EXECUTION COPY
AGREEMENT
AND
PLAN OF MERGER
BY AND AMONG
VIANET TECHNOLOGIES, INC.,
VIANET LABS, INC.,
INFINOP HOLDINGS, INC.,
XXXX XXXXXX,
XXXXX XXXXXX
AND
XXXXXX XXXXXX
DATED AUGUST 31, 1999
TABLE OF CONTENTS
1. Definitions.....................................................................................1
2. Basic Transaction...............................................................................6
(a) The Merger....................................................................6
(b) The Closing...................................................................6
(c) Actions at the Closing........................................................6
(d) Effect of Merger..............................................................6
(e) Procedure for Payment........................................................10
(f) Closing of Transfer Records..................................................11
(g) Registration of, and Restrictions on, Vianet Shares..........................11
(h) Dissenting Shares............................................................11
(i) Legend.......................................................................12
2A. Additional Payment.............................................................................12
3. Representations and Warranties of Principal Stockholders.......................................15
(a) Authorization of Transaction.................................................15
(b) Noncontravention.............................................................15
(c) Brokers' Fees................................................................16
(d) Investment...................................................................16
(e) Infinop Shares...............................................................16
4. Representations and Warranties Concerning Infinop and Its Subsidiaries.........................16
(a)......Organization, Qualification, and Corporate Power;
Authorization................................................................16
(b) Capitalization...............................................................17
(c) Noncontravention.............................................................17
(d) Brokers' Fees................................................................17
(e) Title to Assets..............................................................18
(f) Subsidiaries.................................................................18
(g) Financial Statements.........................................................18
(h) Events Subsequent to April 30, 1999..........................................19
(i) Undisclosed Liabilities......................................................21
(j) Legal Compliance.............................................................21
(k) Tax Matters..................................................................21
(l) Real Property................................................................22
(m) Intellectual Property........................................................23
(n) Tangible Assets..............................................................25
(o) Inventory....................................................................26
(p) Contracts....................................................................26
(q) Notes and Accounts Receivable................................................27
(r) Powers of Attorney...........................................................27
(s) Insurance....................................................................27
(t) Litigation...................................................................28
(u) Product Warranty.............................................................28
(v) Product Liability............................................................29
(w) Employees....................................................................29
(x) Employee Benefits............................................................29
(y) Guaranties...................................................................30
(z) Environmental, Health, and Safety Matters....................................30
(aa) Certain Business Relationships with Infinop and Its
Subsidiaries.................................................................31
(bb) Year 2000 Compliance.........................................................31
(cc) Disclosure...................................................................32
5. Representations and Warranties of Vianet and Labs..............................................32
(a) Organization.................................................................32
(b) Authorization of Transaction.................................................32
(c) Noncontravention.............................................................32
(d) Brokers' Fees................................................................33
6. Representations and Warranties Concerning Vianet...............................................33
(a) Vianet Disclosures...........................................................33
(b) No Material Adverse Change...................................................34
(c) Vianet Shares................................................................34
7. Covenants......................................................................................34
(a) General......................................................................34
(b) Notices and Consents.........................................................34
(c) Consent of Infinop Stockholders..............................................34
(d) Operation of Business........................................................34
(e) Full Access..................................................................35
(f) Notice of Developments.......................................................35
(g) Exclusivity..................................................................35
(h) Expense Budget...............................................................36
(i) Xxxxxx Fee...................................................................36
(j) Board Representation.........................................................36
(k) Reserved Vianet Shares.......................................................36
(l) Employee Bonuses.............................................................36
(m) Information Statement........................................................36
(o) Transfers by Surviving Corporation...........................................37
(p) Tax Information..............................................................37
8. Conditions to Obligation to Close..............................................................37
(a) Conditions to Obligation of Vianet and Labs..................................37
(b) Conditions to Obligation of Infinop..........................................39
10. Survival and Indemnification...................................................................40
(a) Survival and Indemnification.................................................40
(b) Indemnification by Principal Stockholders....................................40
(d) Matters Involving Third Parties..............................................41
(e) Indemnification Payments.....................................................42
(f) Limits on Indemnification....................................................42
(g) Insurance Proceeds...........................................................42
(h) Exclusive Remedy.............................................................43
(i) Effect of Knowledge..........................................................43
11. Termination....................................................................................43
(a) Termination of Agreement.....................................................43
(b) Effect of Termination........................................................44
12. Miscellaneous..................................................................................44
(a) Press Releases and Public Announcements......................................44
(b) No Third Party Beneficiaries.................................................44
(c) Entire Agreement.............................................................44
(d) Succession and Assignment....................................................44
(e) Counterparts.................................................................44
(f) Headings.....................................................................45
(g) Notices......................................................................45
(h) Governing Law; Consent to Jurisdiction.......................................46
(i) Amendment....................................................................46
(j) Extension; Waiver............................................................47
(k) Severability.................................................................47
(l) Expenses.....................................................................47
(m) Construction.................................................................47
(n) Incorporation of Exhibits and Schedules......................................47
(o) Dispute Resolution...........................................................47
EXHIBITS
Exhibit A - Form of Certificate of Merger
Exhibit B - Form of Escrow Agreement
Exhibit C - Infinop Financial Statements
Exhibit D - List of Employees Entitled to Back Salary and Bonuses
Exhibit E - Form of Opinion of Counsel to Infinop
Exhibit F - Form of Employment Agreement for Xxxx Xxxxxx
Exhibit G - Form of Employment Agreement for Xxxxxx Xxxxxx
Exhibit H - Form of Employment Agreement for Xxxx Xxxxxx
Exhibit I - Form of Employment Agreement for Xxxx Xxx
Exhibit J - Form of Employment Agreement for Hongyang Chao
Exhibit K - Form of Employment Agreement for Xxxxxx Xxxx
Exhibit L - Form of Opinion of Counsel to Vianet and Labs
Exhibit M - Form of Registration Rights Agreement
LIST OF SCHEDULES
Schedule 2(d)(vii) Holders of 8% Convertible Debentures due August 17, 1999
* * *
DISCLOSURE SCHEDULES
Section 4(a) Directors and Officers of Infinop and its Subsidiaries
Section 4(b) Capitalization
Section 4(c) Non-Contravention
Section 4(e) Exceptions to Title Representation
Section 4(f) Subsidiaries
Section 4(h) Events Subsequent to Most Recent Fiscal Month End
Section 4(k) Tax Matters
Section 4(l)(ii) Real Property Leased or Subleased
Section 4(m)(iii) Patents or Registrations Issued to Infinop and its
Subsidiaries Section 4(m)(iv) Intellectual Property
Owned by Third Parties
Section 4(p) Contracts and Other Agreements
Section 4(s) Insurance
Section 4(t) Litigation
Section 4(x) Employee Benefit Plans
Section 4(z) Environmental, Health, and Safety Matters -
Permits, Licenses and other Authorizations
Section 4(aa) Certain Business Relationships with Infinop
and its Subsidiaries
* * *
Schedule 6(a) Exceptions to Vianet Representation Re: SEC Filings
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ENTERED INTO ON THIS 31st DAY OF AUGUST, 1999
BY AND AMONG VIANET TECHNOLOGIES, INC., a NEVADA CORPORATION ("VIANET") VIANET
LABS, INC., A DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF VIANET
("LABS"), INFINOP HOLDINGS, INC., A DELAWARE CORPORATION ("INFINOP"), XXXX
XXXXXX ("XXXX"), XXXXX XXXXXX ("XXXXX") AND XXXXXX XXXXXX ("XXXXXX") (Xxxx,
XXXXX AND XXXXXX TO BE REFERRED TO HEREINAFTER, COLLECTIVELY, AS THE "PRINCIPAL
STOCKHOLDERS"). Vianet Labs, Infinop and the PRINCIPAL STOCKHOLDERS ARE REFERRED
TO COLLECTIVELY HEREIN AS THE "PARTIES".
WHEREAS, Infinop is in the business of developing, licensing, marketing and
selling compression technology and products;
WHEREAS, the Parties desire to effect a tax-free reverse subsidiary merger
of Labs into Infinop in a reorganization pursuant to Code Sections 368(a)(1)(A)
and 368(a)(2)(E) as a result of which Vianet will own all of the issued and
outstanding shares of Infinop and the stockholders of Infinop will receive
shares of Vianet in exchange for their Infinop shares; and
WHEREAS, the Boards of Directors of Vianet, Labs and Infinop have approved
the Merger subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ADDITIONAL PAYMENTS" has the meaning set forth in Section 2A below.
"ADDITIONAL PAYMENT PAYEES" has the meaning set forth in Section 2A below.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or reasonably would be expected to
form the basis for any specified consequence.
"CERTIFICATE OF MERGER" has the meaning set forth in Section 2(c) below.
"CLOSING" has the meaning set forth in Section 2(b) below.
"CLOSING DATE" has the meaning set forth in Section 2(b) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
and Code Section 4980B.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of the Infinop and its Subsidiaries that is not already generally
available to the public.
"CONTROLLED GROUP" has the meaning set forth in Code Section 1563.
"CONVERSION RATIO" has the meaning set forth in Section 2(d)(v) below.
"CONVERTIBLE DEBENTURES" has the meaning set forth in Section 2(d)(vii).
"DELAWARE GENERAL CORPORATION LAW" means the General Corporation Law of the
State of Delaware, as amended.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 4 below.
"DISSENTING SHARE" means any Infinop Share which any stockholder who or
which has exercised his or its appraisal rights under the Delaware General
Corporation Law holds of record.
"EFFECTIVE TIME" has the meaning set forth in Section 2(d)(i) below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multi employer Plan), or (d) Employee Welfare
Benefit Plan or material fringe benefit or other retirement, bonus, or incentive
plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Section
3(1).
"EMPLOYMENT AGREEMENT" has the meaning set forth in Section 8(a)(ix).
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means each entity which is treated as a single employer
with Seller for purposes of Code Section 414.
"ESCROW AGENT" has the meaning in Section 2(e)(i) below.
"ESCROW AGREEMENT" has the meaning in Section 2(e)(i) below.
"ESCROWED SHARES" has the meaning set forth in Section 2(e)(i) below.
"EXCHANGE AGENT" has the meaning set forth in Section 2(e)(i) below.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENT" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"INDEMNIFIED PARTY" has the meaning set forth in Section 9(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9(d) below.
"INFINOP" has the meaning set forth in the preface above.
"INFINOP SHARE" means any share of the Common Stock, $.01 par value per
share, of Infinop issued and outstanding as of the ---------------- Effective
Time.
"INFORMATION STATEMENT" has the meaning set forth in Section 7(c) below.
"INFINOP STOCKHOLDER" means any Person who or which holds any Infinop
Shares at the Effective Time.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissues, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all registered and unregistered trademarks, service
marks, trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
"IRS" means the Internal Revenue Service.
"JUNE 30 BALANCE SHEET" means the balance sheet contained in the June 30
Financial Statements.
"JUNE 30 FINANCIAL STATEMENTS" has the meaning set forth in Section 2(d)(x)
below.
"KNOWLEDGE" means actual knowledge after reasonable investigation and
inquiry of the directors, officers and employees of Infinop and its Subsidiaries
who would reasonably be expected to have knowledge of a particular matter.
"LIABILITY" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the assets,
properties, operations or financial condition of Infinop and its Subsidiaries,
taken as a whole.
"MERGER" has the meaning set forth in Section 2(a) below.
"MERGER CONSIDERATION" has the meaning set forth in Section 2(d)(v).
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section
4(g) below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section 4(g)
below.
"MULTI EMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PRINCIPAL STOCKHOLDERS" has the meaning set forth in the preface above.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in Section 2(g)
below.
"REQUISITE INFINOP STOCKHOLDER APPROVAL" means the affirmative vote of the
holders of eighty percent (80%) of Infinop Shares in favor of this Agreement and
the Merger.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" MEANS ANY MORTGAGE, PLEDGE, LIEN, ENCUMBRANCE, CHARGE,
CLAIM OR OTHER SECURITY INTEREST, OTHER THAN (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SUBSIDIARY" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"SURVIVING CORPORATION" has the meaning set forth in Section 2(a) below.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 9(d) below.
"VIANET" has the meaning set forth in the preface above.
"VIANET SHARE" means any share of Class A Common Stock, $.001 par value per
share, of Vianet.
2. BASIC TRANSACTION.
(1) THE MERGER. On and subject to the terms and conditions of this
Agreement, Labs will merge with and into Infinop (the "MERGER") AT THE EFFECTIVE
TIME. INFINOP SHALL BE THE CORPORATION SURVIVING THE MERGER (THE "SURVIVING
CORPORATION"). As of the Effective Time, Infinop shall become a wholly owned
subsidiary of Vianet.
(2) THE CLOSING. THE CLOSING OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT (THE "CLOSING") shall take place at the offices of Xxxxx & Xxxxx, LLP,
000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, commencing at 10:00 a.m. local time on the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the PARTIES MAY MUTUALLY
DETERMINE (THE "CLOSING DATE").
(3) ACTIONS AT THE CLOSING. At the Closing, (i) Infinop will deliver to
Vianet and Labs the various certificates, instruments, and documents referred to
in Section 8(a) below, (ii) Vianet and Labs will deliver to Infinop the various
certificates, instruments, and documents referred to in Section 8(b) below,
(iii) Infinop and Labs will file with the Secretary of State of the State of
Delaware a CERTIFICATE OF MERGER IN THE FORM ATTACHED HERETO AS EXHIBIT A (THE
"CERTIFICATE OF MERGER"), and (iv) Vianet will deliver to the Exchange Agent in
the manner provided below in this Section 2 the certificates evidencing the
Vianet Shares issued in the Merger.
(4) EFFECT OF MERGER.
(1) GENERAL. THE MERGER SHALL BECOME EFFECTIVE AT THE TIME (THE "EFFECTIVE
TIME") Infinop and Labs file the Certificate of Merger with the Secretary of
State of the State of Delaware. The Merger shall have the effect set forth in
the Delaware General Corporation Law. The Surviving Corporation may, at any time
after the Effective Time, take any action (including executing and delivering
any document) in the name and on behalf of either Infinop or Labs in order to
carry out and effectuate the transactions contemplated by this Agreement. (2)
CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the Surviving
Corporation shall be amended and restated at and as of the Effective Time to
read as did the Certificate of Incorporation of Labs immediately prior to the
Effective Time. The name of the Surviving Corporation shall be amended and
changed to Vianet Labs, Inc.
(3) BYLAWS. The Bylaws of the Surviving Corporation shall be amended and
restated at and as of the Effective Time to read as did the Bylaws of Labs
immediately prior to the Effective Time.
(4) DIRECTORS AND OFFICERS. The directors and officers of Labs shall become
the directors and officers of the Surviving Corporation at and as of the
Effective Time (retaining their respective positions and terms of office);
provided, however, that Xxxx Xxxxxx shall become the President of the Surviving
Corporation, Xxxxxx Xxxxxx shall become the Vice President - Operations of the
Surviving Corporation and Xxxx Xxxxxx shall become the Vice President - Business
Development and Marketing of the Surviving Corporation.
(5) CONVERSION OF INFINOP SHARES. At and as of the Effective Time, by
virtue of the Merger and without any action on the part of any party hereto or
any holder of Infinop Shares, (A) each Infinop Share (other than any Dissenting
Share) shall be converted into the right to receive .21936 Vianet Shares, a cash
payment in lieu of fractional Vianet Shares (which, for purposes of this Section
2(d)(v) shall be valued at $7.00 per share), and a pro rata share of the
Additional Payments to be determined pursuant to Section 2A (THE "MERGER
CONSIDERATION") (THE RATIO OF .21936 VIANET SHARES TO ONE INFINOP SHARE IS
REFERRED TO HEREIN AS THE "CONVERSION RATIO") (B) all Infinop Shares shall no
longer be outstanding or issuable and shall be canceled and retired and shall
cease to exist, and each holder thereof shall thereafter cease to have any
rights with respect to such Infinop Shares, and (C) each Dissenting Share shall
be converted into the right to receive payment from the Surviving Corporation
with respect thereto in accordance with the PROVISIONS OF THE DELAWARE GENERAL
CORPORATION LAW, PROVIDED, HOWEVER, that the Conversion Ratio shall be subject
to equitable adjustment in the event of any stock split, stock dividend, reverse
stock split, of the Infinop Shares or the Vianet Shares after the date hereof
but prior to the Effective Time. No Infinop Share shall be deemed to be
outstanding or to have any rights other than those set forth above in this
Section 2(d)(v) after the Effective Time.
(6) CONVERSION OF CAPITAL STOCK OF LABS. At and as of the Effective Time,
each share of Common Stock, without par value, of Labs shall be converted into
one share of Common Stock, without par value, of Infinop.
(7) CONVERTIBLE DEBENTURES. At and as of the Effective Time, pursuant to
the provisions of (1) each of the 8% convertible debentures of Infinop due
September 30, 2002 in the aggregate principal amount of $175,000 issued to
Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxx outstanding at the Effective Time, (2) the 6%
convertible debentures of Infinop due September 30, 2002 in the aggregate
principal amount of $950,000 issued to ANDA Partnership outstanding at the
Effective Time and (3) each of the 8% convertible debentures of Infinop due
August 17, 1999 in the aggregate principal amount of $750,000 issued to the
holders thereof set forth on SCHEDULE 2(D)(VII) OUTSTANDING AT THE EFFECTIVE
TIME (COLLECTIVELY, THE "CONVERTIBLE DEBENTURES"), each holder of an outstanding
Convertible Debenture shall have the right to receive upon the conversion of the
Convertible Debenture (on the terms and conditions specified in each such
Convertible Debenture), after the Effective Time, the number of Vianet Shares
determinable by multiplying (x) the number of Infinop Shares issuable upon such
conversion immediately prior to the Effective Time plus the number of Infinop
Shares that would have been issuable upon a conversion of interest accrued after
the Effective Time by (y) the Conversion Ratio, subject to subsequent adjustment
as provided in Section 8(a) of each of the Convertible Debentures. For purposes
of this Section 2(d)(vii), the Conversion Ratio shall be adjusted if Adjustment
Escrow Shares (as defined below) are delivered to Vianet as a result of a
reduction in the Merger Consideration pursuant to Section 2(d)(x) such that the
Conversion Ratio will equal the actual rate at which Infinop Shares are
converted into Vianet Shares in the Merger after giving effect to the full
dollar amount of such reduction.
(8) STOCK OPTIONS. As of the Effective Time, (1) each outstanding option to
purchase Infinop Shares listed on Section 4(b) of the DISCLOSURE SCHEDULE (AN
"INFINOP STOCK OPTION") SHALL BE CONVERTED INTO AN OPTION (AN "ADJUSTED OPTION")
to purchase the number of Vianet Shares equal to the number of Infinop Shares
subject to such Infinop Stock Option immediately prior to the Effective Time
multiplied by the Conversion Ratio (rounded to the nearest whole number of
Vianet Shares), at an exercise price per share equal to the exercise price for
each such Infinop Share subject to such option divided by the Conversion Ratio,
and all references in each SUCH OPTION TO INFINOP SHALL BE DEEMED TO REFER TO
VIANET, WHERE APPROPRIATE; PROVIDED, HOWEVER, that the adjustments provided in
this clause with respect to any options which are "incentive stock options" (as
defined in Section 422 of the Code) or which are described in Section 423 of the
Code, shall be affected in a manner consistent with the requirements of Section
424(a) of the Code, and (2) Vianet shall assume the obligations of Infinop under
the Infinop Stock Options and the Infinop 1998 Stock Option Plan (the "INFINOP
STOCK OPTION PLAN") and stock option agreements between Infinop and the
individuals listed on Section 4(b)(b) of the Disclosure SCHEDULE (THE "INFINOP
STOCK OPTION AGREEMENTS"). For purposes of this Section 2(d) (viii), the
Conversion Ratio shall be adjusted if Adjustment Escrow Shares (as defined
below) are delivered to Vianet as a result of a reduction in the Merger
Consideration pursuant to Section 2(d)(x) such that the Conversion Ratio will
equal the actual rate at which Infinop Shares are converted into Vianet Shares
in the Merger after giving effect to the full dollar amount of such reduction.
The other terms of each Adjusted Option, and the Infinop Stock Option Plan and
Infinop Stock Option Agreements shall continue to apply in accordance with their
terms. The date of grant of each Adjusted Option shall be the date on which the
corresponding Infinop Stock Option was granted. Vianet agrees that the Infinop
Stock Option Plan shall be amended, to the extent necessary, to reflect the
transactions contemplated by this Agreement, including, but not limited, to the
conversion of Infinop Shares held or to be awarded or paid pursuant to the
Infinop Stock Option Plan and the Infinop Stock Option Agreements into Vianet
Shares on a basis consistent with the transactions contemplated by this
Agreement. Vianet shall (x) reserve for issuance the number of Vianet Shares
that will become subject to the Infinop Stock Option Plan and the Infinop Stock
Option Agreements referred to in this clause and (y) issue or cause to be issued
the appropriate number of Vianet Shares pursuant to the Infinop Stock Option
Plan and the Infinop Stock Option Agreements upon the exercise or maturation of
rights existing thereunder at the Effective Time.
(9) OTHER EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the Delaware General Corporation Law. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of Infinop and Labs shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
Infinop and Labs shall become the debts, liabilities and duties of the Surviving
Corporation.
(10) POST CLOSING ADJUSTMENT. Infinop and the Principal Stockholders shall,
within five (5) days after execution and delivery of this Agreement, deliver to
Vianet unaudited consolidated and consolidating balance sheets and statements of
income as of and for the MONTH ENDED JUNE 30, 1999 (THE "JUNE 30 FINANCIAL
STATEMENTS") for Infinop and its Subsidiaries prepared in accordance with GAAP
on a consistent basis, which June 30 Financial Statements will present fairly in
all material respects the financial condition of Infinop and its Subsidiaries as
of such date and the results of operations of Infinop and its Subsidiaries for
such periods and will be consistent with the books and records of Infinop and
its Subsidiaries. The June 30 Financial Statements will not include any
Liabilities incurred after the date of the Most Recent Financial Statements
outside the Ordinary Course of Business. Vianet shall, within ninety (90) days
after the Closing, deliver to the Principal Stockholders a balance sheet of
Infinop as of the Closing Date AUDITED BY XXXXXX XXXXXX & CO., INC. (THE
"AUDITED BALANCE SHEET"). If the Net Worth of Infinop as set forth on the
Audited Balance Sheet is less than the Net Worth of Infinop as set forth on the
June 30 Balance Sheet (the difference between the Net Worth as set forth on the
Audited Balance Sheet and the Net Worth as set forth on the June 30 Balance
Sheet to be referred to hereafter as the "DEFICIT") THE MERGER CONSIDERATION
SHALL BE REDUCED BY THE AMOUNT OF THE DEFICIT. FOR PURPOSES OF THIS SECTION
2(D)(X), "NET WORTH" shall mean assets, less liabilities (including Convertible
Debentures), determined in accordance with generally accepted accounting
principles. The Principal Stockholders shall have thirty (30) days after
delivery of the Audited Balance Sheet to deliver to Vianet A WRITTEN OBJECTION
TO THE AUDITED BALANCE SHEET ("THE OBJECTION"). The Objection must specify in
reasonable detail the basis for objecting to the Audited Balance Sheet. If the
Objection is not delivered to Vianet within thirty (30) days after delivery of
the Audited Balance Sheet, the Principal Stockholders shall be deemed to have
accepted the Audited Balance Sheet. If an Objection is delivered in a timely
manner, Vianet and the Principal Stockholders shall then have thirty (30) days
to negotiate in good faith to resolve any dispute. If the dispute is not
resolved by Vianet and the Principal Stockholders within such thirty (30) day
period, VIANET AND THE PRINCIPAL STOCKHOLDERS SHALL JOINTLY RETAIN ONE OF THE
BIG FIVE CERTIFIED PUBLIC ACCOUNTING FIRMS (THE "ACCOUNTANTS") mutually agreed
upon by Vianet and the Principal Stockholders to resolve the dispute. The
determination of the Accountants shall be final and binding upon the parties.
The fees and expenses of the Accountants shall be shared equally by Vianet and
the Principal Stockholders. In order to effect the reduction in the Merger
Consideration, at Closing, one and one-half percent (1 1/2%) of the Vianet
Shares (rounded to the nearest whole number of Vianet Shares) to which each
Infinop Stockholder (other than Dissenting Shares), would otherwise be entitled
shall be deposited into escrow with the Escrow Agent pursuant to the terms of
the Escrow AGREEMENT (THE "ADJUSTMENT ESCROW SHARES"). In addition, one and
one-half percent (1 1/2%) of the Vianet Shares to which each holder of
Convertible Debentures would otherwise be entitled upon conversion after the
Closing and one and one-half percent (1 1/2%) of the Vianet Shares to which each
holder of Adjusted Options would otherwise be entitled upon exercise after the
Closing shall be deposited with the Escrow Agent in accordance with the terms of
the Escrow Agreement, if the issuance of such Vianet Shares occurs prior to
final determination of the Deficit. For purposes of this Section 2(d)(x), the
value of each Vianet Share shall be deemed to be $7.00. If there is a Deficit
based upon the Audited Balance Sheet, agreement of the parties, or determination
of the Accountants, within thirty (30) days after delivery of the Audited
Balance Sheet, agreement of the parties, or binding determination of the
Accountants, as the case may be, the Escrow Agent shall be instructed by Vianet
and the Principal Stockholders to deliver the Adjustment Escrow Shares to the
Exchange Agent with instructions to distribute a number of Vianet Shares equal
in value to the Deficit times the Escrow Ratio, but not in excess of the
Adjustment Escrow Shares, to Vianet and to distribute the remaining ADJUSTMENT
ESCROW SHARES PRO RATA TO THE INFINOP STOCKHOLDERS. THE "ESCROW RATIO" shall
mean (A) all issued and outstanding Infinop Shares at the Closing Date, divided
by (B) all issued and outstanding Infinop Shares at the Closing Date, plus all
Infinop Shares into which Convertible Debentures as of Closing Date can be
converted, plus all Infinop Shares for which Infinop Stock Options as of the
Closing Date can be exercised. In no event shall fractional Vianet Shares be
distributed, and in lieu thereof a cash payment shall be made. If there is no
Deficit, within thirty (30) days after delivery of the Audited Balance Sheet,
agreement of the parties or determination of the Accountants, as the case may
be, the Escrow Agent shall be instructed by Vianet and the Principal
Stockholders to deliver the Adjustment Escrow Shares to the Exchange Agent with
instructions to distribute the Adjustment Escrow Shares pro rata to the Infinop
Stockholders. Recovery by Vianet for the Deficit shall be limited to the
Adjustment Escrow Shares and adjustment of the Conversion Ratio as provided by
Sections 2(d)(vii) and 2(d)(viii).
(5) PROCEDURE FOR PAYMENT.
(1) Immediately after the Effective Time, (A) Vianet will, on behalf of,
and for the benefit of Labs, furnish to Continental STOCK TRANSFER & TRUST
COMPANY (THE "EXCHANGE AGENT") a stock certificate (issued in the name of the
Exchange Agent or its nominee) REPRESENTING THAT NUMBER OF VIANET SHARES EQUAL
TO THE PRODUCT OF (1) THE CONVERSION RATIO TIMES (2) the number of outstanding
Infinop Shares (other than any Dissenting Shares) and (B) Vianet will cause the
Exchange Agent to mail a letter of transmittal (with instructions for its use)
in form and substance reasonably satisfactory to the parties hereto to each
record holder of outstanding Infinop Shares for the holder to use in
surrendering the certificates which represented his or its Infinop Shares in
exchange for a certificate representing the number of Vianet Shares to which
each of he or it is entitled. Notwithstanding anything herein to the contrary,
ten percent (10%) of the Vianet Shares to which the Principal Stockholders would
otherwise be entitled shall be deposited INTO ESCROW (THE "ESCROWED SHARES")
WITH CITIBANK, N.A., AS ESCROW AGENT (THE "ESCROW AGENT") for a period of 24
months following the CLOSING PURSUANT TO THE TERMS OF AN ESCROW AGREEMENT IN THE
FORM ANNEXED HERETO AS EXHIBIT B (THE "ESCROW AGREEMENT") to secure the
indemnification obligations of the Principal Stockholders pursuant to
Section 9.
(2) Vianet will not pay any dividend or make any distribution on Vianet
Shares (with a record date at or after the Effective Time) to any record holder
of outstanding Infinop Shares until the holder surrenders for exchange his or
its certificates which represented Infinop Shares. Vianet instead will pay the
dividend or make the distribution to the Exchange Agent in trust for the benefit
of the holder pending surrender and exchange. Vianet may cause the Exchange
Agent to invest any cash the Exchange Agent RECEIVES FROM VIANET AS A DIVIDEND
OR DISTRIBUTION IN ONE OR MORE INVESTMENTS; PROVIDED, HOWEVER, that the terms
and conditions of the investments shall be such as to permit the Exchange Agent
to make prompt payments of cash to the holders of outstanding Infinop Shares as
necessary. Vianet may cause the Exchange Agent to pay over to Vianet any net
earnings with respect to the investments. In no event, however, will any holder
of outstanding Infinop Shares be entitled to any interest or earnings on the
dividend or distribution pending receipt.
(3) Vianet may cause the Exchange Agent to return any Vianet Shares and
dividends and distributions thereon remaining unclaimed 180 days after the
Effective Time, and thereafter each remaining record holder of outstanding
Infinop Shares shall be entitled to look to Vianet (subject to abandoned
property, escheat, and other similar laws) as a general creditor thereof with
respect to Vianet Shares and dividends and distributions thereon to which he or
it is entitled upon surrender of his or its certificates.
(4) Vianet shall pay all charges and expenses of the Exchange Agent and the
charges and expenses of the Escrow Agent shall be shared equally by Vianet and
the Principal Stockholders.
(6) CLOSING OF TRANSFER RECORDS. After the close of business on the Closing
Date, transfers of Infinop Shares outstanding prior to the Effective Time shall
not be made on the stock transfer books of the Surviving Corporation.
(7) REGISTRATION OF, AND RESTRICTIONS ON, VIANET SHARES. At the Closing,
Vianet will enter into a Registration Rights Agreement (THE "REGISTRATION RIGHTS
AGREEMENT") in the form annexed hereto as Exhibit M for the benefit of the
Infinop Stockholders, the holders of the Convertible Debentures and the holders
of the Infinop Options covering registration under the Securities Act of the
Vianet Shares issued and issuable in exchange for the Infinop Shares, including
Vianet Shares issuable upon conversion of the Convertible Debentures and
exercise of the Infinop Stock Options, and Vianet Shares issuable as part of the
Additional Payments. Except as otherwise provided below, the Vianet Shares
issued and issuable in exchange for the Infinop Shares shall be subject to the
following restrictions (with such restrictions applying ratably to the Vianet
Shares issued to each Infinop Stockholder):
(1) No Vianet Shares may be traded prior to the six (6) month anniversary
of the Closing Date;
(2) 25% of the Vianet Shares shall be freely tradeable six (6) months after
the Closing Date;
(3) 25% of the Vianet Shares shall be freely tradeable twelve (12) months
after the Closing Date; and
(4) the remaining 50% of the Vianet Shares shall be freely tradeable
twenty-four (24) months after the Closing Date.
NOTWITHSTANDING THE FOREGOING, IF THE HOLDERS OF THE 8% CONVERTIBLE
DEBENTURES DUE ON AUGUST 17, 1999 (THE "1999 CONVERTIBLE DEBENTURES") exercise
their conversion right and vote their Infinop Shares in favor of the Merger, the
Vianet Shares received by the former holders of the 1999 Convertible Debentures
shall be subject to the following restrictions: (1) 50% of such Vianet Shares
shall be freely tradeable six (6) months after the Closing Date; and (2) the
remaining 50% of such Vianet Shares shall be freely tradeable twelve (12) months
after the Closing Date.
(8) DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, Dissenting Shares shall not be converted into or be exchangeable for
the right to receive the Merger Consideration, but, instead, the holder thereof
shall be entitled to RECEIVE SUCH CONSIDERATION AS SHALL BE DETERMINED PURSUANT
TO SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW; PROVIDED, HOWEVER, that
if such holder shall have failed to perfect or shall have effectively withdrawn
or lost its rights to dissent under the Delaware General Corporation Law, each
of such holder's Dissenting Shares shall thereupon be deemed to have been
converted into and to have become exchangeable for the right to receive, as of
the Effective Time, the Merger Consideration (without any interest thereon) in
accordance with Section 2(d)(v) and such holder shall forfeit its appraisal
rights provided by Section 262 of the Delaware General Corporation Law. Infinop
shall give Vianet and Labs notice of all such Dissenting Shares and Vianet shall
have the right to participate in all negotiations and proceedings with respect
to any demands for payment by the holder of any Dissenting Shares. Infinop shall
not, except with the prior written consent of Vianet, voluntarily make or agree
to make any payment with respect to, or settle or offer to settle, any such
demands for payment. At and as of the Effective Time, the Surviving Corporation
shall assume and be responsible for the satisfaction and discharge of all
appraisal rights to which holders of Dissenting Shares may be entitled under
Section 262 of the Delaware General Corporation Law.
(9) LEGEND. All certificates evidencing Vianet Shares restricted by this
Agreement shall bear a legend indicating the existence of the restrictions
imposed hereby and a stop transfer order may be placed with respect to such
securities. The legend referred to in the preceding sentence shall be
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TRANSFER RESTRICTIONS AND OTHER TERMS OF THE AGREEMENT AND
PLAN OF MERGER DATED AS OF AUGUST __, 1999 BY AND AMONG VIANET
TECHNOLOGIES, INC., VIANET LABS, INC., INFINOP HOLDINGS, INC.
("INFINOP") AND CERTAIN SHAREHOLDERS OF INFINOP AND MAY NOT BE
TRANSFERRED EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT. A COPY
OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF VIANET
TECHNOLOGIES, INC. AND WILL BE FURNISHED UPON REQUEST TO THE
HOLDER OF RECORD OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE.
The holder of record of each certificate evidencing Vianet Shares shall
have the right to have such legend removed from any certificate representing
Vianet Shares not then subject to the restrictions contained in Section 2(g)
from time to time upon written request made to Vianet.
2A. ADDITIONAL PAYMENT. As part of the Merger Consideration, the Infinop
Stockholders (other than any holders of Dissenting Shares), the holders of
Convertible Debentures not converted prior to the Closing Date and the holders
of Adjusted OPTIONS NOT EXERCISED PRIOR TO THE CLOSING DATE (COLLECTIVELY, THE
"ADDITIONAL PAYMENT PAYEES") shall be entitled to receive ADDITIONAL PAYMENTS
(THE "ADDITIONAL PAYMENTs") as set forth below:
(a) The Additional Payments shall be based on royalties actually received
by the Surviving Corporation FOLLOWING THE CLOSING UNDER THE TERMS OF THE
FOLLOWING TWO CONTRACTS (THE "CONTRACTS"):
(I) THE CONTRACT DATED JUNE 25TH, 1998 between Infinop Op, Inc. and
Video Stream International (now DOING BUSINESS AS "TERAGLOBAL") (THE
"TERAGLOBAL CONTRACT"); and
(II) THE CONTRACT DATED OCTOBER 15TH, 1998 between Infinop Op, Inc.
and Transwire, Inc. (now doing BUSINESS AS "PRISM") (THE "PRISM CONTRACT").
(B) THE ADDITIONAL PAYMENTS SHALL BE BASED UPON ROYALTIES (THE "ROYALTIES")
received by the Surviving CORPORATION UNDER THE CONTRACTS FOR A PERIOD OF FOUR
(4) YEARS FROM THE DATE OF THE CLOSING (THE "ADDITIONAL PAYMENT PERIOD"). Each
one (1) year period commencing on the Closing Date or the anniversary of the
Closing Date shall be referred to in this Section 2A as A "CONTRACT YEAR".
(c) The Additional Payments payable by Vianet shall be an amount determined
as follows:
(i) No Additional Payment shall be required with respect to the first
$4 million of Royalties received during the Additional Payment Period by
the Surviving Corporation.
(ii) When the Surviving Corporation has received cumulative Royalties
of $4 million from the Contracts,
Vianet shall be required to pay to the Additional Payment Payees as Additional
Payments the following amount of Royalties earned from the Contracts during the
Additional Payment Period:
(A) An amount equal to 50% of Royalties received under the terms of
the Teraglobal Contract.
(B) An amount equal to 40% of Royalties received under the terms of
the Prism Contract.
(d) The Additional Payments shall be made within thirty (30) days after the
end of each Contract Year for which an Additional Payment is due. All Additional
Payments shall be made in Vianet Shares, unless the Principal Stockholders shall
elect on behalf of all Additional Payment Payees, to receive in cash, in whole
or in part, any Additional Payments (which election shall be made by delivery to
Vianet of written notice thereof at least 10 days prior to the date on which
such Additional Payment is required to be made); provided that, the Principal
Stockholders shall not have the right to elect to receive payment of Additional
Payments exceeding $3.2 million in cash. The aggregate amount of Vianet Shares
to be distributed in respect of the Additional Payments payable in Vianet Shares
shall be calculated by dividing the dollar amount payable in Vianet Shares by
the average closing price of Vianet Shares for the five (5) trading days
immediately preceding the end of the Contract Year for which the Additional
Payment is payable, in whole or part, in Vianet Shares. The Additional Payments
shall be paid or allocated pro rata to the Additional Payment Payees. No holder
of Convertible Debentures or Adjusted Options shall be paid any Additional
Payment until he, she or it has converted to Vianet Shares or exercised his, her
or its option to purchase Vianet Shares. The Additional Payments to holders of
Convertible Debentures who have not converted and holders of Adjusted Options
who have not exercised shall be held in reserve by Vianet until such holder has
converted or exercised, as the case may be. If such holder does not convert or
exercise prior to expiration of his, her or its right to do so, the Additional
Payments held in reserve shall be distributed pro rata to the other Additional
Payment Payees. The Vianet Shares issued in respect of Additional Payments shall
be subject to the restrictions set forth in Section 2(g) above, to the extent
applicable.
(e) Vianet will exercise best efforts to collect all royalties due under
the terms of the Contracts, provided that the payments will become due to the
Additional Payment Payees only on Royalties actually received by the Surviving
Corporation, except that payments will be due to the Additional Payment Payees
for Royalties accrued during the Additional Payment Period but received by the
Surviving Corporation after the termination of the Additional Payment Period.
After the Closing, the Surviving Corporation will not amend the Contracts to
reduce the amount of Royalties without the written consent of the Principal
Stockholders.
(f) No payments will be due to the Additional Payment Payees relating to
engineering design or development or consulting fees paid by Teraglobal or Prism
to the Surviving Corporation during the Additional Payment Period, nor shall
such payments count towards the $4 million amount identified in paragraph (c)(i)
above.
(g) During the Additional Payment Period, and for twelve (12) months
thereafter, Vianet will:
(i) Maintain accurate accounting records of all Royalties accruing and
received under the Contracts.
(ii) Within 60 days of the end of each calendar quarter:
(A) issue a report to the Additional Payment Payees detailing
royalties accrued and received; and
(B) remit to the Additional Payment Payees the amounts due under the
provisions of this section.
(h) Once during each calendar year, the Additional Payment Payees, upon the
approval or direction of the Principal Stockholders or otherwise by a
majority-in-interest of the Additional Payment Payees, shall have the right to
appoint an independent auditor to review the books and records of the Surviving
Corporation with regard to the Additional Payments due for the previous year,
subject to the following provisions:
(i) The Additional Payment Payees shall give sixty (60) days notice of
their intent to conduct an audit.
(ii) In the event that the audit indicates that the amount of Royalty
payments reported by the Surviving Corporation as being due to the
Additional Payment Payees under-reported by 5% or less the amount the
Additional Payment Payees auditors calculate as being due, or over-reported
the amount the Additional Payment Payees auditors calculate as being due,
the cost of the audit will be paid by the Additional Payment Payees pro
rata in accordance with their respective interests. If under-reported,
Vianet will pay to the Additional Payment Payees the amount not reported.
If the Principal Stockholders pay for the costs of any such audit, Vianet
shall, upon the written request of the Principal Stockholders, pay to the
Principal Stockholders out of any future Additional Payments payable
hereunder the pro rata portion of the costs of any such audit allocable to
the other Additional Payment Payees.
(iii) In the event that the audit indicates that the amount of Royalty
payments reported by the Surviving Corporation as being due to the
Additional Payment Payees under-reported by more than 5% the amount the
Additional Payment Payees auditors calculate as being due, the cost of the
audit will be paid by Vianet and Vianet will pay to the Additional Payment
Payees the amount equal to the amount not reported and an additional amount
equal to the amount not reported as liquidated damages for the
administrative inconvenience so caused.
(iv) Vianet shall have the right to have its auditors verify the
findings of the Additional Payment Payees auditors. In the event that
Vianet's auditors disagree with the findings of the Additional Payment
Payees auditors, the two auditing firms shall jointly appoint a third,
independent firm of auditors of national reputation, whose analysis and
opinion shall be binding.
(i) Within thirty (30) days after the Closing, the Principal Stockholders
will provide to Vianet a list of the Additional Payment Payees, the percentage
of the Additional Payments to which each is entitled and the addresses to which
their payments are to be mailed.
(j) The Additional Payments shall be treated by the parties for income tax
purposes as additional Merger Consideration and not as a profits interest in a
partnership or joint venture; it is not the intention of the Additional Payment
Payees and Vianet to enter into any such partnership or joint venture.
3. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL STOCKHOLDERS.
Each of the Principal Stockholders severally represents and warrants to
Vianet that the statements contained in this Section 3 are correct and complete,
with respect to himself only, as of the date of this Agreement and will be
correct and complete, with respect to himself only, as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3).
(1) AUTHORIZATION OF TRANSACTION. The Principal Stockholder has full power
and authority to execute and deliver this Agreement and, at Closing, the Escrow
Agreement and to perform his obligations hereunder and thereunder. This
Agreement and the Escrow Agreement (when executed and delivered) constitute the
valid and legally binding obligation of the Principal Stockholder enforceable in
accordance with its terms and conditions. The Principal Stockholder need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement and the Escrow Agreement.
(2) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement and the Escrow Agreement, nor the consummation of the transactions
contemplated hereby or thereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the
Principal Stockholder is subject or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Principal Stockholder is a party or by which he is bound or to
which any of his assets is subject.
(3) BROKERS' FEES. The Principal Stockholder has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which Vianet could become
liable or obligated.
(4) INVESTMENT. The Principal Stockholder (A) understands that the Vianet
Shares have not been registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, (B) is
acquiring the Vianet Shares solely for his own account for investment purposes,
and not with a view to the distribution thereof, (C) has received certain
information concerning Vianet and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding the Vianet Shares and, (D) is able to bear the economic risk and lack of
liquidity inherent in holding the Vianet Shares.
(5) INFINOP SHARES. The Principal Stockholder holds of record and owns
beneficially the number of Infinop Shares set forth next to his name in Section
4(b) of the Disclosure Schedule, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The Principal Stockholder is not a
party to any option, warrant, purchase right, pledge or other contract or
commitment that could require the Principal Stockholder to sell, transfer, or
otherwise dispose of any capital stock of Infinop (other than this Agreement).
The Principal Stockholder is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock of
Infinop.
4. REPRESENTATIONS AND WARRANTIES CONCERNING INFINOP AND ITS SUBSIDIARIES.
The Principal Stockholders and Infinop, jointly and severally, represent
and warrant to Vianet that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4),
except as set forth in the disclosure schedule delivered by the Principal
Stockholders to Vianet on the date hereof and initialed by the PARTIES (THE
"DISCLOSURE SCHEDULE"). Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
however, unless the Disclosure Schedule identifies the exception with
particularity and describes the relevant facts in detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 4.
(1) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER; AUTHORIZATION. Each
of Infinop and its Subsidiaries is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of Infinop and its Subsidiaries is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each of Infinop and its Subsidiaries has
full corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. Section 4(a) of the Disclosure Schedule
lists the directors and officers of each of Infinop and its Subsidiaries.
Infinop has delivered to Vianet correct and complete copies of the charter and
bylaws of each of Infinop and its Subsidiaries (as amended to date). Infinop has
delivered to Vianet true and complete copies of all documents and instruments
contained in the minute books, the stock certificate books, and the stock record
books of each of Infinop and its Subsidiaries. None of Infinop and its
Subsidiaries is in default under or in violation of any provision of its charter
or bylaws. Infinop has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of Infinop enforceable in accordance
with its terms and conditions.
(2) CAPITALIZATION. The entire authorized capital stock of Infinop consists
of 100,000,000 Infinop Shares, of which 6,025,000 Infinop Shares are issued and
outstanding and no Infinop Shares are held in treasury, and 200,000 shares of
preferred stock, $.01 par value, of which no shares are issued and outstanding.
All of the issued and outstanding Infinop Shares have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record by the
stockholders as set forth in Section 4(b) of the Disclosure Schedule. Except as
set forth and described in Section 4(b) of the Disclosure Schedule (i) there are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, convertible debentures, stock
options or other contracts or commitments that could require Infinop to issue,
sell, or otherwise cause to become outstanding any of its capital stock, (ii)
there are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Infinop, and (iii) there are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of Infinop.
(3) NONCONTRAVENTION. Except as set forth in Section 4(c) to the Disclosure
Schedule neither the execution and the delivery of this Agreement or the Escrow
Agreement, nor the consummation of the transactions contemplated hereby or
thereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of Infinop and its
Subsidiaries is subject or any provision of the charter or bylaws of any of
Infinop and its Subsidiaries or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice,
consent, or approval under any agreement, contract, lease, license, instrument,
or other arrangement to which any of Infinop and its Subsidiaries is a party or
by which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets). None of Infinop and
its Subsidiaries needs to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order for the Parties to consummate the transactions contemplated by this
Agreement or the Escrow Agreement.
(4) BROKERS' FEES. Except for the fee payable to X. Xxxxxx pursuant to the
agreement dated July 28, 1999 by and between Infinop and X. Xxxxxx, none of
Infinop and its Subsidiaries has any Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(5) TITLE TO ASSETS. Except as described in Section 4(e) of the Disclosure
Schedule, Infinop and its Subsidiaries have good and marketable title to, or a
valid leasehold interest in, the properties and assets used by them, located on
their premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
(6) SUBSIDIARIES. Section 4(f) of the Disclosure Schedule sets forth for
each Subsidiary of Infinop (i) its name and jurisdiction of incorporation, (ii)
the number of shares of authorized capital stock of each class of its capital
stock, (iii) the number of issued and outstanding shares of each class of its
capital stock, the names of the holders thereof, and the number of shares held
by each such holder, and (iv) the number of shares of its capital stock held in
treasury. Except as described in Section 4(f) to the Disclosure Schedule, all of
the issued and outstanding shares of capital stock of each Subsidiary of Infinop
have been duly authorized and are validly issued, fully paid, and nonassessable.
Except as described in Section 4(f) to the Disclosure Schedule, Infinop holds of
record and owns beneficially all of the outstanding shares of each Subsidiary of
Infinop free and clear of any restrictions on transfer (other than restrictions
under the Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities, claims,
and demands. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require any of Infinop and its Subsidiaries
to sell, transfer, or otherwise dispose of any capital stock of any of its
Subsidiaries or that could require any Subsidiary of Infinop to issue, sell, or
otherwise cause to become outstanding any of its own capital stock. There are no
outstanding stock appreciation, phantom stock, profit participation, or similar
rights with respect to any Subsidiary of Infinop. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of any
capital stock of any Subsidiary of Infinop. None of Infinop and its Subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary of Infinop.
(7) FINANCIAL STATEMENTS. ATTACHED HERETO AS EXHIBIT C ARE THE FOLLOWING
FINANCIAL STATEMENTS (COLLECTIVELY THE "FINANCIAL STATEMENTS"): (1) unaudited
consolidated statements of revenue, assets, liabilities and equity as of and for
the fiscal year ended JUNE 30, 1998 (THE "MOST RECENT FISCAL YEAR END FINANCIAL
STATEMENTS") for Infinop and its Subsidiaries; and (2) unaudited CONSOLIDATED
AND CONSOLIDATING BALANCE SHEETS AND STATEMENTS OF INCOME, AS OF AND FOR THE
MONTH ENDED APRIL 30, 1999 (THE "MOST RECENT FINANCIAL STATEMENTS") for Infinop
and its Subsidiaries. The Most Recent Fiscal Year End Financial Statements have
been prepared in the manner required for federal income tax purposes on a
consistent basis, and are consistent with the books and records of Infinop and
its Subsidiaries. The Most Recent Financial Statements have been prepared in
accordance with GAAP on a consistent basis, presently fairly in all material
respects the financial condition of Infinop and its Subsidiaries for such
periods, and are consistent with the books and records of Infinop and its
Subsidiaries; provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments (which will not be material individually
or in the aggregate) and lack footnotes and other presentation items. (1)
(8) EVENTS SUBSEQUENT TO APRIL 30, 1999. Except as set forth in Section
4(h) of the Disclosure Schedule, since April 30, 1999, there has not been any
material adverse change in the business, financial condition, operations,
results of operations, of any of Infinop and its Subsidiaries. Without limiting
the generality of the foregoing, since that date:
(1) none of Infinop and its Subsidiaries has sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(2) none of Infinop and its Subsidiaries has entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) either involving more than $25,000 or outside the Ordinary Course
of Business;
(3) no party (including any of Infinop and its Subsidiaries) has
accelerated, terminated, modified, or canceled any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and licenses)
involving more than $25,000 to which any of Infinop and its Subsidiaries is a
party or by which any of them is bound;
(4) none of Infinop and its Subsidiaries has imposed any Security Interest
upon any of its assets, tangible or intangible;
(5) none of Infinop and its Subsidiaries has made any capital expenditure
(or series of related capital expenditures) either involving more than $25,000
or outside the Ordinary Course of Business;
(6) none of Infinop and its Subsidiaries has made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and acquisitions)
either involving more than $25,000 or outside the Ordinary Course of Business;
(7) none of Infinop and its Subsidiaries has issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either involving
more than $10,000;
(8) none of Infinop and its Subsidiaries has delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary Course of
Business;
(9) none of Infinop and its Subsidiaries has canceled, compromised, waived,
or released any right or claim (or series of related rights and claims) either
involving more than $5,000 or outside the Ordinary Course of Business;
(10) none of Infinop and its Subsidiaries has granted any license or
sublicense of any rights under or with respect to any Intellectual Property
other than any license disclosed in Section 4(p) of the Disclosure Schedule;
(11) there has been no change made or authorized in the charter or bylaws
of any of Infinop and its Subsidiaries;
(12) none of Infinop and its Subsidiaries has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock other than grants of stock options disclosed in Section
4(b) of the Disclosure Schedule;
(13) none of Infinop and its Subsidiaries has declared, set aside, or paid
any dividend or made any distribution with respect to its capital stock (whether
in cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(14) none of Infinop and its Subsidiaries has experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property;
(15) none of Infinop and its Subsidiaries has made any loan to, or entered
into any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(16) none of Infinop and its Subsidiaries has entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(17) none of Infinop and its Subsidiaries has granted any increase in the
base compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(18) none of Infinop and its Subsidiaries has adopted, amended, modified,
or terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(19) none of Infinop and its Subsidiaries has made any other change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(20) none of Infinop and its Subsidiaries has made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(21) there has not been any other material occurrence, event, incident,
action, or transaction outside the Ordinary Course of Business involving any of
Infinop and its Subsidiaries; and
(22) none of Infinop and its Subsidiaries has committed to any of the
foregoing.
(9) UNDISCLOSED LIABILITIES. None of Infinop and its Subsidiaries has any
Liability (and, to the knowledge of the Principal Stockholders, there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after April 30, 1999 in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
(10) LEGAL COMPLIANCE. Each of Infinop and its Subsidiaries has complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
(11) TAX MATTERS.
Except as provided in Section 4(k) of the Disclosure Schedule:
(1) Each of Infinop and its Subsidiaries has filed all Tax Returns that it
was required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by any of Infinop and its Subsidiaries (whether or not
shown on any Tax Return) have been paid. None of Infinop and its Subsidiaries
currently is the beneficiary of any extension of time within which to file any
Tax Return. No claim has ever been made by an authority in a jurisdiction where
any of Infinop and its Subsidiaries does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no Security Interests on
any of the assets of any of Infinop and its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
(2) Each of Infinop and its Subsidiaries has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party.
(3) To the knowledge of the Principal Stockholders, no authority will
assess any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of any of
Infinop and its Subsidiaries either (A) claimed or raised by any authority in
writing or (B) as to which any of the Principal Stockholders has Knowledge based
upon personal contact with any agent of such authority. Section 4(k) of the
Disclosure Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect to any of Infinop and its Subsidiaries for taxable
periods ended on or after June 30, 1996, indicates those Tax Returns that have
been audited, and indicates those Tax Returns that currently are the subject of
audit. The Principal Stockholders have delivered to Vianet correct and complete
copies of all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of Infinop and its
Subsidiaries since June 30, 1996.
(4) None of Infinop and its Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(5) None of Infinop and its Subsidiaries has filed a consent under Code
Section 341(f) concerning collapsible corporations. None of Infinop and its
Subsidiaries has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code Section 280G. None of
Infinop and its Subsidiaries has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the applicable
period specified in Code Section 897(c)(1)(A)(ii). None of Infinop and its
Subsidiaries is a party to any Tax allocation or sharing agreement. None of
Infinop and its Subsidiaries (A) has been a member of an Affiliated Group filing
a consolidated federal income Tax Return (other than a group the common parent
of which was Infinop) or (B) has any Liability for the Taxes of any Person
(other than any of Infinop and its Subsidiaries) under Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(6) The unpaid Taxes of Infinop and its Subsidiaries did not, as of April
30, 1999, exceed the reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the Most Recent Balance Sheet (rather than in
any notes thereto). Infinop and its Subsidiaries have not incurred any Liability
for Taxes since April 30, 1999 other than Taxes incurred in the Ordinary Course
of Business.
(12) REAL PROPERTY.
(1) Neither Infinop nor any of its Subsidiaries owns any real property.
(2) Section 4(l)(ii) of the Disclosure Schedule lists and describes briefly
all real property leased or subleased to any of Infinop and its Subsidiaries.
Infinop has delivered to Vianet correct and complete copies of the leases and
subleases listed in Section 4(l)(ii) of the Disclosure Schedule (as amended to
date). With respect to each lease and sublease listed in Section 4(l)(ii) of the
Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding, enforceable, and
in full force and effect, except as limited by bankruptcy and insolvency
laws and other laws affecting creditors rights generally, and general
principles of equity;
(B) no consent, authorization or other approval is required under the
lease or sublease in connection with the consummation of the transactions
contemplated hereby and such lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby,
except as limited by bankruptcy and insolvency laws and other laws
affecting creditors rights generally and general principles of equity;
(C) neither Infinop, nor any of its Subsidiaries nor, to the Knowledge
of the Principal Stockholders, any other person, is in breach or default
thereunder, and, to the Knowledge of the Principal Stockholders, no event
has occurred which, with notice or lapse of time, would constitute a breach
or default or permit termination, modification, or acceleration thereunder;
(D) neither Infinop nor any of its Subsidiaries nor, to the Knowledge
of the Principal Stockholders, any other person, has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
(F) none of Infinop and its Subsidiaries has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(G) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits)
required of Infinop and its Subsidiaries in connection with the operation
thereof by Infinop and its Subsidiaries and have been operated and
maintained by Infinop and its Subsidiaries in accordance with applicable
laws, rules, and regulations; and
(H) all facilities leased or subleased thereunder are supplied with
utilities and other services reasonably necessary for the operation of said
facilities.
(13) INTELLECTUAL PROPERTY.
(1) Infinop and its Subsidiaries own or have the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of Infinop and its Subsidiaries as
presently conducted. Each item of Intellectual Property owned or used by any of
Infinop and its Subsidiaries immediately prior to the Closing hereunder will be
owned or available for use by Infinop or the Subsidiary on identical terms and
conditions immediately subsequent to the Closing hereunder. Except as provided
in Section 4(m)(i) of the Disclosure Schedule, each of Infinop and its
Subsidiaries has taken all action reasonably necessary to maintain and protect
each item of Intellectual Property that it owns or uses. (2) To the knowledge of
the Principal Stockholders, none of Infinop and its Subsidiaries has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties. Except as disclosed in Section
4(m)(ii) to the Disclosure Schedule, neither the Principal Stockholders, the
directors and officers of Infinop and its Subsidiaries or the employees of
Infinop and its Subsidiaries with responsibility for Intellectual Property
matters has ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that any of Infinop and its Subsidiaries must license or
refrain from using any Intellectual Property rights of any third party). Except
as described in Section 4(m)(ii) to the Disclosure Schedule, to the Knowledge of
the Principal Stockholders, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of any of Infinop and its Subsidiaries. (1)
(3) Section 4(m)(iii) of the Disclosure Schedule identifies each item of
Intellectual Property, including, without limitation, each patent, patent
application, trademark, trademark application or registration, copyright or
copyright application or registration owned, held (whether pursuant to license
or otherwise) or used by Infinop and its Subsidiaries in conducting their
business and identifies each license, agreement, or other permission which any
of Infinop and its Subsidiaries has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions). Infinop has
delivered to Vianet correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date) and has made available to Vianet correct and complete copies of all
other written documentation evidencing ownership and prosecution (if applicable)
of each such item. Section 4(m)(iii) of the Disclosure Schedule also identifies
each trade name or unregistered trademark used by any of Infinop and its
Subsidiaries in connection with any of its businesses. With respect to each item
of Intellectual Property required to be identified in Section 4(m)(iii) of the
Disclosure Schedule:
(A) Infinop and its Subsidiaries possess all right, title, and
interest in and to the item, free and clear of any Security Interest,
license, assignment, shop rights, covenants by Infinop or the Principal
Stockholders nor to xxx third parties, or other restriction except for the
licenses disclosed in Section 4(m)(iii) of the Disclosure Schedule;
(B) the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of any of the
Principal Stockholders is, or has been, threatened which challenges the
legality, validity, enforceability, use, or ownership of the item;
(D) neither Infinop nor any of its Subsidiaries has assigned any shop
right, license, release, covenant not to xxx or non-assertion assurance to any
Person and, except as disclosed in Section 4(m)(iii) to the Disclosure Schedule,
has never agreed to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to the item; and
(E) the Principal Stockholders have no Knowledge of any fact or
information that would render any issuing patent based on the pending
patent application item invalid and/or unenforceable and have no Knowledge
of any past, present or threatened claim by any third party that any such
issuing patent would be invalid and/or unenforceable.
(4) Section 4(m)(iv) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that any of Infinop and its
Subsidiaries uses pursuant to license, sublicense, agreement, or permission.
Infinop has delivered to Vianet correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
Section 4(m)(iv) of the Disclosure Schedule, to the Knowledge of the Principal
Stockholders:
(A) the license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and effect,
except as limited by bankruptcy and insolvency laws and other laws
affecting creditors rights generally, and general principles of equity;
(B) no consent, authorization or other approval is required under the
license or sublicense in connection with the consummation of the
transactions contemplated hereby and such license, sublicense, agreement,
or permission will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation of
the transactions contemplated hereby, except as limited by bankruptcy and
insolvency laws and other laws affecting creditors rights generally, and
general principles of equity;
(C) no party to the license, sublicense, agreement, or permission is
in breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) no party to the license, sublicense, agreement, or permission has
repudiated any provision thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, is threatened which challenges
the legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(H) none of Infinop and its Subsidiaries has granted any sublicense or
similar right with respect to the license, sublicense, agreement, or
permission.
(5) To the Knowledge of the Principal Stockholders, none of Infinop and its
Subsidiaries will interfere with, infringe upon, misappropriate, or otherwise
come into conflict with, any Intellectual Property rights of third parties as a
result of the continued operation of its businesses as presently conducted.
(6) None of the Principal Stockholders has any Knowledge of any new
products, inventions, procedures, or methods of manufacturing or processing that
any competitors or other third parties have developed which reasonably could be
expected to supersede or make obsolete any product or process of any of Infinop
and its Subsidiaries.
(14) TANGIBLE ASSETS. Infinop and its Subsidiaries own or lease all
buildings, machinery, equipment, and other tangible assets reasonably necessary
for the conduct of their businesses as presently conducted. Each such tangible
asset has been maintained in accordance with normal industry practice, is in
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
(15) INVENTORY. Infinop and its Subsidiaries have no physical inventory.
(16) CONTRACTS. Section 4(p) of the Disclosure Schedule lists the following
contracts and other agreements to which any of Infinop and its Subsidiaries is a
party:
(1) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $10,000 per annum;
(2) any agreement (or group of related agreements) for the purchase or sale
of raw materials, commodities, supplies, products, or other personal property,
or for the furnishing or receipt of services, the performance of which will
extend over a period of more than one year, result in a material loss to any of
Infinop and its Subsidiaries, or involve consideration in excess of $10,000;
(3) any agreement concerning a partnership or joint venture;
(4) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation, in excess of $10,000 or under which it has
imposed a Security Interest on any of its assets, tangible or intangible;
(5) any agreement concerning confidentiality or noncompetition;
(i) any agreement with any of the Principal Stockholders and their
Affiliates;
(6) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or arrangement for the
benefit of its current or former directors, officers, and employees;
(7) any collective bargaining agreement;
(8) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis or providing severance benefits;
(9) any agreement under which it has advanced or loaned any amount to any
of its directors, officers, and employees;
(10) any agreement not covered by clauses (i) through (x) under which the
consequences of a default or termination reasonably would be expected to have a
Material Adverse Effect; or (1)
(11) any other agreement (or group of related agreements) the performance
of which involves consideration in excess of $10,000. Infinop has delivered to
Vianet a correct and complete copy of each written agreement listed in Section
4(p) of the Disclosure Schedule (as amended to date) and a written summary
setting forth the material terms and conditions of each oral agreement referred
to in Section 4(p) of the Disclosure Schedule. Except as set forth on Section
4(p) of the Disclosure Schedule, with respect to each such agreement: (A) the
agreement is legal, valid, binding, enforceable, and in full force and effect
except as limited by bankruptcy and insolvency laws and other laws affecting
creditors rights generally and general principles of equity; (B) no consent,
authorization or other approval is required under the agreement in connection
with the consummation of the transactions contemplated hereby and such agreement
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby except as limited by bankruptcy and insolvency laws and
other laws affecting creditors rights generally and general principles of
equity; (C) Infinop is not in breach or default and, to the Knowledge of the
Principal Stockholders, no other party is in breach or default, (D) to the
Knowledge of the Principal Stockholders, no event has occurred which with notice
or lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (E) Infinop has not,
and, to the Knowledge of the Principal Stockholders, no other party has,
repudiated any provision of the agreement.
(17) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable of
Infinop and its Subsidiaries have arisen from bona fide transactions in the
Ordinary Course of Business and are reflected properly on their books and
records. All such notes and accounts receivable reflected on the Most Recent
Balance Sheet are valid receivables subject to no set offs or counterclaims, and
are collectible, in accordance with their terms, at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of Infinop and its
Subsidiaries.
(18) POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of any of Infinop and its Subsidiaries.
(19) INSURANCE. Section 4(s) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements, if any) to which any of Infinop and its
Subsidiaries has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past year:
(1) the name, address, and telephone number of the agent;
(2) the name of the insurer, the name of the policyholder, and the name of
each covered insured;
(3) the policy number and the period of coverage;
(4) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage; and
(5) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect, except as limited by
bankruptcy and insolvency laws and other laws affecting creditors rights
generally and general principles of equity; (B) the policy will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby, except
as limited by bankruptcy and insolvency laws and other laws affecting creditors
rights generally and general principles of equity; (C) neither any of Infinop
and its Subsidiaries nor, to the Knowledge of the Principal Stockholders, any
other person is in breach or default (including with respect to the payment of
premiums or the giving of notices), and to the Knowledge of the Principal
Stockholders, no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) neither Infinop nor any of its
subsidiaries, nor, to the Knowledge of the Principal Stockholders, any other
person has repudiated any provision thereof. Each of Infinop and its
Subsidiaries has been covered during the past three years by insurance in scope
and amount customary and reasonable for the businesses in which it has engaged
during the aforementioned period. Section 4(s) of the Disclosure Schedule
describes any self-insurance arrangements affecting any of Infinop and its
Subsidiaries.
(20) LITIGATION. Section 4(t) of the Disclosure Schedule sets forth each
instance in which any of Infinop and its Subsidiaries (i) is, or, with respect
to Intellectual Property, during the past ten years was, subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is
or, with respect to Intellectual Property, during the past ten years was, a
party or, to the Knowledge of any of the Principal Stockholders, is, or with
respect to Intellectual Property during the past ten years was, threatened in
writing to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 4(t) of the Disclosure Schedule could, if
determined adversely to Infinop, have a Material Adverse Effect. None of the
Principal Stockholders has any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against any
of Infinop and its Subsidiaries.
(21) PRODUCT WARRANTY. Each product manufactured, sold, leased, or
delivered by any of Infinop and its Subsidiaries (1) has been in conformity in
all material respects, with all applicable contractual commitments and all
express and implied warranties, and (2) none of Infinop and its Subsidiaries has
any Liability (and there is no Basis for any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) for replacement or repair thereof or other damages in
connection therewith, subject only to the reserve for product warranty claims
set forth on the face of the Most Recent Balance Sheet as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of Infinop and its Subsidiaries.
(22) PRODUCT LIABILITY. To the knowledge of the Principal Stockholders,
none of Infinop and its Subsidiaries has any Liability (and there is no Basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against any of them giving rise to any
Liability) arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product manufactured, sold, leased, or
delivered by any of Infinop and its Subsidiaries.
(23) EMPLOYEES. To the Knowledge of any of the Principal Stockholders, no
executive, key employee, or group of key employees has any plans to terminate
employment with any of Infinop and its Subsidiaries. None of Infinop and its
Subsidiaries is a party to or bound by any collective bargaining agreement, nor
has any of them experienced any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. None of Infinop and its
Subsidiaries has committed any unfair labor practice. None of the Principal
Stockholders has any Knowledge of any organizational effort presently being made
or threatened by or on behalf of any labor union with respect to employees of
any of Infinop and its Subsidiaries.
(24) EMPLOYEE BENEFITS.
(1) Section 4(x) of the Disclosure Schedule lists each Employee Benefit
Plan that any of Infinop and its Subsidiaries maintains or to which any of
Infinop and its Subsidiaries contributes or has any obligation to contribute.
(A) Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and other
applicable laws.
(B) All required reports and descriptions (including Form 5500 Annual
Reports, summary annual reports, PBGC-1's, and summary plan descriptions)
have been timely filed and distributed appropriately with respect to each
such Employee Benefit Plan. When applicable, the requirements of COBRA have
been met with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All premiums and other payments for all periods ending on or
before the Closing Date have been paid with respect to each Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(D) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been timely
paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each such Employee
Pension Benefit Plan or accrued in accordance with the past custom and
practice of Infinop and its Subsidiaries. Each such Employee Benefit Plan
which is an Employee Pension Benefit Plan meets the requirements of a
"Simplified Employee Pension" under Section 408(k) of the Code, including
Section 408(k)(6) of the Code, and the Principal Stockholders are not aware
of any facts or circumstances that could result in the failure of such
Employee Pension Benefit Plan to satisfy the requirements of Section 408(k)
of the Code, including Section 408(k)(6) of the Code. Neither Infinop nor
any of its Subsidiaries maintains any Employee Pension Benefit Plan that is
a "qualified plan" under Section 401 (a) of the Code.
(E) Infinop has delivered to Vianet correct and complete copies of the
plan documents and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the most recent Form
5500 Annual Report, and all related trust agreements, insurance contracts,
and other funding agreements which implement each such Employee Benefit
Plan.
(ii) With respect to each Employee Benefit Plan that any of
Infinop, its Subsidiaries, and any ERISA Affiliate maintains or ever
has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute, there have been
no Prohibited Transactions with respect to any such Employee Benefit
Plan. No Fiduciary has any Liability for breach of fiduciary duty or
any other failure to act or comply in connection with the
administration or investment of the assets of any such Employee
Benefit Plan. No action, suit, proceeding, hearing, or investigation
with respect to the administration or the investment of the assets of
any such Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of any of the Principal
Stockholders, threatened. None of the Principal Stockholders has any
Knowledge of any Basis for any such action, suit, proceeding, hearing,
or investigation.
(2) None of Infinop, its Subsidiaries, and the other members of the
Controlled Group that includes Infinop and its Subsidiaries contributes to, ever
has contributed to, or ever has been required to contribute to any Multi
employer Plan or has any Liability (including withdrawal liability as defined in
ERISA Section 4201) under any Multi employer Plan.
(3) None of Infinop and its Subsidiaries maintains or ever has maintained
or contributes, ever has contributed, or ever has been required to contribute to
any Employee Welfare Benefit Plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
COBRA).
(25) GUARANTIES. None of Infinop and its Subsidiaries is a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person other than Infinop or any such Subsidiary.
(26) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(1) Each of Infinop and its Subsidiaries, has complied and is in compliance
with all Environmental, Health, and Safety Requirements.
(2) Without limiting the generality of the foregoing, each of Infinop, its
Subsidiaries and their respective Affiliates has obtained and complied with, and
is in compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business; a list of all
such permits, licenses and other authorizations is set forth on Section 4(z) of
the Disclosure Schedule.
(3) Neither Infinop, nor its Subsidiaries, has received any written or oral
notice, report or other demand from a third party regarding any actual or
alleged violation of Environmental, Health, and Safety Requirements, or any
Liabilities, including any investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising under Environmental, Health,
and Safety Requirements.
(4) To the Knowledge of the Principal Stockholders, none of the following
exists at any property or facility leased by Infinop or its Subsidiaries: (1)
underground storage tanks, (2) asbestos-containing material in any form or
condition, (3) materials or equipment containing polychlorinated biphenyls, or
(4) landfills, surface impoundments, or disposal areas.
(5) None of Infinop or its Subsidiaries, has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released any
substance, including without limitation any hazardous substance, or owned or
operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or reasonably
would be expected to give rise to Liabilities, including any liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(6) Neither this Agreement nor the consummation of the transaction that is
the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental, Health, and Safety Requirements.
(7) Neither Infinop, nor its Subsidiaries, has, either expressly or by
operation of law, assumed or undertaken any Liability, including without
limitation any obligation for corrective or remedial action, of any other Person
relating to Environmental, Health, and Safety Requirements.
(AA) CERTAIN BUSINESS RELATIONSHIPS WITH INFINOP AND ITS SUBSIDIARIES.
Except as set forth on Section 4(aa) of the Disclosure Schedule, none of the
Principal Stockholders and their Affiliates has been involved in any business
arrangement or relationship with any of Infinop and its Subsidiaries within the
past 12 months, and none of the Principal Stockholders and their Affiliates owns
any asset, tangible or intangible, which is used in the business of any of
Infinop and its Subsidiaries.
(BB) YEAR 2000 COMPLIANCE. ALL DATE DATA AND DATE-SENSITIVE SYSTEMS ARE
YEAR 2000 COMPLIANT. "DATE DATA" means any data of any type that includes date
information or which is otherwise derived from, dependent on or related to date
information. "DATE-SENSITIVE SYSTEM" means any software, microcode or hardware
system or component, including any electronic or electronically controlled
system or component, that processes any Date Data and that is installed, in
development or on order by Infinop or its Subsidiaries for the internal use of
Infinop or its Subsidiaries or that Infinop or its Subsidiaries sells, leases,
licenses, assigns or otherwise provides, or the provision or operation of which
Infinop or its Subsidiaries provides the benefit to its customers, VENDORS,
SUPPLIERS, AFFILIATES OR ANY OTHER THIRD PARTY. "YEAR 2000 COMPLIANT" means (i)
with respect to Date Data, that such data is in proper format and accurate for
all dates in the twentieth and twenty-first centuries, and (ii) with respect to
Date-Sensitive Systems, that each such system accurately processes all Date
Data, including for the twentieth and twenty-first centuries, without loss of
any functionality or performance, including but not limited to calculating,
comparing, sequencing, storing and displaying such Date Data (including all leap
year considerations), when used as a stand-alone system or in combination with
other software or hardware. Infinop or its Subsidiaries have obtained written
representations or assurances from each entity that (x) provides Date Data to
Infinop or its Subsidiaries, (y) processes in any way Date Data for Infinop or
its Subsidiaries or otherwise provides any material product or service to
Infinop or its Subsidiaries that is dependent on Year 2000 Compliant Date Data
or a Year 2000 Compliant Date-Sensitive System, that all of such entity's Date
Data and Date-Sensitive Systems that are used for, or on behalf of, Infinop or
its Subsidiaries are Year 2000 Compliant.
(CC) DISCLOSURE. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. REPRESENTATIONS AND WARRANTIES OF VIANET AND LABS. Each of Vianet and
Labs represents and warrants to Infinop that the statements contained in this
Section 5 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 5).
(1) ORGANIZATION. Each of Vianet and Labs is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(2) AUTHORIZATION OF TRANSACTION. Each of Vianet and Labs has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and, at Closing, the Escrow Agreement and the
Registration Rights Agreement, and to perform its obligations hereunder and
thereunder. This Agreement, the Escrow Agreement and the Registration Rights
Agreement (when executed and delivered) each constitutes the valid and legally
binding obligation of each of Vianet and Labs, enforceable in accordance with
its terms and conditions.
(3) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, the Escrow Agreement or the Registration Rights Agreement, nor the
consummation of the transactions contemplated hereby or thereby, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either Vianet or Labs is subject or any
provision of the charter or bylaws of either Vianet or Labs, or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which either Vianet or Labs is a party or by
which it is bound or to which any of its assets is subject. Other than in
connection with the provisions of the Delaware General Corporation Law, neither
Vianet nor Labs needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
(4) BROKERS' FEES. Except for the fee payable to X. Xxxxxx pursuant to the
agreement dated July 28, 1999 by and between Infinop and X. Xxxxxx, neither
Vianet nor Labs has any liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions contemplated by
this Agreement for which any of Infinop or its Subsidiaries could become liable
or obligated.
6. REPRESENTATIONS AND WARRANTIES CONCERNING VIANET.
Vianet represents and warrants to Infinop that the statements contained in
this Section 6 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 6).
(1) VIANET DISCLOSURES. Vianet currently voluntarily files reports pursuant
to the requirement of Section 15(d) of the Securities Exchange Act. Except for
the filings disclosed on Schedule 6(a) to this Agreement, Vianet has filed all
annual, quarterly, current and other reports that would be applicable to it
under the Securities Exchange Act if the Vianet Shares were registered under
Section 12(g) of the Securities Exchange Act. Vianet has delivered to Infinop
(a) its annual report to stockholders and its Annual Report on Form 10-K for its
last fiscal year and (b) all of its Quarterly Reports on Form 10-Q and each
other report, REGISTRATION STATEMENT OR DEFINITIVE PROXY STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") since March 31, 1999
(COLLECTIVELY, THE Section SEC REPORTSSection ). The SEC Reports do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
audited and unaudited financial statements of Vianet included in the SEC Reports
(the "FINANCIAL STATEMENTS") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as stated
in such Financial Statements or the notes thereto) and fairly present the
financial position of Vianet and its consolidated subsidiaries as of the dates
thereof and the results of their operations and changes in financial position
for the periods then ended. Except as disclosed by Vianet in the SEC Reports,
since the end of the most recent of such fiscal years, there has been no
material adverse change in the business, properties, financial condition or
results of operations of Vianet and its subsidiaries taken together, and there
is no existing condition, event or series of events which reasonably would be
expected to have a material adverse effect on the business, properties,
financial condition or results of operations of Vianet and its subsidiaries
taken together, or the ability of Vianet to perform its obligations under this
Agreement, the Escrow Agreement or the Registration Rights Agreement. The offer,
sale and issuance of the Vianet Shares in connection with the Merger as
contemplated by this Agreement are exempt from the registration requirements of
the Securities Act, and neither Vianet nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption.
(2) NO MATERIAL ADVERSE CHANGE. There has not been, since May 17, 1999, any
material adverse change in the assets, properties, business, operations or
financial position of Vianet.
(3) VIANET SHARES. The Vianet Shares to be issued to the Infinop
Stockholders in connection with the Merger (i) have been duly authorized, and
(ii) upon issuance, delivery and payment therefor in the manner described
herein, will be validly issued, fully paid and nonassesssable.
7. COVENANTS. The Parties agree as follows with respect to the period from and
after the execution of this Agreement:
(1) GENERAL. Each of the Parties will use commercially reasonable efforts
to take all action and to do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 8
below).
(2) NOTICES AND CONSENTS. Infinop will give any notices (and will cause
each of its Subsidiaries to give any notices) to third parties, and will use
commercially reasonable efforts to obtain (and will cause each of its
Subsidiaries to use commercially reasonable efforts to obtain) any consents or
authorizations of any government or government agency or any other Person
required to be obtained by Infinop or any of its Subsidiaries to consummate the
transaction contemplated hereby.
(3) CONSENT OF INFINOP STOCKHOLDERS. Subject to Vianet's reasonable
cooperation in the preparation thereof, Infinop will, within three (3) business
days after execution and delivery this Agreement, disseminate to the Infinop
Stockholders a Confidential SOLICITATION OF CONSENTS AND INFORMATION STATEMENT
REGARDING THE MERGER PREPARED BY THE MANAGEMENT OF INFINOP (THE "INFORMATION
STATEMENT") which shall be in form and substance reasonably acceptable to
Infinop and Vianet. The Principal Stockholders shall exercise commercially
reasonable efforts to obtain the Requisite Infinop Stockholder Approval no later
than ten (10) days after dissemination of the Information Statement. The
Information Statement will contain the affirmative recommendation of the board
of directors of Infinop in favor of the adoption of this Agreement and the
approval of the Merger. Each of the Principal Stockholders covenants and agrees
to consent to and approve the Merger.
(4) OPERATION OF BUSINESS. Infinop will continue to conduct its businesses
in the Ordinary Course of Business and will not (and will not cause or permit
any of its Subsidiaries to)without the prior written consent of Vianet, engage
in any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business. Without limiting the generality of the foregoing,
without the prior written consent of Vianet:
(1) none of Infinop and its Subsidiaries will authorize or effect any
change in its charter or bylaws;
(2) none of Infinop and its Subsidiaries will grant any options, warrants,
or other rights to purchase or obtain any of its capital stock or issue, sell,
or otherwise dispose of any of its capital stock (except upon the conversion or
exercise of options, warrants, and other rights currently outstanding);
(3) none of Infinop and its Subsidiaries will declare, set aside, or pay
any dividend or distribution with respect to its capital stock (whether in cash
or in kind), or redeem, repurchase, or otherwise acquire any of its capital
stock;
(4) none of Infinop and its Subsidiaries will issue any note, bond, or
other debt security or create, incur, assume, or guarantee any indebtedness for
borrowed money or capitalized lease obligation;
(5) none of Infinop and its Subsidiaries will impose any Security Interest
upon any of its assets;
(6) none of Infinop and its Subsidiaries will make any capital investment
in, make any loan to, or acquire the securities or assets of any other Person;
(7) none of Infinop and its Subsidiaries will make any change in employment
terms for any of its directors, officers, and employees; and
(8) none of Infinop and its Subsidiaries will commit to any of the
foregoing.
(5) FULL ACCESS. Infinop will (and will cause each of its Subsidiaries to)
permit representatives of Vianet to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
Infinop and its Subsidiaries, to all premises, properties, personnel, books,
records (including tax records), contracts, and documents of or pertaining to
each of Infinop and its Subsidiaries. Vianet will treat and hold any
Confidential Information it receives from any of Infinop and its Subsidiaries in
the course of the reviews contemplated by this Section 7(e) as confidential and
will not disclose the Confidential Information to any other person, will not use
any of the Confidential Information except in connection with this Agreement,
and, if this Agreement is terminated for any reason whatsoever, agrees to return
to Infinop all tangible embodiments (and all copies) thereof which are in its
possession.
(6) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice to
the other of any material adverse development causing a breach of any of its own
representations and warranties in Section 3, 4, 5 or 6 above. No disclosure by
any Party pursuant to this Section 7(f), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
(7) EXCLUSIVITY. Infinop and the Principal Shareholders will not (and will
not cause or permit any of its Subsidiaries to) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of all or substantially all of the capital stock or assets of any of
Infinop and its Subsidiaries (including any acquisition structured as a merger,
consolidation, or share exchange). Infinop shall notify Vianet immediately if
any Person makes any proposal, offer, inquiry, or contact with respect to any of
the foregoing.
(8) EXPENSE BUDGET. Prior to the Closing, Vianet and Infinop will jointly
prepare a mutually satisfactory expense budget for the operation of the business
of Infinop and the Subsidiaries for the period commencing on the Closing Date
through June 30, 2000 (THE "BUDGET"). The Budget shall provide for minimum
expenditures of $2,500,000. After the Closing, Vianet will fund the expenses
provided for in the Budget at the time and in the manner provided for in the
Budget. The Budget shall not be changed without the written approval of Xxxx
Xxxxxx or such other person as shall be designated by the Principal Stockholders
as their designee for that purpose in a writing signed by the Principal
Stockholders and delivered to Vianet.
(9) XXXXXX FEE. At the Closing, the Infinop Stockholders shall pay 50% of
the fee of X. Xxxxxx in connection with the Merger (THE "XXXXXX FEE") and Vianet
shall pay 50% of the Xxxxxx Fee. Such payment shall be made by delivery by
Vianet to Xxxxxx of 40,000 Vianet Shares, it being understood that the Merger
Consideration has been reduced by 20,000 Vianet Shares representing the Infinop
Stockholders' portion of the Xxxxxx Fee.
(10) BOARD REPRESENTATION. After the Closing, the directors of Vianet shall
appoint one representative of the Principal Stockholders to the Vianet Board of
Directors. Prior to Closing, the Principal Stockholders shall provide Vianet
with a list of three candidates (none of which shall have been an employee of
Infinop) and Vianet shall choose one of these individuals for appointment, after
the Closing, to the Vianet Board. For so long as the Principal Stockholders
continue to own at least ten percent (10%) of the issued and outstanding shares
of Vianet, at each annual meeting of shareholders of Vianet, the nominating
committee shall nominate one candidate for director selected by the nominating
committee from a list of three candidates proposed by the Principal
Stockholders, and management shall recommend the election of such candidate,
provided that, if Vianet adopts a classified Board or a Board with staggered
terms, the Principal Stockholders shall only be entitled to one director serving
at any given time.
(11) RESERVED VIANET SHARES. After the Closing, Vianet shall reserve in
treasury sufficient Vianet Shares to cover (i) the conversion of all Convertible
Debentures that are not converted at or prior to the Closing and (ii) the
exercise of all Infinop Stock Options that were not exercised at or prior to the
Closing.
(12) EMPLOYEE BONUSES. Within 90 days after the Closing, Vianet shall
provide the Surviving Corporation with the funds necessary, and shall cause the
Surviving Corporation, to pay the employees listed on Exhibit D hereto the
back-salary and bonuses described on such Exhibit D, up to a maximum of
$400,000.
(13) INFORMATION STATEMENT. After execution of this Agreement, Vianet will
assist, as reasonably requested by Infinop, in preparing the Information
Statement, including providing to Infinop all information reasonably requested
by Infinop regarding Vianet that is reasonably necessary to complete the
Information Statement. The information provided by Vianet regarding Vianet
including, without limitation, any information filed by Vianet with the SEC
under the Securities Exchange Act incorporated by reference will not contain any
untrue statement of material fact or omit to state any material fact necessary
to make the statements therein not misleading.
(14) PATENT APPLICATIONS. The Principal Stockholders agree to execute and
deliver all applications for patent, including all divisional, continuation,
reissue and other applications for patent on the invention(s) set forth in the
pending applications listed in Section 4(m)(iii) of the Disclosure Schedule and
all assignments thereof to Vianet, the Surviving Corporation or its assigns, to
communicate to Vianet or its representatives all facts known to the Principal
Stockholders respecting said invention(s), whenever requested, to testify in any
interferences or other legal proceedings in which any of said applications or
patents resulting therefrom may become involved, to sign all lawful papers, make
all rightful oaths, and to do generally everything reasonably necessary to
assist Vianet, its successors, assigns and nominees to obtain patent protection
for said invention(s) in the United States and all other countries, all at the
cost and expense of Vianet.
(15) TRANSFERS BY SURVIVING CORPORATION. After the Effective Time, Vianet
shall not cause or permit the Surviving Corporation to transfer any of its
properties or assets outside of the ordinary course of business other than
transfers to subsidiary corporations wholly-owned by the Surviving Corporation
or the merger of the Surviving Corporation into Vianet in a merger qualifying
under Section 368(a) of the Code.
(16) TAX INFORMATION. As promptly as reasonably practicable after the
Closing, the Principal Stockholders will provide to Vianet the following
information with respect to each of Infinop and its Subsidiaries (or, in the
case of clause (B) below, with respect to each of the Subsidiaries) as of the
Closing Date: (A) the basis of Infinop or Subsidiary in its assets; (B) the
basis of the stockholder(s) of the Subsidiary in its stock (or the amount of any
Excess Loss Account); (C) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to Infinop or Subsidiary; and (D) the amount
of any deferred gain or loss allocable to Infinop or Subsidiary arising out of
any deferred intercompany transaction.
8. CONDITIONS TO OBLIGATION TO CLOSE.
(1) CONDITIONS TO OBLIGATION OF VIANET AND LABS. The obligation of each of
Vianet and Labs to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(1) this Agreement and the Merger shall have received the Requisite Infinop
Stockholder Approval and Infinop shall have delivered to Vianet copies of the
Board of Directors and Infinop Stockholders resolutions approving this Agreement
and the Merger, certified by the Secretary of Infinop, and good standing
certificates for Infinop and the Subsidiaries dated not more than ten (10) days
prior to the Closing;
(2) Infinop and its Subsidiaries shall each have procured all consents of
any government agency or other Person required to be obtained by them to
consummate the transactions contemplated by this Agreement including, without
limitation, the consents required under Section 4(c) to the Disclosure Schedule;
(3) the representations and warranties of Infinop and the Principal
Stockholders set forth in this Agreement above shall be true and correct in all
material respects at and as of the Closing Date;
(4) each of Infinop and the Principal Stockholders shall have performed and
complied with all of its covenants hereunder in all material respects through
the Closing;
(5) no action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of Vianet to own the
capital stock of the Surviving Corporation and to control the Surviving
Corporation and its Subsidiaries, or (D) affect adversely the right of the
Surviving Corporation and its Subsidiaries to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(6) Infinop shall have delivered to Vianet and Labs a certificate to the
effect that each of the conditions specified above in Section 8(a)(i)-(v) has
been satisfied in all respects;
(7) Vianet and Labs shall have received from counsel to Infinop an opinion
in form and substance as set forth in Exhibit E attached hereto, addressed to
Vianet and Labs, and dated as of the Closing Date;
(8) Vianet and Labs shall have received the resignations, effective as of
the Closing, of each director and officer of Infinop and its Subsidiaries;
(9) Xxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxx Xxx, Hongyang Chao and
Xxxxxx Xxxx shall have executed and delivered to Vianet AND THE SURVIVING
CORPORATION EMPLOYMENT AGREEMENTS IN THE FORM ANNEXED HERETO AS EXHIBITS F
THROUGH K (THE "EMPLOYMENT AGREEMENTS");
(10) the Principal Stockholders, the Escrow Agent, and all other parties
thereto, shall have executed and delivered the Escrow Agreement;
(11) Infinop shall have delivered a sworn affidavit, in form and substance
reasonably satisfactory to Vianet, signed by Xxxxxxx Xxxxxx affirming that he
owns 300,000 Infinop Shares and releasing Infinop and Vianet from any claim by
him to more than 300,000 Infinop Shares or more than 300,000 Vianet Shares
multiplied by the Conversion Ratio; (1)
(12) Vianet shall have raised and closed at least $1,500,000 in cash
through financing;
(13) Infinop shall have satisfied, and filed with the Xxxxxx County
District Court a Satisfaction of Judgment with respect to, the Judgment against
Computer and Information Sciences, Inc. filed in the Xxxxxx County District
Court on August 14, 1995 in favor of Xxxxx Xxxxxxxxxx (Case No. 95-30531-211);
(14) each of the holders of the 8% Convertible Debentures due August 17,
1999 shall have converted his or its Convertible Debentures into Infinop Shares
and Xxxxxxx Xxxxxxxx shall have converted $50,000 of his Convertible Debentures
due September 30, 2002 into Infinop Shares; and
(15) all actions to be taken by Infinop in connection with consummation of
the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Vianet and Labs.
Vianet and Labs may waive any condition specified in this Section 8(a) if
they execute a writing so stating at or prior to the Closing.
(2) CONDITIONS TO OBLIGATION OF INFINOP. The obligation of Infinop to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(1) the representations and warranties of Vianet and Labs set forth in this
Agreement above shall be true and correct in all material respects at and as of
the Closing Date;
(2) Vianet and Labs shall each have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(3) no action, suit or proceeding shall be pending or threatened before any
court or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation;
(4) Vianet and Labs shall have delivered to Infinop a certificate to the
effect that each of the conditions specified above in Section 8(b)(i)-(iii) is
satisfied in all respects;
(5) this Agreement and the Merger shall have received the Requisite Infinop
Stockholder Approval;
(6) Infinop shall have received from counsel to Vianet and Labs an opinion
in form and substance as set forth in Exhibit L attached hereto, addressed to
Infinop, and dated as of the Closing Date;
(7) Vianet, Labs and the Escrow Agent shall have executed and delivered the
Escrow Agreement;
(8) Vianet shall have executed and delivered the Registration Rights
Agreement;
(9) Vianet shall have raised and closed at least $1,500,000 in cash through
financing; and
(10) all actions to be taken by Vianet and Labs in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Infinop.
Infinop may waive any condition specified in this Section 8(b) if it
executes a writing so stating at or prior to the Closing.
9. SURVIVAL AND INDEMNIFICATION.
(1) SURVIVAL AND INDEMNIFICATION. The representations and warranties of
Infinop and the Principal Stockholders contained in this Agreement shall survive
the Closing hereunder and continue in full force and effect thereafter until the
second anniversary of THE CLOSING DATE, EXCEPT FOR THE REPRESENTATIONS SET FORTH
IN Section 4(B) AND Section 4(F) WHICH SHALL SURVIVE THE CLOSING UNTIL THE FIFTH
(5TH) anniversary of the Closing Date. Covenants and agreements set forth in
this Agreement to be performed after the Closing shall survive the Closing in
accordance with their respective terms. No claim shall be made or action brought
by any party after the Closing for the breach of any representation or warranty
in this Agreement or in any instrument delivered pursuant to this Agreement or
with respect to any agreement or covenant in this Agreement or in any instrument
delivered pursuant to this Agreement after the second anniversary of the Closing
Date, except with respect to those representations and warranties set forth in
Section 4(b) and Section 4(f), and any claim for Adverse Consequences suffered
by Vianet arising out of a CIS Claim (as defined below), which may be brought at
any time UNTIL THE FIFTH (5TH) anniversary of the Closing Date, and except with
respect to those covenants that by their terms contemplate performance after the
Closing.
(2) INDEMNIFICATION BY PRINCIPAL STOCKHOLDERS. The Principal Stockholders,
jointly and severally, agree to indemnify and hold harmless Vianet and its
Subsidiaries and Affiliates (including, after the Effective Time, the Surviving
Corporation and its SUBSIDIARIES) (COLLECTIVELY, THE "VIANET GROUP"), and the
officers, directors and employees of the Vianet Group (other than the Principal
Stockholders) and their successors and assigns (all of the foregoing entities
and individuals to be referred to hereafter AS THE "VIANET INDEMNIFIED PERSONS")
from and against any and all Adverse Consequences that any Vianet Indemnified
Person may suffer resulting from, arising out of, relating to, in the nature of,
or caused by:
(1) any inaccuracy in any of the representations and warranties of the
Principal Stockholders or Infinop set forth in this Agreement;
(2) any failure of Infinop (prior to Closing) or any failure of the
Principal Stockholders to comply with any of the obligations, covenants or
agreements contained in this Agreement; or
(3) any claim by any person arising out of, based upon, relating to or in
connection with ownership or alleged ownership of shares of stock or any other
equity interest in, or any right to share in profits of, or proceeds of sale of,
Computer and INFORMATION SCIENCE, INC. (A "CIS CLAIM").
(3) INDEMNIFICATION BY VIANET. Vianet agrees to indemnify and hold harmless
the Infinop Stockholders from and against any and all Adverse Consequences that
the Infinop Stockholders may suffer resulting from, arising out of, relating to,
in the nature of, or caused by:
(1) any inaccuracy in any of the representations and warranties of Vianet
or Labs set forth in this Agreement; or
(2) any failure of Vianet or Labs to comply with any of their obligations,
covenants or agreements contained in this Agreement.
(4) MATTERS INVOLVING THIRD PARTIES.
(1) If any third party shall notify either a Vianet Indemnified Person or
the Infinop Stockholders, as the case may be (in EITHER CASE, AN "INDEMNIFIED
PARTY") WITH RESPECT TO ANY MATTER (A "THIRD PARTY CLAIM") which may give rise
to a claim for INDEMNIFICATION AGAINST ANY OTHER PARTY (THE "INDEMNIFYING
PARTY") under this Section 9, then the Indemnified Party shall promptly notify
EACH INDEMNIFYING PARTY THEREOF IN WRITING; PROVIDED, HOWEVER, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(2) Any Indemnifying Party will have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party so long as (A) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief, (B) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (C) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently. (1)
(3) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9(d)(ii) above, (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(4) In the event any of the conditions in Section 9(d)(ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 9.
(5) INDEMNIFICATION PAYMENTS. All indemnification payments under this
Section 9 shall be deemed adjustments to the Merger Consideration.
(6) LIMITS ON INDEMNIFICATION. Notwithstanding anything to the contrary
contained in this Section 9, except as provided in the following sentence: (a)
there shall be no amount payable by any Principal Stockholder pursuant to his
indemnification obligations under this Section 9, unless and until the
cumulative amount of all Adverse Consequences incurred by the Vianet Group under
this Section 9 exceeds $200,000, in which event the Vianet Group shall be
entitled to recover from the Principal Stockholders pursuant to this Section 9
the amount of such Adverse Consequences in excess of $200,000 and (b) the
liability of the Principal Stockholders for any claim for indemnification
hereunder shall be limited to, and satisfied exclusively from, the Vianet Shares
on deposit with the Escrow Agent pursuant to the Escrow Agreement and no
Principal Stockholder shall have any liability for any deficiency with respect
to any such claim. The limitations set forth in the foregoing sentence shall not
apply to any Adverse Consequences arising out of a CIS Claim or any breach of
the representations and warranties in Section 4(b) or Section 4(f) of this
Agreement.
(7) INSURANCE PROCEEDS. The amount of any Adverse Consequences otherwise
recoverable under this Section 9 by any Indemnified Party shall be reduced by
any amounts recovered by the Indemnified Party under insurance policies (net of
any costs incurred in connection with the collection thereof) (it being
understood that an Indemnified Party shall use its commercially reasonable
efforts to timely pursue all reasonable remedies against applicable insurers).
(8) EXCLUSIVE REMEDY. Each of Vianet and Labs acknowledges and agrees that
it will not assert, except pursuant to and as permitted by this Section 9, any
claim against any Principal Stockholder or any employee, office or director of
Infinop or any of its Subsidiaries for any inaccuracies, misstatements or
omissions with respect to information furnished to Vianet and Labs in connection
with the transactions contemplated hereby, it being agreed and understood that
indemnification under this Section 9 shall be the sole and exclusive remedy for
any such inaccuracies, misstatements or omissions.
(9) EFFECT OF KNOWLEDGE. Notwithstanding anything to the contrary contained
in this Agreement, except with respect to a breach of the representations and
warranties set forth in Sections 4(a), 4(b), 4(f), 4(m) and 4(cc) (as it relates
to Sections 4(a), 4(b), 4(f) and 4(m)), and a CIS Claim, no claim for
indemnification may be asserted by any member of the Vianet Group against any
Principal Stockholder under this Section 9 in respect of any fact, event or
circumstance giving rise to such claim that was discovered by or known to Vianet
or Labs on or before the Closing, provided that, the Principal Stockholders
shall have the burden of proving discovery or knowledge by Vianet or Labs.
10. TERMINATION.
(1) TERMINATION OF AGREEMENT. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(1) the Parties may terminate this Agreement by mutual written consent at
any time prior to the Effective Time;
(2) Vianet and Labs may terminate this Agreement by giving written notice
to Infinop and the Principal Stockholders at any time prior to the Effective
Time (A) in the event Infinop or the Principal Stockholders have breached in any
material respect any representation, warranty, or covenant contained in this
Agreement, Vianet or Labs has notified Infinop and the Principal Stockholders of
the breach, and the breach has continued without cure for a period of ten (10)
days after the notice of breach and such breach results in the failure to be
satisfied of any condition precedent to the obligation of Vianet or Labs to
consummate the transactions contemplated hereby or (B) if the Closing shall not
have occurred on or before September 30, 1999, by reason of the failure of any
condition precedent under Section 8(a) hereof (unless the failure results
primarily from Vianet or Labs breaching any representation, warranty, or
covenant contained in this Agreement);
(3) Infinop may terminate this Agreement by giving written notice to Vianet
and Labs at any time prior to the Effective Time (A) in the event Vianet or Labs
has breached in any material respect any representation, warranty, or covenant
contained in this Agreement, Infinop has notified Vianet and Labs of the breach,
and the breach has continued without cure for a period of ten (10) days after
the notice of breach and such breach results in the failure to be satisfied of
any condition precedent to the obligation of Infinop and the Principal
Stockholders to consummate the transactions contemplated hereby or (B) if the
Closing shall not have occurred on or before September 30, 1999, by reason of
the failure of any condition precedent under Section 8(b) hereof (unless the
failure results primarily from Infinop breaching any representation, warranty,
or covenant contained in this Agreement); or
(4) any Party may terminate this Agreement by giving written notice to the
other Party at any time in the event this Agreement and the Merger fail to
receive the Requisite Infinop Stockholder Approval prior to September 30, 1999.
(2) EFFECT OF TERMINATION. If any Party terminates this Agreement pursuant
to Section 10(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then IN BREACH); PROVIDED, HOWEVER, that the
confidentiality provisions contained in Section 7(e) above and expense
provisions contained in Section 11(l) shall survive any such termination.
11. MISCELLANEOUS.
(1) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any press
release or make any public announcement relating to THE SUBJECT MATTER OF THIS
AGREEMENT WITHOUT THE PRIOR WRITTEN APPROVAL OF THE OTHER PARTY; PROVIDED,
HOWEVER, that Vianet may make any public disclosure it believes in good faith
and that it is advised by legal counsel is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities.
(2) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties AND THEIR RESPECTIVE
SUCCESSORS AND PERMITTED ASSIGNS; PROVIDED, HOWEVER, that the provisions in
Section 2 above concerning issuance of the Vianet Shares are intended for the
benefit of the Infinop Stockholders, the provisions of Section 2 hereof
regarding the assumption of the obligations of Infinop under the Convertible
Debentures and the Infinop Stock Options are intended for the benefit of the
holders thereof, the provisions of Section 2(g) regarding the registration of
the Vianet shares are intended for the benefit of the Infinop Stockholders, and
the provisions of Section 2A hereof regarding the payment of Additional Payments
are intended for the benefit of the Additional Payment Payees.
(3) ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.
(4) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(5) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(6) HEADINGS. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(7) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if delivered
personally (in such case, on the date of delivery), if sent by registered or
certified mail, return receipt requested, postage prepaid (in such case, three
days after mailing) or if by nationally recognized overnight courier (in such
case, on the date of delivery as confirmed by such courier), and addressed to
the intended recipient as set forth below:
If to Vianet or Labs:
Vianet Technologies, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxx & Xxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to Infinop:
Infinop Holdings., Inc.
0000 Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxxxx, Phleger & Xxxxxxxx, LLP
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to the Principal Stockholders:
Xxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxxx
000 Xxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxx 00000
With a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx, LLP
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(8) GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the domestic laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Delaware. Each of the parties hereto hereby irrevocably submits to the exclusive
jurisdiction of the state or federal courts located in Delaware, in connection
with any suit, action or other proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby, and hereby agree not to
assert, by way of motion, as a defense, or otherwise in any such suit, action or
proceeding that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced by such courts.
(9) AMENDMENT. To the extent permitted by applicable law, this Agreement
may be amended only in writing signed by all parties hereto, approved by each of
the respective boards of directors of Vianet and Labs and the Board of Directors
of the Infinop, and the PRINCIPAL STOCKHOLDERS, AT ANY TIME BEFORE OR AFTER
ADOPTION OF THIS AGREEMENT BY REQUISITE INFINOP STOCKHOLDER APPROVAL; PROVIDED,
HOWEVER, that, after any such approval, no amendment shall be made without the
approval of such shareholders except as permitted by the Delaware General
Corporation Law.
(10) EXTENSION; WAIVER. At any time prior to the Effective Time, any party
hereto, by action taken by or on behalf of their respective boards of directors,
if applicable, may (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 of any other party contained
herein or in any document, certificate or writing delivered pursuant hereto by
any other party, or (iii) subject to Section 11(i), waive compliance with any of
the agreements or conditions contained herein or any breach thereof. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
(11) SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(12) EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(13) CONSTRUCTION. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation. Any reference to the
masculine shall, if the context otherwise requires, be deemed a reference to the
feminine and vice versa; any reference to the singular shall, if the context
otherwise requires, be deemed a reference to the plural, and vice versa.
(14) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(15) DISPUTE RESOLUTION. The parties desire that any controversy or claim
arising out of or related to this Agreement or the transactions contemplated
hereby be resolved in an expeditious and efficient manner exclusively in
accordance with this dispute resolution procedure. A dispute under this clause
shall be initiated by delivering written notice to the other party briefly
stating the nature of the dispute and requesting resolution. Except as otherwise
specified, each party shall bear its own costs and fees relating to any dispute.
(1) INFORMAL RESOLUTION. The parties agree that before initiation of any
legal or arbitration proceeding with respect to any issue arising out of the
transactions contemplated by this Agreement, they shall use their respective
representatives to attempt to resolve in good faith all disputes between the
parties. The parties agree that they will cause their respective representatives
to meet in person at a mutually agreeable location, to attempt in good faith to
resolve such dispute within fifteen business days of notification of such
dispute. In the event that the representatives are unable to resolve such a
dispute, the aggrieved party must refer the dispute to mediation under paragraph
(ii).
(2) MEDIATION. In the event any dispute is not resolved by a meeting of the
parties, the dispute shall be referred to non-binding mediation. The mediation
shall occur within 40 days of the meeting of the parties. Mediation fees shall
be split equally among the parties. The mediator shall be selected by agreement
of the parties or, in the event of no agreement, shall be designated by Judicial
Arbitration and Mediation Services ("JAMS"). The mediation shall be attended by
the parties' representatives and, if desired, the parties' attorneys.
(3) ARBITRATION. In the event a dispute is not resolved by mediation
pursuant to paragraph (ii), and the parties thereafter mutually agree, in
writing, to proceed to binding arbitration, the aggrieved party shall refer the
dispute to binding arbitration. The arbitration shall be governed by the
procedures set forth below. The arbitrator shall give written notice to the
parties of the arbitrator's determination, and judgment upon the same may be
entered by any court of competent jurisdiction.
(4) SELECTION OF ARBITRATOR. Within 30 days of referral of a dispute to
arbitration, a single arbitrator will be selected by agreement of the parties
or, in the event of no agreement, shall be designated by JAMS. Unless agreed
otherwise by the parties, the arbitrator shall be a retired judge with
arbitration experience.
(5) DISCOVERY. The parties agree to submit discovery plans to the
arbitrator within15 days following the date that the arbitrator accepts his
appointment to this matter. The discovery plan will describe all discovery
contemplated. The arbitrator will schedule a meeting of counsel to occur within
15 days of his receipt of the discovery plans, at which time the arbitrator will
issue a written order scheduling dates for all depositions and completion dates
for all additional discovery. The written discovery plan may only be modified by
a written order from the arbitrator. The parties may request, in their discovery
plans, and the arbitrator shall be empowered to impose, limitations on the
nature and quantity of discovery to be conducted.
(6) PROCEDURE. The arbitration hearing shall take place in Wilmington,
Delaware within 90 days of the arbitrator's acceptance of his appointment. The
hearing is not to exceed two (2) days. Introduction of evidence and testimony at
the hearing will be subject to the Federal Rules of Civil Procedure. Each party
is entitled to be heard, to present material evidence and testimony, and to
cross-examine witnesses appearing at the hearing.
(7) LIMITATION ON DAMAGES. The arbitrator may not award exemplary or
punitive damages.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
VIANET TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Chairman
VIANET LABS, INC.
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Chairman
INFINOP HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: CEO
/s/ Xxxx X. Xxxxxx
XXXX XXXXXX
/s/ Xxxxx Xxxxxx
XXXXX XXXXXX
/s/ Xxxxxx Xxxxxx
XXXXXX XXXXXX
