EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
VIANET DIRECT, INC.,
DIGITAL IMAGING RESOURCES, INC.
and
VIANET ACQUISITION, INC.
Dated as of June 5, 2006
TABLE OF CONTENTS
Page No.
RECITALS ..........................................................1
ARTICLE I. DEFINITIONS......................................................1
ARTICLE II. THE MERGER......................................................9
2.1 The Merger................................................9
2.2 Effective Time Of The Merger..............................9
2.3 Closing...................................................9
2.4 Surviving Corporation.....................................9
ARTICLE III. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.........................10
3.1 Effect on Merger Sub Capital Stock.......................10
3.2 Effect on Shares.........................................10
3.3 Effect on Options........................................10
3.4 Effect on Warrants.......................................10
3.5 Exchange of Certificates; Payment........................11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF VIANET.......................11
4.1 Organization and Good Standing...........................11
4.2 Corporate Documents......................................12
4.3 Capitalization of Vianet.................................12
4.4 Authorization of Transaction.............................12
4.5 Noncontravention.........................................12
4.6 Vianet Financial Information.............................13
4.7 Events Subsequent to Vianet Balance Sheet................13
4.8 Tax Matters..............................................15
4.9 Title to Assets..........................................17
4.10 Real Property............................................17
4.11 Leased Real Property.....................................17
4.12 Condition of Facilities..................................17
4.13 Vianet Intellectual Property.............................18
4.14 Affiliate Transactions...................................18
4.15 Contracts................................................19
4.16 Powers of Attorney.......................................19
4.17 Litigation...............................................19
4.18 Employee Benefits........................................20
4.19 Banking Relationships....................................21
4.20 Insurance................................................21
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4.21 Employees................................................21
4.22 Labor Relations..........................................21
4.23 Legal Compliance.........................................22
4.24 Brokers' Fees............................................22
4.25 Undisclosed Liabilities..................................22
4.26 Disclosure...............................................22
ARTICLE V. REPRESENTATIONS AND WARRANTEES OF PARENT AND MERGER SUB.........22
5.1 Representations of Parent Concerning the Transaction.....23
5.2 Power and Authority......................................34
5.3 No Subsidiaries..........................................35
5.4 Merger Sub Common Stock..................................35
ARTICLE VI. ACCESS TO INFORMATION AND DOCUMENTS............................35
6.1 Access to Information....................................35
6.2 Effect of Access.........................................35
ARTICLE VII. COVENANTS.....................................................35
7.1 Preservation of Business.................................35
7.2 Current Information. ....................................36
7.3 Material Transactions....................................36
7.4 Public Disclosures.......................................38
7.5 Confidentiality..........................................39
7.6 No Shop..................................................39
7.7 Other Actions............................................39
7.8 Accounting Methods.......................................40
7.9 Documentation............................................40
7.10 Cooperation..............................................40
7.11 Notice of Subsequent Events..............................40
7.12 Dissolution of Subsidiaries..............................41
7.13 Review and Filing of SEC Reports.........................41
7.14 Registration Rights. ....................................41
7.15 Lock-Up Agreement........................................41
ARTICLE VIII. CONDITIONS TO CLOSING........................................41
8.1 Mutual Conditions........................................41
8.2 Conditions to the Obligations of Parent and
Merger Sub...............................................42
8.3 Conditions to the Obligations of Vianet..................43
ARTICLE IX. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION...................45
9.1 Survival of Representations..............................45
9.2 Indemnification..........................................45
9.3 Conditions of Indemnification............................46
9.4 Remedies Cumulative......................................47
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9.5 Security for the Indemnification Obligations of
Parent and Merger Sub....................................47
ARTICLE X. TERMINATION, AMENDMENT AND WAIVER...............................48
10.1 Termination..............................................48
10.2 Effect of Termination....................................48
10.3 Amendment................................................48
10.4 Extension; Waiver........................................48
10.5 Procedure for Termination, Amendment Extension
or Waiver................................................49
ARTICLE XI. MISCELLANEOUS..................................................49
11.1 Notices..................................................49
11.2 Further Assurances.......................................50
11.3 Governing Law............................................50
11.4 Commissions..............................................50
11.5 Captions.................................................50
11.6 Integration of Exhibits and Schedules....................50
11.7 Entire Agreement.........................................50
11.8 Expenses.................................................50
11.9 Counterparts.............................................51
11.10 Binding Effect...........................................51
11.11 No Rule of Construction..................................51
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of June 5, 2006, among VIANET DIRECT, INC., a Delaware corporation ("Vianet"),
DIGITAL IMAGING RESOURCES, INC., a Delaware corporation ("Parent") and VIANET
ACQUISITION, INC., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Merger Sub").
RECITALS
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WHEREAS, each of the Boards of Directors of Vianet, Parent and Merger
Sub have approved the merger of Merger Sub with and into Vianet (the "Merger"),
upon the terms and subject to the conditions set forth herein and in accordance
with the DGCL.
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein, the parties do hereby agree as
follows:
ARTICLE I. DEFINITIONS
(a) "Affiliate" shall mean, as to any Person, any other Person
controlled by, under the control of, or under common control with, such Person.
As used in this definition, "control" shall mean possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any event, any
Person which owns or holds directly or indirectly five per cent (5%) or more of
the voting securities or five per cent (5%) or more of the partnership or other
equity interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such other Person.
(b) "Agreement" means this Agreement and Plan of Merger.
(c) "Applicable Law" or "Applicable Laws" means any and all
laws, ordinances, constitutions, regulations, statutes, treaties, rules, codes,
licenses, certificates, franchises, permits, principles of common law,
requirements and Orders adopted, enacted, implemented, promulgated, issued,
entered or deemed applicable by or under the authority of any Governmental Body
having jurisdiction over a specified Person or any of such Person's properties
or assets.
(d) "Best Efforts" means the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to achieve
that result as expeditiously as possible, provided, however, that a Person
required to use Best Efforts under this Agreement will not be thereby required
to take actions that would result in a Material Adverse Effect in the benefits
to such Person of this Agreement and the Merger.
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(e) "Breach" means any breach of, or any inaccuracy in, any
representation or warranty or any breach of, or failure to perform or comply
with, any covenant or obligation, in or of this Agreement or any other Contract.
(f) "Business" means Vianet's business of operating a real
time, virtual, interactive and anonymous block trading system for all types of
equity securities.
(g) "Business Day" means any day other than (a) Saturday or
Sunday or (b) any other day on which banks in Pennsylvania are permitted or
required to be closed.
(h) "Certificate of Merger" has the meaning set forth in
Section 2.2.
(i) "Certificates" has the meaning set forth in Section
3.5(a).
(j) "Closing" shall mean the exchange of the Shares for the
Merger Consideration as set forth herein.
(k) "Closing Date" shall mean the date on which the Closing,
except for the physical tender of Certificates by holders of Shares, is
completed.
(l) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(m) "Competing Transaction" has the meaning set forth in
Section 7.6.
(n) "Confidential Information" means any information
pertaining to the business, operations, marketing, customers, financing,
forecasts and plans of any Party provided to or learned by any other Party
during the course of negotiation of the Merger. Information shall be treated as
Confidential Information whether such information has been marked "confidential"
or in a similar manner.
(o) "Consent" means any approval, consent, license, permits,
ratification, waiver or other authorization.
(p) "Contract" means any agreement, contract, lease, license,
consensual obligation, promise, undertaking, understanding, commitment,
arrangement, instrument or document (whether written or oral and whether express
or implied), whether or not legally binding.
(q) "Damages" shall have the meaning set forth in Section
9.2(a).
(r) "DGCL" shall mean the Delaware General Corporation Law, as
amended.
(s) "Disclosure Schedules" means the disclosure schedules
delivered by each Party to the other Parties as required by this Agreement on
the date hereof and initialed by the Parties, as subsequently updated or
supplemented by the Parties prior to the Closing. The Disclosure Schedules will
be arranged in paragraphs corresponding to the lettered and numbered
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paragraphs contained in this Agreement. The Disclosure Schedules shall be
attached hereto as Exhibit A and by reference made a part hereof.
(t) "Effective Time" has the meaning set forth in Section 2.2.
(u) "Employee Benefit Plan" has the meaning set forth in ERISA
Section 3(3).
(v) "Encumbrance" means and includes:
(i) with respect to any personal property, any
security or other property interest or right, claim, lien, pledge, option,
charge, security interest, contingent or conditional sale, or other title claim
or retention agreement or lease or use agreement in the nature thereof, interest
or other right or claim of third parties, whether voluntarily incurred or
arising by operation of law, and including any agreement to grant or submit to
any of the foregoing in the future; and
(ii) with respect to any real property (whether and
including owned real estate or Leased Real Estate), any mortgage, lien,
easement, interest, right-of-way, condemnation or eminent domain proceeding,
encroachment, any building, use or other form of restriction, encumbrance or
other claim (including adverse or prescriptive) or right of Third Parties
(including Governmental Bodies), any lease or sublease, boundary dispute, and
agreements with respect to any real property including: purchase, sale, right of
first refusal, option, construction, building or property service, maintenance,
property management, conditional or contingent sale, use or occupancy, franchise
or concession, whether voluntarily incurred or arising by operation of law, and
including any agreement to grant or submit to any of the foregoing in the
future.
(w) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations issued by the Department of
Labor pursuant to ERISA or any successor law.
(x) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(y) "GAAP" means at any particular time generally accepted
accounting principles in the United States, consistently applied on a going
concern basis, using consistent audit scope and materiality standards.
(z) "Governing Documents" means with respect to any particular
entity, the articles or certificate of incorporation and the bylaws; all
equityholders' agreements, voting agreements, voting trust agreements, joint
venture agreements, registration rights agreements or other agreements or
documents relating to the organization, management or operation of any Person or
relating to the rights, duties and obligations of the equityholders of any
Person; and any amendment or supplement to any of the foregoing.
(aa) "Governmental Authorization" means any Consent, license,
registration or permit issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Applicable Law.
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(bb) "Governmental Body" means: (i) nation, state, county,
city, town, borough, village, district, tribe or other jurisdiction; (ii)
federal, state, local, municipal, foreign, tribal or other government; (iii)
governmental or quasi-governmental authority of any nature (including any
agency, branch, department, board, commission, court, tribunal or other entity
exercising governmental or quasi-governmental powers); (iv) multinational
organization or body; (v) body exercising, or entitled or purporting to
exercise, any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power; or (vi) official of any of the
foregoing.
(cc) "Improvements" means all buildings, structures, fixtures
and improvements located on Land, including those under construction.
(dd) "Indemnified Party" has the meaning set forth in Section
9.3.
(ee) "Indemnifying Party" has the meaning set forth in Section
9.3.
(ff) "IRS" means the United States Internal Revenue Service
and, to the extent relevant, the United States Department of the Treasury.
(gg) "Knowledge" means actual knowledge without independent
investigation.
(hh) "Land" means all parcels and tracts of land in which any
Person has an ownership or leasehold interest.
(ii) "Lock-up Agreement" shall mean the Lock-up Agreement by
and between Parent and each of the Parent Lock-Up Stockholders in the form
attached hereto as Exhibit B.
(jj) "Material Adverse Effect" or "Material Adverse Change"
means, in connection with any Person, any event, change or effect that is
materially adverse, individually or in the aggregate, to the condition
(financial or otherwise), properties, assets, liabilities, revenues, income,
business, operations, results of operations or prospects of such Person, taken
as a whole.
(kk) "Merger" has the meaning set forth in the recitals.
(ll) "Merger Consideration" has the meaning set forth in
Section 3.2.
(mm) "Merger Sub" has the meaning set forth in the preamble.
(nn) "Merger Sub Common Stock" has the meaning set forth in
Section 5.4.
(oo) "Order" means any writ, directive, order, injunction,
judgment, decree, ruling, assessment or arbitration award of any Governmental
Body or arbitrator.
(pp) "Ordinary Course of Business" means an action taken by a
Person will be deemed to have been taken in the Ordinary Course of Business only
if that action: (i) is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person; (ii) does not require authorization by
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the board of directors or shareholders of such Person (or by any Person or group
of Persons exercising similar authority) and does not require any other separate
or special authorization of any nature; and (iii) is similar in nature, scope
and magnitude to actions customarily taken, without any separate or special
authorization, in the ordinary course of the normal, day-to-day operations of
other Persons that are in the same line of business as such Person.
(qq) "Parent" has the meaning given in the preamble above.
(rr) "Parent Business" means Parent's business of developing,
manufacturing, marketing and distributing of a video capture system intended for
use in golf swing analysis and other sporting and entertainment activities.
(ss) "Parent Common Stock" means the common stock, par value
$.001 per share, of Parent.
(tt) "Parent Contracts" has the meaning set forth in Section
5.1(o).
(uu) "Parent's Counsel" means Xxxxxxx Xxxxxxxxx, Counselor at
Law, 0 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxx Xxxxxx 00000.
(vv) "Parent Employee Plans" has the meaning set forth in
Section 5.1(r)(i).
(ww) "Parent Financial Information" has the meaning set forth
in Section 5.1(f).
(xx) "Parent Indemnification Stockholders" shall mean those
stockholders of Parent identified by Parent and listed on the Certificate of
Conversion Ratio, Parent Indemnification Stockholders and Parent Lock-Up
Stockholders who shall pledge and deposit with an escrow agent an aggregate of
one million (1,000,000) shares of Parent Common Stock to secure their
indemnification obligations pursuant to the terms and conditions of Section 9.5.
(yy) "Parent Intellectual Property" has the meaning set forth
in Section 5.1(m).
(zz) "Parent Interim Balance Sheet" has the meaning set forth
in Section 5.1(f)(ii).
(aaa) "Parent Lock-Up Stockholders" shall mean those
stockholders of Parent identified by Parent and listed on the Certificate of
Conversion Ratio, Parent Indemnification Stockholders and Parent Lock-Up
Stockholders who shall sign the Lock-Up Agreement with regards to at least
5,593,674 shares of Parent Common Stock.
(bbb) "Parent SEC Reports" has the meaning set forth in
Section 5.1(n).
(ccc) "Parent Tax Affiliate" has the meaning set forth in
Section 5.1(h)(i).
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(ddd) "Party" or "Parties" means Vianet, Parent and/or Merger
Sub.
(eee) "Person" shall mean an individual, company, partnership,
limited liability company, limited liability partnership, joint venture, trust
or unincorporated organization, joint stock corporation or other similar
organization, government or any political subdivision thereof, or any other
legal entity.
(fff) "Plan of Dissolution" has the meaning set forth in
Section 7.12.
(ggg) "Proceeding" means any action, arbitration, audit,
hearing, investigation, litigation or suit (whether civil, criminal,
administrative, judicial or investigative, whether formal or informal, whether
public or private) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.
(hhh) "Real Property" means any Land and Improvements and all
privileges, rights, easements, hereditaments and appurtenances belonging to or
for the benefit of any Land, including all easements appurtenant to and for the
benefit of any Land (a "Dominant Parcel") for, and as the primary means of
access between, the Dominant Parcel and a public way, or for any other use upon
which lawful use of the Dominant Parcel for the purposes for which it is
presently being used is dependent, and all rights existing in and to any
streets, alleys, passages and other rights-of-way included thereon or adjacent
thereto (before or after vacation thereof) and vaults beneath any such streets.
(iii) "Related Agreements" means the Lock-Up Agreement, the
Certificate of Designations, Rights and Preferences of Series A Preferred Stock,
the Certificate of Conversion Ratio, Parent Indemnification Stockholders and
Parent Lock-Up Stockholders, the Certificate of Merger and the escrow agreement
contemplated by Section 9.5.
(jjj) "Real Property Lease" means any lease or rental
agreement pertaining to the occupancy of any improved space on any Land.
(kkk) "Related Person" means with respect to any Person: (i)
any Person that directly or indirectly controls, is directly or indirectly
controlled by or is directly or indirectly under common control with such
specified Person; (ii) any Person that holds a Material Interest in such
specified Person; (iii) each Person that serves as a director, officer, partner,
executor or trustee of such specified Person (or in a similar capacity); (iv)
any Person in which such specified Person holds a Material Interest; (v) any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity), and (vi) for any Person who is an
individual, any Person who is a member of such Person's Family.
For purposes of this definition, (a) "Control" (including "controlling,"
"controlled by," and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; (b) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the
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individual or the individual's spouse within the second degree and (iv) any
other natural person who resides with such individual; and (c) "Material
Interest" means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of voting securities or other voting interests
representing at least ten percent (10%) of the outstanding voting power of a
Person or equity securities or other equity interests representing at least ten
percent (10%) of the outstanding equity securities or equity interests in a
Person.
(lll) "Representative" means with respect to a particular
Person, any director, officer, manager, employee, agent, consultant, advisor,
accountant, financial advisor, legal counsel or other representative of that
Person.
(mmm) "SEC" means the United States Securities and Exchange
Commission.
(nnn) "Series A Stock" has the meaning set forth in Section
3.2.
(ooo) "Securities Act" means the Securities Act of 1933, as
amended.
(ppp) "Security Interest" means any mortgage, pledge, security
interest, Encumbrance, charge, claim, or other lien, other than: (a) mechanic's,
materialmen's and similar liens; (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
Proceedings; (c) liens arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation; (d) liens
arising in connection with sales of foreign receivables; (e) liens on goods in
transit incurred pursuant to documentary letters of credit; (f) purchase money
liens and liens securing rental payments under capital lease arrangements; and
(g) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
(qqq) "Shares" shall mean all issued and outstanding shares of
Vianet's voting common stock, par value $.001 per share.
(rrr) "Subsidiary" means with respect to any Person (the
"Owner"), any corporation or other Person of which securities or other interests
having the power to elect a majority of that corporation's or other Person's
board of directors or similar governing body, or otherwise having the power to
direct the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of a
contingency that has not occurred), are held by the Owner or one or more of its
Subsidiaries.
(sss) "Surviving Corporation" has the meaning set forth in
Section 2.1.
(ttt) "Tangible Personal Property" means all machinery,
equipment, tools, furniture, office equipment, computer hardware, supplies,
materials, vehicles and other items of tangible personal property of every kind
owned or leased by a Party (wherever located and whether or not carried on a
Party's books), together with any express or implied warranty by the
manufacturers or sellers or lessors of any item or component part thereof and
all maintenance records and other documents relating thereto.
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(uuu) "Tax" or "Taxes" means, with respect to any Person, (i)
all income taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings, profits or selected items of income,
earnings or profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, commercial rent, premium, property or windfall profit taxes,
alternative or add-on minimum taxes, customs duties and other taxes, fees,
assessments or charges of any kind whatsoever, together with all interest and
penalties, additions to tax and other additional amounts imposed by any taxing
authority (domestic or foreign) on such person (if any) and (ii) any liability
for the payment of any amount of the type described in clause (i) above as a
result of (A) being a "transferee" (within the meaning of Section 6901 of the
Code or any Applicable Law) of another person, (B) being a member of an
affiliated, combined or consolidated group or (C) a contractual arrangement or
otherwise.
(vvv) "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
(www) "Third Party" means a Person that is not a Party to this
Agreement.
(xxx) "Vianet" has the meaning set forth in the preamble.
(yyy) "Vianet Balance Sheet" has the meaning set forth in
Section 4.6(b).
(zzz) "Vianet Board" has the meaning set forth in Section 4.4.
(aaaa) "Vianet Contracts" has the meaning set forth in Section
4.15.
(bbbb) "Vianet Employee Plans" has the meaning set forth in
Section 4.18.
(cccc) "Vianet Financial Information" has the meaning set
forth in Section 4.6 below.
(dddd) "Vianet Intellectual Property" has the meaning set
forth in Section 4.13(a).
(eeee) "Vianet Option" has the meaning set forth in Section
3.3.
(ffff) "Vianet Tax Affiliate" has the meaning set forth in
Section 4.8(a).
(gggg) "Vianet Warrant" has the meaning set forth in Section
3.4.
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ARTICLE II. THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement and in accordance with the DGCL, at the Effective Time, Merger
Sub shall be merged with and into Vianet in accordance with the provisions of
Section 251 of the DGCL. Following the Effective Time, the separate existence of
Merger Sub shall cease, and Vianet shall continue as the surviving corporation
in the Merger (hereinafter sometimes referred to as the "Surviving Corporation")
as a business corporation incorporated under the laws of the State of Delaware
under the name "Vianet Direct, Inc." and shall succeed to and assume all the
rights and obligations of Merger Sub in accordance with the DGCL.
2.2 Effective Time Of The Merger. The Merger shall become effective at
such time (the "Effective Time") as a duly executed Certificate of Merger (the
"Certificate of Merger") is filed with the Secretary of State of the State of
Delaware.
2.3 Closing. The Closing will take place at the offices of Xxxx Xxxxx
LLP on July 14, 2006 at 10:00 a.m. or such later date and time to be agreed upon
by the parties (the "Closing Date"), following satisfaction or waiver of the
conditions set forth in Article VIII.
2.4 Surviving Corporation.
(a) The Certificate of Incorporation of Vianet shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof and of the DGCL.
(b) The By-laws of Vianet shall be the By-laws of the
Surviving Corporation until duly amended in accordance with their terms and as
provided by the Certificate of Incorporation of the Surviving Corporation and
the DGCL.
(c) Those individuals set forth on Schedule 2.4 shall, from
and after the Effective Time, be the directors of the Surviving Corporation
until their respective successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-laws.
(d) Those individuals set forth on Schedule 2.4 shall, from
and after the Effective Time, be the officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-laws.
(e) If at any time after the Effective Time, any party shall
consider that any further deeds, assignments, conveyances, agreements,
documents, instruments or assurances in law or any other things are necessary or
desirable to vest, perfect, confirm or record in the Surviving Corporation the
title to any property, rights, privileges, powers and franchises of Merger Sub
by reason of, or as a result of, the Merger, or otherwise to carry out the
provisions of this Agreement, the remaining parties, as applicable, shall
execute and deliver, upon request, any instruments or assurances, and do all
other things necessary or proper to vest, perfect, confirm or
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record title to such property, rights, privileges, powers and franchises in the
Surviving Corporation, and otherwise to carry out the provisions of this
Agreement.
ARTICLE III. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Merger Sub Capital Stock. At the Effective Time, each
share of the common stock of Merger Sub, issued and outstanding immediately
prior to the Effective Time, shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one fully paid and
non-assessable share of common stock, par value $0.001 per share, of the
Surviving Corporation.
3.2 Effect on Xxxxxx.Xx of the Effective Time, by virtue of the Merger
and without any action on the part of Vianet, each Share issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive five one hundredths of one share (0.05) of Parent Series A Convertible
Preferred Stock (the "Series A Stock") having the designations, rights and
preferences set forth in the Certificate of Designation in the form set forth at
Exhibit C hereto. Each share of Series A Stock shall be convertible into sixty
five and seven hundred ninety five one thousandths (65.795) shares of Parent
Common Stock subsequent to the increase of Parent's authorized capital stock to
at least one hundred million (100,000,000) shares (i) by Parent at any time and
(ii) by the holders thereof at any time after the second anniversary of the
Closing Date, on the terms and conditions set forth in the Certificate of
Designation, provided that, such conversion ratio shall be adjusted to ensure
that Vianet's stockholders own that number of shares of Parent Common Stock
equal to 84% of the Parent Common Stock calculated on a fully diluted basis on
the Closing Date. The adjusted conversion ratio shall be documented on the
Certificate of Conversion Ratio, Parent Indemnification Stockholders and Parent
Lock-Up Stockholders set forth on Exhibit D hereto which the parties will
execute on the Closing Date. With respect to all matters presented to a vote of
the stockholders of Parent, each share of Series A Stock shall be entitled to
that number of votes equal to the number of shares of Parent Common Stock into
which it is convertible. The shares of Series A Stock issued in connection with
the Merger shall constitute the "Merger Consideration."
3.3 Effect on Xxxxxxx.Xx of the Effective Time, each outstanding option
to purchase Shares (each a "Vianet Option") shall be deemed to constitute an
option to acquire, on the same terms and conditions as were applicable under
such Vianet Option, that number of shares of Series A Stock as the holder of
such Vianet Option would have been entitled to receive had he exercised his
Vianet Option immediately prior to the Effective Time at an exercise price equal
to the exercise price of such Vianet Option immediately prior to the Effective
Time divided by five one hundredths (0.05).
3.4 Effect on Warrants. As of the Effective Time, each outstanding
warrant to purchase Shares (each a "Vianet Warrant") shall be deemed to
constitute a warrant to acquire, on the same terms and conditions as were
applicable under such Vianet Warrant, that number of shares of Series A Stock as
the holder of such Vianet Warrant would have been entitled to receive had he
exercised his Vianet Warrant immediately prior to the Effective Time at an
exercise price
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equal to the exercise price of such Vianet Warrant immediately prior to the
Effective Time divided by five one hundredths (0.05).
3.5 Exchange of Certificates; Payment.
(a) Vianet shall cause its stockholders to surrender to Parent
at the Effective Time the certificates representing all of the outstanding
Shares ("Certificates"), duly endorsed in blank, or accompanied by blank stock
powers, with signatures guaranteed in a manner reasonably acceptable to Parent's
Counsel. Vianet shall use reasonable commercial efforts to work with its
stockholders to cure promptly any deficiencies with respect to the endorsement
of any certificate or other documents of conveyance with respect to such
Certificate or with respect to the stock powers accompanying any such
Certificate. Upon such surrender, each Vianet stockholder shall be entitled to
receive the Merger Consideration by delivery of certificates evidencing shares
of Parent Series A Stock.
(b) At and after the Effective Time, until the Certificates
have been surrendered, such Certificates shall be deemed to evidence only the
right to receive the appropriate Merger Consideration.
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of Shares. If, after the
Effective Time, any Certificate(s) representing Shares is or are presented to
the Surviving Corporation, they shall be canceled and exchanged for the
appropriate Merger Consideration as provided for, and in accordance with, the
provisions of this Article III.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF VIANET
As a material inducement for Parent and Merger Sub to enter into this
Agreement and to consummate the transactions contemplated hereby, Vianet makes
the following representations and warranties as of the date hereof and as of the
Closing Date, each of which is relied upon by Parent and Merger Sub regardless
of any investigation made or information obtained by Parent (unless and to the
extent specifically and expressly waived in writing by Parent on or before the
Closing Date):
4.1 Organization and Good Standing
(a) Vianet is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation. Vianet
is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification and the failure to be so
qualified would have a Material Adverse Effect on Vianet. Schedule 4.1(a)
contains a complete and accurate list of every jurisdiction in which Vianet is
qualified to do business.
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(b) Vianet has no Subsidiary and does not own any shares of
capital stock or other securities of any other Person, other than as set forth
on Schedule 4.1(b).
4.2 Corporate Documents Schedule 4.2 shall consist of true and correct
copies of:
(i) the Governing Documents, as amended, of Vianet;
and
(ii) a shareholder list setting forth all owners of
the capital stock of Vianet.
4.3 Capitalization of Vianet. The entire authorized capital stock of
Vianet consists of 50,000,000 shares of common stock having a par value of
$0.001 per share, of which 11,029,340 shares are issued and outstanding and
15,000 shares of preferred stock having a par value of $.001 per share, of which
2,400 shares have been designated as Series A Convertible Preferred Stock, all
of which is issued and outstanding. All of Vianet's issued and outstanding
shares of common stock have been duly authorized, are validly issued, fully paid
and nonassessable, and are held of record by the stockholders listed on the
shareholder list attached as Schedule 4.2. Other than this Agreement or as set
forth on Schedule 4.3, there are no outstanding or authorized options, warrants,
rights, contracts, calls, puts, rights to subscribe, conversion rights,
registration rights or other agreements or commitments to which Vianet is a
party or which are binding upon Vianet providing for the issuance, disposition
or acquisition of any of its capital stock, nor any outstanding or authorized
stock appreciation, phantom stock or similar rights with respect to Vianet.
4.4 Authorization of Transaction. Vianet has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
On the Closing Date, this Agreement shall be duly and validly authorized by all
necessary action on the part of Vianet in accordance with Applicable Laws and
Vianet's Governing Documents. This Agreement constitutes the valid and legally
binding obligation of Vianet, enforceable in accordance with its terms and
conditions. Other than filing the appropriate Certificates of Merger, Vianet
does not need to give any notice to, make any filing with, or obtain any Consent
of any Governmental Body in order to consummate the Merger. The Board of
Directors of Vianet (the "Vianet Board") has duly and validly authorized the
execution and delivery of this Agreement and approved the consummation of the
transactions contemplated hereby, and has taken all corporate actions required
to be taken by the Vianet's Board for the consummation of the Merger.
4.5 Noncontravention. Neither the execution and delivery of this
Agreement, nor consummation of the Merger, by Vianet will:
(a) violate any Applicable Law, Order, stipulation, charge or
other restriction of any Governmental Body to which Vianet is subject or any
provision of its Governing Documents; or
(b) except as disclosed on Schedule 4.5(b), conflict with,
result in a Breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate, modify or cancel,
or require any notice under any contract, lease, sublease, license,
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sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which Vianet is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets), except where the violation, conflict, Breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Material Adverse Effect on the financial condition of
Vianet or on the ability of the Parties to consummate the Merger.
4.6 Vianet Financial Information. Schedule 4.6 shall include the
following financial information (collectively, the "Vianet Financial
Information"):
(a) audited consolidated balance sheets and statements of
income and cash flow as of and for the years ended December 31, 2005 and 2004,
for Vianet; and
(b) an unaudited consolidated balance sheet as of March 31,
2006 (the "Vianet Balance Sheet") and an unaudited consolidated statements of
income for the three months ended March 31, 2006 for Vianet. The Vianet
Financial Information presents fairly the financial condition of Vianet as of
such dates and the results of operations of Vianet for such periods, in
accordance with GAAP and are consistent with the books and records of Vianet
(which books and records are correct and complete).
4.7 Events Subsequent to Vianet Balance Sheet. Since the date of the
Vianet Balance Sheet, and except as disclosed on Schedule 4.7, there has not
been, occurred or arisen, with respect to Vianet:
(a) any change or amendment in its Governing Documents;
(b) any reclassification, split up or other change in, or
amendment of or modification to, the rights of the holders of any of its capital
stock;
(c) any direct or indirect redemption, purchase or acquisition
by any Person of any of its capital stock or of any interest in or right to
acquire any such stock;
(d) any issuance, sale, or other disposition of any capital
stock, or any grant of any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any capital stock;
(e) any declaration, set aside, or payment of any dividend or
any distribution with respect to its capital stock (whether in cash or in kind)
or any redemption, purchase, or other acquisition of any of its capital stock;
(f) the organization of any Subsidiary or the acquisition of
any shares of capital stock by any Person or any equity or ownership interest in
any business;
(g) any damage, destruction or loss of any of the its
properties or assets whether or not covered by insurance;
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(h) any sale, lease, transfer, or assignment of any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(i) the execution of, or any other commitment to any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) outside the Ordinary Course of Business;
(j) any acceleration, termination, modification, or
cancellation of any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than $10,000 to
which it is a party or by which it is bound;
(k) any Security Interest or Encumbrance imposed upon any of
its assets, tangible or intangible;
(l) any grant of any license or sublicense of any rights under
or with respect to any Vianet Intellectual Property;
(m) any sale, assignment or transfer (including transfers to
any employees, affiliates or shareholders) of any Vianet Intellectual Property;
(n) any capital expenditure (or series of related capital
expenditures) involving more than $25,000 and outside the Ordinary Course of
Business;
(o) any capital investment in, any loan to, or any acquisition
of the securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions) involving more than $25,000 and outside
the Ordinary Course of Business;
(p) any issuance of any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation involving more than $25,000;
(q) any delay or postponement of the payment of accounts
payable or other liabilities, other than those being contested in good faith or
set forth in Schedule 4.7(q);
(r) any cancellation, compromise, waiver, or release of any
right or claim (or series of related rights and claims) involving more than
$25,000 and outside the Ordinary Course of Business;
(s) any loan to, or any entrance into any other transaction
with, any of its directors, officers, and employees either involving more than
$1,000 individually or $5,000 in the aggregate;
(t) the adoption, amendment, modification, or termination of
any bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and employees (or
taken away any such action with respect to any other Employee Benefit Plan);
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(u) any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement;
(v) any increase in the base compensation of any of its
directors, officers, and employees that is greater than Twenty Five Thousand
Dollars ($25,000) per annum;
(w) any charitable or other capital contribution in excess of
$2,500;
(x) any taking of other action or entrance into any other
transaction other than in the Ordinary Course of Business, or entrance into any
transaction with any insider of Vianet, except as disclosed in this Agreement
and the Disclosure Schedules;
(y) any other event or occurrence that may have or could
reasonably be expected to have a Material Adverse Effect on Vianet (whether or
not similar to any of the foregoing); or
(z) any agreement or commitment, whether in writing or
otherwise, to do any of the foregoing.
4.8 Tax Matters.
(a) Except as set forth on Schedule 4.8: (i) Vianet and (ii)
each other Person included in any consolidated or combined Tax Return and part
of an affiliated group, within the meaning of Section 1504 of the Code, of which
Vianet is or has been a member ("Vianet Tax Affiliate"), for the years that it
was a Vianet Tax Affiliate:
(i) has timely paid or caused to be paid all Taxes
required to be paid by it though the date hereof and as of the Closing Date
(including any Taxes shown due on any Tax Return);
(ii) has filed or caused to be filed in a timely and
proper manner (within any applicable extension periods) all Tax Returns required
to be filed by it with the appropriate Governmental Body in all jurisdictions in
which such Tax Returns are required to be filed; and all tax returns filed on
behalf of Vianet and each Vianet Tax Affiliate were complete and correct in all
material respects; and
(iii) has not requested or caused to be requested any
extension of time within which to file any Tax Return, which Tax Return has not
since been filed.
(b) Vianet has previously delivered true, correct and complete
copies of all Federal Tax Returns filed by or on behalf of Vianet through the
date hereof for the periods ending after December 31, 2004.
(c) Except as set forth in Schedule 4.8(c):
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(i) since January 1, 2004, neither Vianet nor any
Vianet Tax Affiliate (for the years that it was a Vianet Tax Affiliate) has been
notified by the IRS or any other Governmental Body that any issues have been
raised (and no such issues are currently pending) by the IRS or any other
Governmental Body in connection with any Tax Return filed by or on behalf of
Vianet or any Vianet Tax Affiliate; there are no pending Tax audits and no
waivers of statutes of limitations have been given or requested with respect to
Vianet or any Vianet Tax Affiliate (for years that it was a Vianet Tax
Affiliate); no Tax liens have been filed against Vianet or unresolved
deficiencies or additions to Taxes have been proposed, asserted or assessed
against Vianet or any Vianet Tax Affiliate (for the years that it was a Vianet
Tax Affiliate);
(ii) full and adequate accrual has been made (A) on
the Vianet Balance Sheet, and the books and records of Vianet for all income
taxes currently due and all accrued Taxes not yet due and payable by Vianet for
all periods ending on or prior to the Vianet Balance Sheet Date, and (B) on the
books and records of Vianet for all Taxes payable by Vianet for all periods
beginning after the Vianet Balance Sheet Date;
(iii) Vianet has not incurred any liability for Taxes
from and after the Vianet Balance Sheet Date other than Taxes incurred in the
Ordinary Course of Business and consistent with past practices;
(iv) Vianet has not (A) made an election (or had an
election made on its behalf by another person) to be treated as a "consenting
corporation" under Section 341(f) of the Code or (B) a "personal holding
company" within the meaning of Section 542 of the Code;
(v) Vianet has complied in all material respects with
all Applicable Laws relating to the collection or withholding of Taxes (such as
Taxes or withholding of Taxes from the wages of employees);
(vi) Vianet has no liability in respect of any Tax
sharing agreement with any Person and all Tax sharing agreements to which Vianet
has been bound have been terminated;
(vii) Vianet has not incurred any liability to make
any payments either alone or in conjunction with any other payments that:
(A) shall be non-deductible under, or would
otherwise constitute a "parachute payment" within the meaning of Section 280G of
the Code (or any corresponding provision of state local or foreign Applicable
Law related to Taxes); or
(B) are or may be subject to the imposition
of an excise Tax under Section 4999 of the Code;
(viii) Vianet has not agreed to (nor has any other
Person agreed to on its behalf) and is not required to make any adjustments or
changes on, before or after the Closing Date, to its accounting methods pursuant
to Section 481 of the Code, and the IRS has not proposed any such adjustments or
changes in the accounting methods of Vianet;
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(ix) no claim has been made within the last three
years by any taxing authority in a jurisdiction in which Vianet does not file
Tax Returns that Vianet is or may be subject to taxation by that jurisdiction;
(x) the consummation of the Merger will not trigger
the realization or recognition of intercompany gain or income to Vianet under
the Federal consolidated return regulations with respect to Federal, state or
local taxes; and
(xi) Vianet is not currently, nor has it been at any time during the previous
five years, a "U.S. real property holding corporation" and, therefore, the
Shares are not "U.S. real property interests," as such terms are defined in
Section 897 of the Code.
4.9 Title to Assets. Except as disclosed on Schedule 4.9, Vianet has
good and marketable title to, or a valid leasehold interest in, the properties
and assets owned or leased and used by it to operate the Business in the manner
presently operated by Vianet, as reflected in the Vianet Financial Information.
4.10 Real Property. Vianet does not own or hold an ownership interest
in any Real Property.
4.11 Leased Real Property. Schedule 4.11 contains a correct legal
description, street address and tax parcel identification number of all tracts,
parcels and subdivided lots in which Vianet has a leasehold interest and an
accurate description (by location, name of lessor, date of lease and term
expiration date) of all Real Property Leases pursuant to which Vianet has a
leasehold interest.
4.12 Condition of Facilities.
(a) Use of the Real Property of Vianet for the various
purposes for which it is presently being used is permitted as of right under all
Applicable Laws related to zoning and is not subject to "permitted
nonconforming" use or structure classifications. All Improvements are in
compliance with all Applicable Laws, including those pertaining to zoning,
building and the disabled, are in good repair and in good condition, ordinary
wear and tear excepted, and are free from latent and patent defects. No part of
any Improvement encroaches on any real property not included in the Real
Property of Vianet, and there are no buildings, structures, fixtures or other
Improvements primarily situated on adjoining property which encroach on any part
of the Land.
(b) Each item of Tangible Personal Property is in good repair
and good operating condition, ordinary wear and tear excepted, is suitable for
immediate use in the Ordinary Course of Business and is free from latent and
patent defects. No item of Tangible Personal Property is in need of repair or
replacement other than as part of routine maintenance in the Ordinary Course of
Business. Except as disclosed in Schedule 4.12(b), all Tangible Personal
Property used in the Business is in the possession of Vianet.
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4.13 Vianet Intellectual Property.
(a) Vianet owns, or is licensed or otherwise possesses legal
enforceable rights to use all: (i) trademarks and service marks (registered or
unregistered), trade dress, trade names and other names and slogans embodying
business goodwill or indications of origin, all applications or registrations in
any jurisdiction pertaining to the foregoing and all goodwill associated
therewith; (ii) patentable inventions, technology, computer programs and
software (including password unprotected interpretive code or source code,
object code, development documentation, programming tools, drawings,
specifications and data) and all applications and patents in any jurisdiction
pertaining to the foregoing, including re-issues, continuations, divisions,
continuations-in-part, renewals or extensions; (iii) trade secrets, including
confidential and other non-public information (iv) copyrights in writings,
designs, software programs, mask works or other works, applications or
registrations in any jurisdiction for the foregoing and all moral rights related
thereto; (v) databases and all database rights; and (vi) Internet web sites,
domain names and applications and registrations pertaining thereto
(collectively, "Vianet Intellectual Property") that are used in the Business
except for any such failures to own, be licensed or process that would not be
reasonably likely to have a Material Adverse Effect.
(b) Except as may be evidenced by patents issued after the
date hereof, there are no conflicts with or infringements of any material Vianet
Intellectual Property by any third party and the conduct of the Business as
currently conducted does not conflict with or infringe any proprietary right of
a third party.
(c) Schedule 4.13(c) sets forth a complete list of all
patents, registrations and applications pertaining to the Vianet Intellectual
Property owned by Vianet. Except as set forth on Schedule 4.13(c), all such
Vianet Intellectual Property listed is owned by Vianet, free and clear of liens
or Encumbrances of any nature.
(d) Schedule 4.13(d) sets forth a complete list of all
material licenses, sublicenses and other agreements in which Vianet has granted
rights to any person to use the Vianet Intellectual Property. Vianet will not,
as a result of the execution and delivery of this Agreement or the performance
of its obligations under this Agreement, be in Breach of any license, sublicense
or other agreement relating to the Vianet Intellectual Property.
(e) Vianet owns or has the right to use all software currently
used in and material to the Business.
4.14 Affiliate Transactions. Except as set forth on Schedule 4.14, no
officer, director, or employee of Vianet or any member of the immediate family
of any such officer, director or employee, or any entity in which any of such
persons owns any beneficial interest (other than any publicly-held corporation
whose stock is traded on a national securities exchange or in the
over-the-counter market and less than one percent of the stock of which is
beneficially owned by any of such persons), has any agreement with Vianet or any
interest in any of their property of any nature, used in or pertaining to the
Business (other than the ownership of capital stock of the corporation as
disclosed in Section 4.3). None of the foregoing Persons has any direct or
indirect
18
interest in any competitor, supplier or customer of Vianet or in any Person from
whom or to whom Vianet leases any property or transacts business of any nature.
4.15 Contracts. Schedule 4.15 is a true, complete and accurate list of
all written or oral Contracts (including a brief description of all oral
arrangements) executed by an officer or duly authorized employee of Vianet or to
which Vianet is a party either:
(a) involving more than $25,000, or
(b) in the nature of a collective bargaining agreement,
employment agreement, or severance agreement with any of its directors, officers
and employees.
Vianet has or will deliver prior to Closing to Parent a correct and
complete copy of each Contract listed in Schedule 4.15 (the "Vianet Contracts").
Except as disclosed in Schedule 4.15: (i) Vianet has fully complied with all
material terms of the Vianet Contracts; (ii) other parties to the Vianet
Contracts have fully complied with the terms of the Vianet Contracts; and (iii)
there are no disputes or complaints with respect to nor has Vianet received any
notices (whether oral or in writing) that any other party to the Vianet
Contracts is terminating, intends to terminate or is considering terminating,
any of the Vianet Contracts listed or required to be listed in Schedule 4.15.
4.16 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Vianet.
4.17 Litigation.
(a) Except as set forth in Schedule 4.17(a), there is no
pending or, to Vianet's Knowledge, threatened Proceeding:
(i) by or against Vianet or that otherwise relates to
or may affect the Business which, if adversely determined, would have a Material
Adverse Effect; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the Merger.
To the Knowledge of Vianet, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding. Vianet has delivered to Parent copies of all pleadings,
correspondence and other documents relating to each Proceeding listed in
Schedule 4.17(a). There are no Proceedings listed or required to be listed in
Schedule 4.17(a) that could reasonably be expected to have a Material Adverse
Effect.
(b) Except as set forth in Schedule 4.17(b):
(i) there is no material Order to which Vianet or the
Business is subject; and
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(ii) to the Knowledge of Vianet, no officer,
director, agent or employee of Vianet is subject to any Order that prohibits
such officer, director, agent or employee from engaging in or continuing any
conduct, activity or practice relating to the Business.
(c) Except as set forth in Schedule 4.17(c):
(i) Vianet has been and is in compliance with all of
the terms and requirements of each Order to which it or the Business is or has
been subject;
(ii) No event has occurred or circumstance exists
that is reasonably likely to constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any term or requirement
of any Order to which Vianet or the Business is subject; and
(iii) Vianet has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible or potential violation of, or
failure to comply with, any term or requirement of any Order to which Vianet or
the Business is subject.
4.18 Employee Benefits.
(a) Schedule 4.18 lists all material (i) Employee Benefit
Plans of Vianet, (ii) bonus, stock option, stock purchase, stock appreciation
right, incentive, deferred compensation, supplemental retirement, severance, and
fringe benefit plans, programs, policies or arrangements, and (iii) employment
or consulting agreements, for the benefit of, or relating to, any current or
former employee (or any beneficiary thereof) of Vianet, in the case of a plan
described in (i) or (ii) above, that is currently maintained by Vianet or with
respect to which Vianet has an obligation to contribute, and in the case of an
agreement described in (iii) above, that is currently in effect (the "Vianet
Employee Plans"). Vianet has heretofore made available to Parent true and
complete copies of the Vianet Employee Plans and any amendments thereto, any
related trust, insurance contract, summary plan description, and, to the extent
required under ERISA or the Code, the most recent annual report on Form 5500 and
summaries of material modifications.
(b) Except as set forth on Schedule 4.18(b), no Vianet
Employee Plan is (1) a "multiemployer plan" within the meaning of Sections 3(37)
or 4001(a)(3) of ERISA, (2) a "multiple employer plan" within the meaning of
Section 3(40) of ERISA or Section 413(c) of the Code, or (3) is subject to Title
IV of ERISA or Section 412 of the Code.
(c) Except as set forth on Schedule 4.18(c), there is no
Proceeding pending or, to Vianet's Knowledge, threatened against the assets of
any Vianet Employee Plan or, with respect to any Vianet Employee Plan, against
Vianet other than Proceedings that would not reasonably be expected to result in
a Material Adverse Effect, and to Vianet's Knowledge there is no Proceeding
pending or threatened in writing against any fiduciary of any Vianet Employee
Plan other than Proceedings that would not reasonably be expected to result in a
Material Adverse Effect.
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(d) Each of the Vianet Employee Plans has been operated and
administered in all material respects in accordance with its terms and
applicable law, including, but not limited to, ERISA and the Code.
(e) Each of the Vianet Employee Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination, notification, or opinion letter from the IRS.
(f) Except as set forth on Schedule 4.18(f), no director,
officer, or employee of Vianet will become entitled to retirement, severance or
similar benefits or to enhanced or accelerated benefits (including any
acceleration of vesting or lapsing of restrictions with respect to equity-based
awards) under any Vianet Employee Plan solely as a result of consummation of the
Merger.
4.19 Banking Relationships. Schedule 4.19 sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which Vianet maintains safe deposit boxes or accounts
of any nature and the names of all persons authorized to have access thereto,
draw thereon or make withdrawals therefrom.
4.20 Insurance. Schedule 4.20 is an accurate and complete description
of all policies of insurance of any kind or nature, including, but not limited
to, fire, liability, workmen's compensation and other forms of insurance owned
or held by or covering Vianet or all or any portion of its property and assets.
4.21 Employees.
(a) Schedule 4.21 contains a complete and accurate list of
each employee of Vianet, including each employee on leave of absence or layoff
status, and such employee's name, job title, date of hiring or engagement, date
of commencement of employment or engagement, current compensation paid or
payable, and service credited for purposes of vesting and eligibility to
participate under any Vianet Employee Plan, or any other employee or director
benefit plan.
(b) To the Knowledge of Vianet, no officer, director, agent,
employee, consultant, or contractor of Vianet is bound by any Contract that
purports to limit the ability of such officer, director, agent, employee,
consultant, or contractor (i) to engage in or continue or perform any conduct,
activity, duties or practice relating to the Business or (ii) to assign to
Vianet or to any other Person any rights to any invention, improvement, or
discovery. No former or current employee of Vianet is a party to, or is
otherwise bound by, any Contract that in any way adversely affected, affects, or
will affect the ability of Vianet or Parent to conduct the Business as
heretofore carried on by Vianet.
4.22 Labor Relations. Vianet is not a party to any collective
bargaining or similar agreement. To the Knowledge of Vianet, there are no
strikes, work stoppages, unfair labor practice charges or grievances pending or
threatened against Vianet by any employee of Vianet or any other Person or
entity. Vianet believes that its relationship with its employees is good.
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4.23 Legal Compliance.
(a) Except as set forth on Schedule 4.23(a), to the Knowledge
of Vianet, Vianet is in material compliance with all Applicable Laws (including
rules and regulations thereunder) of any Governmental Bodies having jurisdiction
over Vianet, including any requirements relating to antitrust, consumer
protection, currency exchange, equal opportunity, health, occupational safety,
pension and securities matters.
(b) Schedule 4.23(b) contains a complete and accurate list of
each Governmental Authorization that is held by Vianet or that otherwise relates
to the Business. Each Governmental Authorization listed or required to be listed
in Schedule 4.23(b) is valid and in full force and effect. The Governmental
Authorizations listed in Schedule 4.23(b) collectively constitute all of the
Governmental Authorizations necessary to permit Vianet to lawfully conduct and
operate the Business.
4.24 Brokers' Fees. Except as set forth on Schedule 4.24, Vianet has no
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the Merger for which Vianet, Parent or Merger Sub could
become liable or obligated.
4.25 Undisclosed Liabilities. To the Knowledge of Vianet, it has no
liability (and to the Knowledge of Vianet, there is no basis for any present or
future Proceeding, charge, complaint, claim, or demand against any of them
giving rise to any liability), except for
(i) liabilities reflected or reserved against in the
Vianet Balance Sheet; or
(ii) liabilities which have arisen in the Ordinary
Course of Business since the date of the Vianet Balance Sheet.
4.26 Disclosure. The representations and warranties of Vianet contained
in this Agreement do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained herein not misleading.
ARTICLE V. REPRESENTATIONS AND WARRANTEES OF PARENT AND MERGER SUB.
As a material inducement for Vianet to enter into this Agreement and to
consummate the transactions contemplated hereby, Parent and Merger Sub hereby
jointly and severally make the following representations and warranties as of
the date hereof and as of the Closing Date, each of which is relied upon by
Vianet regardless of any investigation made or information obtained by Vianet
(unless and to the extent specifically and expressly waived in writing by Vianet
on or before the Closing Date):
22
5.1 Representations of Parent Concerning the Transaction.
(a) Organization and Good Standing.
(i) Parent is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Parent is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification and the
failure to be so qualified would have a Material Adverse Effect on Parent.
Schedule 5.1(a)(i) contains a complete and accurate list of every jurisdiction
in which Parent is qualified to do business.
(ii) Parent has no Subsidiary and does not own any
shares of capital stock or other securities of any other Person, other than as
set forth on Schedule 5.1(a)(ii).
(iii) Merger Sub is a corporation duly organized and
validly existing and is in good standing under the laws of the State of
Delaware. Merger Sub's authorized capital consists of One Thousand (1,000)
shares of common stock, par value One Mil ($.001) per share, all of which shares
are issued and registered in the name of Parent.
(b) Authorization of Transaction. Parent has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Parent, enforceable in
accordance with its terms and conditions. Parent is not required to give any
notice to, make any filing with or obtain any, Consent of any Governmental Body
in order to consummate the Merger except for such notice filings as may be
required under Applicable Laws.
(c) Capitalization of Parent. The entire authorized capital
stock of Parent consists of 25,000,000 shares of common stock having a par value
of $0.001 per share, of which 9,655,441 shares are issued and outstanding, and
1,000,000 shares of preferred stock, none of which are issued and outstanding.
All issued and outstanding shares of Parent Common Stock have been duly
authorized, are validly issued, fully paid and nonassessable. Attached as
Schedule 5.1(c) is a stockholder list setting forth all owners of the capital
stock of Parent and the number of shares held by each stockholder of Parent.
Other than this Agreement and as disclosed on Schedule 5.1(c), there are no
outstanding or authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights or other agreements or commitments to
which Parent is a party or which are binding upon Parent providing for the
issuance, disposition or acquisition of any of its capital stock, nor any
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to Parent.
(d) Noncontravention. Neither the execution and delivery of
this Agreement, nor consummation of the Merger, will:
(i) violate any Applicable Law, Order, stipulation,
charge or other restriction of any Governmental Body to which Parent is subject
or any provision of its Governing Documents; or
23
(ii) conflict with, result in a Breach of, constitute
a default under, result in the acceleration of, create in any Person the right
to accelerate, terminate, modify or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which Parent is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Security Interest upon any of its assets), except where the violation,
conflict, Breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have a
Material Adverse Effect on the financial condition of Parent or on the ability
of the Parties to consummate the Merger.
(e) Affiliate Transactions. No officer, director, or employee
of Parent or any member of the immediate family of any such officer, director or
employee, or any entity in which any of such persons owns any beneficial
interest (other than any publicly-held corporation whose stock is traded on a
national securities exchange or in the over-the-counter market and less than one
percent of the stock of which is beneficially owned by any of such Persons), has
any agreement with Parent or any interest in any of their property of any
nature, used in or pertaining to the Parent Business, except as disclosed in
Schedule 5.1(e). None of the foregoing Persons has any direct or indirect
interest in any competitor, supplier or customer of Parent or in any Person from
whom or to whom Parent leases any property or transacts business of any nature.
(f) Parent Financial Information. Schedule 5.1(f) shall
include the following financial information (collectively, the "Parent Financial
Information"):
(i) audited consolidated balance sheets and
statements of income, changes in stockholders' equity and cash flow as of and
for each of the years ended September 30, 2005 and September 30, 2004, for
Parent; and
(ii) unaudited consolidated balance sheets and
statements of income, changes in stockholders' equity and cash flow as of and
for the three months ended December 31, 2005 (the "Parent Interim Balance
Sheet") for Parent. Parent Financial Information present fairly the financial
condition of Parent as of such dates and the results of operations of Parent for
such periods, in accordance with GAAP and are consistent with the books and
records of Parent (which books and records are correct and complete).
(iii) the names and locations of all banks, trust
companies, savings and loan associations and other financial institutions at
which Parent and Merger Sub maintain safe deposit boxes or accounts of any
nature and the names of all persons authorized to have access thereto, draw
thereon or make withdrawals therefrom.
(g) Events Subsequent to Parent Interim Balance Sheet. Since
the date of Parent Interim Balance Sheet, and except as disclosed on Schedule
5.1(g), there has not been, occurred or arisen, with respect to Parent:
(i) any change or amendment in its Governing
Documents;
24
(ii) any reclassification, split up or other change
in, or amendment of or modification to, the rights of the holders of any of its
capital stock;
(iii) any direct or indirect redemption, purchase or
acquisition by any Person of any of its capital stock or of any interest in or
right to acquire any such stock;
(iv) any issuance, sale, or other disposition of any
capital stock, or any grant of any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
capital stock;
(v) any declaration, set aside, or payment of any
dividend or any distribution with respect to its capital stock (whether in cash
or in kind) or any redemption, purchase, or other acquisition of any of its
capital stock;
(vi) the organization of any Subsidiary (other than
the Merger Sub) or the acquisition of any shares of capital stock by any Person
or any equity or ownership interest in any business;
(vii) any damage, destruction or loss of any of the
its properties or assets whether or not covered by insurance;
(viii) any sale, lease, transfer, or assignment of
any of its assets, tangible or intangible, other than for a fair consideration
in the Ordinary Course of Business;
(ix) the execution of, or any other commitment to any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) outside the Ordinary Course of Business;
(x) any acceleration, termination, modification, or
cancellation of any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses), involving more than $10,000 to
which it is a party or by which it is bound;
(xi) any Security Interest or Encumbrance imposed
upon any of its assets, tangible or intangible;
(xii) any grant of any license or sublicense of any
rights under or with respect to any Parent Intellectual Property;
(xiii) any sale, assignment or transfer (including
transfers to any employees, affiliates or shareholders) of any Parent
Intellectual Property;
(xiv) any capital expenditure (or series of related
capital expenditures) involving more than $10,000 and outside the Ordinary
Course of Business;
25
(xv) any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions) involving more than
$10,000 and outside the Ordinary Course of Business;
(xvi) any issuance of any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation involving more than $25,000;
(xvii) any delay or postponement of the payment of
accounts payable or other liabilities, other than those being contested in good
faith or set forth in Schedule 5.1(g)(xvii);
(xviii) any cancellation, compromise, waiver, or
release of any right or claim (or series of related rights and claims) involving
more than $25,000 and outside the Ordinary Course of Business;
(xix) any loan to, or any entrance into any other
transaction with, any of its directors, officers, and employees either involving
more than $500 individually or $2,500 in the aggregate;
(xx) the adoption, amendment, modification, or
termination of any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken away any such action with respect to any other Employee
Benefit Plan);
(xxi) any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contract or agreement;
(xxii) any increase in the base compensation of any
of its directors, officers, and employees;
(xxiii) any charitable or other capital contribution
in excess of $2,500;
(xxiv) any taking of other action or entrance into
any other transaction other than in the Ordinary Course of Business, or entrance
into any transaction with any insider of Parent, except as disclosed in this
Agreement and the Disclosure Schedules;
(xxv) any other event or occurrence that may have or
could reasonably be expected to have an Material Adverse Effect on Parent
(whether or not similar to any of the foregoing); or
(xxvi) any agreement or commitment, whether in
writing or otherwise, to do any of the foregoing.
26
(h) Tax Matters.
(i) Except as set forth on Schedule 5.1(h)(i): (i)
Parent and (ii) each other Person included in any consolidated or combined Tax
Return and part of an affiliated group, within the meaning of Section 1504 of
the Parent Code, of which Parent is or has been a member ("Parent Tax
Affiliate"), for the years that it was a Parent Tax Affiliate of Parent:
(A) has timely paid or caused to be paid all
Taxes required to be paid by it though the date hereof and as of the Closing
Date (including any Taxes shown due on any Tax Return);
(B) has filed or caused to be filed in a
timely and proper manner (within any applicable extension periods) all Tax
Returns required to be filed by it with the appropriate Governmental Body in all
jurisdictions in which such Tax Returns are required to be filed; and all tax
returns filed on behalf of Parent and each Parent Tax Affiliate were completed
and correct in all material respects; and
(C) has not requested or caused to be
requested any extension of time within which to file any Tax Return, which Tax
Return has not since been filed.
(ii) Parent has previously delivered true, correct
and complete copies of all Federal Tax Returns filed by or on behalf of Parent
through the date hereof for the periods ending after September 30, 2003.
(iii) Except as set forth in Schedule 5.1(h)(iii):
(A) since January 1, 2004, neither Parent
nor any Parent Tax Affiliate (for the years that it was a Parent Tax Affiliate)
has been notified by the Internal Revenue Service or any other Governmental Body
that any issues have been raised (and no such issues are currently pending) by
the IRS or any other Governmental Body in connection with any Tax Return filed
by or on behalf of Parent or any Parent Tax Affiliate; there are no pending Tax
audits and no waivers of statutes of limitations have been given or requested
with respect to Parent or any Parent Tax Affiliate (for years that it was a
Parent Tax Affiliate); no Tax liens have been filed against Parent or unresolved
deficiencies or additions to Taxes have been proposed, asserted or assessed
against Parent or any Parent Tax Affiliate (for the years that it was a Parent
Tax Affiliate);
(B) full and adequate accrual has been made
(i) on the Parent Interim Balance Sheet, and the books and records of Parent for
all income Taxes currently due and all accrued Taxes not yet due and payable by
Parent for all periods ending on or prior to the Parent Interim Balance Sheet
Date, and (ii) on the books and records of Parent and for all Taxes payable by
Parent for all periods beginning after the Parent Interim Balance Sheet Date;
(C) Parent has not incurred any liability
for Taxes from and after the Parent Interim Balance Sheet Date other than Taxes
incurred in the Ordinary Course of Business and consistent with past practices;
27
(D) Parent has not (i) made an election (or
had an election made on its behalf by another person) to be treated as a
"consenting corporation" under Section 341(f) of the Code or (ii) a "personal
holding company" within the meaning of Section 542 of the Code;
(E) Parent has complied in all material
respects with all Applicable Laws relating to the collection or withholding of
Taxes (such as Taxes or withholding of Taxes from the wages of employees);
(F) Parent has no liability in respect of
any Tax sharing agreement with any Person and all Tax sharing agreements to
which Parent has been bound have been terminated;
(G) Parent has not incurred any Liability to
make any payments either alone or in conjunction with any other payments that:
(1) shall be non-deductible under,
or would otherwise constitute a "parachute payment" within the meaning of
Section 280G of the Code (or any corresponding provision of state local or
foreign income Tax Law); or
(2) are or may be subject to the
imposition of an excise Tax under Section 4999 of the Code;
(H) Parent has not agreed to (nor has any
other Person agreed to on its behalf) and is not required to make any
adjustments or changes on, before or after the Closing Date, to its accounting
methods pursuant to Section 481 of the Code, and the Internal Revenue Service
has not proposed any such adjustments or changes in the accounting methods of
Parent;
(I) no claim has been made within the last
three years by any taxing authority in a jurisdiction in which Parent does not
file Tax Returns that Parent is or may be subject to taxation by that
jurisdiction;
(J) the consummation of the Merger will not
trigger the realization or recognition of intercompany gain or income to Parent
under the Federal consolidated return regulations with respect to Federal, state
or local Taxes;
(K) none of Parent's stockholders are
foreign Persons within the meaning of Treasury Regulation ss. 1.1445-2(b) of the
rules and regulations promulgated under Section 1445 of the Code, and Vianet has
been furnished with a true and accurate certificate of Parent so stating which
complies in all respects with Treasury Regulation ss. 1.1445-2(b)(2) of such
rules and regulations; and
(L) Parent is not currently, nor has it been
at any time during the previous five years, a "U.S. real property holding
corporation" and, therefore, the Parent Common Stock is not "U.S. real property
interests," as such terms are defined in Section 897 of the Code.
28
(i) Title to Assets. Parent has good and marketable title to,
or a valid leasehold interest in, the properties and assets owned or leased and
used by it to operate the Parent Business in the manner presently operated by
Parent, as reflected in Parent Financial Information.
(j) Real Property. Parent does not own or hold an ownership
interest in any Real Property.
(k) Leased Real Property. Schedule 5.1(k) contains a correct
legal description, street address and tax parcel identification number of all
tracts, parcels and subdivided lots in which Parent has a leasehold interest and
an accurate description (by location, name of lessor, date of lease and term
expiration date) of all Real Property Leases pursuant to which Parent has a
leasehold interest.
(l) Condition of Facilities.
(i) Use of the Real Property of Parent for the
various purposes for which it is presently being used is permitted as of right
under all Applicable Laws related to zoning and is not subject to "permitted
nonconforming" use or structure classifications. All Improvements are in
compliance with all Applicable Laws, including those pertaining to zoning,
building and the disabled, are in good repair and in good condition, ordinary
wear and tear excepted, and are free from latent and patent defects. To the
Knowledge of Parent, no part of any Improvement encroaches on any real property
not included in the Real Property of Parent, and there are no buildings,
structures, fixtures or other Improvements primarily situated on adjoining
property which encroach on any part of the Land.
(ii) Each item of Tangible Personal Property is in
good repair and good operating condition, ordinary wear and tear excepted, is
suitable for immediate use in the Ordinary Course of Business and is free from
latent and patent defects. No item of Tangible Personal Property is in need of
repair or replacement other than as part of routine maintenance in the Ordinary
Course of Business. Except as disclosed in Schedule 5.1(l)(ii), all Tangible
Personal Property used in the Parent Business is in the possession of Parent.
(m) Parent Intellectual Property.
(i) Parent owns, or is licensed or otherwise
possesses legal enforceable rights to use all: (i) trademarks and service marks
(registered or unregistered), trade dress, trade names and other names and
slogans embodying business goodwill or indications of origin, all applications
or registrations in any jurisdiction pertaining to the foregoing and all
goodwill associated therewith; (ii) patentable inventions, technology, computer
programs and software (including password unprotected interpretive code or
source code, object code, development documentation, programming tools,
drawings, specifications and data) and all applications and patents in any
jurisdiction pertaining to the foregoing, including re-issues, continuations,
divisions, continuations-in-part, renewals or extensions; (iii) trade secrets,
including confidential and other non-public information (iv) copyrights in
writings, designs, software programs, mask works or other works, applications or
registrations in any jurisdiction for the foregoing and all moral rights related
thereto; (v) databases and all database rights; and (vi) Internet Web sites,
domain names
29
and applications and registrations pertaining thereto (collectively, "Parent
Intellectual Property") that are used in the Parent Business except for any such
failures to own, be licensed or process that would not be reasonably likely to
have a Material Adverse Effect.
(ii) Except as may be evidenced by patents issued
after the date hereof, there are no conflicts with or infringements of any
material Parent Intellectual Property by any Third Party and the conduct of the
Parent Business as currently conducted does not conflict with or infringe any
proprietary right of a Third Party.
(iii) Schedule 5.1(m)(iii) sets forth a complete list
of all patents, registrations and applications pertaining to Parent Intellectual
Property owned by Parent. Except as set forth on Schedule 5.1(m)(iii), all such
Parent Intellectual Property listed is owned by Parent, free and clear of liens
or Encumbrances of any nature.
(iv) Schedule 5.1(m)(iv) sets forth a complete list
of all material licenses, sublicenses and other agreements in which Parent has
granted rights to any person to use Parent Intellectual Property. Parent will
not, as a result of the execution and delivery of this Agreement or the
performance of its obligations under this Agreement, be in Breach of any
license, sublicense or other agreement relating to Parent Intellectual Property.
(v) Parent owns or has the right to use all software
currently used in and material to the Parent Business.
(n) SEC Reports and Financial Statements. Since January 1,
1996, Parent has filed with the SEC all reports and other filings required to be
filed by Parent in accordance with the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder (the "Parent SEC Reports"). As
of their respective dates, Parent SEC Reports complied in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and the
respective rules and regulations promulgated thereunder applicable to such
Parent SEC Reports and, except to the extent that information contained in any
Parent SEC Report has been revised or superseded by a later Parent SEC Report
filed and publicly available prior to the date of this Agreement, none of the
Parent SEC Reports contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of Parent included in Parent
SEC Reports were prepared from and are in accordance with the accounting books
and other financial records of Parent, were prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by the rules of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and presented fairly the consolidated financial
position of Parent and its consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in Parent SEC Reports, Parent has no
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) other than liabilities or obligations incurred in the Ordinary
Course of Business. Parent SEC Reports accurately disclose (i) the terms and
provisions of all stock option plans, (ii) transactions with affiliates, and
30
(iii) all material contracts required to be disclosed pursuant to Item
601(b)(10) of Regulation S-B promulgated by the SEC.
(o) Contracts. Schedule 5.1(o) is a true, complete and
accurate list of all written or oral contracts, understandings, agreements and
other arrangements (including a brief description of all such oral arrangements)
executed by an officer or duly authorized employee of Parent or to which Parent
is a party either:
(i) involving more than $10,000, or
(ii) in the nature of a collective bargaining
agreement, employment agreement, or severance agreement with any of its
directors, officers and employees.
Parent has delivered or will, prior to Closing, deliver to Vianet a correct and
complete copy of each Contract (redacted copies for names are acceptable) listed
in Schedule 5.1(o) (the "Parent Contracts"). Except as disclosed in Schedule
5.1(o): (i) Parent has fully complied with all material terms of Parent
Contracts; (ii) to the Knowledge of Parent, other parties to Parent Contracts
have fully complied with the terms of Parent Contracts; and (iii) there are no
disputes or complaints with respect to nor has Parent received any notices
(whether oral or in writing) that any other party to Parent Contracts is
terminating, intends to terminate or is considering terminating, any of Parent
Contracts listed or required to be listed in Schedule 5.1(o).
(p) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of Parent.
(q) Litigation.
(i) Except as set forth in Schedule 5.1(q)(i), there
is no pending or, to Parent's Knowledge, threatened Proceeding:
(A) by or against Parent or that otherwise
relates to or may affect the Parent Business which, if adversely determined,
would have a Material Adverse Effect; or
(B) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the Merger.
To the Knowledge of Parent, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding. Parent has delivered to Vianet copies of all pleadings,
correspondence and other documents relating to each Proceeding listed in
Schedule 5.1(q)(i). There are no Proceedings listed or required to be listed in
Schedule 5.1(q)(i) that could reasonably be expected to have a Material Adverse
Effect.
(ii) Except as set forth in Schedule 5.1(q)(ii):
(A) there is no material Order to which
Parent or the Parent Business is subject; and
31
(B) to the Knowledge of Parent, no officer,
director, agent or employee of Parent is subject to any Order that prohibits
such officer, director, agent or employee from engaging in or continuing any
conduct, activity or practice relating to the Parent Business.
(iii) Except as set forth in Schedule 5.1(q)(iii):
(A) Parent has been and is in compliance
with all of the terms and requirements of each Order to which it or the Parent
Business is or has been subject;
(B) No event has occurred or circumstance
exists that is reasonably likely to constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply with any term or
requirement of any Order to which Parent or the Parent Business is subject; and
(C) Parent has not received any notice, or
received but subsequently resolved to the satisfaction of the Governmental Body
or other Person (evidence of such approval is attached as Schedule 5.1(q)(iii)),
or other communication (whether oral or written) from any Governmental Body or
any other Person regarding any actual, alleged, possible or potential violation
of, or failure to comply with, any term or requirement of any Order to which
Parent or the Parent Business is subject.
(r) Employee Benefits.
(i) Schedule 5.1(r)(i) lists all material (i)
Employee Benefit Plans of Parent, (ii) bonus, stock option, stock purchase,
stock appreciation right, incentive, deferred compensation, supplemental
retirement, severance, and fringe benefit plans, programs, policies or
arrangements, and (iii) employment or consulting agreements, for the benefit of,
or relating to, any current or former employee (or any beneficiary thereof) of
Parent, in the case of a plan described in (i) or (ii) above, that is currently
maintained by Parent or with respect to which Parent has an obligation to
contribute, and in the case of an agreement described in (iii) above, that is
currently in effect (the "Parent Employee Plans"). Parent has heretofore made
available to Vianet true and complete copies of Parent Employee Plans and any
amendments thereto, any related trust, insurance contract, summary plan
description, and, to the extent required under ERISA or the Code, the most
recent annual report on Form 5500 and summaries of material modifications.
(ii) Except as set forth on Schedule 5.1(r)(ii), no
Parent Employee Plan is (1) a "multiemployer plan" within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA, (2) a "multiple employer plan" within the
meaning of Section 3(40) of ERISA or Section 413(c) of the Code, or (3) is
subject to Title IV of ERISA or Section 412 of the Code.
(iii) Except as set forth on Schedule 5.1(r)(iii),
there is no Proceeding pending or, to Parent's Knowledge, threatened against the
assets of any Parent Employee Plan or, with respect to any Parent Employee Plan,
against Parent other than Proceedings that would not reasonably be expected to
result in a Material Adverse Effect, and to Parent's Knowledge there is no
Proceeding pending or threatened in writing against any fiduciary of any Parent
Employee Plan
32
other than Proceedings that would not reasonably be expected to result in a
Material Adverse Effect.
(iv) Each of Parent Employee Plans has been operated
and administered in all material respects in accordance with its terms and
applicable law, including, but not limited to, ERISA and the Code.
(v) Each of Parent Employee Plans that is intended to
be "qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination, notification, or opinion letter from the IRS.
(vi) Except as set forth on Schedule 5.1(r)(vi), no
director, officer, or employee of Parent will become entitled to retirement,
severance or similar benefits or to enhanced or accelerated benefits (including
any acceleration of vesting or lapsing of restrictions with respect to
equity-based awards) under any Parent Employee Plan solely as a result of
consummation of the Merger.
(s) Insurance. Schedule 5.1(s) is an accurate and complete
description of all policies of insurance of any kind or nature, including, but
not limited to, fire, liability, workmen's compensation and other forms of
insurance owned or held by or covering Parent or all or any portion of its
property and assets.
(t) Employees.
(i) Schedule 5.1(t)(i) contains a complete and
accurate list of each employee of Parent, including each employee on leave of
absence or layoff status, their name; job title; date of hiring; date of
commencement of employment; current compensation paid or payable and any change
in compensation since September 30, 2005.
(ii) To the Knowledge of Parent, no officer,
director, agent, employee, consultant, or contractor of Parent is bound by any
Contract that purports to limit the ability of such officer, director, agent,
employee, consultant, or contractor (i) to engage in or continue or perform any
conduct, activity, duties or practice relating to the Parent Business or (ii) to
assign to Parent or to any other Person any rights to any invention,
improvement, or discovery. No former or current employee of Parent is a party
to, or is otherwise bound by, any Contract that in any way adversely affected,
affects, or will affect the ability of Parent to conduct the Parent Business.
(u) Labor Relations. Parent is not a party to any collective
bargaining or similar agreement. To the Knowledge of Parent, there are no
strikes, work stoppages, unfair labor practice charges or grievances pending or
threatened against Parent by any employee of Parent or any other person or
entity.
(v) Legal Compliance.
(i) To the Knowledge of Parent, Parent is in material
compliance with all Applicable Laws of any Governmental Bodies having
jurisdiction over Parent, including any
33
requirements relating to antitrust, consumer protection, currency exchange,
equal opportunity, health, occupational safety, pension and securities matters.
(ii) Schedule 5.1(v)(ii) contains a complete and
accurate list of each Governmental Authorization that is held by Parent or that
otherwise relates to the Parent Business. Each Governmental Authorization listed
or required to be listed in Schedule 5.1(v)(ii) is valid and in full force and
effect. The Governmental Authorizations listed in Schedule 5.1(v)(ii)
collectively constitute all of the Governmental Authorizations necessary to
permit Parent to lawfully conduct and operate the Parent Business.
(w) Brokers' Fees. Parent has no liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
Merger for which Parent, Merger Sub or Vianet could become liable or obligated.
(x) Undisclosed Liabilities. To the Knowledge of Parent, it
has no liability (and to the Knowledge of Parent, there is no basis for any
present or future Proceeding, charge, complaint, claim, or demand against any of
them giving rise to any liability), except for
(i) liabilities reflected or reserved against in the
Parent Interim Balance Sheet; or
(ii) liabilities which have arisen in the Ordinary
Course of Business since the date of Parent Interim Balance Sheet.
(y) Disclosure. The representations and warranties of Parent
and Merger Sub contained in this Agreement do not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements and information contained herein not misleading.
5.2 Power and Authority. Parent and Merger Sub each has the corporate
power to execute, deliver and perform this Agreement, the Related Agreements,
and, subject to the satisfaction of the conditions precedent set forth herein,
has taken all action required by law, its Governing Documents or otherwise, to
authorize the execution and delivery of this Agreement and such related
documents. The execution and delivery of this Agreement does not and, subject to
the receipt of required regulatory approvals and any other required Third-Party
Consents, the consummation of the Merger contemplated hereby will not, violate
any provisions of the Governing Documents of Parent or Merger Sub or any
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which Parent or Merger Sub is a party or by which it or its
properties is bound, any legal or other restrictions of any kind to which Parent
or Merger Sub is subject, or result in the creation of any Encumbrance upon any
of the property or assets of Parent or Merger Sub. The execution and delivery of
this Agreement has been approved by the Boards of Directors of Parent and Merger
Sub. This Agreement is a valid obligation of Parent and Merger Sub and is
legally binding on each in accordance with its terms.
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5.3 No Subsidiaries. Merger Sub does not own stock in and does not
control, directly or indirectly, any other corporation, association or business
organization. Merger Sub is not a party to any joint venture or partnership.
5.4 Merger Sub Common Stock. Parent owns, beneficially and of record,
all of the issued and outstanding shares of common stock, par value $0.001 per
share, of Merger Sub (the "Merger Sub Common Stock"), all which Merger Sub
Common Stock is validly issued and outstanding, fully paid and non-assessable,
free and clear of all liens and encumbrances. Parent has the corporate power to
vote such shares of Merger Sub Common Stock pursuant to this Agreement. Parent
has, or will by the Effective Time have, taken all such actions as may be
required in its capacity as the sole stockholder of Merger Sub to approve the
Merger.
ARTICLE VI. ACCESS TO INFORMATION AND DOCUMENTS.
6.1 Access to Information. Between the date hereof and the Closing
Date, each Party will give to the other and its counsel, accountants and other
representatives full access to all the properties, documents, contracts,
personnel files and other records and shall furnish copies of such documents and
with such information with respect to its affairs as may from time to time be
reasonably requested. Each Party will disclose to the other and make available
to such Party and its representatives all books, contracts, accounts, personnel
records, letters of intent, papers, records, communications with regulatory
authorities and other documents relating to the business and operations of
Vianet, Merger Sub or Parent, as the case may be. In addition, Vianet shall make
available to Parent all such banking, investment and financial information as
shall be necessary to allow for the efficient integration of Vianet's banking,
investment and financial arrangements with those of Parent at the Effective
Time. Access of Parent pursuant to the foregoing shall be granted at a
reasonable time and upon reasonable notice.
6.2 Effect of Access.
(a) Nothing contained in this Article VI shall be deemed to
create any duty or responsibility on the part of either Party to investigate or
evaluate the value, validity or enforceability of any Contract or other asset
included in the assets of the other Party.
(b) With respect to matters as to which any Party has made
express representations or warranties herein, the Parties shall be entitled to
rely upon such express representations and warranties irrespective of any
investigations made by such Parties, except to the extent that such
investigations result in actual knowledge of the inaccuracy or falsehood of
particular representations and warranties.
ARTICLE VII. COVENANTS.
7.1 Preservation of Business.
(a) Prior to the Effective Time or the termination of this
Agreement, Vianet will use its Best Efforts to preserve the Business, to keep
available to Parent and the
35
Surviving Corporation the services of the present employees of Vianet, and to
preserve for Parent and the Surviving Corporation the goodwill of the suppliers,
customers and others having business relations with Vianet. Vianet shall conduct
its Business only in the usual and ordinary course as it has previously been
conducted, including, without limitation, its policies and practices relating to
the collection of accounts receivable and the payment of accounts payable and
other liabilities, and not introduce any new methods of management, operations
or accounting, without Parent's prior written consent (which shall not be
unreasonably withheld); maintain its assets in as good working order and
condition as at present, ordinary wear and tear excepted; perform all material
obligations under material agreements and leases relating to or affecting it,
and keep in full force and effect present insurance policies.
(b) Prior to the Effective Time or the termination of this
Agreement, Parent will use its Best Efforts to preserve the Parent Business, to
keep available to Parent the services of the present employees of Parent, and to
preserve for Parent the goodwill of the suppliers, customers and others having
business relations with Parent. Parent shall conduct the Parent Business only in
the usual and ordinary course as it has previously been conducted, including,
without limitation, its policies and practices relating to the collection of
accounts receivable and the payment of accounts payable and other liabilities,
and not introduce any new methods of management, operations or accounting,
without Parent's prior written consent of Vianet (which shall not be
unreasonably withheld); maintain its assets in as good working order and
condition as at present, ordinary wear and tear excepted; perform all material
obligations under material agreements and leases relating to or affecting it,
and keep in full force and effect present insurance policies. Without the prior
written consent of Vianet, Parent shall not permit Merger Sub to take any
actions or conduct any operations other than in connection with the Merger.
7.2 Current Information.(a) During the period from the date of this
Agreement to the Effective Time, each Party hereto shall promptly notify each
other Party of any (i) significant change in the normal course of business or
operations of the Parent Business, (ii) Proceeding (or communications indicating
that the same may be contemplated), or the institution or threat or settlement
of Proceedings, in each case involving the Parties the outcome of which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect on the Party, taken as a whole or (iii) event which such Party reasonably
believes could be expected to have a Material Adverse Effect on the ability of
any party hereto to consummate the Merger.
(b) During the period from the date of this Agreement to the
Effective Time, Parent shall promptly notify Vianet of any correspondence
received from the SEC and shall deliver a copy of such correspondence to Vianet
within two (2) Business Days of receipt.
7.3 Material Transactions.Prior to the Effective Time, no Party will
(other than (i) as contemplated by the terms of this Agreement and the Related
Agreements, (ii) with respect to transactions for which there is a binding
commitment existing prior to the date hereof disclosed in the Disclosure
Schedules, and (iii) transactions described on Schedule 7.3 which do not vary
materially from the terms set forth on such Schedule 7.3, or in the Ordinary
Course of Business without first obtaining the written consent of the other
Parties):
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(a) declare or pay any dividend or make any other distribution
to shareholders, whether in cash, stock or other property;
(b) amend its Governing Documents or enter into any agreement
to merge or consolidate with, or sell a significant portion of its assets to,
any other Person;
(c) except pursuant to options, warrants, conversion rights or
other contractual rights disclosed in either Section 4.3 or Schedule 5.1(c),
issue any shares of its capital stock or any options, warrants or other rights
to subscribe for or purchase such common or other capital stock or any
securities convertible into or exchangeable for any such common or other capital
stock;
(d) directly redeem, purchase or otherwise acquire any of its
common or other capital stock;
(e) effect a reclassification, recapitalization, split-up,
exchange of shares, readjustment or other similar change in or to any capital
stock or otherwise reorganize or recapitalize;
(f) enter into any employment contract which is not terminable
upon notice of ninety (90) days or less, at will, and without penalty except as
provided herein or grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to become payable
to officers or salaried employees, grant any stock options or, except as
required by law, adopt or make any change in any bonus, insurance, pension or
other Employee Benefit Plan, agreement, payment or agreement under, to, for or
with any of such officers or employees;
(g) make any payment or distribution to the trustee under any
bonus, pension, profit sharing or retirement plan or incur any obligation to
make any such payment or contribution which is not in accordance with such
Party's usual past practice, or make any payment or contributions or incur any
obligation pursuant to or in respect of any other plan or contract or
arrangement providing for bonuses, options, executive incentive compensation,
pensions, deferred compensation, retirement payments, profit sharing or the
like, establish or enter into any such plan, contract or arrangement, or
terminate or modify any plan;
(h) prepay any debt in excess of Twenty Five Thousand Dollars
($25,000), borrow or agree to borrow any amount of funds except in the Ordinary
Course of Business or, directly or indirectly, guarantee or agree to guarantee
obligations of others, or fail to pay any monetary obligation in a timely manner
prior to delinquency;
(i) enter into any agreement, contract or commitment having a
term in excess of three (3) months or involving payments or obligations in
excess of Twenty Five Thousand Dollars ($25,000) in the aggregate, except in the
Ordinary Course of Business;
(j) amend or modify any material Contract;
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(k) agree to increase the compensation or benefits of any
employee (except for normal annual salary increases in accordance with past
practices);
(l) place on any of its assets or properties any pledge,
charge or other Encumbrance, except as otherwise authorized hereunder, or enter
into any transaction or make any contract or commitment relating to its
properties, assets and business, other than in the Ordinary Course of Business
or as otherwise disclosed herein;
(m) guarantee the obligation of any person, firm or
corporation, except in the Ordinary Course of Business;
(n) make any loan or advance in excess of Twenty-Five Thousand
Dollars ($25,000) or cancel or accelerate any material indebtedness owing to it
or any claims which it may possess or waive any material rights of substantial
value;
(o) sell or otherwise dispose of any Real Property or any
material amount of any tangible or intangible personal property other than
leasehold interests in closed facilities, except in the Ordinary Course of
Business;
(p) commit any act or fail to do any act which will cause a
Breach of any Contract and which will have a Material Adverse Effect on its
business, financial condition or earnings;
(q) violate any Applicable Law which violation might have a
Material Adverse Effect on such Party;
(r) purchase any real or personal property or make any other
capital expenditure where the amount paid or committed is in excess of
Twenty-Five Thousand Dollars ($25,000) per expenditure;
(s) except in the Ordinary Course of Business, enter into any
agreement or transaction with any of such Party's Affiliates; or
(t) engage in any transaction or take any action that would
render untrue in any material respect any of the representations and warranties
of such Party contained in this Agreement, as if such representations and
warranties were given as of the date of such transaction or action.
7.4 Public Disclosures. Parent and Vianet will consult with each other
before issuing any press release or otherwise making any public statement with
respect to the transactions contemplated by this Agreement, and shall not issue
any such press release or make any such public statement prior to such
consultation except as may be required by Applicable Law. The Parties shall
issue a joint press release, mutually acceptable to Vianet and Parent, promptly
upon execution and delivery of this Agreement.
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7.5 Confidentiality. Parent and Vianet shall hold, and shall use their
best efforts to cause their respective auditors, attorneys, financial advisors,
bankers and other consultants and advisors to hold, in strict confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all Confidential Information, and each Party shall not
release or disclose such Confidential Information to any other Person, except
its auditors, attorneys, financial advisors, bankers and other consultants and
advisors in connection with the transactions contemplated by this Agreement.
7.6 No Shop. From the date of this Agreement until the earlier of (i)
the Effective Time, (ii) August 31, 2006, or (iii) until this Agreement is
terminated in accordance with Article X hereof, neither Parent, Vianet nor
Merger Sub shall initiate, solicit or encourage (including by way of furnishing
assistance or proprietary information), or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may reasonably
be expected to lead to, any "Competing Transaction" (as defined below), or enter
into any discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of its Representatives to take
any such action, and each Party shall promptly notify the other Party of all
relevant terms (including the identity of the parties involved) of any such
inquiries and proposals received by such Party or any such officer, director,
investment banker, financial advisor, attorney, accountant or other
representative relating to any of such matters and if such inquiry or proposal
is in writing, such Party shall promptly deliver or cause to be delivered to the
other Party a copy of such inquiry or proposal. For the purposes of this
Agreement, "Competing Transaction" shall mean any of the following (other than
the Merger) (i) any merger, consolidation, share exchange, business combination
or similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of the assets of any Party; (iii) any tender offer
or exchange offer for more than fifty percent (50%) of the outstanding shares of
the capital stock of any Party or other form of investment in, or purchase of,
capital stock of any Party; (iv) any current Affiliate acquiring beneficial
ownership of, or any group (as such term is defined under Section 13(d) of the
Exchange Act) being formed which beneficially owns or has the right to acquire
beneficial ownership of, twenty-five percent (25%) or more of the outstanding
shares of the capital stock of any Party; or (v) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing. In the event that the provisions of this Section
7.6 are violated by any Party or by any Party's Representatives, and the Merger
is not consummated, then, in addition to other remedies available to the
non-violating Party, the non-violating Party will be entitled to receive from
the violating Party all out-of-pocket expenses (including reasonable attorneys'
fees and expenses relating to the Merger), which such non-violating Party has
incurred.
7.7 Other Actions. None of Vianet, Parent or Merger Sub shall knowingly
or intentionally take any action, or omit to take any action, if such action or
omission would, or reasonably might be expected to, result in any of its
representations and warranties set forth herein being or becoming untrue in any
material respect, or in any of the conditions to the Merger set forth in this
Agreement not being satisfied, or delay the Effective Time or (unless such
action is required by Applicable Law) which would have a Material Adverse Effect
on the ability of Vianet or Parent to obtain any Consents required for the
consummation of the Merger without imposition
39
of a condition or restriction which would have a Material Adverse Effect on the
Surviving Corporation or which would otherwise materially impair the ability of
Vianet or Parent to consummate the Merger in accordance with the terms of this
Agreement or materially delay such consummation. Without limiting the generality
of the foregoing, Vianet shall use its reasonable best efforts to obtain all
Consents required of Third Parties in respect of the Merger under all material
Contracts to which Vianet is a party, including without limitation lessor
consents under the lease of Vianet's corporate headquarters.
7.8 Accounting Methods. Prior to Closing, Vianet will not change, in
any material respect, its methods of accounting in effect at its most recent
fiscal year end except as required by changes in GAAP as concurred by Vianet's
independent accountants.
7.9 Documentation. True and complete copies of all documents required
by this Agreement will be delivered by Vianet to Parent and by Parent to Vianet
within five (5) days from the date hereof.
7.10 Cooperation.
(a) Parent and Vianet shall together or pursuant to an
allocation of responsibility agreed to between them, (i) cooperate with one
another in determining whether any filings are required to be made or consents
are required to be obtained in any jurisdiction prior to the Effective Time in
connection with the consummation of the Merger and cooperate in making any such
filings promptly and in seeking to obtain timely any such Consents, (ii) use
their respective commercially reasonable efforts to cause to be lifted any
impediment preventing consummation of the Merger, or any part thereof, or the
other transactions contemplated hereby, and (iii) furnish to one another and to
one another's counsel all such information as may be required to affect the
foregoing actions.
(b) Subject to the terms and conditions herein provided, and
unless this Agreement shall have been validly terminated as provided herein,
each of Parent and Vianet shall use all reasonable efforts (i) to take, or cause
to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party (or any subsidiaries or
affiliates of such party) with respect to this Agreement and to consummate the
Merger, subject to the vote of its stockholders described above, and (ii) to
obtain (and to cooperate with the other party to obtain) any Consent by any
Governmental Body and/or any Third Party which is required to be obtained or
made by such Party or any of its Affiliates in connection with this Agreement
and the Merger. Each of Parent and Vianet will promptly cooperate with and
furnish information to the other in connection with any such burden suffered by,
or requirement imposed upon, either of them or any of their Affiliates in
connection with the foregoing.
7.11 Notice of Subsequent Events. Vianet shall notify Parent of any
changes, additions or events of which it has or obtains knowledge as to which it
concludes or reasonably should conclude would cause any material change in or
material addition to any Disclosure Schedule delivered by Vianet under this
Agreement or otherwise would, in Vianet's reasonable judgment,
40
likely result in a breach of this Agreement by Vianet prior to the Closing Date,
promptly after the occurrence of the same.
7.12 Dissolution of Subsidiaries. Parent shall take all actions
necessary to cause each of Diamond World Funding Corp., Dominion Cellular, Inc.
and Diamond Leasing Corp., its wholly owned subsidiaries, to adopt a plan of
liquidation under Section 332 of the Code. Prior to adoption, each plan of
liquidation shall be submitted to Vianet for review and comment by Vianet and
shall be approved by Vianet in its sole discretion prior to adoption. Further,
each of Diamond World Funding Corp., Dominion Cellular, Inc. and Diamond Leasing
Corp. shall file appropriate documents and take all actions necessary to
dissolve each of these corporations in accordance with applicable laws of their
respective jurisdictions of organization (collectively, with the plans of
liquidation, the "Plan of Dissolution").
7.13 Review and Filing of SEC Reports. Parent shall prepare and file
all Parent SEC Reports with the SEC on a timely basis and in full compliance
with all SEC rules and regulations. Parent shall send a draft of each Parent SEC
Report to Vianet at least two (2) days before it is due for filing at the SEC.
Parent shall make all revisions to the Parent SEC Reports reasonably requested
by Vianet. In the event that the SEC issues any comments regarding a Parent SEC
Report, then Parent will use its Best Efforts to address and respond to such
comments in a complete manner as soon as reasonably practicable. Parent agrees
to amend any Parent SEC Report as reasonably requested by Vianet. Parent shall
ensure that Xxxxxxxx X. Xxxxxxxxx is reasonably accessible to Vianet and Parent
subsequent to the Closing Date to provide such assistance with filing Parent SEC
Reports as Vianet and Parent may reasonably request through January 31, 2007.
7.14 Registration Rights. Parent acknowledges and agrees to honor all
existing registration rights agreements of Vianet set forth on Schedule 4.3
after Closing.
7.15 Lock-Up Agreement. Parent shall cause each of the Parent Lock-Up
Stockholders to execute the Lock-Up Agreement in the form attached as Exhibit B
pursuant to which each Parent Lock-Up Stockholder shall agree to a one year
restriction on any sale or transfer of the shares of Parent Common Stock set
forth in his/her/its respective Lock-Up Agreement.
ARTICLE VIII. CONDITIONS TO CLOSING.
8.1 Mutual Conditions. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Closing Date, of the following conditions (any of which may be waived in writing
by Parent, Merger Sub and Vianet):
(a) None of Parent, Merger Sub or Vianet shall be subject to
any Order by a court of competent jurisdiction which (i) prevents or materially
delays the consummation of the Merger or (ii) would impose any material
limitation on the ability of Parent effectively to exercise full rights of
ownership of the common stock of the Surviving Corporation or any material
portion of the assets or Business, taken as a whole.
41
(b) No statute, rule or regulation, shall have been enacted by
any Governmental Body that makes the consummation of the Merger illegal.
(c) Parent, Merger Sub and Vianet shall have received all
Consents of Third Parties that are required of such Third Parties prior to the
consummation of the Merger, in form and substance acceptable to Parent or
Vianet, as the case may be, except where the failure to obtain such consent,
approval or authorization would not have a Material Adverse Effect on the
Surviving Corporation.
8.2 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub under this Agreement are subject to the
satisfaction, at or before the Closing, of each of the following conditions:
(a) The representations and warranties of Vianet contained
herein that are qualified as to materiality shall be true in all respects on and
as of the Closing Date with the same force and effect as though made on and as
of such date, and each of the representations and warranties of Vianet that are
not so qualified shall be true in all material respects.
(b) Vianet shall have performed and complied in all material
respects with all covenants, agreements, obligations and conditions required by
this Agreement to be performed or complied with by Vianet at or prior to the
Closing.
(c) There shall not be threatened, instituted or pending any
Proceeding by or before any court or Governmental Body requesting or looking
toward an Order that (a) restrains or prohibits the consummation of the Merger,
(b) could have a Material Adverse Effect on Parent's ability to exercise control
over or manage Vianet after the Closing or (c) could have a Material Adverse
Effect on Vianet.
(d) On the Closing Date, there shall be no effective Order
issued by a court of competent jurisdiction restraining or prohibiting the
consummation of the Merger.
(e) Vianet shall have delivered to Parent a certificate, dated
the Closing Date, executed by a duly authorized officer of Vianet certifying the
fulfillment of the conditions specified in Sections 8.2(a), (b) and (c).
(f) Vianet shall have delivered to Parent a certificate, dated
the Closing Date, executed by the Secretary of Vianet, certifying as to (i)
Vianet's Governing Documents, (ii) resolutions with respect to the Merger
adopted by Vianet's board of directors and shareholders attached thereto, and
(iii) incumbency and signatures of the persons who have executed this Agreement,
the Related Agreements to which it is a Party and any other documents,
certificates and agreements to be executed and delivered at the Closing pursuant
to this Agreement or any of the Related Agreements to which it is a party on
behalf of Vianet.
(g) The Related Agreements to which Vianet is a party and all
other documents to be delivered by Vianet to Parent at the Closing shall be
satisfactory in form and substance to Parent.
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(h) All Consents of all Third Parties and Governmental Bodies
shall have been obtained that are necessary, in the opinion of Parent Counsel,
in connection with (a) the execution and delivery by Vianet of this Agreement
and the Related Agreements to which it is a Party or (b) the consummation by
Vianet of the Merger and copies of all such Consents shall have been delivered
to Parent.
(i) Parent shall receive possession of the Certificates.
(j) Vianet shall have raised net proceeds of at least one
million dollars ($1,000,000) in a private placement offering of its securities.
(k) Vianet shall have executed and delivered to Parent a
Certificate of Conversion Ratio, Parent Indemnification Stockholders and Parent
Lock-Up Stockholders in the form attached as Exhibit D hereto.
8.3 Conditions to the Obligations of Vianet.The obligations of Vianet
under this Agreement are subject to the satisfaction, at or before the Closing,
of each of the following conditions:
(a) The representations and warranties of Parent and Merger
Sub contained herein that are qualified as to materiality shall be true in all
respects on and as of the Closing Date (except for the representations and
warranties made as of a specific date which shall be true in all material
respects as of such date) with the same force and effect as though made on and
as of such date, and each of the representations and warranties of Parent and
Merger Sub that are not so qualified shall be true in all material respects.
(b) Parent and Merger Sub shall have performed and complied in
all material respects with all covenants, agreements, obligations and conditions
required by this Agreement to be so performed or complied with by Parent and
Merger Sub at or prior to the Closing.
(c) There shall not be threatened, instituted or pending any
Proceeding by or before any court or Governmental Body requesting or looking
toward an Order, that (a) restrains or prohibits the consummation of the Merger
or (b) could have a Material Adverse Effect on Parent or Merger Sub.
(d) On the Closing Date, there shall be no effective Order
issued by a court of competent jurisdiction restraining or prohibiting the
consummation of the Merger.
(e) Parent and Merger Sub shall have delivered to Vianet a
certificate, dated the Closing Date, executed by a duly authorized officer of
Parent and Merger Sub, certifying to the fulfillment of the conditions specified
in Sections 8.3(a), (b) and (c).
(f) Parent shall have delivered to Vianet a certificate, dated
the Closing Date, executed by the Secretary of Parent, certifying as to (i)
Parent and Merger Sub's Governing Documents, (ii) resolutions with respect to
the Merger adopted by Parent's and Merger Sub's respective boards of directors
and shareholders attached thereto, and (iii) incumbency and
43
signatures of the persons who have executed this Agreement, the Related
Agreements to which Parent or Merger Sub is a Party and any other documents,
certificates and agreements to be executed and delivered at the Closing pursuant
to this Agreement or any of the Related Agreements to which it is a party on
behalf of Vianet.
(g) Parent shall have delivered to Vianet a Lock-up Agreement
executed by each of the Parent Lock-Up Stockholders.
(h) The Related Agreements to which Parent or Merger Sub is a
party and all other documents to be delivered by Parent and Merger Sub to Vianet
at the Closing shall be satisfactory in form and substance to Vianet.
(i) All Consents of all Third Parties and Governmental Bodies
shall have been obtained that are necessary, in the opinion of counsel to
Vianet, in connection with (a) the execution and delivery by Parent and Merger
Sub of this Agreement or the Related Agreements to which either of them is a
party, and (b) the consummation by Parent and Merger Sub of the transactions
contemplated hereby or thereby, and copies of all such Consents shall have been
delivered to Vianet.
(j) Parent shall have delivered to Vianet (i) the resignations
of all directors of Parent, and (ii) the resignations of all officers of Parent,
each effective upon Closing. Parent shall also deliver to Vianet an agreement
from Xxxxxxxx X. Xxxxxxxxx releasing each of Parent, SwingStation, Inc. and
Vianet from all liabilities and obligations related to that certain employment
agreement dated as of January 1, 2006 by and between Parent and Xxxxxxxx X.
Xxxxxxxxx and Xx. Xxxxxxxxx'x employment with Parent, including, but not limited
to, all amounts owed to Xx. Xxxxxxxxx for salary, bonus or expense
reimbursements.
(k) Parent shall have delivered to Vianet evidence of the
expansion of Parent's Board of Directors to five (5) members, and, simultaneous
with the resignations of all directors of Parent, evidence of the appointment of
up to five (5) new directors nominated by Vianet.
(l) Parent shall deliver to each stockholder of Vianet a
certificate evidencing ownership of the shares of Series A Stock described in
Section 3.2.
(m) Parent shall have filed the Certificate of Designations,
Rights and Preferences of Series A Preferred Stock with the Secretary of State
of the State of Delaware.
(n) Stockholders of Vianet owning no more than five percent
(5%) of Vianet's issued and outstanding common stock shall have elected to
execute their appraisal rights under the DGCL. (o) The stockholders of Vianet
shall have given all necessary approvals and consents required under DGCL.
(p) The Merger shall qualify as a tax-free transaction to each
of Parent, Vianet and Vianet's stockholders.
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(q) As of the Closing Date, Parent shall not have any debts or
liabilities that are not disclosed in the Parent SEC Reports, including but not
limited to, liabilities related to or ensuing out of the Plan of Dissolution as
contemplated in Section 7.12 hereof, and shall not have any liens recorded
against its properties or assets. In addition, all liabilities owed to Xxxxxx
Xxxxxx, Xxxxxxxx Xxxxxxxxx, BSB Bank (or its successors or assignees), New
Jersey Department of Labor, Division of Employer Accounts, The Pointer Group,
LLC, Xxxxxxx Xxxxxxxx & Xxxxxx,LLP, Xxxxxxx Xxxxxxxxx, Xxxxxxx X. Xxxxxx and
Xxxxxxxxx Xxxxxxx Associates as of the Closing Date shall have been satisfied by
Parent. These liabilities may be satisfied by (i) the payment of cash, (ii) the
issuance of shares of Parent Common Stock or (iii) the assumption by
SwingStation, Inc., Parent's wholly owned subsidiary, of such liabilities
pursuant to a written agreement that is reasonably acceptable Vianet.
Furthermore, all unpaid liabilities of SwingStation, Inc. on the Closing Date
shall be satisfied on or after the Closing Date from funding sources other than
Vianet, Merger Sub or Parent.
(r) Parent and Merger Sub shall have executed and delivered to
Vianet a Certificate of Conversion Ratio in the form attached as Exhibit D
hereto.
(s) The Plan of Dissolution shall be completed in all
respects.
(t) Parent shall have resolved all outstanding SEC comments to
any Parent SEC Reports to the satisfaction of the SEC and to the reasonable
satisfaction of Vianet.
(u) Parent shall have caused each of the Parent
Indemnification Stockholders to execute an escrow agreement on terms and
conditions mutually acceptable to Parent and Vianet pursuant to which each of
the Parent Indemnification Stockholders shall agree to pledge and deposit 20% of
his, her or its shares of Parent Common Stock into escrow to secure the
performance of their indemnification obligations pursuant to Section 9.5 herein.
ARTICLE IX. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1 Survival of Representations. All representations and warranties
made by any party to this Agreement or pursuant hereto, as modified by any
Disclosure Schedule, exhibit, certificate or other document executed and
delivered pursuant hereto shall survive the Closing and any investigation made
by or on behalf of any party hereto for a period of one (1) year following the
Closing Date. All statements contained herein or in any schedule, exhibit,
certificate or other document executed and delivered pursuant hereto shall be
deemed representations and warranties for purposes of Sections 9.1, 8.2(a), and
8.3(a). The right to indemnification or other remedy based upon such
representations and warranties shall not be affected by any investigation
conducted with respect to, or any knowledge acquired at any time, whether before
or after execution and delivery of this Agreement or the Closing Date, with
respect to the accuracy or inaccuracy of any such representation or warranty.
9.2 Indemnification.
(a) Subject to the terms and conditions of this Article IX,
Vianet shall indemnify, defend and hold harmless Parent and the Surviving
Corporation (and their respective
45
Representatives, Affiliates, successors and assigns), from and against all
Claims, assessments, losses, damages, liabilities, deficiencies, judgments,
settlements, costs and expenses, including interest, penalties and reasonable
attorneys' fees and expenses incurred in enforcing this indemnification or in
any litigation between the Parties or with Third Parties (collectively,
"Damages") asserted against, resulting to, imposed upon, suffered or incurred by
Parent or the Surviving Corporation (or any of their respective officers,
managers, members, employees, Affiliates, successors or assigns), directly or
indirectly, by reason of or resulting from (i) any failure of Vianet to duly
perform or observe any term, provision, instrument, covenant or agreement to be
performed or observed by it, prior to the Closing, pursuant to this Agreement or
any Related Agreement and/or (ii) a breach of any representation, warranty,
covenant or agreement of Vianet contained in or made pursuant to this Agreement
or any of the Related Agreements, provided, however, that the maximum liability
of Vianet (collectively and not individually) to Parent and the Surviving
Corporation for Damages under this Section 9.2(a) shall not exceed Five Hundred
Thousand Dollars ($500,000).
(b) Subject to the terms and conditions of this Article IX,
Parent, the Surviving Corporation and each Parent Indemnification Stockholder
shall, jointly and severally, indemnify, defend and hold harmless Vianet (and
its respective Representatives, Affiliates, successors and assigns) at any time
after consummation of the Closing, from and against all Damages asserted
against, resulting to, imposed upon or incurred by Vianet, directly or
indirectly, by reason of or resulting from: (i) any failure of Parent or Merger
Sub to duly perform or observe any term, provision, instrument, covenant or
agreement to be performed or observed by it, prior to the Closing, pursuant to
this Agreement or any Related Agreement; or (ii) a breach of any representation,
warranty, covenant or agreement of Parent or Merger Sub contained in or made
pursuant to this Agreement, provided, however, that the maximum liability of
Parent to Vianet for Damages under this Section 9.2(b) shall not exceed the
Merger Consideration paid to Vianet hereunder and the maximum liability of the
Parent Indemnification Stockholders to Vianet for Damages under this Section
9.2(b) shall not exceed the one million (1,000,000) shares pledged by the Parent
Indemnification Stockholders pursuant to Section 9.5.
(c) Notwithstanding any provision hereof to the contrary,
Vianet shall not be liable to Parent and the Surviving Corporation, and Parent,
the Surviving Corporation and the Parent Indemnification Stockholders shall not
be liable to Vianet, unless the aggregate Damages exceed $50,000, and then only
to the extent that the aggregate Damages exceed $50,000.
9.3 Conditions of Indemnification. The obligations and liabilities of
Parent, the Surviving Corporation and the Parent Stockholders, on the one hand,
and Vianet, on the other hand, as indemnifying parties (each, an "Indemnifying
Party") to indemnify Vianet, Parent and the Surviving Corporation, as applicable
(each, an "Indemnified Party"), under Section 9.2 with respect to Claims made by
Third Parties shall be subject to the following terms and conditions:
The Indemnified Party shall give written notice to the Indemnifying Party of any
Damages with respect to which it seeks indemnification promptly after the
discovery by such party of any matters giving rise to such Claim for
indemnification; provided, however, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
46
obligations under Section 9.2 unless it shall have been prejudiced by the
omission to provide such notice. In case any Claim is brought against an
Indemnified Party, the Indemnifying Party shall be entitled to participate in
the defense thereof and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to the Indemnified Party, and
after notice from the Indemnifying Party of its election so to assume the
defense thereof, the Indemnifying Party will not be liable to the Indemnified
Party under Section 9.2 for any legal or other expense subsequently incurred by
the Indemnified Party in connection with the defense thereof; provided, however,
that (i) if the Indemnifying Party shall elect not to assume the defense of such
claim or action or (ii) if the Indemnified Party reasonably determines that
there may be a conflict between the positions of the Indemnifying Party and the
Indemnified Party in defending such Claim, then separate counsel shall be
entitled to participate in and conduct such defense, and the Indemnifying Party
shall be liable for any reasonable legal or other expenses incurred by the
Indemnified Party in connection with such defense (but not more than one
counsel). The Indemnifying Party shall not be liable for any settlement of any
Claim effected without its written consent, which consent shall not be
unreasonably withheld. The Indemnifying Party shall not, without the Indemnified
Party's prior written consent, which consent shall not be unreasonably withheld,
settle or compromise any Claim to which the Indemnified Party is a party or
consent to entry of any judgment in respect thereof. The Indemnifying Party
further agrees that it will not, without the Indemnified Party's prior written
consent, settle or compromise any claim or consent to entry of any judgment in
respect thereof in any pending or threatened Claim in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Party is
an actual or potential party to such Claim) unless such settlement or compromise
includes an unconditional release of the Indemnified Party from all liability
arising out of such Claim.
9.4 Remedies Cumulative. Except as expressly provided in this
Agreement, the remedies provided herein shall be cumulative and shall not
preclude assertion by any Party hereto of any other rights or the seeking of any
other remedies against any other Party hereto.
9.5 Security for the Indemnification Obligations of Parent and Merger
Sub. In order to secure their obligations pursuant to this Article IX, Parent
shall cause each of the Parent Indemnification Stockholders to pledge and
deposit with an escrow agent mutually satisfactory to Parent and Vianet stock
certificates evidencing ownership of an aggregate of one million (1,000,000)
shares of Parent Common Stock. Such certificates shall be held by the escrow
agent for a period of one (1) year from the Closing Date. Subject to the limits
set forth in Section 9.2, if Vianet has a valid claim for indemnification
against Parent and/or the Parent Indemnification Stockholders pursuant to this
Article IX, Vianet, Parent and each of the Parent Indemnification Stockholders
shall issue a joint instruction to the escrow agent to either (i) release such
stock certificates or any portion thereof necessary to satisfy such
indemnification obligation to Vianet or (ii) coordinate the sale of a sufficient
number of shares of Parent Common Stock evidenced by such stock certificates to
satisfy such indemnification obligations and ensure that the net proceeds of
such sales are deposited to an account in accordance with the instructions of
Vianet. For Parent Indemnification Stockholders who are also Parent Lock-Up
Stockholders, all pledged shares of Parent Common Stock shall be considered
shares subject to the Lock-Up Agreement, as described in Section 7.15.
47
ARTICLE X. TERMINATION, AMENDMENT AND WAIVER.
10.1 Termination. This Agreement may be terminated at anytime prior to
the Effective Time:
(a) by mutual written consent of Parent, Merger Sub and
Vianet;
(b) by Parent or Vianet:
(i) if the Merger shall not have been consummated on
or before August 31, 2006, unless the failure to consummate the Merger is the
result of a willful and material Breach of this Agreement by the Party seeking
to terminate this Agreement;
(ii) if any court of competent jurisdiction or other
Governmental Body shall have issued an Order or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
non-appealable;
(iii) in the event of a Breach by the other Party of
any representation, warranty, covenant or other agreement contained in this
Agreement which cannot be or has not been cured within ten (10) days after the
giving of written notice to the breaching Party of such Breach (provided that
the terminating Party is not then in Breach of any representation, warranty,
covenant or other agreement contained in this Agreement);
(iv) in the event that (i) all of the conditions to
the obligation of such Party to effect the Merger set forth in Section 8.1 shall
have been satisfied and (ii) any condition to the obligation of such Party to
effect the Merger set forth in Section 8.2 (in the case of Parent or Merger Sub)
or Section 8.3 (in the case of Vianet) is not capable of being satisfied prior
to the end of the period referred to in Section 10.1(b)(i); or
(v) if there shall have occurred prior to the
Effective Time changes in Applicable Law that, in the aggregate, shall have a
Material Adverse Effect on either Party.
10.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on the part of any
Party except to the extent that such termination results from the willful and
material Breach by a Party of any of its representations, warranties, covenants
or other agreements set forth in this Agreement, in which case the terminating
Party shall have the right to pursue any remedies available to it at law or in
equity.
10.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Parties.
10.4 Extension; Waiver. At any time prior to the Effective Time, the
Parties may (i) extend the time for the performance of any of the obligations or
other acts of the other Parties, (ii) waive any inaccuracies in the
representations and warranties contained in this Agreement or in
48
any document delivered pursuant to this Agreement or (iii) waive compliance with
any of the agreements or conditions contained in this Agreement. Any agreement
on the part of a Party 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 Procedure for Termination, Amendment Extension or Waiver. A
termination of this Agreement pursuant to Section 10.1, an amendment of this
Agreement pursuant to Section 10.3, or an extension or waiver pursuant to
Section 10.4 shall, in order to be effective, require in the case of Parent,
Merger Sub or Vianet, action by its Board of Directors or the duly authorized
designee of the Board of Directors.
ARTICLE XI. MISCELLANEOUS.
11.1 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery
or by facsimile and overnight courier or overnight courier to the parties hereto
at the following addresses, or at such other address as either party may advise
the other in writing from time to time:
If to Parent or Merger Sub:
--------------------------
Digital Imaging Resources, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
--------------
Xxxxxxx Xxxxxxxxx
Counselor at Law
0 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx
The Pointer Group LLC
0000 Xxxx Xxxxx Xxxx
Xxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Vianet:
Vianet Direct, Inc.
Glenhardie Corporate Center Three
0000 Xxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
49
with a copy to:
--------------
Xxxx Xxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx Xxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esquire
Facsimile: (215) 972- 2284
All such communications shall be deemed to have been delivered on the
date of hand delivery or facsimile or on the next Business Day following the
deposit of such communications with the overnight courier.
11.2 Further Assurances. Each Party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.
11.3 Governing Law. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of Delaware, applied without
giving effect to any conflicts of law principles.
11.4 Commissions. Except as set forth on Schedule 4.24, each of the
Parties hereto represents and warrants that no broker or finder is entitled to
any brokerage or finder's fee or other commission in connection with the Merger.
Each of the Parties hereto shall pay or discharge, and shall indemnify and hold
the other harmless from and against, all claims or liabilities for brokerage
commissions or finder's fees incurred by reason of any action taken by it.
11.5 Captions. The captions or headings in this Agreement are made for
convenience and general reference only and shall not be construed to describe,
define or limit the scope or intent of the provisions of this Agreement.
11.6 Integration of Exhibits and Schedules. All Exhibits and Disclosure
Schedules to this Agreement are integral parts of this Agreement as if fully set
forth herein.
11.7 Entire Agreement. This Agreement, the Related Agreements,
including all Exhibits and Disclosure Schedules attached hereto and thereto
contain the entire agreement of the parties and supersede any and all prior or
contemporaneous agreements between the parties, written or oral, with respect to
the transactions contemplated hereby. Such agreement may not be changed or
terminated orally, but may only be changed by an agreement in writing signed by
the party or parties against whom enforcement of any waiver, change,
modification, extension, discharge or termination is sought.
11.8 Expenses. Except as expressly provided otherwise, each party
hereto will bear its own costs and expenses (including fees and expenses of
auditors, attorneys, financial advisors, bankers, brokers and other consultants
and advisors) incurred in connection with this Agreement, the Related Agreements
and the transactions contemplated hereby and thereby.
50
11.9 Counterparts. This Agreement may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall together constitute and be one and the
same instrument.
11.10 Binding Effect. This Agreement shall be binding on, and shall
inure to the benefit of, the Parties hereto, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. No Party may assign any right or obligation hereunder without
the prior written consent of the other Parties.
11.11 No Rule of Construction. The Parties agree that, because all
Parties participated in negotiating and drafting this Agreement, no rule of
construction shall apply to this Agreement which construes ambiguous language in
favor of or against any Party by reason of that Party's role in drafting this
Agreement.
[REMINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Parent, Merger Sub and Vianet have caused this
Agreement and Plan of Merger to be executed by their respective duly authorized
officers, all as of the day and year first above written.
BY PARENT:
DIGITAL IMAGING RESOURCES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxxxx X. Xxxxxxxxx, President
BY MERGER SUB:
VIANET ACQUISITION CORP.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxxxx X. Xxxxxxxxx, President
BY VIANET:
VIANET DIRECT, INC.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
Chief Executive Officer
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SCHEDULE OF EXHIBITS
--------------------
Exhibit A Disclosure Schedules
Exhibit B Form of Lock-up Agreement
Exhibit C Certificate of Designation of Series A Preferred Stock
Exhibit D Certificate of Conversion Ratio, Parent Indemnification
Stockholders and Parent Lock-Up Stockholders
