to obtain such consents,
approvals, orders, licenses, authorizations, registrations, declarations,
permits or waivers or to make such filings, in the aggregate shall not be or
have a Material Adverse Effect;
(d) Fairness
Opinion. Convera shall have received a written fairness
opinion as to the fairness of the transaction contemplated in this Agreement to
the stockholders of Convera from a financial point of view, and such fairness
opinion shall not have been revoked or rescinded;
(e) Employment
Agreements. Each of FL Key Employees shall have executed and
delivered an employment agreement with Company or one of its
Subsidiaries.
(f) No Material Adverse
Effect. Immediately prior to the Closing, there is no fact,
event or circumstances that individually or taken together with all other facts,
events and circumstances known to Convera or B2B, has had or reasonably could be
expected to have a Material Adverse Effect on FL and its Subsidiaries taken
together as a whole;
(g) Audited FL Financial
Statements. The Audited FL Financial Statements do not reflect
any material negative differences from the unaudited unconsolidated financial
statements of FL and its Subsidiaries delivered to Convera prior to the
execution of this Agreement unless such differences are solely resulted from (1)
GAAP adjustments, (2) conversion to accrual basis or (3) the consolidation, of
such financial statements; and
(h) FL
Restructuring. The UK Restructuring and the Second
Restructuring have each closed.
7.3 Additional Conditions to Obligation
of FL. The obligation of FL (and the UK Surviving Company and
FL Subs upon their execution and delivery of the Joinder
Agreement) to effect the Merger is also subject to the following
conditions:
(a) Representations and
Warranties. Disregarding all “Material Adverse Effect”
qualifications and other qualifications based on the word “material” or similar
phrases contained herein, each of the representations and warranties of Convera
and B2B contained in this Agreement shall be true, complete and correct in all
material respects, in each case as of the date of this Agreement and as of the
Closing Date (except to the extent such representations and warranties speak as
of a different date) as though made on and as of the Closing Date, except for
changes contemplated by this Agreement and breaches or inaccuracies of such
representations and warranties which have neither had nor reasonably would be
expected to have a Material Adverse Effect; and FL shall have received a
certificate signed on behalf of each of Convera and B2B by their respective
chief executive officer and chief financial officer to such effect;
(b) Agreements and
Covenants. Convera and B2B shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them at or prior to the Closing
Date; and FL shall have received a certificate signed by their respective chief
executive officer and the chief financial officer to such effect;
(c) Consents
Obtained. All consents, approvals, orders, licenses,
authorizations, registrations, declarations, permits or waivers required to be
obtained, and all filings required to be made, by Convera and/or B2B, as the
case may be, for the authorization, execution and delivery of this Agreement and
the consummation by it of the transactions contemplated hereby shall have been
obtained and made by Convera and/or B2B, as the case may be, except where the
failure to obtain such consents, approvals, orders, licenses, authorizations,
registrations, declarations, permits or waivers or to make such filings, in the
aggregate shall not be or have a Material Adverse Effect;
(d) Employment
Agreements. Each of Convera Key Employees shall have executed
and delivered an employment agreement with Company or one of its Subsidiaries
and each of Convera’s employees shall have executed and delivered to Convera a
valid and binding general release, which shall release Convera of all
liabilities and claims;
(e) Video Patent
License. Prior to or at the Closing, Convera has granted a
royalty-free, non-exclusive use license to B2B assignable to Company for the
video patents specified in Schedule 7.3(e) so
far as such license will not create an encumbrance or restriction that may be
reasonably expected to materially reduce the value of such patents to
Convera;
(f) Tax
Clearance. Favorable tax clearance confirming that no tax will
be levied on Mr. Xxxxx Xxxxxxx or Mr. Xxxxx Xxxxx in connection with the UK
Restructuring and Second Restructuring from Her Majesty’s Revenue and Customs
has been obtained by the shareholders of Global News Net Ltd.;
(g) No Material Adverse
Effect. Immediately prior to the Closing, there is no fact,
event or circumstances that individually or taken together with all other facts,
events and circumstances known to FL, has had or reasonably could be expected to
have a Material Adverse Effect on Convera and its Subsidiaries taken together as
a whole; and
(h) Convera
Restructuring. The transactions contemplated by the Convera
Contribution Agreement have closed in accordance with such
agreement.
ARTICLE
VIII.
TERMINATION
8.1 Termination. This
Agreement may be terminated at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of Convera:
(a) by mutual
written consent duly authorized by the Boards of Directors of Convera or B2B on
one side, and FL on the other side;
(b) by either
Convera or B2B on one side, or FL on the other side, if the Merger shall not
have been consummated by October 31, 2009 (the “Outside Date”) (provided, that the right to
terminate this Agreement under this Section 8.1(b) shall
not be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or materially contributed to the failure of the
Merger to occur on or before the Outside Date);
(c) by either
Convera or B2B on one side, or FL on the other side, if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger (provided that the party
seeking to terminate pursuant to this Section 8.1(c) shall
have complied with its obligations under Section 6.3 and used
its reasonable best efforts to have any such order, decree, ruling or other
action vacated or lifted);
(d) by either
Convera or B2B on one side, or FL on the other side, if at the Convera
Stockholders’ Meeting considering the Merger (giving effect to any adjournment
or postponement thereof), the requisite vote of the stockholders of Convera
favor of this Agreement and the Merger shall not have been obtained; provided that the right to
terminate this Agreement under this Section 8.1(d) shall
not be available to a party if at such time it is in breach of or has failed to
fulfill its obligations under this Agreement;
(e) by
Convera or B2B, if FL shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform would cause the conditions set
forth in Section
7.2(a) or Section 7.2(b) to not
be satisfied and which breach or failure, if capable of being cured, shall not
have been cured within twenty (20) business days following receipt by FL of
written notice of such breach or failure from Convera or B2B;
(f) by FL, if
Convera or B2B shall have breached or failed to perform any of their respective
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform would cause the conditions set
forth in Sections 7.3(a)
or 7.3(b), to
not be satisfied and which breach or failure, if capable of being cured, shall
not have been cured within twenty (20) business days following receipt by
Convera of written notice of such breach or failure from FL;
(g) by FL,
Convera or B2B, in connection with the acceptance by Convera of a Superior
Proposal.
8.2 Effect of
Termination. In the event of the termination of this Agreement
pursuant to Section
8.1, this Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto or any of its affiliates, directors,
officers or stockholders except (i) that the provisions of this Section 8.2, Section 8.3 and
Article IX
hereof shall survive termination and (ii) nothing herein shall relieve any
party from liability for any willful breach of this Agreement. The
Confidentiality Agreement shall survive termination of this Agreement as
provided therein.
8.3 Fees
and Expenses.
(a) Except as
set forth in this Section 8.3, FL shall
be responsible for the payment of all the fees and expenses incurred and to be
incurred by FL and any of its Subsidiaries in connection with this Agreement and
the transactions contemplated hereby (including the fees and expenses of legal
counsel and accountants of FL and its Subsidiaries). Convera shall be
responsible for the payment of all the fees and expenses incurred and to be
incurred by Convera and any of its Subsidiaries in connection with this
Agreement and the transactions contemplated hereby (including the fees and
expenses of legal counsel and accountants of Convera and its Subsidiaries), in
each case whether or not the Merger is consummated.
(b) FL shall
reimburse Convera for all their fees and expenses actually incurred subject to a
maximum amount of $400,000 relating to the transactions contemplated by this
Agreement (including without limitation reasonable fees and expenses of counsel,
accountants and financial advisors), upon the termination of this Agreement
(i) by Convera or B2B pursuant to Section 8.1(e), or
(ii) by Convera or B2B on one side, or FL on the other side, pursuant to
Section 8.1(b)
if the failure to satisfy the conditions by FL set forth in Section 7.2(a) or
7.2(b) by the
Outside Date shall have resulted in the Closing not occurring.
(c) Convera
shall reimburse FL for all fees and expenses of the other parties actually
incurred subject to a maximum amount of $400,000 relating to the transactions
contemplated by this Agreement (including without limitation reasonable fees and
expenses of counsel, accountants and financial advisors), upon the termination
of this Agreement (i) by any of FL pursuant to Section 8.1(f), or
(ii) by Convera or B2B, on one side, or FL on the other side, pursuant to
Section 8.1(b)
if the failure to satisfy the conditions by Convera or B2B set forth in Section 7.3(a) or
7.3(b) by the
Outside Date shall have resulted in the Closing not occurring.
(d) Convera
shall pay to FL a termination fee (the “Convera Termination
Fee”) of $600,000 as liquidated damages in the event that this Agreement
is terminated as follows: (i) Convera, B2B or FL shall terminate this Agreement
pursuant to Section
8.1(d); or (ii) Convera’s failure to satisfy the condition set forth in
Section 7.2(d)
hereof by the Outside Date shall have resulted in the Closing not
occurring. Any Convera Termination Fee payable under this provision
shall be payable as liquidated damages to compensate FL for the damages FL will
suffer if this Agreement is terminated in the circumstances set forth in this
Section 8.3(d),
which damages cannot be determined with reasonable certainty. It is
specifically agreed that any Convera Termination Fee to be paid pursuant to this
Section 8.3(d)
represents liquidated damages and not a penalty. Any payment required
to be made pursuant to Section 8.3(d) shall
be made not later than ten (10) business days after the consummation of an
Acquisition Proposal. In no event shall more than one Convera
Termination Fee be made. In no event shall Convera be required to pay
the Convera Termination Fee if, immediately prior to the termination of this
Agreement, FL was in material breach of its obligations under this
Agreement.
(e) No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of FL or any of its
Subsidiaries; provided,
however, that Hempstead & Co Inc. is providing a fairness opinion to
Convera.
ARTICLE
IX.
INDEMNIFICATION;
REMEDIES
9.1 Survival.
All
representations, warranties, covenants and obligations in this Agreement, the
disclosure schedules, the supplements to the disclosure schedules, and any other
certificate or document delivered pursuant to this Agreement shall survive the
Closing Date for a period of six (6) months, subject to Section 9.4, except
for the agreements contained in: Articles I and II; Sections 5.6 (SEC
Information), 6.4 (Public
Announcements), 6.6 (Commercially
Reasonable Efforts), 6.10 (Distribution to
Convera Stockholders), 8.2 (Effect of
Termination) and 8.3 (Fees and
Expenses); and Article X, which shall survive the Effective Time for an
indefinite period of time. The Confidentiality Agreement shall
survive the execution and delivery of this Agreement or the termination of this
Agreement in accordance with the provisions of this Agreement, as the case may
be, pursuant to its terms and conditions. The right to
indemnification, reimbursement or other remedy based upon such representations,
warranties, covenants and obligations shall not be affected by any investigation
(including any environmental investigation or assessment) conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or compliance with
any such representation, warranty, covenant or obligation. The waiver of any
condition based upon the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations.
9.2 Mutual
Indemnification and Reimbursement
Convera
and B2B, on one side, and FL (jointly and severally together with the UK
Surviving Company and FL Subs upon their execution and delivery of the Joinder
Agreement), on the other side, will indemnify and hold harmless each other, and
its shareholders, owners, principals, directors, officers, employees, agents,
subsidiaries and affiliates (collectively, the “Indemnified
Persons”), and will reimburse the Indemnified Persons for any loss,
liability, claim, damage, expense (including costs of investigation and defense
and reasonable attorneys’ fees and expenses) or diminution of value, whether or
not involving a third-party claim (collectively, “Damages”), arising
from or in connection with:
(a) their or
its breach of any representation or warranty in (i) this Agreement (without
giving effect to any supplement to their respective disclosure schedules), (ii)
their respective disclosure schedules, (iii) the supplements to their respective
disclosure schedules (which supplements, taken together as a whole, shall not
materially adversely affect the disclosure schedules delivered at the time of
execution of this Agreement), or (iv) any other certificate, document, writing
or instrument delivered pursuant to this Agreement;
(b) their or
its breach of any of their or its covenant or obligation in this Agreement or in
any other certificate, document, writing or instrument delivered pursuant to
this Agreement;
(c) any
brokerage or finder’s fees or commissions or similar payments based upon any
agreement or understanding made, or alleged to have been made, by any person
with such party or parties (or any person acting on its or their behalf) in
connection with any of the transactions contemplated in or by this Agreement;
and
(d) Convera
and B2B will jointly and severally indemnify and hold harmless of Indemnified
Persons of FL (including the UK Surviving Company and FL Subs upon their
execution and delivery of the Joinder Agreement) and reimburse them for any
Damages arising from or in connection with the claims or disputes set forth on
Sections
4.12(a) through 4.12(d) of the
Convera Disclosure Schedule, and FL (jointly and severally together with the UK
Surviving Company and FL Subs upon their execution and delivery of the Joinder
Agreement) will indemnify and hold harmless of Convera’s and B2B’s Indemnified
Persons and reimburse them for any Damages arising from or in connection with
the claims or disputes set forth on Section 3.12 of the
FL Disclosure Schedule. Notwithstanding anything to the contrary in
this Agreement, the parties agree that, upon the Closing, any Damages arising
from or in connection with the claims set forth on Section 4.12(e) of
the Convera Disclosure Schedule will be assumed by the Company in
full.
9.3 Limitations
on Amount
No party
shall have any liability (for indemnification or otherwise) with respect to
claims under Sections
9.2(a) and 9.2(b) until the
total of all Damages with respect to such matters exceeds $150,000 and then only
for the amount by which such Damages exceed $150,000. In any event,
the claims of FL, on one hand, and Convera and B2B, on the other hand, under
Sections 9.2(a)
and 9.2(b) are
subject to a maximum amount of $1,350,000 in the aggregate. This
Section 9.3
will not apply to claims under Sections 5.6, 6.10 and 9.2(c), and the
breaching party or parties will be liable for all Damages with respect to such
matters.
9.4 Time
Limitations
If the
Closing occurs, a party will have liability (for indemnification or otherwise)
under Section
9.2, only if on or before the date that is the six (6) month anniversary
of the Closing Date (except for Section 9.2(d)), the
Indemnified Person notifies the party of a claim specifying the factual basis of
the claim in reasonable detail to the extent then known by the Indemnified
Person, other than breach of Sections 5.6 and
6.10, which
covenants shall expire on December 31, 2010. For the avoidance of any
doubt, the time limitations set forth in this Section 9.4 shall not
apply to the mutual indemnification obligations set forth in Section
9.2(d).
9.5 Third-Party
Claims
(a) Promptly
after receipt by an Indemnified Person of notice of the assertion of a
third-party claim against it, such Indemnified Person shall give notice to the
party obligated to indemnify under Section 9.2 (an
“Indemnifying
Person”) of the assertion of such third-party claim, provided that the
failure to notify the Indemnifying Person will not relieve the Indemnifying
Person of any liability that it may have to any Indemnified Person, except to
the extent that the Indemnifying Person demonstrates that the defense of such
third-party claim is prejudiced by the Indemnified Person’s failure to give such
notice.
(b) If an
Indemnified Person gives notice to the Indemnifying Person pursuant to Section 9.5(a) of the
assertion of a third-party claim, the Indemnifying Person shall be entitled to
participate in the defense of such third-party claim and, to the extent that it
wishes (unless (i) the Indemnifying Person is also a person against whom the
third-party claim is made and the Indemnified Person determines in good faith
that joint representation would be inappropriate or (ii) the Indemnifying Person
fails to provide reasonable assurance to the Indemnified Person of its financial
capacity to defend such third-party claim and provide indemnification with
respect to such third-party claim), to assume the defense of such third-party
claim with counsel satisfactory to the Indemnified Person. After
notice from the Indemnifying Person to the Indemnified Person of its election to
assume the defense of such third-party claim, the Indemnifying Person shall not,
so long as it diligently conducts such defense, be liable to the Indemnified
Person under this Article IX for any
fees of other counsel or any other expenses with respect to the defense of such
third-party claim, in each case subsequently incurred by the Indemnified Person
in connection with the defense of such third-party claim, other than reasonable
costs of investigation. If the Indemnifying Person assumes the defense of a
third-party claim, (i) such assumption will conclusively establish for purposes
of this Agreement that the claims made in that third-party claim are within the
scope of and subject to indemnification, and (ii) no compromise or settlement of
such third-party claims may be effected by the Indemnifying Person without the
Indemnified Person’s written consent unless (A) there is no finding or admission
of any violation of legal requirement or any violation of the rights of any
person; (B) the sole relief provided is monetary damages that are paid in full
by the Indemnifying Person; and (C) the Indemnified Person shall have no
liability with respect to any compromise or settlement of such third-party
claims effected without its written consent. If notice is given to an
Indemnifying Person of the assertion of any third-party claim and the
Indemnifying Person does not, within ten (10) days after the Indemnified
Person’s notice is given, give notice to the Indemnified Person of its election
to assume the defense of such third-party claim, the Indemnifying Person will be
bound by any determination made in such third-party claim or any compromise or
settlement effected by the Indemnified Person.
(c) Notwithstanding
the foregoing, if an Indemnified Person determines in good faith that there is a
reasonable probability that a third-party claim may adversely affect it or its
affiliates or subsidiaries other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the Indemnified
Person may, by notice to the Indemnifying Person, assume the exclusive right to
defend, compromise or settle such third-party claim, but the Indemnifying Person
will not be bound by any determination of any third-party claim so defended for
the purposes of this Agreement or any compromise or settlement effected without
its written consent (which may not be unreasonably withheld).
(d) Notwithstanding
the provisions of this Section 9.5, each
party hereby consents to the nonexclusive jurisdiction of any court in
Wilmington, Delaware, New York, New York and London, England, in which a
proceeding in respect of a third-party claim is brought against the Indemnified
Person for purposes of any claim that the Indemnified Person may have under this
Agreement with respect to such proceeding or the matters alleged therein and
agree that process may be served on such party with respect to such a claim
anywhere in the world.
(e) With
respect to any third-party claim subject to indemnification under this Article IX: (i) both
the Indemnified Person and the Indemnifying Person, as the case may be, shall
keep the other person fully informed of the status of such third-party claim and
any related proceedings at all stages thereof where such person is not
represented by its own counsel, and (ii) the parties agree (each at its own
expense) to render to each other such assistance as they may reasonably require
of each other and to cooperate in good faith with each other in order to ensure
the proper and adequate defense of any third-party claim.
(f) With
respect to any third-party claim subject to indemnification under this Article IX, the
parties agree to cooperate in such a manner as to preserve in full (to the
extent possible) the confidentiality of all confidential information and the
attorney-client and work-product privileges. In connection therewith, each party
agrees that: (i) it will use its best efforts, in respect of any third-party
claim in which it has assumed or participated in the defense, to avoid
production of confidential information (consistent with applicable law and rules
of procedure), and (ii) all communications between any party hereto and counsel
responsible for or participating in the defense of any third-party claim shall,
to the extent possible, be made so as to preserve any applicable attorney-client
or work-product privilege.
9.6 Other
Claims
A claim
for indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought and shall be
paid promptly after such notice.
ARTICLE
X.
GENERAL
PROVISIONS
10.1 Notices. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made if and when
delivered personally or by overnight courier to the parties at the following
addresses or sent by electronic transmission, with confirmation received, to the
facsimile numbers specified below (or at such other address or telecopy number
for a party as shall be specified by like notice):
(a) If to
Convera or B2B:
Convera
Corporation
0000
Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxx 00000
Attention: Xxxxxxx
X. Condo
Facsimile
No.: (000) 000-0000
Telephone
No.: (000) 000-0000
with a
copy to:
Xxxxxxx
Procter LLP
The New
York Times Building
000
Xxxxxx Xxxxxx
Xxx Xxxx,
XX 00000
Attention: Xxxxxxx
X. Xxxxx, Esq.
Facsimile
No.: (1) (000) 000-0000
Telephone
No.: (1) (000) 000-0000
(b) If to
FL:
Firstlight
Online Limited
000 Xxxx
00xx
Xxxxxx, Xxxxx 000
Xxx Xxxx,
XX 00000
Attention:
Xxxxx Xxxxxxx
Facsimile
No.: (1) (000) 000-0000
Telephone
No.: (1) (000) 000-0000
with a
copy to:
Xxxxx
& Xxxxx
000 Xxxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxxxxx
Xxxxx, Esq.
Facsimile
No.: (1) (000) 000-0000
Telephone
No.: (1) (000) 000-0000
10.2 Certain
Definitions. For purposes of this Agreement, the
term:
(a) “affiliate”
means a person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first mentioned
person; including, without limitation, any partnership or joint venture in which
the first mentioned person (either alone, or through or together with any other
subsidiary) has, directly or indirectly, an interest of 5% or more.
Notwithstanding anything to the contrary in the foregoing, the entities set
forth on Schedule
10.2(a) shall not be deemed an “affiliate” of FL for the purpose of this
Agreement;
(b) “beneficial
owner” with respect to any shares of a company means a person who shall be
deemed to be the beneficial owner of such shares (i) which such person or
any of its affiliates or associates (as such term is defined in Rule 12b-2 of
the Exchange Act) beneficially owns, directly or indirectly, (ii) which
such person or any of its affiliates or associates has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding, or (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such person or any
of its affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any
shares;
(c) “business
day” means any day other than a Saturday or Sunday or any day on which banks in
New York City are required or authorized to be closed;
(d) “control”
including the terms “controlled by” and “under common control with”) means the
possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management or policies of a person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise; and
(e) “include”
or “including” means “include, without limitation” or “including, without
limitation,” as the case may be, and the language following “include” or
“including” shall not be deemed to set forth an exhaustive list;
and
(f) “knowledge”
with respect to a company means the knowledge that the directors and officers of
the company and any Subsidiaries and the employees of the company and any of the
company’s Subsidiaries having responsibility for the particular subject matter
at issue have or would possess after reasonable investigation and
inquiry.
(g) “Material
Adverse Effect” with respect to a company means any change, effect or
circumstance that, individually or when taken together with all other such
similar or related changes, effects or circumstances that have occurred prior to
the date of determination of the occurrence of the Material Adverse Effect, (i)
is materially adverse to the business, assets, financial condition or results of
operations of the company and its Subsidiaries taken as a whole or (ii) would
reasonably be expected to prevent the company from consummating the transactions
contemplated hereby; provided,
however, that none of the following shall be deemed to constitute a
Material Adverse Effect: (A) any change or event attributable to
conditions affecting the industries in which the company participates or the
U.S. economy as a whole; provided that such change or
event does not have a substantially disproportionate impact on the company; (B)
any change or event resulting from compliance with the terms and conditions of
this Agreement; (C) any change required by any change in applicable
accounting requirements or principles, or applicable laws, rules or regulations
which occurs or becomes effective after the date of this Agreement or (D) any
change or event to the extent attributable to the announcement or pendency of
the Merger that impacts the company’s or any of its Subsidiary’s revenues or
relationships with its employees, customers, suppliers or partners.
(h) “person”
means an individual, corporation, partnership, association, trust,
unincorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act).
(i) “SEC”
means United States Securities and Exchange Commission.
(j) “Subsidiary”
means, with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (A) such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party or any Subsidiary of
such party do not have a majority of the voting interest in such partnership),
(B) such party or any Subsidiary of such party owns in excess of a majority
of the outstanding equity or voting securities or interests or (C) such
party or any Subsidiary of such party has the right to elect at least a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization.
10.3 Amendment. This
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective Time;
provided, however,
that, after approval of the Merger by the stockholders of Convera, no amendment
may be made which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
10.4 Extension;
Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may to the extent legally allowed, (a) extend the time for the performance
of any of the obligations or other acts of any other party hereto,
(b) waive any inaccuracies in the representations and warranties of any
other party hereto contained herein or in any document delivered pursuant hereto
or (c) waive compliance with any of the agreements or conditions of any
other party hereto contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
10.5 Headings. 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.
10.6 Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the fullest extent possible.
10.7 Entire Agreement; No Third Party
Beneficiaries. This Agreement (including the documents and
instruments referred to herein, including the Confidentiality Agreement)
(a) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof, and (b) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
10.8 Assignment. This
Agreement shall not be assigned by operation of law or otherwise without the
prior written consent of the other parties; provided, however, that any assignment
made in connection with Sections 1.4, 1.5 or 1.6 hereof shall not
require such consent.
10.9 Interpretation. When
a reference is made in this Agreement to Sections, such reference shall be to a
Section of this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
10.10 Failure or Indulgence Not Waiver;
Remedies Cumulative. No failure or delay on the part of any
party hereto in the exercise of any right hereunder shall impair such right or
be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or of
any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
10.11 Governing Law. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Delaware, without regard to the conflict of law provisions
thereof.
10.12 Counterparts. This
Agreement may be executed in two or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
10.13 Dispute
Resolution. In the event that any dispute or controversy
arises between the parties out of or relating to this Agreement or any documents
or instruments delivered pursuant to this Agreement (a “Dispute”), a party
shall notify the other party in writing of the existence of the Dispute, and the
parties shall meet and negotiate in good faith to attempt to resolve the
matter. If such efforts do not within thirty (30) days resolve the
Dispute, the Dispute shall be resolved by binding arbitration as provided in
this Section
10.13. The parties shall each appoint an arbitrator of choice
from a list of arbitrators recognized by the American Arbitration
Association. The two appointed arbitrators shall appoint a third
arbitrator from the list, and the three arbitrators shall hear the parties and
settle the Dispute. The proceedings shall be conducted under and
governed by the Commercial Rules of the American Arbitration Association, as in
effect from time to time. All arbitration hearings shall be conducted
in the venue selected by the party not bringing the action, which jurisdiction
shall either be Manhattan County of New York State, New Castle County of
Delaware State, or London, England. All applicable statues of
limitation shall apply to any Dispute. The arbitrators shall have no
power to award punitive or exemplary damages or to ignore or vary the terms of
this Agreement, and shall be bound to apply the governing law. A
judgment upon the award may be entered in any court having
jurisdiction.
10.14 Enforcement. Notwithstanding
anything to the contrary in Section 10.13 above,
the parties agree that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in the Court of Chancery of and for the New Castle County,
State of Delaware, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties (a)
consents to submit itself to the personal jurisdiction of the Court of Chancery
of and for the New Castle County, State of Delaware in an injunctive or specific
enforcement action brought under this Section 10.14, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any injunctive or specific enforcement action under this Section 10.14 in any
court other than the Court of Chancery of and for the New Castle County, State
of Delaware.
10.15 Legal Fees. The
prevailing party in any action under Section 10.13 or
10.14 hereof
shall be entitled to recover reasonable attorneys’ fees and expenses from the
non-prevailing party, which fees and expenses shall be in addition to any other
relief which may be awarded.
10.16 WAIVER
OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HERBY OR HEREIN OR THE ACTIONS OF THE PARTIES IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT.
LIBNY/4821565.24 06/03/2009
EXECUTION
VERSION
IN WITNESS WHEREOF, the
parties have caused this Agreement and Plan of Merger to be executed as of the
date first written above by their respective officers thereunto duly
authorized.
| CONVERA CORPORATION | |||
|
|
By:
|
/s/ Xxxxxxx Condo | |
|
Name: Xxxxxxx
Condo
|
|||
| Position: Chief Executive Officer | |||
| B2BNETSEARCH, INC. | |||
|
|
By:
|
/s/ Xxxxxxx Condo | |
|
Name: Xxxxxxx
Condo
|
|||
| Position: Chief Executive Officer | |||
|
|
|||
| FIRSTLIGHT ONLINE LIMITED | |||
|
|
By:
|
/s/ Xxxxx Xxxxxxx | |
|
Name:
Xxxxx Xxxxxxx
|
|||
| Position: Chief Executive Officer | |||
LIBNY/4821565.24 06/03/2009
EXECUTION
VERSION
EXHIBIT
1.4
Form of Joinder
Agreement
The
undersigned hereby agrees, effective as of the date hereof, to become a party to
that certain Agreement and Plan of Agreement dated as of May 29, 2009, by and
among Convera Corporation, a Delaware corporation, B2BNetSearch, Inc., a
Delaware corporation and Firstlight Online Limited, a UK company, as may be
amended from time to time, and to be bound by all the terms and conditions
thereof (the “Agreement”).
For the
purpose of notice under Section 10.1 of the Agreement, the contact information
of the undersigned shall be as set forth on the signature block
below.
THE
UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THE AGREEMENT, THIS JOINDER AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN OR THE ACTIONS OF THE UNDERSIGNED IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THE AGREEMENT OR
THIS JOINDER AGREEMENT.
[NAME
OF UK SURVIVING COMPANY/COMPANY/INTERMEDIARY SUB/MERGER SUB]
___________________________
Name:
Position:
Address:
Attention:
Facsimile
No.:
Telephone
No:
LIBNY/4821565.24 06/03/2009
EXECUTION
VERSION
EXHIBIT 1.9(A)
Directors
Directors
of Company and the Surviving Corporation immediately subsequent to the Effective
Time shall be:
(1) Xxxxxxx
Condo (Chairman of the Boards)
(2) Xxxxx
Xxxxxxx
(3) Xxxx
Xxxxxxxxxx
(4) Xxxxx
Xxxxx
(5) Xxxxxxx
Xxxxxxx
LIBNY/4821565.24 06/03/2009
EXECUTION
VERSION
EXHIBIT
1.9(B)
Officers
Officer
of Company and the Surviving Corporation immediately subsequent to the Effective
Time shall be:
(1) Xxxxx
Xxxxxxx (CEO)
LIBNY/4821565.24 06/03/2009
