EXHIBIT 2.7
AGREEMENT AND PLAN OF MERGER
Dated as of May 3, 2001
Between
ZIASUN TECHNOLOGIES, INC.
And
TELESCAN, INC.
TABLE OF CONTENTS
Page
ARTICLE I FORMATION OF HOLDING COMPANY AND SUBSIDIARIES.....................1
1.1. Organization of Holdco......................................1
1.2. Directors and Officers of Holdco............................2
1.3. Organization of Merger Subsidiaries.........................2
1.4. Actions of Directors and Officers...........................2
1.5. Actions of ZiaSun and Telescan..............................3
ARTICLE II THE MERGERS; CERTAIN RELATED MATTERS.............................3
2.1. The Merger..................................................3
2.2. Closing.....................................................3
2.3. Effective Time..............................................4
2.4. Effects of the Mergers......................................4
2.5. Charters and Bylaws.........................................4
2.6. Officers and Directors......................................4
2.7. Effect on ZiaSun Common Stock...............................5
2.8. ZiaSun Stock Options........................................5
2.9. Certain Adjustments.........................................7
2.10. ZiaSun Appraisal Rights.....................................7
2.11. Effect on Telescan Capital Stock............................8
2.12. Telescan Stock Options......................................9
ARTICLE III EXCHANGE OF CERTIFICATES.......................................10
3.1. Exchange Fund..............................................10
3.2. Exchange Procedures........................................10
3.3. Distributions with Respect to Unexchanged Shares...........11
3.4. No Further Ownership Rights in Telescan Capital Stock
or ZiaSun Common Stock....................................12
3.5. No Fractional Shares of Holdco Common Stock................12
3.6. Termination of Exchange Fund...............................12
3.7. No Liability...............................................13
3.8. Investment of the Exchange Fund............................13
3.9. Lost Certificates..........................................13
3.10. Withholding Rights.........................................13
3.11. Further Assurances.........................................13
3.12. Stock Transfer Books.......................................14
3.13. Exchange Procedure for Telescan Preferred Stock............14
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................14
4.1. Representations and Warranties of Telescan.................14
4.2. Representations and Warranties of ZiaSun...................33
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS........................49
5.1. Covenants of Telescan......................................49
5.2. Covenants of ZiaSun........................................54
5.3. Rescission Offer...........................................58
5.4. Governmental Filings.......................................58
ARTICLE VI ADDITIONAL AGREEMENTS...........................................58
6.1. Preparation of Proxy Statement; Stockholders Meetings......58
6.2. Holdco Board of Directors; Executive Officers..............61
6.3. Access to Information......................................62
6.4. Reasonable Best Efforts....................................62
6.5. Acquisition Proposals......................................63
6.6. Fees and Expenses..........................................64
6.7. Directors' and Officers' Indemnification and Insurance.....65
6.8. Public Announcements.......................................66
6.9. Listing of Shares of Holdco Common Stock...................66
6.10. Affiliates.................................................67
6.11. Section 16 Matters.........................................67
ARTICLE VII CONDITIONS PRECEDENT...........................................67
7.1. Conditions to Each Party's Obligation to Effect its
Respective Merger........................................67
7.2. Additional Conditions to Obligations of Telescan...........68
7.3. Additional Conditions to Obligations of ZiaSun.............69
ARTICLE VIII TERMINATION AND AMENDMENT.....................................70
8.1. Termination................................................70
8.2. Effect of Termination......................................72
8.3. Amendment..................................................74
8.4. Extension; Waiver..........................................74
ARTICLE IX GENERAL PROVISIONS..............................................74
9.1. Non-Survival of Representations, Warranties and
Agreements................................................74
9.2. Notices....................................................74
9.3. Interpretation.............................................76
9.4. Counterparts...............................................76
9.5. Entire Agreement; No Third Party Beneficiaries.............76
9.6. Governing Law..............................................76
9.7. Severability...............................................76
9.8. Assignment.................................................77
9.9. Submission to Jurisdiction; Waivers........................77
9.10. Enforcement................................................77
9.11. Definitions................................................77
LIST OF EXHIBITS
Exhibit Title
- ------- -----
Exhibit A-1 Form of Voting Agreements relating to ZiaSun Shares Exhibit A-2 Form
of Voting Agreements relating to Telescan Shares Exhibit B-1 Form of Certificate
of Incorporation of Holdco Exhibit B-2 Form of Bylaws of Holdco Exhibit 6.2 List
of Holdco Officers and Directors Exhibit 6.10 Form of Affiliate Agreement
Exhibit 7.2(c)(1) Form of Holdco and Telescan Merger Sub Representations
Letter
Exhibit 7.2(c)(2) Form of Holdco and ZiaSun Merger Sub Representations Letter
Exhibit 7.2(c)(3) Form of Telescan Representations Letter
Exhibit 7.2(c)(4) Form of ZiaSun Representations Letter
AGREEMENT AND PLAN OF MERGER, dated as of May 3, 2001 (this
"Agreement"), between ZIASUN TECHNOLOGIES, INC., a Nevada corporation
("ZiaSun"), and TELESCAN, INC., a Delaware corporation ("Telescan").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of ZiaSun and Xxxxxxxx xxxx it advisable
and in the best interests of each corporation and its respective stockholders
that ZiaSun and Telescan engage in a business combination on the terms set forth
herein in order to advance the long-term strategic business interests of ZiaSun
and Telescan;
WHEREAS, the combination of ZiaSun and Telescan shall be effected by the
terms of this Agreement through the Mergers (as defined in Section 2.1(b));
WHEREAS, in furtherance thereof, the Board of Directors of each of ZiaSun
and Telescan has approved this Agreement and the applicable Merger, upon the
terms and subject to the conditions set forth in this Agreement, pursuant to
which each share of capital stock of ZiaSun and each share of capital stock of
Telescan issued and outstanding immediately prior to the Effective Time (as
defined in Section 2.3) will be converted into the right to receive shares of
capital stock of Holdco (as defined in Section 1.1) as set forth herein;
WHEREAS, as a condition and inducement to each of ZiaSun's and Telescan's
willingness to enter into this Agreement, ZiaSun, Telescan, certain stockholders
of ZiaSun (the "ZiaSun Designated Stockholders") and certain stockholders of
Telescan (the "Telescan Designated Stockholders") are entering into agreements
dated as of the date hereof in the form of Exhibit A (the "Voting Agreements")
pursuant to which each of the ZiaSun Designated Stockholders and the Telescan
Designated Stockholders have agreed, among other things, to vote their shares of
capital stock of ZiaSun and Telescan, respectively, in favor of the adoption of
this Agreement; and
WHEREAS, for Federal income tax purposes, it is intended that the Mergers
shall qualify as exchanges within the meaning of Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder, and that the ZiaSun Merger (as defined in Section 2.1(a)) shall
qualify as a reorganization within the meaning of Section 368(a) of the Code and
the regulations promulgated thereunder.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I FORMATION OF HOLDING COMPANY AND SUBSIDIARIES
1.1. Organization of Holdco. As promptly as practicable following the
execution of this Agreement and receipt of any required approvals, ZiaSun and
Telescan shall cause a new corporation ("Holdco") to be organized under the
laws of the State of Delaware. The certificate of incorporation and bylaws of
Holdco shall initially be as agreed upon by ZiaSun and Telescan. The authorized
capital stock of Holdco shall initially consist of 100 shares of common stock,
par value $0.01 per share (the "Holdco Common Stock"), of which one share shall
be issued to ZiaSun and one share shall be issued to Telescan. ZiaSun and
Telescan shall take, and shall cause Holdco to take, all requisite action to
cause the certificate of incorporation of Holdco to be in the form of Exhibit
B-1 (the "Holdco Charter") and the bylaws of Holdco to be in the form of Exhibit
B-2 (the "Holdco Bylaws"), in each case, at the Effective Time.
1.2. Directors and Officers of Holdco. Prior to the Effective Time, the
directors and officers of Holdco shall consist of equal numbers of
representatives of ZiaSun and Telescan and shall initially be as designated and
elected by ZiaSun and Telescan. ZiaSun and Telescan shall take all requisite
action to cause the directors and officers of Holdco as of the Effective Time to
be as provided in Section 6.2. Each such director and officer shall remain in
office until his or her successors are elected in accordance with Section 6.2
and the Holdco Bylaws.
1.3. Organization of Merger Subsidiaries. As promptly as practicable
following the execution of this Agreement, Holdco shall cause to be organized
for the sole purpose of effectuating the Mergers contemplated herein:
(a) a corporation organized under the laws of the State of Nevada
("ZiaSun Merger Sub"); the certificate of incorporation and bylaws of
ZiaSun Merger Sub shall be in such forms as shall be determined by Holdco
as soon as practicable following the execution of this Agreement and the
authorized capital stock of ZiaSun Merger Sub shall initially consist of
100 shares of common stock, par value $0.01 per share, all of which shares
shall be issued to Holdco at a price of $1.00 per share; and
(b) a corporation organized under the laws of the State of Delaware
("Telescan Merger Sub" and, together with ZiaSun Merger Sub, the "Merger
Subsidiaries"); the certificate of incorporation and bylaws of Telescan
Merger Sub shall be in such forms as shall be determined by Holdco as soon
as practicable following the execution of this Agreement; and the
authorized capital stock of Telescan Merger Sub shall initially consist of
100 shares of common stock, par value $0.01 per share, all of which shares
shall be issued to Holdco at a price of $1.00 per share.
1.4. Actions of Directors and Officers. As promptly as practicable
following the execution of this Agreement, ZiaSun and Telescan shall take all
requisite action to designate the directors and officers of Holdco and each of
the Merger Subsidiaries and to take such steps as may be necessary or
appropriate to complete the organization of Holdco and the Merger Subsidiaries.
ZiaSun and Telescan shall cause the directors of Holdco to ratify and approve
this Agreement, and the directors of the Merger Subsidiaries to ratify and
approve this Agreement.
1.5. Actions of ZiaSun and Telescan. As promptly as practicable following
the execution of this Agreement, ZiaSun and Telescan, as the holders of all the
outstanding shares of Holdco Common Stock, shall adopt this Agreement and shall
cause Holdco, as the sole stockholder of each of the Merger
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Subsidiaries, to adopt this Agreement. Each of ZiaSun and Telescan shall cause
Holdco, and Holdco shall cause the Merger Subsidiaries, to perform their
respective obligations under this Agreement. As promptly as practicable after
the date hereof the parties shall cause this Agreement to be amended to add
Holdco and the Merger Subsidiaries as parties hereto and each Merger Subsidiary
shall become a constituent corporation in its respective Merger.
ARTICLE II THE MERGERS; CERTAIN RELATED MATTERS
2.1. The Merger. (a) Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Nevada Revised Statutes
(the "NRS"), ZiaSun Merger Sub shall be merged with and into ZiaSun (the
"ZiaSun Merger"). ZiaSun shall be the surviving corporation in the ZiaSun
Merger and shall continue its corporate existence under the laws of the
State of Nevada. As a result of the ZiaSun Merger, ZiaSun shall become a
wholly owned subsidiary of Holdco.
(b) Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), Telescan Merger Sub shall be merged with and into Telescan (the
"Telescan Merger"). Telescan shall be the surviving corporation in the
Telescan Merger and shall continue its corporate existence under the laws
of the State of Delaware. As a result of the Telescan Merger, Telescan
shall become a wholly owned subsidiary of Holdco. The ZiaSun Merger and the
Telescan Merger are together referred to herein as the "Mergers".
2.2. Closing. Upon the terms and subject to the conditions set forth in
Article VII and the termination rights set forth in Article VIII, the closing of
the Mergers (the "Closing") will take place on the first Business Day (as
defined in Section 9.11(d)) after the satisfaction or waiver (subject to
applicable law) of the conditions (excluding conditions that, by their nature,
cannot be satisfied until the Closing Date (as defined below)) set forth in
Article VII, unless this Agreement has been theretofore terminated pursuant to
its terms or unless another time or date is agreed to in writing by the parties
hereto (the actual time and date of the Closing being referred to herein as the
"Closing Date"). The Closing shall be held at the offices of Xxxxxxx Xxxxxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, unless another place
is agreed to in writing by the parties hereto.
2.3. Effective Time. As soon as practicable, but not later than five
business days, following the satisfaction or waiver (subject to applicable law)
of the conditions set forth in Article VII, at the Closing the parties shall
file (i) the ZiaSun Certificate of Merger (as defined below) with the Secretary
of State of the State of Nevada in such form as is required by and executed and
acknowledged in accordance with the relevant provisions of the NRS and make all
other filings or recordings required under the NRS in connection with the ZiaSun
Merger and (ii) the Telescan Certificate of Merger (as defined below) with the
Secretary of State of the State of Delaware in such form as is required by and
executed and acknowledged in accordance with
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the relevant provisions of the DGCL and make all other filings or recordings
required under the DGCL in connection with the Telescan Merger. The Mergers
shall become effective at (i) the later of the date and time the certificate of
merger relating to the ZiaSun Merger (the "ZiaSun Certificate of Merger") is
duly filed with the Secretary of State of the State of Nevada and the date and
time the certificate of merger relating to the Telescan Merger (the "Telescan
Certificate of Merger"; together with the ZiaSun Certificate of Merger, the
"Certificates of Merger") is duly filed with the Secretary of State of the State
of Delaware or (ii) such subsequent time as ZiaSun and Telescan shall agree and
as shall be specified in the Certificates of Merger; provided that both Mergers
shall become effective at the same time (such time as the Mergers become
effective being the "Effective Time").
2.4. Effects of the Mergers. At and after the Effective Time, (i) the
ZiaSun Merger will have the effects set forth in the NRS and (ii) the Telescan
Merger will have the effects set forth in the DGCL.
2.5. Charters and Bylaws. (a) Certificates of Incorporation. The
Restated Articles of Incorporation of ZiaSun, as in effect immediately
prior to the Effective Time, shall be the certificate of incorporation of
the surviving corporation in the ZiaSun Merger. The Restated Certificate of
Incorporation of Telescan, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the surviving
corporation in the Telescan Merger.
(b) Bylaws. The bylaws of ZiaSun, as in effect immediately prior to
the Effective Time, shall be the bylaws of the surviving corporation in the
ZiaSun Merger. The bylaws of Telescan, as in effect immediately prior to
the Effective Time, shall be the bylaws of the surviving corporation in the
Telescan Merger.
2.6. Officers and Directors. The officers and directors of ZiaSun Merger
Sub immediately prior to the Effective Time shall be the officers and directors
of the surviving corporation in the ZiaSun Merger. The officers and directors of
Telescan Merger Sub immediately prior to the Effective Time shall be the
officers and directors of the surviving corporation in the Telescan Merger.
2.7. Effect on ZiaSun Common Stock. (a) As of the Effective Time, by virtue
of the ZiaSun Merger and without any action on the part of the holder of any
shares of the common stock, par value $0.001 per share, of ZiaSun (the "ZiaSun
Common Stock") or any shares of common stock of ZiaSun Merger Sub:
(b) Common Stock of ZiaSun Merger Sub. Each issued and outstanding
share of common stock, par value $0.01 per share, of ZiaSun Merger Sub
shall be converted into one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the surviving corporation in the
ZiaSun Merger.
(c) Cancellation of Treasury Stock. Each share of ZiaSun Common Stock
issued and owned or held by ZiaSun at the Effective Time shall, by virtue
of the ZiaSun Merger, cease to be outstanding and shall be canceled and
retired, and no consideration shall be delivered in exchange therefor.
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(d) Conversion of ZiaSun Common Stock. Subject to Section 3.5, each
issued and outstanding share of ZiaSun Common Stock (other than shares to
be canceled in accordance with Section 2.7(b) and other than shares subject
to Section 2.10) shall be converted into the right to receive one (the
"ZiaSun Exchange Ratio") fully paid and nonassessable shares of Holdco
Common Stock. The shares of Holdco Common Stock into which shares of ZiaSun
Common Stock are converted pursuant to the foregoing are referred to herein
collectively as the "ZiaSun Merger Consideration."
As a result of the ZiaSun Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of ZiaSun Common Stock shall
cease to be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of a certificate which immediately prior to the Effective
Time represented any such shares of ZiaSun Common Stock (such certificate or
other evidence of ownership, a "ZiaSun Certificate") shall thereafter cease to
have any rights with respect to such shares of ZiaSun Common Stock, except the
right (subject to Section 2.7(b) and Section 2.10) to receive the applicable
ZiaSun Merger Consideration with respect thereto and any cash in lieu of
fractional shares of applicable Holdco Common Stock with respect thereto to be
issued in consideration therefor and any dividends or other distributions to
which holders of ZiaSun Common Stock become entitled all in accordance with
Article III upon the surrender of such ZiaSun Certificate.
2.8. ZiaSun Stock Options. (a) Each ZiaSun Stock Option (as defined in
Section 4.2(b)) granted prior to the Effective Time and which remains
outstanding immediately prior to the Effective Time shall cease to
represent a right to acquire shares of ZiaSun Common Stock and shall be
converted (each, as so converted, a "ZiaSun Converted Option"), at the
Effective Time, into an option to acquire, on the same terms and conditions
as were applicable under the ZiaSun Stock Option (but taking into account
any changes thereto, including the acceleration thereof, provided for in
the ZiaSun Stock Option Plans (as defined in Section 4.2(b)), in any award
agreement or in such option by reason of this Agreement or the transactions
contemplated hereby), that number of shares of Holdco Common Stock
determined by multiplying the number of shares of ZiaSun Common Stock
subject to such ZiaSun Stock Option by the ZiaSun Exchange Ratio, rounded
down, if necessary, to the nearest whole share of Holdco Common Stock, at a
price per share (rounded to the nearest one-hundredth of a cent) equal to
the per share exercise price specified in such ZiaSun Stock Option divided
by the ZiaSun Exchange Ratio; provided, however, that in the case of any
ZiaSun Stock Option to which Section 421 of the Code applies by reason of
its qualification under Section 422 of the Code, the option price, the
number of shares subject to such option and the terms and conditions of
exercise of such option shall be determined in a manner consistent with the
requirements of Section 424(a) of the Code. Without limiting the foregoing,
the duration and other terms of each ZiaSun Converted Option immediately
after the Effective Time (unless otherwise agreed in writing by the holder
of a ZiaSun Converted Option with respect to such ZiaSun Converted Option)
shall be the same as the corresponding ZiaSun Stock Option that were in
5
effect immediately before the Effective Time, except that references to
ZiaSun and ZiaSun Common Stock in the ZiaSun Option Plans (and the
corresponding references in each option agreement documenting each such
ZiaSun Stock Option) shall, as appropriate, be deemed to be references to
Holdco and Holdco Common Stock.
(b) As soon as practicable after the Effective Time, Holdco shall
deliver to the holders of ZiaSun Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective ZiaSun Stock Option
Plans and agreements evidencing the grants of such ZiaSun Stock Options and
stating that such ZiaSun Stock Options and agreements shall be assumed by
Holdco and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 2.8 after giving
effect to the ZiaSun Merger and the terms of the ZiaSun Stock Option
Plans). To the extent permitted by law, Holdco shall comply with the terms
of the ZiaSun Stock Option Plans and shall take such reasonable steps as
are necessary or required by, and subject to the provisions of, such ZiaSun
Stock Option Plans, to have the ZiaSun Stock Options which qualified as
incentive stock options under Section 422 of the Code prior to the
Effective Time continue to qualify as incentive stock options of Holdco
after the Effective Time.
(c) Prior to the Effective Time, Holdco shall take all necessary
action to assume as of the Effective Time all obligations undertaken by, or
on behalf of, Holdco under this Section 2.8 and to adopt at the Effective
Time the ZiaSun Stock Option Plans and each ZiaSun Converted Option, and to
take all other actions called for by this Section 2.8, including the
reservation, issuance and listing of a number of shares of Holdco Common
Stock at least equal to the number of shares of Holdco Common Stock that
will be subject to ZiaSun Converted Options. No later than the Effective
Time, Holdco shall file a registration statement on Form S-8 (or any
successor or, including if Form S-8 is not available, other appropriate
forms) with respect to the shares of Holdco Common Stock subject to such
options or restricted shares and shall maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as
such options or restricted shares remain outstanding.
2.9. Certain Adjustments. If, between the date of this Agreement and the
Effective Time (and as permitted by Sections 5.1 and 5.2), the outstanding
shares of Telescan Capital Stock (as defined in Section 2.11(d)) or the
outstanding shares of ZiaSun Common Stock shall have been increased, decreased,
changed into or exchanged for a different number of shares or different class,
in each case, by reason of any reclassification, recapitalization, stock split,
split-up, combination or exchange of shares or a stock dividend or dividend
payable in any other securities shall be declared with a record date within such
period, or any similar event shall have occurred, the applicable Merger
Consideration (as defined in Section 2.11(d)) shall be appropriately adjusted to
provide to the holders of ZiaSun Common Stock and Telescan Capital Stock the
same economic effect as contemplated by this Agreement prior to such event.
2.10. ZiaSun Appraisal Rights. (a) Notwithstanding anything in this
Agreement to the contrary and unless provided for by applicable law, shares
of ZiaSun Common Stock that are issued and outstanding immediately prior to
the Effective Time and that are owned by stockholders who have properly
perfected their rights of appraisal within the meaning of Chapter 92A of
the NRS (the "ZiaSun Dissenting Shares") shall not be
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converted into the right to receive the applicable ZiaSun Merger
Consideration with respect thereto, unless and until such stockholders
shall have failed to perfect their right of appraisal under applicable law,
but, instead, the holders thereof shall be entitled to payment of the
appraised value of such ZiaSun Dissenting Shares in accordance with Chapter
92A of the NRS. If any such holder shall have failed to perfect or shall
have effectively withdrawn or lost such right of appraisal, each share of
ZiaSun Common Stock held by such stockholder shall thereupon be deemed to
have been converted into the right to receive and become exchangeable for,
at the Effective Time, the applicable ZiaSun Merger Consideration with
respect thereto, in the manner provided for in Section 2.7.
(b) ZiaSun shall give Telescan (i) prompt notice of any demands for
appraisal filed pursuant to Chapter 92A of the NRS received by ZiaSun,
withdrawals of such demands and any other instruments served or delivered
in connection with such demands pursuant to the NRS and received by ZiaSun
and (ii) the opportunity to participate in all negotiations and proceedings
with respect to demands under the NRS consistent with the obligations of
ZiaSun thereunder. ZiaSun shall not, except with the prior written consent
of Telescan, (x) make any payment with respect to any such demand, (y)
offer to settle or settle any such demand or (z) waive any failure to
timely deliver a written demand for appraisal or timely take any other
action to perfect appraisal rights in accordance with the NRS.
2.11. Effect on Telescan Capital Stock. As of the Effective Time, by
virtue of the Telescan Merger and without any action on the part of the holder
of any shares of the Telescan Capital Stock or any shares of capital stock of
Telescan Merger Sub:
(a) Capital Stock of Telescan Merger Sub. Each issued and outstanding
share of common stock, par value $0.01 per share, of Telescan Merger Sub
shall be converted into one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the surviving corporation in the
Telescan Merger.
(b) Cancellation of Treasury Stock. Each share of Telescan Capital
Stock issued and owned or held by Telescan at the Effective Time shall, by
virtue of the Telescan Merger, cease to be outstanding and shall be
canceled and retired, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Telescan Common Stock. Subject to Section 3.5, (i)
each issued and outstanding share of common stock, par value $0.01 per
share, of Telescan (the "Telescan Common Stock") (other than shares to be
canceled in accordance with Section 2.11(b)) shall be converted into the
right to receive 0.56486 (the "Telescan Exchange Ratio") fully paid and
nonassessable shares of Holdco Common Stock.
(d) Conversion of Telescan Preferred Stock. Subject to Section 3.5,
each issued and outstanding share of the 5% Series B Convertible
Preferred Stock, par value $0.01 per share, of Telescan, (the "Telescan
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Preferred Stock"), shall be converted into and become one fully paid and
nonassessable share of 5% Convertible Preferred Stock, par value $0.01 per
share, of Holdco (the "Holdco Preferred Stock"), with the identical terms
as the Telescan Preferred Stock with the terms of conversion into shares of
Holdco Common Stock consistent with the Telescan Exchange Ratio. The
Telescan Preferred Stock, together with the Telescan Common Stock are
referred to herein collectively as the "Telescan Capital Stock"). The
shares of Holdco Common Stock or Holdco Preferred Stock into which shares
of Telescan Common Stock or Telescan Preferred Stock are respectively
converted pursuant to Sections 2.11(c) and (d) are referred herein
collectively as the "Telescan Merger Consideration", and together with the
ZiaSun Merger Consideration, are referred to herein as the "Merger
Consideration."
As a result of the Telescan Merger and without any action on the part of
the holders thereof, at the Effective Time, all shares of Telescan Capital Stock
shall cease to be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Telescan Capital Stock (such
certificate or other evidence of ownership, an "Telescan Certificate" and,
together with the ZiaSun Certificates, the "Certificates") shall thereafter
cease to have any rights with respect to such shares of Telescan Capital Stock,
except the right (subject to Section 2.11(b)) to receive the Telescan Merger
Consideration to be issued in consideration therefor and any dividends or other
distributions to which holders of Telescan Capital Stock become entitled all in
accordance with Article III upon the surrender of such Telescan Certificate.
2.12. Telescan Stock Options. (a) Each Telescan Stock Option (as
defined in Section 4.1(b)) granted prior to the Effective Time and which
remains outstanding immediately prior to the Effective Time shall cease to
represent a right to acquire shares of Telescan Common Stock and shall be
converted (each, as so converted, a "Telescan Converted Option"), at the
Effective Time, into an option to acquire, on the same terms and conditions
as were applicable under the Telescan Stock Option (but taking into account
any changes thereto, including the acceleration thereof, provided for in
the Telescan Stock Option Plans (as defined in Section 4.1(b)), in any
award agreement or in such option by reason of this Agreement or the
transactions contemplated hereby), that number of shares of Holdco Common
Stock determined by multiplying the number of shares of Telescan Common
Stock subject to such Telescan Stock Option by the Telescan Exchange Ratio,
rounded down, if necessary, to the nearest whole share of Holdco Common
Stock, at a price per share (rounded to the nearest one-hundredth of a
cent) equal to the per share exercise price specified in such Telescan
Stock Option divided by the Telescan Exchange Ratio; provided, however,
that in the case of any Telescan Stock Option to which Section 421 of the
Code applies by reason of its qualification under Section 422 of the Code,
the option price, the number of shares subject to such option and the terms
and conditions of exercise of such option shall be determined in a manner
consistent with the requirements of Section 424(a) of the Code. Without
limiting the foregoing, the duration and other terms of each Telescan
Converted Option immediately after the Effective Time (unless otherwise
agreed in writing by the holder of an Telescan Converted Option with
respect to such Telescan Converted Option) shall be the same as the
corresponding Telescan Stock Option that were in effect immediately before
the
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Effective Time, except that references to Telescan and Telescan Common
Stock in the Telescan Option Plans (and the corresponding references in
each option agreement documenting each such Telescan Stock Option) shall,
as appropriate, be deemed to be references to Holdco and Holdco Common
Stock.
(b) As soon as practicable after the Effective Time, Holdco shall
deliver to the holders of Telescan Stock Options appropriate notices
setting forth such holders' rights pursuant to the respective Telescan
Stock Option Plans and agreements evidencing the grants of such Telescan
Stock Options and stating that such Telescan Stock Options and agreements
shall be assumed by Holdco and shall continue in effect on the same terms
and conditions (subject to the adjustments required by this Section 2.12
after giving effect to the Telescan Merger and the terms of the Telescan
Stock Option Plans). To the extent permitted by law, Holdco shall comply
with the terms of the Telescan Stock Option Plans and shall take such
reasonable steps as are necessary or required by, and subject to the
provisions of, such Telescan Stock Option Plans, to have the Telescan Stock
Options which qualified as incentive stock options under Section 422 of the
Code prior to the Effective Time continue to qualify as incentive stock
options of Holdco after the Effective Time.
(c) Prior to the Effective Time, Holdco shall take all necessary
action to assume as of the Effective Time all obligations undertaken by, or
on behalf of, Holdco under this Section 2.12 and to adopt at the Effective
Time the Telescan Stock Option Plans and each Telescan Converted Option,
and to take all other actions called for by this Section 2.12, including
the reservation, issuance and listing of a number of shares of Holdco
Common Stock at least equal to the number of shares of Holdco Common Stock
that will be subject to Telescan Converted Options. No later than the
Effective Time, Holdco shall file a registration statement on Form S-8 (or
any successor or, including if Form S-8 is not available, other appropriate
forms) with respect to the shares of Holdco Common Stock subject to such
options or restricted shares and shall maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as
such options or restricted shares remain outstanding.
ARTICLE III EXCHANGE OF CERTIFICATES
3.1. Exchange Fund. Prior to the Effective Time, the parties shall
appoint a commercial bank or trust company to act as exchange agent hereunder
for the purpose of exchanging Certificates for the applicable Merger
Consideration (the "Exchange Agent"). At or prior to the Effective Time,
Holdco shall deposit with the Exchange Agent, in trust for the benefit of
9
holders of shares of Telescan Common Stock and ZiaSun Common Stock, certificates
representing the shares of the Holdco Common Stock issuable pursuant to Sections
2.7 and 2.11 in exchange for outstanding shares of Telescan Common Stock and
ZiaSun Common Stock. Holdco agrees to make available to the Exchange Agent from
time to time as needed, cash sufficient to pay cash in lieu of fractional shares
pursuant to Section 3.5 and any dividends and other distributions pursuant to
Section 3.3. Any cash and certificates representing Holdco Common Stock
deposited with the Exchange Agent shall hereinafter be referred to as the
"Exchange Fund".
3.2. Exchange Procedures. Promptly after the Effective Time, Holdco shall
cause the Exchange Agent to mail to each holder of a Certificate (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent, and which letter shall be in customary form
and have such other provisions as ZiaSun or Telescan may reasonably specify
(such letter to be reasonably acceptable to ZiaSun and Telescan prior to the
Effective Time) and (ii) instructions for effecting the surrender of such
Certificates in exchange for the applicable Merger Consideration, together with
any dividends and other distributions with respect thereto and any cash in lieu
of fractional shares. Upon surrender of a Certificate to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) one or more shares of
Holdco Common Stock (which shall be in uncertificated book-entry form unless a
physical certificate is requested or is otherwise required by applicable law or
regulation) representing, in the aggregate, the whole number of shares that such
holder has the right to receive pursuant to Section 2.7 or 2.11 (after taking
into account all shares of Telescan Common Stock and ZiaSun Common Stock then
held by such holder) and (B) a check in the amount equal to the cash that such
holder has the right to receive pursuant to the provisions of this Article III,
including cash in lieu of any fractional shares of Holdco Common Stock pursuant
to Section 3.5 and dividends and other distributions pursuant to Section 3.3. No
interest will be paid or will accrue on any cash payable pursuant to Section 3.3
or 3.5. In the event of a transfer of ownership of Telescan Common Stock which
is not registered in the transfer records of Telescan or a transfer of ownership
of ZiaSun Common Stock which is not registered in the transfer records of
ZiaSun, one or more shares of Holdco Common Stock evidencing, in the aggregate,
the proper number of shares of Holdco Common Stock, a check in the proper amount
of cash in lieu of any fractional shares of Holdco Common Stock pursuant to
Section 3.5 and any dividends or other distributions to which such holder is
entitled pursuant to Section 3.3, may be issued with respect to such Telescan
Common Stock or ZiaSun Common Stock to such a transferee if the Certificate
representing such shares of Telescan Common Stock or ZiaSun Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
3.3. Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Holdco
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate and no cash payment in lieu of fractional shares of Holdco
Common Stock shall be paid to any such holder pursuant to Section 3.5 until such
holder shall surrender such Certificate in accordance with Section 3.2. Subject
to the effect of applicable laws, following surrender of
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any such Certificate, there shall be paid to the record holder thereof without
interest, (a) promptly after the time of such surrender, the amount of any cash
payable in lieu of fractional shares of Holdco Common Stock to which such holder
is entitled pursuant to Section 3.5 and the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Holdco Common Stock and (b) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time and a payment date subsequent to such surrender payable
with respect to such shares of Holdco Common Stock.
3.4. No Further Ownership Rights in Telescan Capital Stock or ZiaSun Common
Stock. All shares of Holdco Common Stock issued and cash paid upon conversion of
shares of Telescan Capital Stock or ZiaSun Common Stock in accordance with the
terms of Article II and this Article III (including any cash paid pursuant to
Section 3.3 or 3.5) shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to the shares of Telescan Capital Stock or
ZiaSun Common Stock.
3.5. No Fractional Shares of Holdco Common Stock.
(a) No certificates or scrip or shares of Holdco Common Stock
representing fractional shares of Holdco Common Stock or book-entry credit
of the same shall be issued upon the surrender for exchange of Certificates
and such fractional share interests will not entitle the owner thereof to
vote or to have any rights of a stockholder of Holdco or a holder of shares
of Holdco Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of Telescan Common Stock or ZiaSun Common Stock exchanged
pursuant to the Telescan Merger and the ZiaSun Merger, respectively, who
would otherwise have been entitled to receive a fraction of a share of
Holdco Common Stock (determined after taking into account all Certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of
a share of Holdco Common Stock multiplied by (ii) the closing price for a
share of Holdco Common Stock as reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") on the first
trading day following the date on which the Effective Time occurs. As
promptly as practicable after the determination of the amount of cash, if
any, to be paid to holders of fractional interests, the Exchange Agent
shall so notify Holdco, and Holdco shall deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to forward payments to
such holders of fractional interests subject to and in accordance with the
terms hereof.
3.6. Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Certificates for six months after the
Effective Time shall, at Holdco's request, be delivered to Holdco or otherwise
on the instruction of Holdco, and any holders of the Certificates who have not
theretofore complied with this Article III shall after such delivery look only
to Holdco for the Merger Consideration with respect to the shares of Telescan
Common Stock or ZiaSun Common Stock formerly represented thereby to which such
holders are entitled pursuant to Sections 2.7, 2.11 and 3.2, any cash in lieu of
fractional shares of Holdco Common Stock to which such holders are entitled
11
pursuant to Section 3.5 and any dividends or distributions with respect to
shares of Holdco Common Stock to which such holders are entitled pursuant to
Section 3.3. Any such portion of the Exchange Fund remaining unclaimed by
holders of shares of Telescan Common Stock or ZiaSun Common Stock immediately
prior to such time as such amounts would otherwise escheat to or become property
of any Governmental Entity (as defined in Section 4.1(c)(iii)) shall, to the
extent permitted by law, become the property of Holdco free and clear of any
claims or interest of any Person (as defined in Section 9.11(h)) previously
entitled thereto.
3.7. No Liability. None of Holdco, ZiaSun, ZiaSun Merger Sub, Telescan,
Telescan Merger Sub or the Exchange Agent shall be liable to any Person in
respect of any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
3.8. Investment of the Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by Holdco on a daily basis;
provided that no such investment or loss thereon shall affect the amounts
payable to ZiaSun or Telescan stockholders pursuant to Article II and the other
provisions of this Article III. Any interest and other income resulting from
such investments shall promptly be paid to Holdco.
3.9. Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by Holdco, the
posting by such Person of a bond in such reasonable amount as Holdco may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will deliver in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect to the
shares of Telescan Common Stock or ZiaSun Common Stock formerly represented
thereby, any cash in lieu of fractional shares of Holdco Common Stock, and
unpaid dividends and distributions on shares of Holdco Common Stock deliverable
in respect thereof, pursuant to this Agreement.
3.10. Withholding Rights. Holdco shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Telescan Common Stock or ZiaSun Common Stock such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Code and the rules and regulations promulgated thereunder, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Holdco, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of Telescan
Common Stock or ZiaSun Common Stock in respect of which such deduction and
withholding was made by Holdco.
3.11. Further Assurances. At and after the Effective Time, the officers
and directors of Holdco will be authorized to execute and deliver, in the name
and on behalf of ZiaSun, ZiaSun Merger Sub, Telescan or Telescan Merger Sub,
any deeds, bills of sale, assignments or assurances and to take and do, in the
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name and on behalf of ZiaSun, ZiaSun Sub, Telescan or Telescan Merger Sub, any
other actions and things to vest, perfect or confirm of record or otherwise in
Holdco any and all right, title and interest in, to and under any of the rights,
properties or assets acquired or to be acquired by Holdco as a result of, or in
connection with, the Mergers.
3.12. Stock Transfer Books. The stock transfer books of Telescan and ZiaSun
shall be closed immediately upon the Effective Time and there shall be no
further registration of transfers of shares of Telescan Common Stock or ZiaSun
Common Stock thereafter on the records of Telescan or ZiaSun. On or after the
Effective Time, any Certificates presented to the Exchange Agent or Holdco for
any reason shall be converted into the right to receive the applicable Merger
Consideration with respect to the shares of Telescan Common Stock or ZiaSun
Common Stock formerly represented thereby (including any cash in lieu of
fractional shares of Holdco Common Stock to which the holders thereof are
entitled pursuant to Section 3.5 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 3.3).
3.13. Exchange Procedure for Telescan Preferred Stock. At or prior to the
Effective Time, Holdco shall hold in trust for the benefit of holders of shares
of Telescan Preferred Stock, certificates representing the shares of Holdco
Preferred Stock issuable pursuant to Section 2.11(d) in exchange for outstanding
shares of Telescan Preferred Stock. Upon surrender of a Certificate representing
any shares of Telescan Preferred Stock, and such other documents as may
reasonably be required by Holdco, the holder of such Certificate shall be
entitled to receive in exchange therefor shares of Holdco Preferred Stock
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 2.11(d). The exchange of the Telescan
Preferred Stock for Holdco Preferred Stock shall also be subject to the
provisions of Section 3.4, Section 3.7, Section 3.9, Section 3.11 and Section
3.12.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Telescan. Except as disclosed in the
Telescan SEC Reports (as defined in Section 4.1 (d)(i)) filed prior to the date
hereof or as set forth in the Telescan Disclosure Schedule delivered by Telescan
to ZiaSun prior to the execution of this Agreement (the "Telescan Disclosure
Schedule"), Telescan represents and warrants to ZiaSun as follows:
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of Telescan and each of its Subsidiaries (as defined in Section
9.11(j)) is a corporation or other organization duly incorporated or
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all requisite power and
authority to own, lease, use and operate its assets and properties and to
carry on its business as now being conducted, except where the failure to
be in good standing, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on Telescan.
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Telescan and each of the Subsidiaries is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure
so to qualify or to be in good standing, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
Telescan. The copies of the certificate of incorporation and bylaws of
Telescan and each of its Subsidiaries in, or incorporated by reference in,
the Telescan SEC Reports are true, complete and correct copies of such
documents as in effect on the date of this Agreement. A list of the
respective jurisdictions of organization of Telescan and each of its
Subsidiaries, and the respective jurisdictions where Telescan and each of
its Subsidiaries is qualified or licensed as a foreign corporation to do
business, are disclosed in Section 4.1(a) of the Telescan Disclosure
Schedule.
(ii) Exhibit 21 to Telescan's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000 includes all the Subsidiaries of Telescan
which as of the date of this Agreement are Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "SEC")). All the outstanding shares of capital stock of, or
other equity interests in, each such Significant Subsidiary are duly
authorized, validly issued, fully paid and nonassessable and are, except as
set forth in such Exhibit 21, owned directly or indirectly by Telescan,
free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively "Liens")
and free of any other restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other ownership
interests), except for restrictions imposed by applicable securities laws.
Except as disclosed in Section 4.1(a) of the Telescan Disclosure Schedule,
as of the date of this Agreement, neither Telescan nor any of its
Subsidiaries directly or indirectly owns 5% or more of any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other
business association or entity (other than Subsidiaries) that is or would
reasonably be expected to be material to Telescan and its Subsidiaries
taken as a whole.
(b) Capital Structure. As of the date hereof, the authorized capital stock
of Telescan consists of (A) 30,000,000 shares of Telescan Common Stock, of which
16,296,026 shares were outstanding and (B) 10,000,000 shares of Telescan
Preferred Stock, of which 120,000 shares were outstanding. All issued and
outstanding shares of the capital stock of Telescan are duly authorized, validly
issued, fully paid and nonassessable and free of any preemptive rights. There
are no subscriptions, options, warrants or other rights (including "phantom"
stock rights), agreements, arrangements or commitments obligating Telescan to
issue or sell shares of Capital Stock or other equity interests in Telescan
other than options and other rights to acquire Telescan Common Stock from
Telescan representing in the aggregate the right to purchase approximately
2,433,865 shares of Telescan Common Stock (such options,
14
together with the other employee stock options issued by Telescan after the date
hereof in accordance with the Telescan Stock Option Plans and Section 5.1,
collectively, the "Telescan Stock Options") under Telescan's Amended and
Restated Amended Stock Option Plan, 1995 Stock Option Plan, 2000 Stock Option
Plan and other option plans assumed by Telescan (collectively, the "Telescan
Stock Option Plans"). Section 4.1(b) of the Telescan Disclosure Schedule sets
forth a complete and correct list, as of the date hereof, of the number of
shares of Telescan Common Stock subject to Telescan Stock Options or other
rights to purchase or receive Telescan Common Stock granted under the Telescan
Benefit Plans or otherwise and the exercise price of the outstanding Telescan
Stock Options referenced therein. Except as disclosed in Sections 4.01(b) or
4.01(m) of the Telescan Disclosure Schedule, there are no outstanding
obligations of Telescan or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of Telescan Capital Stock or any capital stock or
other equity or ownership interests of any Subsidiary of Telescan or to provide
funds to, or make any investments (in form of a loan, capital contribution or
otherwise) in, any Subsidiary of Telescan or any other Person.
(c) Authority; No Conflicts.
(i) Telescan has all requisite corporate power and authority to enter into
this Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby, subject in the case of the consummation
of the Telescan Merger to the adoption of this Agreement by the Required
Telescan Vote (as defined in Section 4.1(g)). The execution and delivery of
this Agreement, the performance of the obligations hereunder and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of
Telescan and no other corporate proceedings on the part of Telescan are
necessary to authorize the execution and delivery of this Agreement or to
consummate the Telescan Merger and the other transactions contemplated
hereby, subject in the case of the consummation of the Telescan Merger to
the adoption of this Agreement by the Required Telescan Vote. This
Agreement has been duly and validly executed and delivered by Telescan and
constitutes a valid, legal and binding agreement of Telescan, enforceable
against Telescan in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally or
by general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement by Telescan do not, and
the performance of its obligations hereunder and the consummation by
Telescan of the Telescan Merger and the other transactions contemplated
hereby will not, conflict with, or result in any violation or breach of, or
constitute a default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result by its terms in the,
termination, amendment, cancellation or acceleration of any obligation or
the loss of a material benefit under, or the creation of a Lien, charge,
15
"put" or "call" right or other encumbrance on, or the loss of, any assets,
including Intellectual Property (as defined in Section 4.1(j)), or cause or
create any right of payment or reimbursement (any such conflict, violation,
breach, default, right of termination, amendment, cancellation or
acceleration, loss, creation, payment or reimbursement, a "Violation")
pursuant to: (A) any provision of the certificate of incorporation or
bylaws or similar organizational document of Telescan or any Significant
Subsidiary of Telescan, or (B) except as (1) individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on Telescan; (2) would not prevent or materially delay the
consummation of the Mergers, subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in paragraph (iii) below or (3) as set forth in Section 4.1(c)
of the Telescan Disclosure Schedule, any loan or credit agreement, note,
mortgage, bond, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Telescan or any Subsidiary of Telescan or their respective properties or
assets.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any supranational, national, state, municipal,
local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a
"Governmental Entity") or any other Person is required by or with respect
to Telescan or any Subsidiary of Telescan in connection with the execution
and delivery of this Agreement by Telescan or the performance of its
obligations hereunder or the consummation of the Telescan Merger and the
other transactions contemplated hereby, except for those required under or
in relation to (A) state securities or "blue sky" laws (the "Blue Sky
Laws"), (B) the Securities Act of 1933, as amended (the "Securities Act"),
(C) the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(D) the DGCL and NRS with respect to the filing of the Certificates of
Merger, (E) the rules and regulations of the NASDAQ and (F) such consents,
approvals, orders, authorizations, registrations, declarations and filings
the failure of which to make or obtain, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
Telescan. Consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to any of the
foregoing clauses (A) through (E) are hereinafter referred to as "Necessary
Consents".
(d) Reports and Financial Statements.
(i) Telescan has filed all required registration statements, prospectuses,
reports, schedules, forms, statements and other documents required to be
filed by it with the SEC since January 1, 1999 (collectively, including all
exhibits thereto, the "Telescan SEC Reports"). None of the Telescan SEC
Reports, as of their respective dates
16
(and, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing), contained or will contain any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Each of the financial statements (including the
related notes) included in the Telescan SEC Reports presents fairly, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flows of Telescan and its consolidated
Subsidiaries as of the respective dates or for the respective periods set
forth therein, all in conformity with United States generally accepted
accounting principles ("GAAP") consistently applied during the periods
involved except as otherwise noted therein, and subject, in the ---- case
of the unaudited interim financial statements, to the absence of notes and
normal year-end adjustments that have not been and are not expected to be
material in amount. All of such Telescan SEC Reports, as of their
respective dates (and as of the date of any amendment to the respective
Telescan SEC Report), complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder. Each Subsidiary of Telescan
is treated as a consolidated Subsidiary of Telescan in the financial
reports of Telescan included in the Telescan SEC Reports.
(ii) Except as disclosed in the Telescan financial statements for the
period ending December 31, 2000, included in the Telescan SEC Reports, or
as disclosed in Section 4.1(d) of the Telescan Disclosure Schedule, neither
Telescan nor any of its Subsidiaries has any obligations, liabilities or
debts (whether accrued or fixed, or absolute or contingent, or unmatured,
or determined or determinable), including without limitation those arising
under law or any contract, arrangement or commitment or undertaking that
are of a nature that would be required to be disclosed on the consolidated
balance sheet of Telescan and its consolidated Subsidiaries or the
footnotes thereto prepared in conformity with GAAP, other than (A)
liabilities incurred in the ordinary course of business consistent with
past practices, (B) liabilities incurred in accordance with Section 5.1,
(C) liabilities for Taxes (as defined in Section 4.1(l)) or (D) liabilities
that, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on Telescan.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by Telescan for
inclusion or incorporation by reference in (A) the Form S-4 (as defined in
Section 6.1) will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
17
circumstances under which they were made, not misleading and (B) the Joint
Proxy Statement/Prospectus (as defined in Section 6.1) will, on the date it
is first mailed to ZiaSun stockholders or Telescan stockholders or at the
time of the ZiaSun Stockholders Meeting or the Telescan Stockholders
Meeting (each as defined in Section 6.1), contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Form S-4
and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section 4.1(e), no
representation or warranty is made by Telescan with respect to statements
made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by ZiaSun for inclusion
or incorporation by reference therein.
(f) Board Approval. The Board of Directors of Telescan, by resolutions duly
adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way (the "Telescan Board Approval"), has duly (i) determined
that this Agreement is fair to and in the best interests of Telescan and its
stockholders and declared the Telescan Merger to be advisable, (ii) approved
this Agreement, the Voting Agreements and the Telescan Merger and (iii)
recommended that the stockholders of Telescan adopt this Agreement and directed
that such matter be submitted for consideration by Telescan's stockholders at
the Telescan Stockholders Meeting. The Telescan Board Approval constitutes
approval of this Agreement, the Voting Agreements and the Telescan Merger for
purposes of Section 203 of the DGCL. To the knowledge of Telescan, except for
Section 203 of the DGCL (which has been rendered inapplicable), no state
takeover statute is applicable to this Agreement, the Voting Agreements or the
Telescan Merger or the other transactions contemplated hereby or thereby.
(g) Vote Required. The affirmative vote of the holders of a majority of the
outstanding shares of Telescan Common Stock to adopt this Agreement (the
"Required Telescan Vote") is the only vote of the holders of any class or series
of Telescan Capital Stock necessary to approve or adopt this Agreement and the
Telescan Merger and to consummate the Telescan Merger and the other transactions
contemplated hereby.
(h) Litigation; Compliance with Laws.
(i) There are no claims, investigations, suits, actions, judgments or
proceedings (collectively, "Actions") pending or, to the knowledge of
Telescan, threatened, against or affecting Telescan or any Subsidiary of
Telescan or any property or asset of Telescan or any Subsidiary of
Telescan, before any court, arbitrator or Governmental Entity (domestic
18
or foreign), which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Telescan, nor are there any
judgments, decrees, determinations, awards, injunctions, rules or orders of
any Governmental Entity or arbitrator outstanding against Telescan or any
Subsidiary of Telescan which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Telescan.
(ii) Except as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Telescan, Telescan and its
Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
orders and approvals of all Governmental Entities which are necessary for
the operation of the businesses as now being conducted of Telescan and its
Subsidiaries, (the "Telescan Permits"), and no suspension or cancellation
of any of the Telescan Permits is pending or, to the knowledge of Telescan,
threatened. Telescan and its Subsidiaries are in compliance with the terms
of the Telescan Permits, except where the failure to so comply,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on Telescan. Neither Telescan nor any of its
Subsidiaries is in violation of, and Telescan and its Subsidiaries have not
received any notices of violations with respect to, any laws, statutes,
ordinances, rules or regulations of any Governmental Entity, except for
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Telescan.
(i) Absence of Certain Changes or Events. Except as disclosed in Section
4.1(i) of the Telescan Disclosure Schedule and for liabilities permitted to be
incurred in accordance with this Agreement or the transactions contemplated
hereby, since December 31, 2000, Telescan and each Subsidiary of Telescan has
conducted its business only in the ordinary course and in a manner consistent
with past practices and since such date and prior to the date hereof, neither
Telescan nor any Subsidiary of Telescan has:
(i) made or adopted amendments or changes to its Certificate or Articles
of Incorporation or Bylaws;
(ii) declared, set aside or paid a dividend or other distribution with
respect to its capital stock or any direct or indirect redemption, purchase
or other acquisition by it of any of its capital stock;
(iii) acquired or entered into any agreement, arrangement or understanding
for the acquisition (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) of any material interest
in any corporation, partnership, other business organization or any
division thereof or any material assets, other than the acquisition of
assets in the ordinary course of business consistent with past practices;
(iv) incurred any indebtedness for borrowed money or issued any debt
securities or assumed, guaranteed or endorsed, or otherwise as an
accommodation become responsible for the obligations of any Person, or
19
made any loans or advances except for indebtedness incurred in the
ordinary course of business consistent with past practices;
(v) entered into any contract or agreement material to its business,
results of operations or financial condition other than in the ordinary
course of business consistent with past practices;
(vi) made or authorized any capital expenditure of $50,000 in any
individual case or $125,000 in the aggregate;
(vii) revalued any of its assets;
(viii) sold, leased, licensed or otherwise disposed of any of its material
assets or properties, except in the ordinary course of business as
conducted on that date and consistent with past practices;
(ix) amended or terminated any material contract, agreement or license to
which it is a party or by which it is bound;
(x) permitted or allowed any of its material assets or properties (whether
tangible or intangible) to be subjected to any Lien, other than in the
ordinary course of business, consistent with past practices;
(xi) taken any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practices, with
respect to accounting policies, methods or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable);
(xii) paid, discharged or satisfied any material claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practices, of
liabilities reflected or reserved against in the financial statements of
Telescan included in the Telescan SEC Reports or subsequently incurred in
the ordinary course of business and consistent with past practices;
(xiii) suffered any casualty, loss or damage with respect to any of its
assets which in the aggregate have a replacement cost of more than $50,000,
whether or not such casualty, loss or damage shall have been covered by
insurance;
(xiv) increased the salary or other compensation payable or to become
payable by it to any of its directors, executive-level officers or
advisors, or declared, paid, committed or otherwise become obligated for
the payment of a bonus or other additional salary or compensation to any
such person except as otherwise contemplated by this Agreement;
20
(xv) waived or released any of its material rights or claims, including
any write-off or other compromise of any amount of its account
receivables;
(xvi) changed the prices or royalties set or charged by it to its customers
or licensees or in pricing or royalties set or charged by persons who have
licensed Intellectual Property to it;
(xvii) terminated, discontinued, closed or disposed of any facility or
other business operation, or laid off any employees (other than layoffs of
less than 5 employees) or implemented any early retirement, separation or
program providing early retirement window benefits or announced or planned
any such action or program for the future;
(xviii) commenced or received notice or threat of commencement of any
lawsuit or proceeding against or investigation of it or its affairs;
(xix) received notice of any claim of ownership by a third party of its
Intellectual Property (as defined in Section 4.1(j) below) or of
infringment by it of any third party's Intellectual Property rights;
(xx) issued or sold any of its shares of capital stock, or securities
exchangeable, convertible or exercisable therefor, or of any other of its
securities;
(xxi) suffered any Material Adverse Effect;
(xxii) made any material changes in the customary methods of its
operations; or
(xxiii) agreed, whether in writing or otherwise, to take any of the actions
specified in this Section 4.1(i).
(j) Intellectual Property.
(i) For the purposes of this Agreement, the following terms have the
following definitions:
"Intellectual Property" shall mean any of the following and all rights
in, arising out of, or associated therewith: (i) all United States and
foreign patents and utility models and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof, and equivalent or similar rights
anywhere in the world in inventions and discoveries ("Patents"); (ii)
all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all documentation
embodying or evidencing any of the foregoing; (iii) all copyrights,
copyrights registrations and applications therefor and all other
rights corresponding thereto throughout the world; ("Copyrights");
(iv) all mask works, mask work
21
registrations and applications therefor, and any equivalent or similar
rights in semiconductor masks, layouts, architectures or topology
("Mask Works"); (v) all industrial designs and any registrations and
applications therefor throughout the world; (vi) all trade names,
brand names, logos, common law trademarks and service marks, trademark
and service xxxx registrations and applications therefor and all
goodwill associated therewith throughout the world ("Trademarks");
(vii) all databases and data collections and all rights therein
throughout the world; and (viii) all computer software including all
source code, object code, firmware, development tools, files, records
and data, all media on which any of the foregoing is recorded; (ix)
all World Wide Web addresses, sites and domain names; and (x) any
similar, corresponding or equivalent rights to any of the foregoing
anywhere in the world.
"Telescan Business" means the business of Telescan or any Subsidiary
of Telescan, including the manufacture, use, licensing, distribution
and sale of any products or technology or the provision of any
services by Telescan or any Subsidiary of Telescan, as currently
conducted, as conducted since the inception of Telescan or any
Subsidiary of Telescan, or as reasonably is contemplated to be
conducted by Telescan or any Subsidiary of Telescan in the future.
"Telescan Intellectual Property" shall mean any Intellectual Property
that is owned by or licensed to Telescan or any Subsidiary of
Telescan.
"Registered Intellectual Property" shall mean all United States,
international and foreign: (i) Patents, including applications
therefor; (ii) registered Trademarks, applications to register
Trademarks, including intent-to-use applications, or other
registrations or applications related to Trademarks; (iii) Copyrights
registrations and applications to register Copyrights; (iv) Mask Work
registrations and applications to register Mask Works; and (v) any
other Intellectual Property of Telescan or any Subsidiary of Telescan
that is the subject of an application, certificate, filing,
registration or other document issued by, filed with, or recorded by
any state, government or other public legal authority at any time.
22
(ii) Section 4.1(j) of the Telescan Disclosure Schedule lists all
Registered Intellectual Property in whole or in part owned by,
assigned to, or filed in the name of Telescan or any Subsidiary of
Telescan (the "Telescan Registered Intellectual Property").
(iii) Except as set forth in Section 4.1(j) of the Telescan Disclosure
Schedule, each item of Telescan Intellectual Property, including all
Telescan Registered Intellectual Property listed on Section 4.1(j) of
the Telescan Disclosure Schedule, is free and clear of any Lien.
(iv) Telescan or a Subsidiary of Telescan: (i) is the exclusive owner
of all Trademarks as such Trademarks are currently used by the
Telescan Business, including trade names, trade dress and similar
designations of origin used in connection with the operation or
conduct of the Telescan Business and (ii) owns exclusively, and has
good title to, all copyrighted works, software products or other works
of authorship that it otherwise purports to own.
(v) Except as set forth in Section 4.1(j) of the Disclosure Schedule,
neither Telescan nor any Subsidiary of Telescan has transferred
ownership of, or granted any license of or right to use or authorized
the retention of any rights to use, any Intellectual Property that is,
or was, Telescan Intellectual Property, to any other Person, except in
the ordinary course of business consistent with past practices.
(vi) The Telescan Intellectual Property constitutes all the
Intellectual Property used in and/or necessary to the conduct of the
Telescan Business including (i) the making, using, selling, marketing,
or importing of any product or device, (ii) the practice of any
process, (iii) the offering or performance of any service, or (iv) the
copying, display, performance, distribution, creation of derivative
works of, or the exploitation of any device or work.
(vii) The contracts, licenses and agreements listed in Section 4.1(j)
of the Telescan Disclosure Schedule include all material contracts,
licenses and agreements pursuant to which any Person, including any
affiliate or any Subsidiary of Telescan, has licensed any Intellectual
Property to Telescan or any Subsidiary of Telescan. Neither Telescan
nor any Subsidiary of Telescan is in breach of, nor has it failed to
perform under any of the foregoing contracts, licenses and agreements
and, to its knowledge, no other party to such contracts, licenses and
agreements is in breach of or has failed to perform thereunder.
(viii) The contracts, licenses and agreements listed in Section 4.1(j)
of the Telescan Disclosure Schedule include all material contracts and
agreements pursuant to which any Person, including any
23
third party developer or consultant, has developed any device or
technology, authored any work, or otherwise created any thing in which
any Intellectual Property rights might arise, either separately or
jointly with Telescan, any Subsidiary of Telescan, or any other
Person, which Telescan or any Subsidiary of Telescan uses or possess
or which it believes it owns.
(ix) The contracts, licenses and agreements listed in Section 4.1(j)
of the Telescan Disclosure Schedule include all material contracts,
licenses and agreements pursuant to which Telescan or any Subsidiary
of Telescan has licensed or transferred to any third person or any
affiliate or Subsidiary of Telescan any Telescan Intellectual
Property. Neither Telescan nor any Subsidiary of Telescan is in breach
of, nor has it failed to perform under any of the foregoing contracts,
licenses and agreements and, to its knowledge, no other party to such
contracts, licenses and agreements is in breach of or has failed to
perform thereunder.
(x) Neither the consummation of the transaction contemplated by this
Agreement nor the transfer to ZiaSun of any contracts, licenses,
agreements or Telescan Intellectual Property will cause or obligate
ZiaSun (i) to grant to any third party any rights or licenses with
respect to any Intellectual Property of ZiaSun; or (ii) pay any
royalties or other amounts in excess of those being paid by Telescan
or any Subsidiary of Telescan prior to the Effective Date.
(xi) Section 4.1(j) of the Telescan Disclosure Schedule lists all
material agreements, licenses and contracts pursuant to which Telescan
or any Subsidiary of Telescan has agreed to indemnify, hold harmless,
or otherwise agree to be liable for any losses, cost or damages of a
third party with respect to any Intellectual Property or product or
service of Telescan or any Subsidiary of Telescan.
(xii) Except as set forth in Section 4.1(j) of the Telescan Disclosure
Schedule, all Telescan Intellectual Property (other than Telescan
Intellectual Property licensed from third parties) will be fully,
transferable, alienable or licensable by, or between, Telescan (or any
Subsidiary of Telescan) or ZiaSun without restriction and without
payment of any kind to any third party.
(xiii) Except as set forth in Section 4.1(j) of the Telescan
Disclosure Schedule, the consummation of the transactions contemplated
by this Agreement will not result in the loss of, or otherwise
adversely affect, any ownership rights of Telescan or any Subsidiary
of Telescan in any Telescan Intellectual Property or result in the
breach or termination of any license, contract or agreement to which
Telescan or any Subsidiary of Telescan is a party respecting any
Telescan Intellectual Property.
24
(xiv) To Telescan's knowledge, the operation of the Telescan Business,
including (i) the making, using, selling, marketing, or importing of
any product or device, (ii) the practice of any process, (iii) the
offering or performance of any service, or (iv) the copying,
distribution, performance, display, creation of derivative works of,
or the exploitation of any device or work, does not, and will not when
conducted in substantially the same manner, following the Closing by
Holdco, infringe or misappropriate the Intellectual Property of any
person, violate the rights of any person, or constitute unfair
competition or trade practices under the laws of any jurisdiction, and
neither Telescan nor any Subsidiary of Telescan has received notice
from any person claiming that such operation or any act, product,
technology or service of the Telescan Business infringes or
misappropriates the Intellectual Property of any person or constitutes
unfair competition or trade practices under the laws of any
jurisdiction (nor is Telescan or any Subsidiary of Telescan aware of
any basis therefor). Without limiting the foregoing, to Telescan's
knowledge, neither Telescan nor any Subsidiary of Telescan has
misappropriated the trade secrets of, or infringed the Copyright or
Mask Works of any third party.
(xv) There are no material contracts, licenses or agreements between
Telescan or any Subsidiary of Telescan and any other person with
respect to Telescan Intellectual Property under which there is any
dispute known to Telescan or any Subsidiary of Telescan regarding the
scope of, or performance under, such contract, license or agreement,
including with respect to any payments to be made or received by
Telescan or any Subsidiary of Telescan thereunder.
(xvi) To the knowledge of Telescan or any of its Subsidiaries, no
person is infringing or misappropriating any Telescan Intellectual
Property.
(xvii) No Telescan Intellectual Property or product, technology or
service of the Telescan Business is subject to any proceeding or
outstanding decree, order, judgment or stipulation that restricts in
any manner the use, transfer or licensing thereof by Telescan or any
Subsidiary of Telescan or may affect the validity, use or
enforceability of such Telescan Intellectual Property.
(xviii) Section 4.1(j) of the Telescan Disclosure Schedule lists all
action, including the payment of any fees, that must, or should be
performed by, or on behalf of, Telescan or any Subsidiary of Telescan
in the ninety-day period following the Effective Date, with respect to
any application for, perfection of, preservation of, or continuation
of any rights of Telescan or any Subsidiary of Telescan with respect
to any Telescan Intellectual Property, including the filing of any
patent applications, response to Patent Office actions or payment of
fees, including renewal fees.
(xix) Neither Telescan nor any Subsidiary of Telescan has claimed
small business status, or other particular status in the application
25
for any Registered Telescan Intellectual Property which claim of
status was not at the time made, or which has since become, inaccurate
or false, or that will no longer be true and accurate as a result of
the Closing.
(xx) All software products of Telescan or any Subsidiary of Telescan
were written and created solely by either (i) employees of Telescan or
any Subsidiary of Telescan acting within the scope of their employment
or (ii) by third parties who have validly assigned or licensed the
necessary rights, including Intellectual Property rights, in such
products to Telescan or any Subsidiary of Telescan.
(xxi) Neither Telescan nor any Subsidiary of Telescan has knowledge of
any facts or circumstances that would render any Telescan Intellectual
Property invalid or unenforceable. Without limiting the foregoing,
neither Telescan nor any Subsidiary of Telescan knows of any
information, materials, facts or circumstances, including any
information or fact that would constitute prior art, that would render
any of the Telescan Registered Intellectual Property invalid or
unenforceable, or would adversely affect any pending application for
any Telescan Registered Intellectual Property, and neither Telescan
nor any Subsidiary of Telescan has misrepresented, or failed to
disclose, nor is aware of any misrepresentation or failure to
disclose, any fact or circumstances in any application for any
Telescan Register Intellectual Property that would constitute fraud or
a material misrepresentation with respect to such application or that
would otherwise effect the validity or enforceability of any Telescan
Registered Intellectual Property.
(xxii) Telescan and each Subsidiary of Telescan have taken all steps
reasonable under the circumstances to protect the confidentiality and
trade secret status of their material confidential information and
know of no basis on which it could be claimed that either Telescan or
any Subsidiary of Telescan has failed to protect the confidentiality
of any of their material confidential information.
(k) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Telescan.
(l) Taxes. Each of Telescan and its Subsidiaries has filed all Tax Returns
(as defined below) required to have been filed (or extensions for filing thereof
have been duly obtained and have not expired), has paid all Taxes (as defined
below) required to have been paid by it, has provided adequate reserves in the
financial statements for any Taxes that have not been paid (whether or not shown
as being due on any returns) or are payable by Telescan or any of its
Subsidiaries, except where failure to file such Tax Returns or pay or provide
reserves for such Taxes would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Telescan. All Tax Returns filed
by Telescan or any Subsidiary of Telescan are
26
true, correct and complete in all material respects. Neither Telescan nor any of
its Subsidiaries has received from any governmental authority any written notice
of any proposed adjustment, deficiency or underpayment of Taxes, which notice
has not been withdrawn or satisfied by payment, and there are no material claims
that have been asserted or, to the knowledge of Telescan or any Subsidiary of
Telescan, threatened against Telescan or any of its Subsidiaries relating to
such Taxes. For purposes of this Agreement: (i) "Tax" (and, with correlative
meaning, "Taxes") means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add on minimum, ad valorem, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any governmental authority or any obligation to pay Taxes imposed on any entity
for which a party to this Agreement is liable as a result of any indemnification
provision or other contractual obligation and (ii) "Tax Return" means any
return, report or similar statement required to be filed with respect to any Tax
(including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax. Neither Telescan nor any of its Subsidiaries has taken any action or knows
of any fact that is reasonably likely to prevent the Mergers from qualifying as
exchanges within the meaning of Section 351 of the Code and the ZiaSun Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(m) Certain Contracts. As of the date hereof, except as disclosed in
Section 4.1(m) of the Telescan Disclosure Schedule, neither Telescan nor any
Subsidiary of Telescan has, is a party to, or is bound by
(i) any collective bargaining agreements;
(ii) any agreements or arrangements that contain any severance pay or
post-employment liabilities or obligations;
(iii) any bonus, deferred compensation, pension, profit sharing or
retirement plans, or any other employee benefit plans or arrangements;
(iv) any employment or consulting agreement with an employee or
individual consultant or salesperson;
(v) any agreement or plan, including, without limitation, any stock option
plan, stock appreciation rights plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(vi) any fidelity or surety bond or completion bond;
27
(vii) any lease of real or personal property having a value or obligation
individually in excess of $100,000, or that does not terminate within six
months;
(viii) any agreement of indemnification or guaranty;
(ix) any agreement containing any covenant limiting its freedom to engage
in any line of business or to compete with any Person or in any geographic
area or during any period of time;
(x) any agreement relating to capital expenditures and involving future
payments in excess of $50,000;
(xi) any agreement relating to the disposition or acquisition of assets or
any interest in any business enterprise outside the ordinary course of
Telescan's or any Subsidiary of Telescan's business;
(xii) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of
money or extension of credit, including guaranties referred to in clause
(viii) hereof;
(xiii) any letter of credit in excess of $50,000;
(xiv) any distribution, joint marketing or development agreement;
(xv) any agreement pursuant to which it has granted or may grant in the
future, to any Person a source-code license or option or other right to use
or acquire a source-code;
(xvi) any agreement relating to trademarks, copyrights, licenses,
software development or any other Intellectual Property; or
(xvii) any other agreement that involves $100,000 or more and is not
cancelable without penalty within 30 days.
Except for such alleged breaches, violations and defaults, and events that
would constitute a breach, violation or default with the lapse of time, giving
of notice or both, as are all noted in Section 4.1(m) of the Telescan Disclosure
Schedule, neither Telescan nor any of its Subsidiaries has breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the terms or conditions of any agreement, contract or commitment
required to be set forth on Section 4.1(m) of the Telescan Disclosure Schedule
(any such agreement, contract or commitment, an "Telescan Contract"). Each
Telescan Contract is in full force and effect and, except as otherwise disclosed
in Section 4.1(m) of the
28
Telescan Disclosure Schedule, is not subject to any default thereunder, of which
Telescan has knowledge, by any party obligated to Telescan or any of the
Subsidiaries pursuant thereto. Section 4.1(m) of the Telescan Disclosure
Schedule identifies each Telescan Contract that requires a consent, waiver or
approval to preserve all rights of, and benefits to, Telescan or any of the
Subsidiaries under such Telescan Contract as a result of entering into this
Agreement or effecting the Merger or the other transactions contemplated by this
Agreement.
(n) Employee Benefits.
(i) The Benefit Plans, whether oral or written, under which any current or
former employee or director of Telescan or its Subsidiaries has any present
or future right to benefits contributed to, sponsored by or maintained by
Telescan or its Subsidiaries, or under which Telescan or its Subsidiaries
has any present or future liability shall be collectively referred to as
the "Telescan Benefit Plans."
(ii) Except as set forth in Section 4.1(n) of the Telescan Disclosure
Schedule, with respect to each Telescan Benefit Plan, no liability has been
incurred and there exists no condition or circumstances in connection with
which Telescan or any of its Subsidiaries could be subject to any liability
that is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on Telescan, in each case under ERISA (as defined
in Section 9.11(b)), the Code, or any other applicable law, rule or
regulation.
(iii) Telescan and its Subsidiaries are in compliance with all federal,
state, local and foreign requirements regarding employment, except for any
failures to comply that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Telescan. As of the date of
this Agreement, there is no labor dispute, strike or work stoppage against
Telescan or any of its Subsidiaries pending or, to the knowledge of
Telescan, threatened which may interfere with the business activities of
Telescan or any of its Subsidiaries, except where such dispute, strike or
work stoppage is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on Telescan.
(o) Labor Matters. Except as disclosed in the Telescan SEC Reports filed
prior to the date of this Agreement or in Section 4.1(o) of the Telescan
Disclosure Schedule, there are no controversies pending or, to the knowledge of
Telescan, threatened between Telescan or any of its Subsidiaries and any
representatives of its employees, except as would not, individually or in the
aggregate, have a Material Adverse Effect on Telescan and, to the knowledge of
Telescan and its Subsidiaries, there are no material organizational efforts
presently being made involving any of the now unorganized employees of Telescan
or any of its Subsidiaries. Since January 1, 1999, there has been no work
stoppage, strike or other concerted action by employees of Telescan or any of
its Subsidiaries, except as is not having or could not be reasonably expected to
have a Material Adverse Effect on Telescan.
29
(p) Environmental Matters.
(i) Each of Telescan and its Subsidiaries has obtained all licenses,
permits, authorizations, approvals and consents from Governmental Entity
which are required under any applicable Environmental Law in respect of its
business or operations ("Environmental Permits"), except for such failures
to have Environmental Permits which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on
Telescan. Each of such Environmental Permits is in full force and effect
and each of Telescan and its Subsidiaries is in compliance with the terms
and conditions of all such Environmental Permits and with any applicable
Environmental Law, except for such failures to be in full force and effect
or to be in compliance which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Telescan.
(ii) To the knowledge of Telescan, no site or facility now or previously
owned, operated or leased by Telescan or any of its Subsidiaries is listed
or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations thereunder
("CERCLA"), or on any similar state or local list of sites requiring
investigation or clean-up.
(iii) No Liens have arisen under or pursuant to any Environmental Law on
any site or facility owned, operated or leased by Telescan or any of its
Subsidiaries, other than any such Liens on real property not individually
or in the aggregate material to Telescan and its Subsidiaries taken as a
whole, and no action of any Governmental Entity has been taken or, to the
knowledge of Telescan, is in process which could subject any of such
properties to such Liens, and neither Telescan nor any of its Subsidiaries
would be required to place any notice or restriction relating to the
presence of Hazardous Materials at any such site or facility owned by it in
any deed to the real property on which such site or facility is located.
(iv) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or which are in the
possession of, Telescan or any of its Subsidiaries in relation to any site
or facility now or previously owned, operated or leased by Telescan or any
of its Subsidiaries which have not been delivered to ZiaSun prior to the
execution of this Agreement.
(q) Assets. The assets, properties, rights and Telescan Contracts,
including (as applicable) title or leaseholds thereto, of Telescan and its
Subsidiaries, taken as a whole, are sufficient to permit Telescan and its
Subsidiaries to conduct their business as currently being conducted with only
such exceptions as are not reasonably likely to have a Material Adverse Effect
on Telescan. All material real property owned by Telescan and its Subsidiaries
is owned free and clear of all Liens, except (i) those reflected or reserved
against in the latest balance sheet or notes thereto included in the Telescan
30
financial statements included in the Telescan SEC Reports, (ii) taxes and
general and special assessments not in default and payable without penalty or
interest, (iii) Liens disclosed in Section 4.1(q) of the Telescan Disclosure
Schedule and (iv) Liens that do not materially adversely interfere with any
present use of such property.
(r) Insurance. Section 4.1(r) of the Telescan Disclosure Schedule sets
forth a complete and accurate list of all material policies of insurance of
Telescan and its Significant Subsidiaries currently in force, including surety
bonds or other credit support therefor (the "Telescan Insurance Policies"), the
current annual premiums for each Telescan Insurance Policy and the types of risk
covered and limits of coverage. All Telescan Insurance Policies are in full
force and effect and all premiums due thereon have been paid. Telescan has
complied in all material respects with the terms and provisions of the Telescan
Insurance Policies. Telescan has never applied for and been refused or denied
any policy of insurance with respect to product liability matters, matters
arising by reason of clinical trials, environmental matters or worker's
compensation. Telescan's insurance coverage is adequate in kind and amount based
on current industry practice.
(s) Affiliate Arrangements. Except as disclosed in Section 4.1(s) of
the Telescan Disclosure Schedule, neither Telescan nor any of its Subsidiaries
is a party to any contract, arrangement, understanding or other commitment or
pending or proposed transaction with any director or officer of Telescan or of
any of its Subsidiaries or any affiliates of any such persons (other than
compensation arrangements entered into in the ordinary course of business and
other than as disclosed in the Telescan SEC Reports filed prior to the date of
this Agreement and employee health, welfare and benefit plans available
generally to the officers or employees of Telescan and its Subsidiaries).
(t) Takeover Provisions of the DGCL Not Applicable. Telescan has taken
all necessary actions so that the provisions of Section 203 of the DGCL do not
and will not, before the termination of this Agreement, apply to this Agreement,
the Merger or the other transactions contemplated hereby.
(u) Contingent Voting Rights of the Telescan Preferred Stock.
Telescan has not acted or failed to act in any manner that would entitle the
holders of the Telescan Preferred Stock to the voting rights set forth in
Section 8(b) of the certificate of designation of Telescan Preferred Stock
4.2. Representations and Warranties of ZiaSun. Except as disclosed in the
ZiaSun SEC Reports (as defined in Section 4.2(d)(i)) filed prior to the date
hereof or as set forth in the ZiaSun Disclosure Schedule delivered by ZiaSun to
Telescan prior to the execution of this Agreement (the "ZiaSun Disclosure
Schedule"), ZiaSun represents and warrants to Telescan as follows:
31
(a) Organization, Standing and Power; Subsidiaries.
(i) Each of ZiaSun and its Subsidiaries (as defined in Section 9.11(j)) is
a corporation or other organization duly incorporated or organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority to
own, lease, use and operate its assets and properties and to carry on its
business as now being conducted, except where the failure to be in good
standing, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on ZiaSun. ZiaSun and each of
the Subsidiaries is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary other than in
such jurisdictions where the failure so to qualify or to be in good
standing, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on ZiaSun. The copies of the
certificate of incorporation and bylaws of ZiaSun and each of its
Subsidiaries in, or incorporated by reference in, the ZiaSun SEC Reports
are true, complete and correct copies of such documents as in effect on the
date of this Agreement. A list of the respective jurisdictions of
organization of ZiaSun and each of its Subsidiaries, and the respective
jurisdictions where ZiaSun and each of its Subsidiaries is qualified or
licensed as a foreign corporation to do business, are disclosed in Section
4.2(a) of the ZiaSun Disclosure Schedule.
(ii) Exhibit 21 to ZiaSun's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 includes all the Subsidiaries of ZiaSun which as of
the date of this Agreement are Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X of the SEC). All the outstanding shares of capital
stock of, or other equity interests in, each such Significant Subsidiary
are duly authorized, validly issued, fully paid and nonassessable and are,
except as set forth in such Exhibit 21, owned directly or indirectly by
ZiaSun, free and clear of all Liens and free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests), except for
restrictions imposed by applicable securities laws. Except as disclosed in
Section 4.2(a) of the ZiaSun Disclosure Schedule, as of the date of this
Agreement, neither ZiaSun nor any of its Subsidiaries directly or
indirectly owns 5% or more of any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association or
entity (other than Subsidiaries) that is or would reasonably be expected to
be material to ZiaSun and its Subsidiaries taken as a whole.
(b) Capital Structure. As of the date hereof, the authorized capital stock
of ZiaSun consists of 50,000,000 shares of ZiaSun Common Stock, of which
32,698,669 shares were outstanding. All issued and outstanding shares of the
capital stock of ZiaSun are duly authorized, validly issued, fully paid and
nonassessable and free of any preemptive rights. There are no subscriptions,
options, warrants or other rights (including "phantom" stock rights),
32
agreements, arrangements or commitments obligating ZiaSun to issue or sell
shares of capital stock or other equity interests in ZiaSun other than options
and other rights to acquire ZiaSun Common Stock from ZiaSun representing in the
aggregate the right to purchase approximately 1,679,900 shares of ZiaSun Common
Stock (such options, together with the other employee stock options issued by
ZiaSun after the date hereof in accordance with the ZiaSun Stock Option Plans
and Section 5.2, collectively, the "ZiaSun Stock Options") under ZiaSun's 1999
Stock Option Plan and other option plans assumed by ZiaSun (collectively, the
"ZiaSun Stock Option Plans"). Section 4.2(b) of the ZiaSun Disclosure Schedule
sets forth a complete and correct list, as of the date hereof, of the number of
shares of ZiaSun Common Stock subject to ZiaSun Stock Options or other rights to
purchase or receive ZiaSun Common Stock granted under the ZiaSun Benefit Plans
or otherwise and the exercise price of the outstanding ZiaSun Stock Options
referenced therein. Except as disclosed in Sections 4.2(b) or 4.2(m) of the
ZiaSun Disclosure Schedule, there are no outstanding obligations of ZiaSun or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
ZiaSun Common Stock or any capital stock or other equity or ownership interests
of any Subsidiary of ZiaSun or to provide funds to, or make any investments (in
form of a loan, capital contribution or otherwise) in, any Subsidiary of ZiaSun
or any other Person.
(c) Authority; No Conflicts.
(i) ZiaSun has all requisite corporate power and authority to enter into
this Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby, subject in the case of the consummation
of the ZiaSun Merger to the adoption of this Agreement by the Required
ZiaSun Vote (as defined in Section 4.2(g)). The execution and delivery of
this Agreement, the performance of the obligations hereunder and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of ZiaSun
and no other corporate proceedings on the part of ZiaSun are necessary to
authorize the execution and delivery of this Agreement or to consummate the
ZiaSun Merger and the other transactions contemplated hereby, subject in
the case of the consummation of the ZiaSun Merger to the adoption of this
Agreement by the Required ZiaSun Vote. This Agreement has been duly and
validly executed and delivered by ZiaSun and constitutes a valid, legal,
and binding agreement of ZiaSun, enforceable against ZiaSun in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors generally or by general equity principles (regardless
of whether such enforceability is considered in a proceeding in equity or
at law).
(ii) The execution and delivery of this Agreement by ZiaSun do not, and the
performance of its obligations hereunder and the consummation by ZiaSun of
the ZiaSun Merger and the other transactions contemplated hereby will not,
conflict with, or result in a Violation pursuant to: (A) any provision of
the certificate of incorporation or bylaws or similar organizational
document of ZiaSun or any Significant Subsidiary of ZiaSun or (B) except as
(1) individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on ZiaSun, (2) would not prevent or
materially delay the consummation of the Mergers,
33
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below or (3) as set forth in Section 4.2(c)(ii) of the
ZiaSun Disclosure Schedule, any loan or credit agreement, note, mortgage,
bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to ZiaSun or
any Subsidiary of ZiaSun or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity or any other Person is
required by or with respect to ZiaSun or any Subsidiary of ZiaSun in
connection with the execution and delivery of this Agreement by ZiaSun or
the performance of its obligations hereunder or the consummation of the
ZiaSun Merger and the other transactions contemplated hereby, except the
Necessary Consents.
(d) Reports and Financial Statements.
(i) ZiaSun has filed all required registration statements, prospectuses,
reports, schedules, forms, statements and other documents required to be
filed by it with the SEC since January 1, 1999 (collectively, including all
exhibits thereto, the "ZiaSun SEC Reports"). None of the ZiaSun SEC
Reports, as of their respective dates (and, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such
filing), contained or will contain any untrue statement of a material fact
or omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the
financial statements (including the related notes) included in the ZiaSun
SEC Reports presents fairly, in all material respects, the consolidated
financial position and consolidated results of operations and cash flows of
ZiaSun and its consolidated Subsidiaries as of the respective dates or for
the respective periods set forth therein, all in conformity with GAAP
consistently applied during the periods involved except as otherwise noted
therein, and subject, in the case of the unaudited interim financial
statements, to the absence of notes and normal year-end adjustments that
have not been and are not expected to be material in amount. All of such
ZiaSun SEC Reports, as of their respective dates (and as of the date of any
amendment to the respective ZiaSun SEC Reports), complied as to form in all
material respects with the applicable requirements of the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder.
Each Subsidiary of ZiaSun is treated as a consolidated Subsidiary of ZiaSun
in the financial reports of ZiaSun included in the ZiaSun SEC Reports.
34
(ii) Except as disclosed in the ZiaSun financial statements for the period
ending December 31, 2000, included in the ZiaSun SEC Reports or as
disclosed in Section 4.2(d) of the ZiaSun Disclosure Schedule, neither
ZiaSun nor any of its Subsidiaries has any obligations, liabilities or
debts (whether accrued or fixed, or absolute or contingent, or unmatured,
or determined or determinable), including without limitation those arising
under Law or any contract, arrangement or commitment or undertaking, that
are of a nature that would be required to be disclosed on the consolidated
balance sheet of ZiaSun and its consolidated Subsidiaries or the footnotes
thereto prepared in conformity with GAAP, other than (A) liabilities
incurred in the ordinary course of business, consistent with past
practices, (B) liabilities incurred in accordance with Section 5.2, (C)
liabilities for Taxes or (D) liabilities that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on ZiaSun.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by ZiaSun for
inclusion or incorporation by reference in (A) the Form S-4 (as defined in
Section 6.1) will, at the time the Form S-4 is filed with the SEC, at any
time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (B) the Joint Proxy
Statement/Prospectus (as defined in Section 6.1) will, on the date it is
first mailed to ZiaSun stockholders or Telescan stockholders or at the time
of the ZiaSun Stockholders Meeting or the Telescan Stockholders Meeting
(each as defined in Section 6.1), contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Form S-4
and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section 4.2(e), no
representation or warranty is made by ZiaSun with respect to statements
made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/ Prospectus based on information supplied by Telescan for
inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of ZiaSun, by resolutions duly
adopted at a meeting duly called and held and not subsequently rescinded or
modified in any way (the "ZiaSun Board Approval"), has duly (i) determined that
this Agreement is fair to and in the best interests of ZiaSun and its
stockholders and declared the ZiaSun Merger to be advisable, (ii) approved this
Agreement, the Voting Agreements and the ZiaSun Merger and (iii) recommended
that the stockholders of ZiaSun adopt this Agreement and directed
35
that such matter be submitted for consideration by ZiaSun's stockholders at the
ZiaSun Stockholders Meeting. The ZiaSun Board Approval constitutes approval of
this Agreement, the Voting Agreements and the ZiaSun Merger for purposes of
Section 78.438 of the NRS. To the knowledge of ZiaSun, except for Sections
78.411 to 78.444 of the NRS (which has been rendered inapplicable), no state
takeover statute is applicable to this Agreement, the Voting Agreements or the
ZiaSun Merger or the other transactions contemplated hereby or thereby.
(g) Vote Required. The affirmative vote of the holders of a majority of the
outstanding shares of ZiaSun Common Stock to adopt this Agreement (the "Required
ZiaSun Vote") is the only vote of the holders of any class or series of ZiaSun
common stock necessary to approve or adopt this Agreement and the ZiaSun Merger
and to consummate the ZiaSun Merger and the other transactions contemplated
hereby.
(h) Litigation; Compliance with Laws.
(i) There are no Actions pending or, to the knowledge of ZiaSun,
threatened, before any court, arbitrator or Government Entity (domestic or
foreign) against or affecting ZiaSun or any Subsidiary of ZiaSun or any
property or asset of ZiaSun or any Subsidiary of ZiaSun, before any court,
arbitrator or Governmental Entity (domestic or foreign) which, individually
or in the aggregate, would reasonably be expected to have a Material
Adverse Effect on ZiaSun, nor are there any judgments, decrees,
determinations, awards, injunctions, rules or orders of any Governmental
Entity or arbitrator outstanding against ZiaSun or any Subsidiary of ZiaSun
which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect on ZiaSun.
(ii) Except as, individually or in the aggregate, would not to have a
Material Adverse Effect on ZiaSun, ZiaSun and its Subsidiaries hold all
permits, licenses, franchises, variances, exemptions, orders and approvals
of all Governmental Entities which are necessary for the operation of the
businesses as now being conducted of ZiaSun and its Subsidiaries (the
"ZiaSun Permits"), and no suspension or cancellation of any of the ZiaSun
Permits is pending or, to the knowledge of ZiaSun, threatened. ZiaSun and
its Subsidiaries are in compliance with the terms of the ZiaSun Permits,
except where the failure to so comply, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on
ZiaSun. Neither ZiaSun nor any of its Subsidiaries is in violation of, and
ZiaSun and its Subsidiaries have not received any notices of violations
with respect to, any laws, statutes, ordinances, rules or regulations of
any Governmental Entity, except for violations which, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on ZiaSun.
(i) Absence of Certain Changes or Events. Except as disclosed in Section
4.2(i) of the ZiaSun Disclosure Schedule and for liabilities permitted to be
incurred in accordance with this Agreement or the transactions contemplated
hereby, since December 31, 2000, ZiaSun and each Subsidiary of ZiaSun has
36
conducted its business only in the ordinary course and in a manner consistent
with past practices and, since such date and prior to the date hereof, neither
ZiaSun nor any Subsidiary of ZiaSun has:
(i) made or adopted amendments or changes to its Certificate or Articles
of Incorporation or Bylaws;
(ii) declared, set aside or paid a dividend or other distribution with
respect to its capital stock, or any direct or indirect redemption,
purchase or other acquisition by it of any of its capital stock;
(iii) acquired or entered into any agreement, arrangement or understanding
for the acquisition (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) of any material interest
in any corporation, partnership, other business organization or any
division thereof or any material assets, other than the acquisition of
assets in the ordinary course of business consistent with past practices;
(iv) incurred any indebtedness for borrowed money or issued any debt
securities or assumed, guaranteed or endorsed, or otherwise as an
accommodation become responsible for, the obligations of any Person, or
made any loans or advances except for indebtedness incurred in the ordinary
course of business consistent with past practices;
(v) entered into any contract or agreement material to its business,
results of operations or financial condition other than in the ordinary
course of business consistent with past practices;
(vi) made or authorized any capital expenditure of $50,000 in any
individual case or $125,000 in the aggregate;
(vii) revalued any of its assets;
(viii) sold, leased, licensed or otherwise disposed of any of its material
assets or properties, except in the ordinary course of business as
conducted on that date and consistent with past practices;
(ix) amended or terminated any material contract, agreement or license to
which it is a party or by which it is bound;
(x) permitted or allowed any of its material assets or properties (whether
tangible or intangible) to be subjected to any Lien, other than in the
ordinary course of business, consistent with past practices;
37
(xi) taken any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practices, with
respect to accounting policies, methods or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable);
(xii) paid, discharged or satisfied any material claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practices, of
liabilities reflected or reserved against in the financial statements of
ZiaSun included in the ZiaSun SEC Reports or subsequently incurred in the
ordinary course of business and consistent with past practices;
(xiii) suffered any casualty, loss or damage with respect to any of its
assets which in the aggregate have a replacement cost of more than $50,000,
whether or not such casualty, loss or damage shall have been covered by
insurance;
(xiv) increased the salary or other compensation payable or to become
payable by it to any of its directors, executive-level officers or
advisors, or declared, paid, committed or otherwise become obligated for
the payment of a bonus or other additional salary or compensation to any
such person except as otherwise contemplated by this Agreement;
(xv) waived or released any of its material rights or claims, including
any write-off or other compromise of any amount of its account
receivables;
(xvi) changed the prices or royalties set or charged by it to its customers
or licensees or in pricing or royalties set or charged by persons who have
licensed Intellectual Property to it;
(xvii) terminated, discontinued, closed or disposed of any facility or
other business operation, or laid off any employees (other than layoffs of
less than 5 employees) or implemented any early retirement, separation or
program providing early retirement window benefits or announced or planned
any such action or program for the future;
(xviii) commenced or received notice or threat of commencement of any
lawsuit or proceeding against or investigation of it or its affairs;
(xix) received notice of any claim of ownership by a third party of its
Intellectual Property or of infringment by it of any third party's
Intellectual Property rights;
(xx) issued or sold any of its shares of capital stock, or securities
exchangeable, convertible or exercisable therefor, or of any other of its
securities;
38
(xxi) suffered any Material Adverse Effect;
(xxii) made any material changes in the customary methods of its
operations; or
(xxiii) agreed, whether in writing or otherwise, to take any of the actions
specified in this Section 4.2(i).
(j) Intellectual Property.
(i) For the purposes of this Agreement, the following terms have the
following definitions:
"ZiaSun Business" means the business of ZiaSun or any Subsidiary of
ZiaSun, including the manufacture, use, licensing, distribution and
sale of any products or technology or the provision of any services by
ZiaSun or any Subsidiary of ZiaSun, as currently conducted, as
conducted since the inception of ZiaSun or any Subsidiary of ZiaSun,
or as reasonably is contemplated to be conducted by ZiaSun or any
Subsidiary of ZiaSun in the future.
"ZiaSun Intellectual Property" shall mean any Intellectual Property
that is owned by or licensed to ZiaSun or any Subsidiary of ZiaSun.
(ii) Section 4.2(j) of the ZiaSun Disclosure Schedule lists all Registered
Intellectual Property in whole or in part owned by, assigned to, or filed
in the name of ZiaSun or any Subsidiary of ZiaSun (the "ZiaSun Registered
Intellectual Property").
(iii) Except as set forth on Section 4.2(j) of the ZiaSun Disclosure
Schedule, each item of ZiaSun Intellectual Property, including all ZiaSun
Registered Intellectual Property listed on Section 4.2(j) of the ZiaSun
Disclosure Schedule, is free and clear of any Lien.
(iv) ZiaSun or a Subsidiary of ZiaSun: (i) is the exclusive owner of all
Trademarks as such Trademarks are currently used by the ZiaSun Business,
including trade names, trade dress and similar designations of origin used
in connection with the operation or conduct of the ZiaSun Business and (ii)
owns exclusively, and has good title to, all copyrighted works, software
products or other works of authorship that it otherwise purports to own.
(v) Except as set forth in Section 4.2(j) of the Disclosure Schedule,
neither ZiaSun nor any Subsidiary of ZiaSun has transferred ownership of,
or granted any license of or right to use or authorized the retention of
any rights to use, any Intellectual Property that is, or was, ZiaSun
Intellectual Property, to any Person, except in the ordinary course of
business consistent with past practices.
39
(vi) The ZiaSun Intellectual Property constitutes all the Intellectual
Property used in and/or necessary to the conduct of the ZiaSun Business
including (i) the making, using, selling, marketing, or importing of any
product or device, (ii) the practice of any process, (iii) the offering or
performance of any service, or (iv) the copying, display, performance,
distribution, creation of derivative works of, or the exploitation of any
device or work.
(vii) The contracts, licenses and agreements listed on Section 4.2(j) of
the ZiaSun Disclosure Schedule include all material contracts, licenses and
agreements pursuant to which any Person, including any affiliate or any
Subsidiary of ZiaSun, has licensed any Intellectual Property to ZiaSun or
any Subsidiary of ZiaSun. Neither ZiaSun nor any Subsidiary of ZiaSun is in
breach of, nor has it failed to perform under any of the foregoing
contracts, licenses and agreements and, to its knowledge, no other party to
such contracts, licenses and agreements is in breach of or has failed to
perform thereunder.
(viii) The contracts, licenses and agreements listed in Section 4.2(j) of
the ZiaSun Disclosure Schedule include all material contracts and
agreements pursuant to which any Person, including any third party
developer or consultant, has developed any device or technology, authored
any work, or otherwise created any thing in which any Intellectual Property
rights might arise, either separately or jointly with ZiaSun, any
Subsidiary of ZiaSun, or any other Person, which ZiaSun or any Subsidiary
of ZiaSun uses or possess or which it believes it owns.
(ix) The contracts, licenses and agreements listed on Section 4.2(j) of the
ZiaSun Disclosure Schedule include all material contracts, licenses and
agreements pursuant to which ZiaSun or any Subsidiary of ZiaSun has
licensed or transferred to any third person or any affiliate or Subsidiary
of ZiaSun any ZiaSun Intellectual Property. Neither ZiaSun nor any
Subsidiary of ZiaSun is in breach of, nor has it failed to perform under
any of the foregoing contracts, licenses and agreements and, to its
knowledge, no other party to such contracts, licenses and agreements is in
breach of or has failed to perform thereunder.
(x) Neither the consummation of the transaction contemplated by this
Agreement nor the transfer to Telescan of any contracts, licenses,
agreements or ZiaSun Intellectual Property will cause or obligate Telescan
(i) to grant to any third party any rights or licenses with respect to any
Intellectual Property of Telescan; or (ii) pay any royalties or other
amounts in excess of those being paid by ZiaSun or any Subsidiary of ZiaSun
prior to the Effective Date.
(xi) Section 4.2(j) of the ZiaSun Disclosure Schedule lists all material
agreements, licenses and contracts pursuant to which ZiaSun or any
Subsidiary of ZiaSun has agreed to indemnify, hold harmless, or otherwise
agree to be liable for any losses, cost or damages of, a third party with
respect to any Intellectual Property or product or service of ZiaSun or any
Subsidiary of ZiaSun.
40
(xii) Except as set forth on Section 4.2(j) of the ZiaSun Disclosure
Schedule, all ZiaSun Intellectual Property (other than ZiaSun Intellectual
Property licensed from third parties) will be fully, transferable,
alienable or licensable by, or between, ZiaSun (or any Subsidiary of
ZiaSun) or Telescan without restriction and without payment of any kind to
any third party.
(xiii) Except as set forth on Section 4.2(j) of the ZiaSun Disclosure
Schedule, the consummation of the transactions contemplated by this
Agreement will not result in the loss of, or otherwise adversely affect,
any ownership rights of ZiaSun or any Subsidiary of ZiaSun in any ZiaSun
Intellectual Property or result in the breach or termination of any
license, contract or agreement to which ZiaSun or any Subsidiary of ZiaSun
is a party respecting any ZiaSun Intellectual Property.
(xiv) To ZiaSun's knowledge, the operation of the ZiaSun Business,
including (i) the making, using, selling, marketing, or importing of any
product or device, (ii) the practice of any process, (iii) the offering or
performance of any service, or (iv) the copying, distribution, performance,
display, creation of derivative works of, or the exploitation of any device
or work, does not, and will not when conducted in substantially the same
manner following the Closing by Holdco, infringe or misappropriate the
Intellectual Property of any person, violate the rights of any person, or
constitute unfair competition or trade practices under the laws of any
jurisdiction, and neither ZiaSun nor any Subsidiary of ZiaSun has received
notice from any person claiming that such operation or any act, product,
technology or service of the ZiaSun Business infringes or misappropriates
the Intellectual Property of any Person or constitutes unfair competition
or trade practices under the laws of any jurisdiction (nor is ZiaSun or any
Subsidiary of ZiaSun aware of any basis therefor). Without limiting the
foregoing, to ZiaSun's knowledge, neither ZiaSun nor any Subsidiary of
ZiaSun has misappropriated the trade secrets of, or infringed the Copyright
or Mask Works of any third party.
(xv) There are no material contracts, licenses or agreements between ZiaSun
or any Subsidiary of ZiaSun and any other person with respect to ZiaSun
Intellectual Property under which there is any dispute known to ZiaSun or
any Subsidiary of ZiaSun regarding the scope of, or performance under, such
contract, license or agreement including with respect to any payments to be
made or received by the Power or any Subsidiary of ZiaSun thereunder.
(xvi) To the knowledge of ZiaSun or any of its Subsidiaries, no person is
infringing or misappropriating any ZiaSun Intellectual Property.
(xvii) No ZiaSun Intellectual Property or product, technology or service of
the ZiaSun Business is subject to any proceeding or outstanding decree,
order, judgment or stipulation that restricts in any manner the use,
transfer or licensing thereof by ZiaSun or any Subsidiary of ZiaSun or may
affect the validity, use or enforceability of such ZiaSun Intellectual
Property.
41
(xviii) Section 4.2(j) of the ZiaSun Disclosure Schedule lists all action,
including the payment of any fees, that must, or should be performed by, or
on behalf of, ZiaSun or any Subsidiary of ZiaSun in the ninety-day period
following the Effective Date, with respect to any application for,
perfection of, preservation of, or continuation of any rights of ZiaSun or
any Subsidiary of ZiaSun with respect to any ZiaSun Intellectual Property,
including the filing of any patent applications, response to Patent Office
actions or payment of fees, including renewal fees.
(xix) Neither ZiaSun nor any Subsidiary of ZiaSun has claimed small
business status, or other particular status in the application for any
Registered ZiaSun Intellectual Property which claim of status was not at
the time made, or which has since become, inaccurate or false, or that will
no longer be true and accurate as a result of the Closing.
(xx) All software products of ZiaSun or any Subsidiary of ZiaSun were
written and created solely by either (i) employees of ZiaSun or any
Subsidiary of ZiaSun acting within the scope of their employment or (ii) by
third parties who have validly assigned or licensed the necessary rights,
including Intellectual Property rights, in such products to ZiaSun or any
Subsidiary of ZiaSun.
(xxi) Neither ZiaSun nor any Subsidiary of ZiaSun has knowledge of any
facts or circumstances that would render any ZiaSun Intellectual Property
invalid or unenforceable. Without limiting the foregoing, neither ZiaSun
nor any Subsidiary of ZiaSun knows of any information, materials, facts, or
circumstances, including any information or fact that would constitute
prior art, that would render any of the ZiaSun Registered Intellectual
Property invalid or unenforceable, or would adversely affect any pending
application for any ZiaSun Registered Intellectual Property, and neither
ZiaSun nor any Subsidiary of ZiaSun has misrepresented, or failed to
disclose, and nor is aware of any misrepresentation or failure to disclose,
any fact or circumstances in any application for any ZiaSun Register
Intellectual Property that would constitute fraud or a material
misrepresentation with respect to such application or that would otherwise
effect the validity or enforceability of any ZiaSun Registered Intellectual
Property.
(xxii) ZiaSun and each Subsidiary of ZiaSun have taken all steps reasonable
under the circumstances to protect the confidentiality and trade secret
status of their material confidential information and know of no basis on
which it could be claimed that either ZiaSun or any Subsidiary of ZiaSun
has failed to protect the confidentiality of any of their material
confidential information.
(k) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of ZiaSun.
42
(l) Taxes. Each of ZiaSun and its Subsidiaries has filed all Tax Returns
required to have been filed (or extensions for the filing thereof have been duly
obtained and have not expired), has paid all Taxes required to have been paid by
it, has provided adequate reserves in the financial statements for any Taxes
that have not been paid (whether or not shown as being due on any returns) or
are payable by ZiaSun or any of its Subsidiaries, except where failure to file
such Tax Returns or pay or provide reserves for such Taxes would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on ZiaSun. All Tax Returns filed by ZiaSun or any Subsidiary of
ZiaSun are true, correct and complete in all material respects. Neither ZiaSun
nor any of its Subsidiaries has received from any governmental authority any
written notice of any proposed adjustment, deficiency or underpayment of Taxes,
which notice has not been withdrawn or satisfied by payment, and there are no
material claims that have been asserted or, to the knowledge of ZiaSun or any
Subsidiary of ZiaSun, threatened against ZiaSun or any of its Subsidiaries
relating to such Taxes. Neither ZiaSun nor any of its Subsidiaries has taken any
action or knows of any fact that is reasonably likely to prevent the Mergers
from qualifying as exchanges within the meaning of Section 351 of the Code and
the ZiaSun Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(m) Certain Contracts. As of the date hereof, except as disclosed in
Section 4.2(m) of the ZiaSun Disclosure Schedule, neither ZiaSun nor any
Subsidiary of ZiaSun has, is a party to, or is bound by:
(i) any collective bargaining agreements;
(ii) any agreements or arrangements that contain any severance pay or
post-employment liabilities or obligations;
(iii) any bonus, deferred compensation, pension, profit sharing or
retirement plans, or any other employee benefit plans or arrangements;
(iv) any employment or consulting agreement with an employee or
individual consultant or salesperson;
(v) any agreement or plan, including, without limitation, any stock option
plan, stock appreciation rights plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement;
(vi) any fidelity or surety bond or completion bond;
(vii) any lease of real or personal property having a value or obligation
individually in excess of $100,000, or that does not terminate within six
months;
43
(viii) any agreement of indemnification or guaranty;
(ix) any agreement containing any covenant limiting its freedom to engage
in any line of business or to compete with any Person or in any geographic
area or during any period of time;
(x) any agreement relating to capital expenditures and involving future
payments in excess of $50,000;
(xi) any agreement relating to the disposition or acquisition of assets or
any interest in any business enterprise outside the ordinary course of
ZiaSun's or any Subsidiary of ZiaSun's business;
(xii) any mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the borrowing of
money or extension of credit, including guaranties referred to in clause
(viii) hereof;
(xiii) any letter of credit in excess of $50,000;
(xiv) any distribution, joint marketing or development agreement;
(xv) any agreement pursuant to which it has granted or may grant in the
future, to any Person a source-code license or option or other right to use
or acquire a source-code;
(xvi) any agreement relating to trademarks, copyrights, licenses,
software development or any other Intellectual Property; or
(xvii) any other agreement that involves $100,000 or more and is not
cancelable without penalty within 30 days.
Except for such alleged breaches, violations and defaults, and events that
would constitute a breach, violation or default with the lapse of time, giving
of notice, or both, as are all noted in Section 4.2(m) of the ZiaSun Disclosure
Schedule, neither ZiaSun nor any of its Subsidiaries has breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the terms or conditions of any agreement, contract or commitment
required to be set forth on Section 4.2(m) of the ZiaSun Disclosure Schedule
(any such agreement, contract or commitment, a "ZiaSun Contract"). Each ZiaSun
Contract is in full force and effect and, except as otherwise disclosed in
Section 4.2(m) of the ZiaSun Disclosure Schedule, is not subject to any default
thereunder, of which ZiaSun has knowledge, by any party obligated to ZiaSun or
any of the Subsidiaries pursuant thereto. Section 4.2(m) of the ZiaSun
Disclosure Schedule identifies each ZiaSun Contract that requires a consent,
waiver or approval to preserve all rights of, and benefits
44
to, ZiaSun or any of the Subsidiaries under such ZiaSun Contract as a result of
entering into this Agreement or effecting the Merger or the other transactions
contemplated by this Agreement.
(n) Employee Benefits.
(i) The Benefit Plans, whether oral or written, under which any current or
former employee or director of ZiaSun or its Subsidiaries has any present
or future right to benefits contributed to, sponsored by or maintained by
ZiaSun or its Subsidiaries, or under which ZiaSun or its Subsidiaries has
any present or future liability shall be collectively referred to as the
"ZiaSun Benefit Plans."
(ii) Except as set forth in Section 4.2(n) of the ZiaSun Disclosure
Schedule, with respect to each ZiaSun Benefit Plan, no liability has been
incurred and there exists no condition or circumstances in connection with
which ZiaSun or any of its Subsidiaries could be subject to any liability
that is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on ZiaSun, in each case under ERISA, the Code, or
any other applicable law, rule or regulation.
(iii) ZiaSun and its Subsidiaries are in compliance with all federal,
state, local and foreign requirements regarding employment, except for any
failures to comply that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on ZiaSun. As of the date of
this Agreement, there is no labor dispute, strike or work stoppage against
ZiaSun or any of its Subsidiaries pending or, to the knowledge of ZiaSun,
threatened which may interfere with the business activities of ZiaSun or
any of its Subsidiaries, except where such dispute, strike or work stoppage
is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on ZiaSun.
(o) Labor Matters. Except as disclosed in the ZiaSun SEC Reports filed
prior to the date of this Agreement or in Section 4.2(o) of the ZiaSun
Disclosure Schedule, there are no controversies pending or, to the knowledge of
ZiaSun, threatened between ZiaSun or any of its Subsidiaries and any
representatives of its employees, except as would not, individually or in the
aggregate, have a Material Adverse Effect on ZiaSun, and, to the knowledge of
ZiaSun and its Subsidiaries, there are no material organizational efforts
presently being made involving any of the now unorganized employees of ZiaSun or
any of its Subsidiaries. Since January 1, 1999, there has been no work stoppage,
strike or other concerted action by employees of ZiaSun or any of its
Subsidiaries except as is not having or could not be reasonably expected to have
a Material Adverse Effect on ZiaSun.
(p) Environmental Matters.
(i) Each of ZiaSun and its Subsidiaries has obtained all Environmental
Permits, except for such failures to have Environmental Permits which,
individually or in the aggregate, could not reasonably be expected to
45
have a Material Adverse Effect on ZiaSun. Each of such Environmental
Permits is in full force and effect and each of ZiaSun and its Subsidiaries
is in compliance with the terms and conditions of all such Environmental
Permits and with any applicable Environmental Law, except for such failures
to be in compliance which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on ZiaSun.
(ii) To the knowledge of ZiaSun, no site or facility now or previously
owned, operated or leased by ZiaSun or any of its Subsidiaries is listed or
proposed for listing on the National Priorities List promulgated pursuant
to CERCLA, or on any similar state or local list of sites requiring
investigation or clean-up.
(iii) No Liens have arisen under or pursuant to any Environmental Law on
any site or facility owned, operated or leased by ZiaSun or any of its
Subsidiaries, other than any such Liens on real property not individually
or in the aggregate material to ZiaSun and its Subsidiaries taken as a
whole, and no action of any Governmental Entity has been taken or, to the
knowledge of ZiaSun, is in process which could subject any of such
properties to such Liens, and neither ZiaSun nor any of its Subsidiaries
would be required to place any notice or restriction relating to the
presence of Hazardous Materials at any such site or facility owned by it in
any deed to the real property on which such site or facility is located.
(iv) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or which are in the
possession of, ZiaSun or any of its Subsidiaries in relation to any site or
facility now or previously owned, operated or leased by ZiaSun or any of
its Subsidiaries which have not been delivered to Telescan prior to the
execution of this Agreement.
(q) Assets. The assets, properties, rights and ZiaSun Contracts, including
(as applicable) title or leaseholds thereto, of ZiaSun and its Subsidiaries,
taken as a whole, are sufficient to permit ZiaSun and its Subsidiaries to
conduct their business as currently being conducted with only such exceptions as
are not reasonably likely to have a Material Adverse Effect on ZiaSun. All
material real property owned by ZiaSun and its Subsidiaries is owned free and
clear of all Liens, except (i) those reflected or reserved against in the latest
balance sheet or notes thereto included in the ZiaSun financial statements
included in the ZiaSun SEC Reports, (ii) taxes and general and special
assessments not in default and payable without penalty or interest, (iii) Liens
disclosed in Section 4.2(q) of the ZiaSun Disclosure Schedule and (iv) Liens
that do not materially adversely interfere with any present use of such
property.
(r) Insurance. Section 4.2(r) of ZiaSun Disclosure Schedule sets forth a
complete and accurate list of all material policies of insurance of ZiaSun and
its Significant Subsidiaries currently in force, including surety bonds or other
credit support therefor (the "ZiaSun Insurance Policies"), the current annual
premiums for each ZiaSun Insurance Policy and the types of risk covered and
limits of coverage. All ZiaSun Insurance Policies are in full force and effect
and all premiums due thereon have been paid. ZiaSun has complied in all
46
material respects with the terms and provisions of the ZiaSun Insurance
Policies. ZiaSun has never applied for and been refused or denied any policy of
insurance with respect to product liability matters, matters arising by reason
of clinical trials, environmental matters or workmen's compensation. ZiaSun's
insurance coverage is adequate in kind and amount based on current industry
practice.
(s) Affiliate Arrangements. Except as disclosed in Section 4.2(s) of the
ZiaSun Disclosure Schedule, neither ZiaSun nor any of its Subsidiaries is a
party to any contract, arrangement, understanding or other commitment or pending
or proposed transaction with any director or officer of ZiaSun or of any of its
Subsidiaries or any affiliates of any such persons (other than compensation
arrangements entered into in the ordinary course of business and other than as
disclosed in the ZiaSun SEC Reports filed prior to the date of this Agreement
and employee health, welfare and benefit plans available generally to the
officers or employees of ZiaSun and its Subsidiaries).
(t) Takeover Provisions of the NRS Not Applicable. ZiaSun has taken all
necessary actions so that the provisions of Sections 78.411 to 78.444 of the NRS
do not and will not, before the termination of this Agreement, apply to this
Agreement, the Merger or the other transactions contemplated hereby. ZiaSun is
not an "Issuing Corporation" as defined in Section 78.3788 of the NRS.
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of Telescan. During the period from the date of this
Agreement and continuing until the Effective Time, Telescan agrees as to itself
and its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or Section 5.1 of the Telescan Disclosure Schedule or to the extent
that ZiaSun shall otherwise consent in writing):
(a) Ordinary Course.
(i) Telescan and its Subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all material
respects, in substantially the same manner as heretofore conducted, and
shall use their reasonable best efforts to preserve intact their present
lines of business, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business dealings
with them to the end that their ongoing businesses shall not be impaired in
any material respect at the Effective Time; provided, however, that no
action by Telescan or its Subsidiaries with respect to matters specifically
addressed by any other provision of this Section 5.1 shall be deemed a
breach of this Section 5.1(a)(i) unless such action would constitute a
breach of one or more of such other provisions of this Section 5.1.
Telescan shall promptly notify ZiaSun of any event or occurrence or
emergency not in the ordinary course of business of Telescan and any event
which would reasonably be expected to have a Material Adverse Effect on
Telescan.
47
(ii) Other than in connection with acquisitions permitted by Section 5.1(i)
or investments permitted by Section 5.1(k), Telescan shall not, and shall
not permit any of its Subsidiaries to, (A) enter into any new material line
of business or (B) incur or commit to any capital expenditures or any
obligations or liabilities in connection therewith other than capital
expenditures and obligations or liabilities in connection therewith
incurred or committed to in the ordinary course of business consistent with
past practices.
(b) Stock Options. Telescan shall not, and shall not permit any of its
Subsidiaries to, accelerate, amend or change the period of exercisability of any
outstanding Telescan Stock Options or stock subject to vesting, or authorize
cash payments in exchange for any such outstanding options.
(c) Intellectual Property. Telescan shall not, and shall not permit any of
its Subsidiaries to, transfer to any Person any rights to any Telescan
Intellectual Property (other than end-user licenses granted to customers of
Telescan in the ordinary course of business).
(d) Marketing Rights. Telescan shall not, and shall not permit any of its
Subsidiaries to, enter into or amend any material agreements pursuant to which
any other party is granted marketing, distribution, or similar rights of any
type or scope with respect to any products of Telescan except in the ordinary
course of business consistent with past practices.
(e) Amendments to Agreements. Telescan shall not, and shall not permit any
of its Subsidiaries to, amend or otherwise modify (or agree to do so), except in
the ordinary course of business, or materially violate the terms of, any of the
agreements set forth or described in the Telescan Disclosure Schedule.
(f) Dividends; Changes in Share Capital. Except for the payment of
dividends on Telescan Preferred Stock, Telescan shall not, and shall not permit
any of its Subsidiaries to, and shall not propose to, (i) declare or pay any
dividends on or make other distributions in respect of any of its capital stock,
except for any such dividend or distribution by a wholly owned Subsidiary of
Telescan, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for, shares of its capital stock or (iii) repurchase,
redeem or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock (or options,
warrants, or other rights exercisable therefor).
(g) Issuance of Securities. Telescan shall not, and shall not permit any of
its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class or
any securities convertible into or exercisable for, or any rights, warrants,
calls or options to acquire, any such shares, or enter into any commitment,
arrangement, undertaking or agreement with respect to any of the foregoing,
48
other than (i) the issuance of Telescan Common Stock upon the exercise of
Telescan Stock Options in accordance with their present terms or pursuant to
Telescan Stock Options or other stock based awards granted pursuant to clause
(ii) below, (ii) the granting of Telescan Stock Options or other stock based
awards of or to acquire shares of Telescan Common Stock granted under Benefit
Plans outstanding on the date hereof in the ordinary course of business
consistent with past practices, (iii) issuances by a wholly owned Subsidiary of
Telescan of capital stock to such Subsidiary's parent or another wholly owned
Subsidiary of Telescan.
(h) Governing Documents. Except to the extent required to comply with their
respective obligations hereunder or with applicable law, Telescan shall not
amend or propose to so amend its certificate of incorporation or bylaws.
(i) No Acquisitions. Telescan shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merger or consolidation, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets (excluding the acquisition of assets used
in the operations of the business of Telescan and its Subsidiaries in the
ordinary course, which assets do not constitute a business unit, division or all
or substantially all of the assets of the transferor) in excess of $500,000
individually or in the aggregate; provided, however, that the foregoing shall
not prohibit (x) internal reorganizations or consolidations involving existing
Subsidiaries of Telescan or (y) the creation of new Subsidiaries of Telescan
organized to conduct or continue activities otherwise permitted by this
Agreement.
(j) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Telescan, (ii) dispositions
referred to in the Telescan SEC Reports filed prior to the date of this
Agreement or (iii) as may be required by or in conformance with law or
regulation in order to permit or facilitate the consummation of the transactions
contemplated hereby or (iv) as disclosed in Section 5.1 of the Telescan
Disclosure Schedule, Telescan shall not, and shall not permit any of its
Subsidiaries to, sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets (including capital stock of Subsidiaries
of Telescan but excluding inventory in the ordinary course of business), if the
fair market value of the total consideration (including the value of the
indebtedness acquired or assumed) therefor exceeds $50,000.
(k) Investments; Indebtedness. Telescan shall not, and shall not permit any
of its Subsidiaries to, (i) make any loans, advances or capital contributions
to, or investments in, any other Person in excess of $10,000, other than (x)
loans or investments by Telescan or a Subsidiary of Telescan to or in Telescan
or any Subsidiary of Telescan, (y) employee loans or advances made in the
ordinary course of business or (z) in the ordinary course of business consistent
with past practices which are not, individually or in the aggregate, material to
Telescan and its Subsidiaries taken as a whole or (ii) without regard to
anything contained in the Telescan Disclosure Schedule,
49
incur any indebtedness for borrowed money or guarantee any such indebtedness of
another Person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of Telescan or any of its Subsidiaries, guarantee
any debt securities of another Person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another Person (other
than any wholly owned Subsidiary) or enter into any arrangement having the
economic effect of any of the foregoing in excess of $2,500,000.
(l) Tax-Free Qualification. Telescan shall use its reasonable best efforts
not to, and shall use its reasonable best efforts not to permit any of its
Subsidiaries to, take any action (including any action otherwise permitted by
this Section 5.1) that would prevent or impede the Mergers from qualifying as
exchanges under Section 351 of the Code and the ZiaSun Merger from qualifying as
a reorganization under Section 368 of the Code.
(m) Compensation. Except (x) as required by law or by the terms of any
agreement currently in effect between Telescan or any Subsidiary of Telescan and
any executive officer or employee thereof or (y) in the ordinary course of
business consistent with past practices, Telescan shall not increase the amount
of compensation of any director, executive officer or key employee of Telescan
or any Subsidiary of Telescan or grant any severance or termination pay to any
director or officer or to any other employee of Telescan or any Subsidiary of
Telescan, or make any increase in or commitment to increase any employee
benefits, issue any additional Telescan Stock Options, adopt or amend or make
any commitment to adopt or amend any Benefit Plan or make any contribution,
other than regularly scheduled contributions, to any Telescan Benefit Plan.
(n) Accounting Methods; Income Tax Elections. Except as disclosed in
Telescan SEC Reports filed prior to the date of this Agreement, or as required
by a Governmental Entity, Telescan shall not change its methods of accounting,
except as required by changes in GAAP as concurred in by Telescan's independent
public accountants. Telescan shall not (i) change its fiscal year or (ii) make
any tax election that, individually or in the aggregate, would have a Material
Adverse Effect on Telescan.
(o) Certain Agreements and Arrangements. Telescan shall not, and shall not
permit any of its Subsidiaries to, enter into any agreements or arrangements
that limit or otherwise restrict Telescan or any of its Subsidiaries or any of
their respective affiliates or any successor thereto or that could, after the
Effective Time, limit or restrict Telescan or any of its affiliates (including
Holdco) or any successor thereto, from engaging or competing in any line of
business or in any geographic area which agreements or arrangements,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Holdco and its Subsidiaries, taken together, after
giving effect to the Mergers.
(p) Satisfaction of Closing Conditions. Except as required by law,
Telescan shall not, and shall not permit any of its Subsidiaries to, take any
action that would, or would reasonably be expected to, result in (i) any of
50
the conditions to the Mergers set forth in Article VII not being satisfied or
(ii) a material delay in the satisfaction of such conditions.
(q) Write-Offs. Telescan shall not, and shall not permit any of its
Subsidiaries to, and shall not propose to, revalue any of Telescan's assets,
including without limitation writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business.
(r) Strategic Alliances. Telescan shall not, and shall not permit any of
its Subsidiaries to, and shall not propose to, enter into any strategic
alliance, joint venture, partnership, joint development or joint marketing
agreement with any Person.
(s) Other Actions. Telescan shall not, and shall not permit any of its
Subsidiaries to, and shall not propose to agree orally or in writing or
otherwise to take, any action that would reasonably be expected to cause a
Material Adverse Effect on ZiaSun or Holdco.
(t) No Related Actions. Telescan will not, and will not permit any of its
Subsidiaries to agree or commit to do any of the foregoing (except for clause
(a)(i) of this Section 5.1).
(u) Contingent Voting Rights of the Telescan Preferred Stock. Telescan
shall not take any action, or fail to take any action, that would entitle the
holders of the Telescan Preferred Stock to the voting rights set forth in
Section 8(b) of the certificate of designation of the Telescan Preferred Stock.
5.2. Covenants of ZiaSun. During the period from the date of this Agreement
and continuing until the Effective Time, ZiaSun agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or Section 5.2 of the ZiaSun Disclosure Schedule or to the extent that
ZiaSun shall otherwise consent in writing):
(a) Ordinary Course.
(i) ZiaSun and its Subsidiaries shall carry on their respective businesses
in the usual, regular and ordinary course in all material respects, in
substantially the same manner as heretofore conducted, and shall use their
reasonable best efforts to preserve intact their present lines of business,
maintain their rights and franchises and preserve their relationships with
customers, suppliers and others having business dealings with them to the
end that their ongoing businesses shall not be impaired in any material
respect at the Effective Time; provided, however, that no action by ZiaSun
or its Subsidiaries with respect to matters specifically addressed by any
other provision of this Section 5.2 shall be deemed a breach of this
Section 5.2(a)(i) unless such action would constitute a breach of one or
more of such other provisions of this Section 5.2. ZiaSun shall promptly
notify Telescan of any event or occurrence or emergency not in the ordinary
course of
51
business of ZiaSun and any event which would reasonably be expected to have
a Material Adverse Effect on ZiaSun.
(ii) Other than in connection with acquisitions permitted by Section 5.1(i)
or investments permitted by Section 5.1(k), ZiaSun shall not, and shall not
permit any of its Subsidiaries to, (A) enter into any new material line of
business or (B) incur or commit to any capital expenditures or any
obligations or liabilities in connection therewith other than capital
expenditures and obligations or liabilities in connection therewith
incurred or committed to in the ordinary course of business consistent with
past practices.
(b) Stock Options. ZiaSun shall not, and shall not permit any of its
Subsidiaries to, accelerate, amend or change the period of exercisability of any
outstanding ZiaSun Stock Options or stock subject to vesting, or authorize cash
payments in exchange for any such outstanding options.
(c) Intellectual Property. ZiaSun shall not, and shall not permit any of
its Subsidiaries to, transfer to any Person any rights to any ZiaSun
Intellectual Property (other than end-user licenses granted to customers of
ZiaSun in the ordinary course of business).
(d) Marketing Rights. ZiaSun shall not, and shall not permit any of its
Subsidiaries to, enter into or amend any material agreements pursuant to which
any other party is granted marketing, distribution, or similar rights of any
type or scope with respect to any products of ZiaSun except in the ordinary
course of business consistent with past practices.
(e) Amendments to Agreements. ZiaSun shall not, and shall not permit any of
its Subsidiaries to, amend or otherwise modify (or agree to do so), except in
the ordinary course of business, or materially violate the terms of, any of the
agreements set forth or described in the ZiaSun Disclosure Schedule.
(f) Dividends; Changes in Share Capital. ZiaSun shall not, and shall not
permit any of its Subsidiaries to, and shall not propose to, (i) declare or pay
any dividends on or make other distributions in respect of any of its capital
stock, except for any such dividend or distribution by a wholly owned Subsidiary
of ZiaSun, (ii) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock or (iii) repurchase,
redeem or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock (or options,
warrants, or other rights exercisable therefor).
(g) Issuance of Securities. ZiaSun shall not, and shall not permit any of
its Subsidiaries to, issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class or
52
any securities convertible into or exercisable for, or any rights, warrants,
calls or options to acquire, any such shares, or enter into any commitment,
arrangement, undertaking or agreement with respect to any of the foregoing,
other than (i) the issuance of ZiaSun Common Stock upon the exercise of ZiaSun
Stock Options in accordance with their present terms or pursuant to ZiaSun Stock
Options or other stock based awards granted pursuant to clause (ii) below, (ii)
the granting of ZiaSun Stock Options or other stock based awards of or to
acquire shares of ZiaSun Common Stock granted under Benefit Plans outstanding on
the date hereof in the ordinary course of business consistent with past
practices, (iii) issuances by a wholly owned Subsidiary of ZiaSun of capital
stock to such Subsidiary's parent or another wholly owned Subsidiary of ZiaSun.
(h) Governing Documents. Except to the extent required to comply with their
respective obligations hereunder or with applicable law, ZiaSun shall not amend
or propose to so amend its certificate of incorporation or bylaws.
(i) No Acquisitions. ZiaSun shall not, and shall not permit any of its
Subsidiaries to, acquire or agree to acquire by merger or consolidation, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets (excluding the acquisition of assets used
in the operations of the business of ZiaSun and its Subsidiaries in the ordinary
course, which assets do not constitute a business unit, division or all or
substantially all of the assets of the transferor) in excess of $500,000
individually or in the aggregate; provided, however, that the foregoing shall
not prohibit (x) internal reorganizations or consolidations involving existing
Subsidiaries of ZiaSun or (y) the creation of new Subsidiaries of ZiaSun
organized to conduct or continue activities otherwise permitted by this
Agreement.
(j) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of ZiaSun, (ii) dispositions
referred to in the ZiaSun SEC Reports filed prior to the date of this Agreement,
(iii) as may be required by or in conformance with law or regulation in order to
permit or facilitate the consummation of the transactions contemplated hereby or
(iv) as disclosed in Section 5.2(j) of the ZiaSun Disclosure Schedule, ZiaSun
shall not, and shall not permit any of its Subsidiaries to, sell, lease or
otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of
its assets (including capital stock of Subsidiaries of ZiaSun but excluding
inventory in the ordinary course of business), if the fair market value of the
total consideration (including the value of the indebtedness acquired or
assumed) therefor exceeds $50,000.
(k) Investments; Indebtedness. ZiaSun shall not, and shall not permit any
of its Subsidiaries to, (i) make any loans, advances or capital contributions
to, or investments in, any other Person in excess of $10,000, other than (x)
loans or investments by ZiaSun or a Subsidiary of ZiaSun to or in ZiaSun or any
Subsidiary of ZiaSun, (y) employee loans or advances made in the ordinary course
of business or (z) in the ordinary course of business consistent with past
practices which are not, individually or in the aggregate, material to
53
ZiaSun and its Subsidiaries taken as a whole or (ii) without regard to anything
contained in the ZiaSun Disclosure Schedule, incur any indebtedness for borrowed
money or guarantee any such indebtedness of another Person, issue or sell any
debt securities or warrants or other rights to acquire any debt securities of
ZiaSun or any of its Subsidiaries, guarantee any debt securities of another
Person, enter into any "keep well" or other agreement to maintain any financial
statement condition of another Person (other than any wholly owned Subsidiary)
or enter into any arrangement having the economic effect of any of the foregoing
in excess of $2,500,000.
(l) Tax-Free Qualification. ZiaSun shall use its reasonable best efforts
not to, and shall use its reasonable best efforts not to permit any of its
Subsidiaries to, take any action (including any action otherwise permitted by
this Section 5.2) that would prevent or impede the Mergers from qualifying as
exchanges under Section 351 of the Code and the ZiaSun Merger from qualifying as
a reorganization under Section 368 of the Code.
(m) Compensation. Except (x) as required by law or by the terms of any
agreement currently in effect between ZiaSun or any Subsidiary of ZiaSun and any
executive officer or employee thereof or (y) in the ordinary course of business
consistent with past practices, ZiaSun shall not increase the amount of
compensation of any director, executive officer or key employee of ZiaSun or any
Subsidiary of ZiaSun or grant any severance or termination pay to any director
or officer or to any other employee of ZiaSun or any Subsidiary of ZiaSun, or
make any increase in or commitment to increase any employee benefits, issue any
additional ZiaSun Stock Options, adopt or amend or make any commitment to adopt
or amend any Benefit Plan or make any contribution, other than regularly
scheduled contributions, to any ZiaSun Benefit Plan.
(n) Accounting Methods; Income Tax Elections. Except as disclosed in ZiaSun
SEC Reports filed prior to the date of this Agreement, or as required by a
Governmental Entity, ZiaSun shall not change its methods of accounting, except
as required by changes in GAAP as concurred in by ZiaSun's independent public
accountants. ZiaSun shall not (i) change its fiscal year or (ii) make any tax
election that, individually or in the aggregate, would have a Material Adverse
Effect on ZiaSun.
(o) Certain Agreements and Arrangements. ZiaSun shall not, and shall not
permit any of its Subsidiaries to, enter into any agreements or arrangements
that limit or otherwise restrict ZiaSun or any of its Subsidiaries or any of
their respective affiliates or any successor thereto, or that could, after the
Effective Time, limit or restrict Telescan or any of its affiliates (including
Holdco) or any successor thereto, from engaging or competing in any line of
business or in any geographic area which agreements or arrangements,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Holdco and its Subsidiaries, taken together, after
giving effect to the Mergers.
(p) Satisfaction of Closing Conditions. Except as required by law, ZiaSun
shall not, and shall not permit any of its Subsidiaries to, take any action
that would, or would reasonably be expected to, result in (i) any of the
54
conditions to the Mergers set forth in Article VII not being satisfied or (ii) a
material delay in the satisfaction of such conditions.
(q) Write-Offs. ZiaSun shall not, and shall not permit any of its
Subsidiaries to, and shall not propose to, revalue any of ZiaSun's assets,
including without limitation writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business.
(r) Strategic Alliances. ZiaSun shall not, and shall not permit any of its
Subsidiaries to, and shall not propose to, enter into any strategic alliance,
joint venture, partnership, joint development or joint marketing agreement with
any Person.
(s) Other Actions. ZiaSun shall not, and shall not permit any of its
Subsidiaries to, and shall not propose to agree orally or in writing or
otherwise to take, any action that would reasonably be expected to cause a
Material Adverse Effect on ZiaSun or Holdco.
(t) No Related Actions. ZiaSun will not, and will not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing (except for clause
(a)(i) of this Section 5.2).
5.3. Rescission Offer. ZiaSun shall offer to rescind the transaction
pursuant to the Acquisition Agreement and Plan of Reorganization, dated as of
September 8, 2000, among ZiaSun and the selling shareholders party thereto. Such
offer to rescind shall be made to each such selling shareholder and shall be
registered with the SEC.
5.4. Governmental Filings. Each party shall (a) confer on a reasonable
basis with the other and (b) report to the other (to the extent permitted by law
or regulation or any applicable confidentiality agreement) on operational
matters. ZiaSun and Telescan shall file all reports required to be filed by each
of them with the SEC (and all other Governmental Entities) between the date of
this Agreement and the Effective Time and shall, if requested by the other party
and to the extent permitted by law or regulation or any applicable
confidentiality agreement, deliver to the other party copies of all such
reports, announcements and publications promptly after such request.
ARTICLE VI ADDITIONAL AGREEMENTS
6.1. Preparation of Proxy Statement; Stockholders Meetings. (a) As promptly
as reasonably practicable following the date hereof, Telescan and ZiaSun shall
cooperate in preparing and each shall cause to be filed with the SEC mutually
acceptable proxy materials which shall constitute the joint proxy
statement/prospectus relating to the matters to be submitted to the Telescan
stockholders at the Telescan Stockholders Meeting and the matters to be
submitted to the ZiaSun stockholders at the ZiaSun Stockholders Meeting (such
proxy statement/prospectus, and any amendments or supplements thereto, the
"Joint Proxy Statement/Prospectus") and Holdco shall prepare and file with the
SEC a registration statement on Form S-4 with respect to the issuance of Holdco
Common Stock in the Mergers (such Form S-4, and any amendments or
55
supplements thereto, the "Form S-4"). The Joint Proxy Statement/Prospectus will
be included as a prospectus in and will constitute a part of the Form S-4 as
Holdco's prospectus. Each of Telescan and ZiaSun shall use reasonable best
efforts to have the Joint Proxy Statement/Prospectus cleared by the SEC and the
Form S-4 declared effective by the SEC and to keep the Form S-4 effective as
long as is necessary to consummate the Mergers and the transactions contemplated
hereby. Telescan and ZiaSun shall, as promptly as practicable after receipt
thereof, provide the other party copies of any written comments and advise the
other party of any oral comments with respect to the Joint Proxy
Statement/Prospectus or Form S-4 received from the SEC. The parties shall
cooperate and provide the other with a reasonable opportunity to review and
comment on any amendment or supplement to the Joint Proxy Statement/Prospectus
and the Form S-4 prior to filing such with the SEC, and will provide each other
with a copy of all such filings made with the SEC. Notwithstanding any other
provision herein to the contrary, no amendment or supplement (including by
incorporation by reference) to the Joint Proxy Statement/Prospectus or the Form
S-4 shall be made without the approval of both parties, which approval shall not
be unreasonably withheld or delayed; provided that with respect to documents
filed by a party which are incorporated by reference in the Form S-4 or Joint
Proxy Statement/Prospectus, this right of approval shall apply only with respect
to information relating to the other party or its business, financial condition
or results of operations. Telescan will use reasonable best efforts to cause the
Joint Proxy Statements/Prospectus to be mailed to Telescan's stockholders, and
ZiaSun will use reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to ZiaSun's stockholders, in each case as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Holdco shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or to file a
general consent to service of process) required to be taken under any applicable
state securities laws in connection with the Mergers and each of ZiaSun and
Telescan shall furnish all information concerning it and the holders of its
capital stock as may be reasonably requested in connection with any such action.
Each party will advise the other party, promptly after it receives notice
thereof, of the time when the Form S-4 has become effective, the issuance of any
stop order, the suspension of the qualification of the Holdco Common Stock
issuable in connection with the Mergers for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Joint Proxy
Statement/Prospectus or the Form S-4. If at any time prior to the Effective Time
any information relating to Telescan or ZiaSun, or any of their respective
affiliates, officers or directors, should be discovered by Telescan or ZiaSun
which should be set forth in an amendment or supplement to any of the Form S-4
or the Joint Proxy Statement/Prospectus so that any of such documents would not
include any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers such information
shall promptly notify the other party and, to the extent required by law, rules
or
56
regulations, an appropriate amendment or supplement describing such information
shall be promptly filed with the SEC and disseminated to the stockholders of
Telescan and ZiaSun.
(b) ZiaSun shall duly take all lawful action to call, give notice of,
convene and hold a meeting of its stockholders on a date determined in
accordance with the mutual agreement of ZiaSun and Telescan (the "ZiaSun
Stockholders Meeting") for the purpose of obtaining the Required ZiaSun Vote
with respect to the transactions contemplated by this Agreement and shall take
all lawful action to solicit the adoption of this Agreement by the Required
ZiaSun Vote; and the Board of Directors of ZiaSun shall recommend adoption of
this Agreement by the stockholders of ZiaSun to the effect as set forth in
Section 4.2(f) (the "ZiaSun Recommendation"), and shall not, unless Telescan
makes a Change in the Telescan Recommendation, (x) withdraw, modify or qualify
(or propose to withdraw, modify or qualify) in any manner adverse to Telescan
such recommendation or (y) take any action or make any statement (other than any
action described in the foregoing clause (x)) in connection with the ZiaSun
Stockholders Meeting inconsistent with such recommendation (collectively, a
"Change in the ZiaSun Recommendation"); provided, however, any action or
statement under clause (y) will not be deemed a Change in the ZiaSun
Recommendation provided (I) such action or statement is taken or made pursuant
to advice from Jones, Waldo, Xxxxxxxx & XxXxxxxxx, counsel to ZiaSun, to the
effect that such action or statement is required by applicable law, (II) if a
ZiaSun Public Proposal (as defined in Section 8.2(b)) has been made and not
rescinded, such action or statement shall not relate to such ZiaSun Public
Proposal other than any factual statement required by any regulatory authority
(including the SEC) and shall in any event include a rejection of such ZiaSun
Public Proposal and (III) such action or statement also includes a reaffirmation
of the ZiaSun Board of Directors' approval of the Mergers and the other
transactions contemplated hereby and recommendation to the ZiaSun stockholders
to adopt this Agreement; provided further, however, that the Board of Directors
of ZiaSun may make a Change in the ZiaSun Recommendation pursuant to Section
6.5. Notwithstanding any Change in the ZiaSun Recommendation, this Agreement
shall be submitted to the stockholders of ZiaSun at the ZiaSun Stockholders
Meeting for the purpose of adopting this Agreement and nothing contained herein
shall be deemed to relieve ZiaSun of such obligation.
(c) Telescan shall duly take all lawful action to call, give notice of,
convene and hold a meeting of its stockholders on a date determined in
accordance with the mutual agreement of Telescan and ZiaSun (the "Telescan
Stockholders Meeting") for the purpose of obtaining the Required Telescan Vote
with respect to the transactions contemplated by this Agreement and shall take
all lawful action to solicit the adoption of this Agreement by the Required
Telescan Vote, and the Board of Directors of Telescan shall recommend adoption
of this Agreement by the stockholders of Telescan to the effect as set forth in
Section 4.1(f) (the "Telescan Recommendation"), and shall not, unless ZiaSun
makes a Change in the ZiaSun Recommendation, (x) withdraw, modify or qualify (or
propose to withdraw, modify or qualify) in any manner adverse to ZiaSun such
recommendation or (y) take any action or make any statement (other
57
than any action described in the foregoing clause (x)) in connection with the
Telescan Stockholders Meeting inconsistent with such recommendation
(collectively, a "Change in the Telescan Recommendation"); provided, however,
any action or statement under clause (y) will not be deemed a Change in the
Telescan Recommendation provided (I) such action or statement is taken or made
pursuant to advice from Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel to Telescan, to the
effect that such action or statement is required by applicable law, (II) if an
Telescan Public Proposal (as defined in Section 8.2(c)) has been made and not
rescinded, such action or statement shall not relate to such Telescan Public
Proposal other than any factual statement required by any regulatory authority
(including the SEC) and shall in any event include a rejection of such Telescan
Public Proposal and (III) such action or statement also includes a reaffirmation
of the Telescan Board of Directors' approval of the Mergers and the other
transactions contemplated hereby and recommendation to the Telescan stockholders
to adopt this Agreement; provided further, however, that the Board of Directors
of Telescan may make a Change in the Telescan Recommendation pursuant to Section
6.5. Notwithstanding any Change in the Telescan Recommendation, this Agreement
shall be submitted to the stockholders of Telescan at the Telescan Stockholders
Meeting for the purpose of adopting this Agreement and nothing contained herein
shall be deemed to relieve Telescan of such obligation.
6.2. Holdco Board of Directors; Executive Officers. At or prior to the
Effective Time, each party hereto will take all action necessary to (i) cause
the Board of Directors of Holdco and each committee thereof as of the Effective
Time to be comprised in accordance with Exhibit 6.2 hereto and (ii) cause the
individuals listed in Exhibit 6.2 hereto to be appointed as officers of Holdco
as of the Effective Time in accordance with Exhibit 6.2 hereto. Each such
director and officer shall remain in office until the next election of the
directors of Holdco which shall not be prior to April 2, 2002, provided,
however, any such director may be removed for cause as set forth in the Holdco
Bylaws. In the event that any of the four directors of Holdco identified on
Exhibit 6.2 as having been nominated by ZiaSun or any of the three directors of
Holdco identified on Exhibit 6.2 as having been nominated by Telescan are
unwilling or unable to continue to serve in such capacity during the period
following the Effective Time and prior to the first election if the Board of
Directors of Holdco, either due to death, disability, resignation or removal for
cause, such vacating director shall be replace by: (A) in the case of a vacating
director who was nominated by ZiaSun, by the remaining directors of Holdco who
were nominated by ZiaSun as set forth on Exhibit 6.2 hereto or appointed
pursuant to this clause (A) of this Section 6.2 and (B) in the case of a
vacating director who was nominated by Telescan, by the remaining directors of
Holdco who were nominated by Telescan as set forth on Exhibit 6.2 hereto or
appointed pursuant to this clause (B) of this Section 6.2. In the event the
holders of the Series A Preferred Stock of Holdco elect an additional director
to the Board of Directors of Holdco pursuant to Section B9(b) of Article IV of
the Holdco Charter, Holdco shall increase the size of the Board of Directors by
an additional director (above that required to accommodate the rights of the
holders of the Series A Preferred Stock of Holdco), which vacancy shall be
filled by a person selected by the directors of Holdco who were nominated by
ZiaSun as set forth on Schedule 6.2 hereto or appointed pursuant to clause (A)
of the immediately preceding sentence of this Section 6.2
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6.3. Access to Information. Upon reasonable notice, each party shall (and
shall cause its Subsidiaries to) afford to the officers, employees, accountants,
counsel, financial advisors and other representatives of the other party
reasonable access during normal business hours, during the period prior to the
Effective Time, to all its properties, books, contracts, commitments, records,
officers and employees and, during such period, such party shall (and shall
cause its Subsidiaries to) furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of federal, state or local laws (other than documents which such
party is not permitted to disclose under applicable law), and (b) all other
information concerning it and its business, properties and personnel as such
other party may reasonably request. The parties will hold any such information
obtained pursuant to this Section 6.3 in confidence in accordance with, and
shall otherwise be subject to, the provisions of the confidentiality letter
dated January 12, 2001, between ZiaSun and Telescan (the "Confidentiality
Agreement"), which Confidentiality Agreement shall continue in full force and
effect. Any investigation by either of Telescan or ZiaSun shall not affect the
representations and warranties of the other.
6.4. Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each party will use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under this Agreement and applicable laws and regulations to
consummate the Mergers and the other transactions contemplated by this Agreement
as soon as practicable after the date hereof, including (i) preparing and filing
as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings, tax ruling requests and other
documents and to obtain as promptly as practicable all consents, waivers,
licenses, orders, registrations, approvals, permits, rulings, authorizations and
clearances necessary or advisable to be obtained under any of the parties'
agreements, contracts, licenses or leases in order to preserve the benefits
thereunder or otherwise in connection with the Merger and from any third party
and/or any Governmental Entity in order to consummate the Mergers or any of the
other transactions contemplated by this Agreement (collectively, the "Required
Approvals"), (ii) taking all reasonable steps as may be necessary to obtain all
Required Approvals and (iii) the satisfaction of the conditions hereunder.
6.5. Acquisition Proposals. Without limitation on any of such party's other
obligations under this Agreement (including under Article V hereof), each of
Telescan and ZiaSun agrees that neither it nor any of its Subsidiaries nor any
of the officers and directors of it or its Subsidiaries shall, and that it shall
cause its and its Subsidiaries' employees, agents and representatives (including
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, (i) initiate, solicit, encourage
or knowingly facilitate any inquiries or the making of any proposal or offer
with respect to, or a transaction to effect, a merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving it or any of its Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC), or any
purchase or sale of 20% or more of the consolidated assets (including without
limitation stock of its Subsidiaries) of such party and its Subsidiaries, taken
as a whole, or any purchase or sale of, or tender or exchange offer for, the
equity securities of such party that, if
59
consummated, would result in any Person (or the stockholders of such Person)
beneficially owning securities representing 20% or more of the total voting
power of such party (or of the surviving parent entity in such transaction) or
any of its Significant Subsidiaries (any such proposal, offer or transaction
(other than a proposal or offer made by the other party or an affiliate thereof)
being hereinafter referred to as an "Acquisition Proposal"), (ii) have any
discussion with or provide any confidential information or data to any Person
relating to an Acquisition Proposal, or engage in any negotiations concerning an
Acquisition Proposal, or knowingly facilitate any effort or attempt to make or
implement an Acquisition Proposal, (iii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal or (iv) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement or propose publicly or
agree to do any of the foregoing related to any Acquisition Proposal.
Notwithstanding anything in this Agreement to the contrary, each of
Telescan and ZiaSun or its Board of Directors shall be permitted to (A) to the
extent applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal, (B) effect a Change in the
Telescan or ZiaSun Recommendation, as the case may be, or (C) engage in any
discussions or negotiations with, or provide any information to, any Person in
response to an unsolicited bona fide written Acquisition Proposal by any such
Person, if and only to the extent that, in any such case referred to in clause
(B) or (C), (i) its Stockholders Meeting shall not have occurred, (ii) (x) in
the case of clause (B) above, it has received an unsolicited bona fide written
Acquisition Proposal from a third party and its Board of Directors concludes in
good faith that such Acquisition Proposal constitutes a Superior Proposal (as
defined below) and (y) in the case of clause (C) above, its Board of Directors
concludes in good faith that there is a reasonable likelihood that such
Acquisition Proposal could constitute a Superior Proposal, (iii) in the case of
clause (B) or (C) above, its Board of Directors, after consultation with outside
counsel, determines in good faith that the failure to take such action would
violate its fiduciary duties under applicable law, (iv) prior to providing any
information or data to any Person in connection with an Acquisition Proposal by
any such Person, its Board of Directors receives from such Person an executed
confidentiality agreement having provisions that are customary in such
agreements, as advised by counsel, provided that if such confidentiality
agreement contains provisions that are less restrictive than the comparable
provision, or omits restrictive provisions, contained in the Confidentiality
Agreement, then the Confidentiality Agreement will be deemed to be amended to
contain only such less restrictive provisions or to omit such restrictive
provisions, as the case may be, and (v) prior to providing any information or
data to any Person or entering into discussions or negotiations with any Person,
such party notifies the other party promptly of such inquiries, proposals or
offers received by, any such information requested from, or any such discussions
or negotiations sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any inquiries, proposals or
offers. Each of Telescan and ZiaSun agrees that it will promptly keep the other
party informed of the status and terms of any such proposals or offers and the
status and terms of any such discussions or negotiations. Each of Telescan and
ZiaSun agrees that it will, and will cause its officers, directors and
representatives to, immediately cease and cause to be terminated any activities,
discussions or negotiations existing as of the date of this Agreement with any
parties conducted heretofore with respect to any
60
Acquisition Proposal. Each of Telescan and ZiaSun agrees that it will use
reasonable best efforts to promptly inform its directors, officers, key
employees, agents and representatives of the obligations undertaken in this
Section 6.5. Nothing in this Section 6.5 shall (x) permit Telescan or ZiaSun to
terminate this Agreement (except as specifically provided in Article VIII
hereof) or (y) affect any other obligation of Telescan or ZiaSun under this
Agreement. Neither Telescan nor ZiaSun shall submit to the vote of its
stockholders any Acquisition Proposal other than the Telescan Merger or ZiaSun
Merger, respectively. "Superior Proposal" means with respect to Telescan or
ZiaSun, as the case may be, a bona fide written proposal made by a Person other
than either such party which is (I) for a merger, reorganization, consolidation,
share exchange, business combination, recapitalization or similar transaction
involving such party as a result of which the other party thereto or its
stockholders will own 40% or more of the combined voting power of the entity
surviving or resulting from such transaction (or the ultimate parent entity
thereof) and (II) is on terms which the Board of Directors of such party in good
faith concludes (following receipt of the advice of its financial advisors and
outside counsel), taking into account, among other things, all legal, financial,
regulatory and other aspects of the proposal and the Person making the proposal,
(x) would, if consummated, result in a transaction that is more favorable to its
stockholders (in their capacities as stockholders), from a financial point of
view, than the transactions contemplated by this Agreement and (y) is reasonably
capable of being completed.
6.6. Fees and Expenses. Subject to Section 8.2, whether or not the Mergers
are consummated, all Expenses (as defined below) incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such Expenses, except Expenses incurred in connection with the
filing, printing and mailing of the Joint Proxy Statement/Prospectus and Form
S-4 shall be paid 50% by ZiaSun and 50% by Telescan. "Expenses" includes all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the Voting Agreements and the transactions
contemplated hereby and thereby, including the preparation, printing, filing and
mailing of the Joint Proxy Statement/Prospectus and Form S-4 and the
solicitation of stockholder approvals and all other matters related to the
transactions contemplated hereby and thereby. The parties hereto shall cooperate
with each other in preparing, executing and filing any Tax Returns with respect
to property or transfer taxes.
6.7. Directors' and Officers' Indemnification and Insurance.
(a) Holdco shall (i) indemnify and hold harmless, and provide advancement
of expenses to, all past and present directors, officers and employees of ZiaSun
and its Subsidiaries (in all of their capacities) (a) to the same extent such
persons are indemnified or have the right to advancement of expenses as of the
date of this Agreement by ZiaSun pursuant to ZiaSun's certificate of
incorporation, bylaws and indemnification agreements, if any, in existence on
the date hereof with any directors, officers and employees of ZiaSun and its
Subsidiaries and (b) without limitation to clause (a), to the fullest extent
permitted by law, in each case for acts or omissions occurring
61
at or prior to the Effective Time (including for acts or omissions occurring in
connection with the approval of this Agreement and the consummation of the
transactions contemplated hereby), (ii) include and cause to be maintained in
effect in Holdco's (or any successor's) certificate of incorporation and bylaws
after the Effective Time, provisions regarding elimination of liability of
directors, indemnification of officers, directors and employees and advancement
of expenses which are, in the aggregate, no less advantageous to the intended
beneficiaries than the corresponding provisions contained in the current
certificate of incorporation and bylaws of ZiaSun and (iii) cause to be
maintained for a period of six years after the Effective Time the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by ZiaSun (provided that Holdco (or any successor) may
substitute therefor one or more policies of at least the same coverage and
amounts containing terms and conditions which are, in the aggregate, no less
advantageous to the insured) with respect to claims arising from facts or events
that occurred on or before the Effective Time; provided, however, that in no
event shall Holdco be required to expend in any one year an amount in excess of
200% of the annual premiums currently paid by ZiaSun for such insurance; and,
provided further that if the annual premiums of such insurance coverage exceed
such amount, Holdco shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding such amount. The obligations of
Holdco under this Section 6.7(a) shall not be terminated or modified in such a
manner as to adversely affect any indemnitee to whom this Section 6.7(a) applies
without the consent of such affected indemnitee (it being expressly agreed that
the indemnitees to whom this Section 6.7(a) applies shall be third party
beneficiaries of this Section 6.7(a)).
(b) Holdco shall (i) indemnify and hold harmless, and provide advancement
of expenses to, all past and present directors, officers and employees of
Telescan and its Subsidiaries (in all of their capacities) (a) to the same
extent such persons are indemnified or have the right to advancement of expenses
as of the date of this Agreement by Telescan pursuant to Telescan's certificate
of incorporation, bylaws and indemnification agreements, if any, in existence on
the date hereof with any directors, officers and employees of Telescan and its
Subsidiaries and (b) without limitation to clause (a), to the fullest extent
permitted by law, in each case for acts or omissions occurring at or prior to
the Effective Time (including for acts or omissions occurring in connection with
the approval of this Agreement and the consummation of the transactions
contemplated hereby), (ii) include and cause to be maintained in effect in
Holdco's (or any successor's) certificate of incorporation and bylaws after the
Effective Time, provisions regarding elimination of liability of directors,
indemnification of officers, directors and employees and advancement of expenses
which are, in the aggregate, no less advantageous to the intended beneficiaries
than the corresponding provisions contained in the current certificate of
incorporation and bylaws of Telescan and (iii) cause to be maintained for a
period of six years after the Effective Time the current policies of directors'
and officers' liability insurance and fiduciary liability insurance maintained
by Telescan (provided that Holdco (or any successor) may substitute therefor one
or more policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured)
with respect to claims arising from facts or events that occurred on or before
the Effective Time; provided,
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however, that in no event shall Holdco be required to expend in any one year an
amount in excess of 200% of the annual premiums currently paid by Telescan for
such insurance; and, provided further that if the annual premiums of such
insurance coverage exceed such amount, Holdco shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount. The obligations of Holdco under this Section 6.7(b) shall not be
terminated or modified in such a manner as to adversely affect any indemnitee to
whom this Section 6.7(b) applies without the consent of such affected indemnitee
(it being expressly agreed that the indemnitees to whom this Section 6.7(b)
applies shall be third party beneficiaries of this Section 6.7(b)).
6.8. Public Announcements. Telescan and ZiaSun shall use reasonable best
efforts to develop a joint communications plan and each party shall use
reasonable best efforts (i) to ensure that all press releases and other public
statements with respect to the transactions contemplated hereby shall be
consistent with such joint communications plan and (ii) unless otherwise
required by applicable law or by obligations pursuant to any listing agreement
with or rules of any securities exchange, to consult with each other before
issuing any press release or, to the extent practical, otherwise making any
public statement with respect to this Agreement or the transactions contemplated
hereby. In addition to the foregoing, except to the extent disclosed in or
consistent with the Joint Proxy Statement/Prospectus in accordance with the
provisions of Section 6.1, neither Telescan nor ZiaSun shall issue any press
release or otherwise make any public statement or disclosure concerning the
other party or the other party's business, financial condition or results of
operations without the consent of the other party, which consent shall not be
unreasonably withheld or delayed.
6.9. Listing of Shares of Holdco Common Stock. Holdco shall use its
reasonable best efforts to cause the shares of Holdco Common Stock to be issued
in the Merger and the shares of Holdco Common Stock to be reserved for issuance
upon exercise of the ZiaSun Stock Options and Telescan Stock Options to be
quoted on the NASDAQ, subject to official notice of issuance, prior to the
Closing Date.
6.10. Affiliates. (a) Not less than 45 days prior to the date of the
ZiaSun Stockholders Meeting, ZiaSun shall deliver to Telescan a letter
identifying all Persons who, in the judgment of ZiaSun, may be deemed at
the time this Agreement is submitted for adoption by the stockholders of
ZiaSun, "affiliates" of ZiaSun for purposes of Rule 145 under the
Securities Act and applicable SEC rules and regulations, and such list
shall be updated as necessary to reflect changes from the date thereof.
ZiaSun shall use reasonable best efforts to cause each Person identified on
such list to deliver to Holdco not less than 30 days prior to the Effective
Time, a written agreement substantially in the form attached as Exhibit
6.10 hereto (an "Affiliate Agreement").
(b) Not less than 45 days prior to the date of the Telescan
Stockholders Meeting, Telescan shall deliver to ZiaSun a letter identifying
all Persons who, in the judgment of Telescan, may be deemed at the time
this Agreement is submitted for adoption by the stockholders of Telescan,
"affiliates" of Telescan for purposes of Rule 145 under the
63
Securities Act and applicable SEC rules and regulations, and such list
shall be updated as necessary to reflect changes from the date thereof.
Telescan shall use reasonable best efforts to cause each Person identified
on such list to deliver to Holdco not less than 30 days prior to the
Effective Time, an Affiliate Agreement.
6.11. Section 16 Matters. Prior to the Effective Time, Telescan and ZiaSun
shall take all such steps as may be required to cause any dispositions of ZiaSun
Common Stock or Telescan Common Stock (including derivative securities with
respect to ZiaSun Common Stock or Telescan Common Stock) or acquisitions of
Holdco Common Stock (including derivative securities with respect to Holdco
Common Stock) resulting from the transactions contemplated by Article I or
Article II of this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to Telescan and
ZiaSun to be exempt under Rule 16b-3 promulgated under the Exchange Act.
ARTICLE VII CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation to Effect its Respective Merger.
The respective obligations of ZiaSun and Telescan to effect the ZiaSun Merger
and Telescan Merger are subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Stockholder Approval. (i) ZiaSun shall have obtained the Required
ZiaSun Vote in connection with the adoption of this Agreement by the
stockholders of ZiaSun and (ii) Telescan shall have obtained the Required
Telescan Vote in connection with the adoption of this Agreement by the
stockholders of Telescan.
(b) No Injunctions or Restraints, Illegality. No laws shall have been
adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Entity of competent jurisdiction shall be in effect, having the effect of
making the Mergers illegal or otherwise prohibiting consummation of the
Mergers.
(c) NASDAQ Listing. The shares of Holdco Common Stock to be issued in
the Mergers and such other shares of Holdco Common Stock to be reserved for
issuance in connection with the Mergers shall have been approved for
listing on the NASDAQ, subject to official notice of issuance.
(d) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Form S-4 shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) Appraisal Rights. Stockholders of ZiaSun shall not have perfected
their rights of appraisal within the meaning of Chapter 92A of NRS with
respect to more than 1,000,000 shares of ZiaSun Common Stock.
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7.2. Additional Conditions to Obligations of Telescan. The obligations of
Telescan to effect the Telescan Merger are subject to the satisfaction, or
waiver by Telescan, on or prior to the Closing Date of the following
additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of ZiaSun set forth in this Agreement, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect, shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent that such representations and warranties
speak as of another date, in which case such representations and warranties
shall be true and correct as of such other date), except where the failure
of such representations and warranties to be true and correct would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on ZiaSun; and Telescan shall have received a certificate of
a senior executive officer and a senior financial officer of ZiaSun to such
effect.
(b) Performance of Obligations of ZiaSun. ZiaSun shall have performed
or complied with all agreements and covenants required to be performed by
it under this Agreement at or prior to the Closing Date that are qualified
as to materiality or Material Adverse Effect and shall have performed or
complied in all material respects with all other material agreements and
covenants required to be performed by it under this Agreement at or prior
to the Closing Date that are not so qualified, and Telescan shall have
received a certificate of a senior executive officer and a senior financial
officer of ZiaSun to such effect.
(c) Tax Opinion. Telescan shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel to Telescan, on the Closing Date, a written opinion to
the effect that the Mergers, taken together, will be treated for federal
income tax purposes as exchanges to which Section 351 of the Code applies.
In rendering such opinion, counsel to Telescan shall be entitled to rely
upon information, representations and assumptions provided by Holdco,
Telescan and ZiaSun substantially in the form of Exhibits 7.2(c)(1),
7.2(c)(2) and 7.2(c)(3) (allowing for such amendments to the
representations as counsel to Telescan deems reasonably necessary).
(d) Governmental and Regulatory and Other Consents and Approvals.
Other than the filing provided for by Section 7.1(c), all consents,
approvals, and actions of, filings with and notices to any Governmental
Entity or any other public or private third parties required of ZiaSun,
Telescan or any of their Subsidiaries to consummate the Merger and the
other matters contemplated hereby, the failure of which to be obtained or
taken could be reasonably expected to have a Material Adverse Effect on
Holdco or to materially diminish the value of the transactions contemplated
by this Agreement to Telescan, or on the ability of ZiaSun and Telescan to
consummate the transactions contemplated hereby, shall have been obtained,
all in form and substance reasonably satisfactory to Telescan.
65
(e) Material Adverse Change. There shall not have occurred any
Material Adverse Effect on ZiaSun since the date of this Agreement.
7.3. Additional Conditions to Obligations of ZiaSun. The obligations of
ZiaSun to effect the ZiaSun Merger are subject to the satisfaction, or waiver by
ZiaSun, on or prior to the Closing Date of the following additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Telescan set forth in this Agreement, disregarding all
qualifications and exceptions contained therein relating to materiality or
Material Adverse Effect, shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent that such representations and warranties
speak as of another date, in which case such representations and warranties
shall be true and correct as of such other date), except where the failure
of such representations and warranties to be true and correct would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Telescan; and ZiaSun shall have received a certificate of
a senior executive officer and a senior financial officer of Telescan to
such effect.
(b) Performance of Obligations of Telescan. Telescan shall have
performed or complied with all agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that
are qualified as to materiality or Material Adverse Effect and shall have
performed or complied in all material respects with all other material
agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified, and
ZiaSun shall have received a certificate of a senior executive officer and
a senior financial officer of Telescan to such effect.
(c) Tax Opinion. ZiaSun shall have received from Jones, Waldo,
Xxxxxxxx & XxXxxxxxx, counsel to ZiaSun, on the Closing Date, a written
opinion to the effect that the Mergers, taken together, will be treated for
federal income tax purposes as exchanges to which Section 351 of the Code
applies and that the ZiaSun Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code. In rendering such opinion,
counsel to ZiaSun shall be entitled to rely upon information,
representations and assumptions provided by Holdco, Telescan and ZiaSun
substantially in the form of Exhibits 7.2(c)(1), 7.2(c)(2) and 7.2(c)(3)
(allowing for such amendments to the representations as counsel to XxxXxx
xxxxx reasonably necessary).
(d) Governmental and Regulatory and Other Consents and Approvals.
Other than the filing provided for by Section 7.1(c), all consents,
approvals and actions of, filings with and notices to any Governmental
Entity or any other public or private third parties required of ZiaSun,
Telescan or any of their Subsidiaries to consummate the Merger and the
other matters contemplated hereby, the failure of which to be obtained or
taken could be reasonably expected to have a Material Adverse Effect on
Holdco or to materially diminish the value of the transactions contemplated
by this Agreement to Telescan, or
66
on the ability of ZiaSun and Telescan to consummate the transactions
contemplated hereby, shall have been obtained, all in form and substance
reasonably satisfactory to Telescan.
(e) Material Adverse Change. There shall not have occurred any
Material Adverse Effect on Telescan since the date of this Agreement.
ARTICLE VIII TERMINATION AND AMENDMENT
8.1. Termination. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, and except as provided below, whether before or
after approval of the matters presented in connection with the Mergers by the
stockholders of ZiaSun or Telescan:
(a) By mutual written consent of Telescan and ZiaSun;
(b) By either ZiaSun or Telescan, if the Effective Time shall not have
occurred on or before November 1, 2001 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement (including without limitation such party's
obligations set forth in Section 6.4) has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before the Termination
Date;
(c) By either ZiaSun or Telescan, if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action (which the
parties shall have used their reasonable best efforts to resist, resolve or
lift, as applicable, in accordance with Section 6.4) permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other
action shall have become final and nonappealable and which is necessary to
fulfill the conditions set forth in Section 7.1(b) or (c), as applicable;
provided, however, that the right to terminate this Agreement under this
Section 8.1(c) shall not be available to any party whose failure to comply
with Section 6.4 has been the cause of such action;
(d) By either ZiaSun or Telescan, if the approvals of the stockholders
of either Telescan or ZiaSun contemplated by this Agreement shall not have
been obtained by reason of the failure to obtain the required vote at a
duly held meeting of stockholders or of any adjournment thereof at which
the vote was taken;
(e) By Telescan, if ZiaSun shall have (i) failed to make the ZiaSun
Recommendation or effected a Change in the ZiaSun Recommendation (or
resolved to take any such action), whether or not permitted by the terms
hereof or (ii) materially breached its obligations under this Agreement by
reason of a failure to call the ZiaSun Stockholders Meeting in accordance
with Section 6.1(b) or a failure to prepare and mail to its stockholders
the Joint Proxy Statement/Prospectus in accordance with Section 6.1(a);
67
(f) By ZiaSun, if Telescan shall have (i) failed to make the Telescan
Recommendation or effected a Change in the Telescan Recommendation (or
resolved to take any such action), whether or not permitted by the terms
hereof, or (ii) materially breached its obligations under this Agreement by
reason of a failure to call the Telescan Stockholders Meeting in accordance
with Section 6.1(c) or a failure to prepare and mail to its stockholders
the Joint Proxy Statement/Prospectus in accordance with Section 6.1(a);
(g) By ZiaSun, if Telescan shall have breached or failed to perform
any of its representations, warranties, covenants or other agreements
contained in this Agreement, such that the conditions set forth in Section
7.3(a) or (b) are not capable of being satisfied on or before the
Termination Date; or
(h) By Telescan, if ZiaSun shall have breached or failed to perform
any of its representations, warranties, covenants or other agreements
contained in this Agreement, such that the conditions set forth in Section
7.2(a) or (b) are not capable of being satisfied on or before the
Termination Date.
(i) By ZiaSun, if (i) the board of directors of ZiaSun authorizes
ZiaSun to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and ZiaSun notifies Telescan in
writing that it intends to enter into such an agreement, attaching the most
current version of such agreement to such notice (which version shall be
updated on a current basis) and (ii) Telescan does not make, within three
Business Days (or, in the case of any update of such version with respect
to a given third party, other than the initial notification, one Business
Day) of receipt of ZiaSun's written notification of its intention to enter
into a binding agreement for a Superior Proposal, a non-revocable binding
offer that the board of directors of ZiaSun determines, in good faith, is
at least as favorable to the stockholders of ZiaSun as the Superior
Proposal; or
(j) By Telescan, if (i) the board of directors of Telescan authorizes
Telescan to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and Telescan notifies ZiaSun in
writing that it intends to enter into such an agreement, attaching the most
current version of such agreement to such notice (which version shall be
updated on a current basis) and (ii) ZiaSun does not make, within three
Business Days (or, in the case of any update of such version with respect
to a given third party, other than the initial notification, one Business
Day) of receipt of Telescan's written notification of its intention to
enter into a binding agreement for a Superior Proposal, a non-revocable
binding offer that the board of directors of Telescan determines, in good
faith, is at least as favorable to the stockholders of Telescan as the
Superior Proposal.
8.2. Effect of Termination.
(a) In the event of termination of this Agreement by either ZiaSun or
Telescan as provided in Section 8.1, this Agreement shall forthwith
68
become void and there shall be no liability or obligation on the part of
any of the parties or their respective officers or directors except with
respect to Section 4.1(k), Section 4.2(k), the second sentence of Section
6.3, Section 6.6, this Section 8.2 and Article IX, which provisions shall
survive such termination, and except that, notwithstanding anything to the
contrary contained in this Agreement, neither Telescan nor ZiaSun shall be
relieved or released from any liabilities or damages arising out of its
willful and material breach of this Agreement.
(b) If (A) (I) Telescan or ZiaSun shall terminate this Agreement
pursuant to Section 8.1(d) (provided that the basis for such termination is
the failure of ZiaSun's stockholders to adopt this Agreement) or pursuant
to Section 8.1(b) without the ZiaSun Stockholder Meeting having occurred,
(II) at any time after the date of this Agreement and before such
termination an Acquisition Proposal with respect to ZiaSun shall have been
publicly announced or otherwise communicated to the senior management,
Board of Directors or stockholders of ZiaSun (a "ZiaSun Public Proposal")
and (III) within twelve months of such termination ZiaSun or any of its
Subsidiaries enters into any definitive agreement with respect to, or
consummates, any Acquisition Proposal, (B) Telescan shall terminate this
Agreement pursuant to Section 8.1(e) or (C) ZiaSun shall terminate this
Agreement pursuant to Section 8.1(i); then ZiaSun shall promptly, but in no
event later than the date of such termination (or, if later, in the case of
clause (A), the date ZiaSun or its Subsidiary enters into such agreement
with respect to or consummates such Acquisition Proposal), pay Telescan an
amount equal to the ZiaSun Termination Fee, by wire transfer of immediately
available funds. The "ZiaSun Termination Fee" shall be an amount equal to
3% of the product of (x) the number of shares of ZiaSun Common Stock
outstanding as of the date hereof multiplied by (y) the last sale price of
ZiaSun Common Stock on the NASDAQ on the trading day immediately prior to
the date hereof (such product, the "ZiaSun Amount").
(c) If (A) (I) Telescan or ZiaSun shall terminate this Agreement
pursuant to Section 8.1(d) (provided that the basis for such termination is
the failure of Telescan's stockholders to adopt this Agreement) or pursuant
to Section 8.1(b) without the Telescan Stockholders Meeting having
occurred, (II) at any time after the date of this Agreement and before such
termination an Acquisition Proposal with respect to Telescan shall have
been publicly announced or otherwise communicated to the senior management,
Board of Directors or stockholders of Telescan (an "Telescan Public
Proposal") and (III) within twelve months of such termination Telescan or
any of its Subsidiaries enters into any definitive agreement with respect
to, or consummates, any Acquisition Proposal, (B) ZiaSun shall terminate
this Agreement pursuant to Section 8.1(f) or (C) Telescan shall terminate
this Agreement pursuant to Section 8.1(j); then Telescan shall promptly,
but in no event later than the date of such termination (or, if later, in
the case of clause (A), the date Telescan or its Subsidiary enters into
such agreement with respect to or consummates such Acquisition Proposal),
pay ZiaSun an amount equal to the Telescan Termination Fee, by wire
transfer of immediately available funds. The "Telescan Termination Fee"
shall be an amount equal to 3% of the product of (x) the number of shares
of Telescan Common Stock outstanding as of the date hereof multiplied by
(y) the last sale price
69
of Telescan Common Stock on the NASDAQ on the trading day immediately prior
to the date hereof (such product, the "Telescan Amount").
(d) The parties acknowledge that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, none of the parties would
enter into this Agreement; accordingly, if either Telescan or ZiaSun fails
promptly to pay any amount due pursuant to this Section 8.2, and, in order
to obtain such payment, the other party commences a suit which results in a
judgment against such party for the fee set forth in this Section 8.2, such
party shall pay to the other party its costs and expenses (including
attorneys' fees and expenses) in connection with such suit, together with
interest on the amount of the fee at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made notwithstanding the
provisions of Section 6.6. The parties agree that any remedy or amount
payable pursuant to this Section 8.2 shall not preclude any other remedy or
amount payable hereunder and shall not be an exclusive remedy for any
breach of any representation, warranty, covenant or agreement contained in
this Agreement.
8.3. Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Mergers
by the stockholders of ZiaSun and Telescan, but, after any such approval, no
amendment shall be made which by law or in accordance with the rules of any
relevant stock exchange requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
8.4. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE IX GENERAL PROVISIONS
9.1. Non-Survival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such representations, warranties,
covenants, agreements and other provisions, shall survive the Effective Time,
except for those covenants, agreements and other provisions contained herein
(including Section 6.7, Section 6.2 and Exhibit 6.2) that by their terms apply
or are to be performed in whole or in part after the Effective Time and this
Article.
9.2. Notices. All notices and other communications hereunder shall be in
70
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b)
on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service or (c) on the tenth Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:
(a) if to Telescan to:
Telescan, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxx X. Xxxxx
with copies to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
(b) if to ZiaSun to:
ZiaSun Technologies Inc.
000 Xxx Xxxxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Fax:
Attention: D. Xxxxx Xxxxx
with a copy to:
Jones, Waldo, Xxxxxxxx & XxXxxxxxx
0000 Xxxxx Xxxxx Xxxxx
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Wenthur & Chachas
0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
if to Holdco, Telescan Merger Sub or ZiaSun Merger Sub to each of the
parties entitled to receive notice pursuant to this Section 9.2 for Telescan and
ZiaSun.
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9.3. Interpretation. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to an Article
or Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." In addition, each Section of this Agreement is
qualified by the matters set forth in the Telescan Disclosure Schedule, the
ZiaSun Disclosure Schedule and the Schedules to this Agreement, as applicable,
to the extent specified therein and such other Sections of this Agreement to the
extent a matter in such Section is disclosed in such a way as to make its
relevance called for by such other Section readily apparent.
9.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
9.5. Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement, the Confidentiality Agreement and the exhibits and
schedules hereto and the other agreements and instruments of the parties
delivered in connection herewith constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 6.7 (which is intended to be for the benefit
of the Persons covered thereby).
9.6. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware (without giving effect to
choice of law principles thereof).
9.7. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
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9.8. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole
or in part (whether by operation of law or otherwise), without the prior written
consent of the other parties, and any attempt to make any such assignment
without such consent shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
9.9. Submission to Jurisdiction; Waivers. Each of the parties to this
Agreement irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by any other party hereto or its successors or assigns may be
brought and determined in the Chancery or other Courts of the State of Delaware,
and each party hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
party hereby irrevocably waives, and agrees not to assert, by way of motion, as
a defense, counterclaim or otherwise, in any action or proceeding with respect
to this Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure to
lawfully serve process (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
(c) to the fullest extent permitted by applicable law, that (i) the suit, action
or proceeding in any such court is brought in an inconvenient forum, (ii) the
venue of such suit, action or proceeding is improper and (iii) this Agreement,
or the subject matter hereof, may not be enforced in or by such courts and (d)
any right to a trial by jury.
9.10. Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
9.11. Definitions. As used in this Agreement:
(a) "beneficial ownership" or "beneficially own" shall have the
meaning under Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
(b) "Benefit Plans" means, with respect to any Person, each employee
benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
any bonus, deferred compensation, stock bonus, stock purchase, restricted
stock, stock option, employment, termination, stay agreement or bonus,
change in control and severance plan, program, arrangement and contract) in
effect on the date of this Agreement or disclosed on the ZiaSun Disclosure
Schedule or the Telescan Disclosure Schedule, as the case may be, to which
such Person or its Subsidiary is a
73
party, which is maintained or contributed to by such Person, or with
respect to which such Person could incur material liability under Sections
4069, 4201 or 4212(c) of ERISA.
(c) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(d) "Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
(e) "Hazardous Materials": any solid wastes, toxic or hazardous
substances, materials or wastes, defined, listed, classified or regulated
as such in or under any Environmental Laws, including, without limitation,
asbestos, petroleum or petroleum products (including gasoline, crude oil or
any fraction thereof), polychlorinated biphenyls, and urea-formaldehyde
insulation, and any other substance the presence of which may give rise to
liability under any Environmental Law.
(f) "known" or "knowledge" means, with respect to any party, the
knowledge of such party's or its Subsidiaries' executive officers after
reasonable inquiry.
(g) "Material Adverse Effect" means, with respect to any entity any
event, change, circumstance or effect that is or is reasonably likely to be
materially adverse to the business, financial condition or results of
operations of such entity and its Subsidiaries taken as a whole, other than
(x) any event, change, circumstance or effect relating to the economy or
financial markets in general, (y) any event, change, circumstance or effect
relating in general to the industries in which such entity operates and not
specifically relating to (or having the effect of specifically relating to
or having a materially disproportionate effect (relative to most other
industry participants) on) such entity or (z) a decline in the market price
of the capital stock of such entity in the absence of any other event,
change, circumstance or effect with regard to such entity that otherwise
would cause a Material Adverse Effect.
(h) "the other party" means, with respect to ZiaSun, Telescan and
means, with respect to Telescan, ZiaSun.
(i) "Person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(j) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated,
at least a majority of the securities or other interests of which having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and one or more of its Subsidiaries.
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(k) "Environmental Laws" means all applicable U.S. federal, state,
local and foreign laws, regulations, rules and orders relating to pollution
or protection of the environment (including ambient air, surface water,
ground water, land surface or subsurface strata).
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed by its respective officers thereunto duly authorized, all as of the
date first written above.
TELESCAN, INC.
By: /s/ Xxx Xxxxx
------------------------------------
Name: Xxx Xxxxx
Title: CEO
ZIASUN TECHNOLOGIES, INC.
By: /s/ D. Xxxxx Xxxxx
----------------------------------
Name: D. Xxxxx Xxxxx
Title: CEO, Chairman
