EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER (the "Agreement") is dated as of
April [___], 2001 by and among WebToTel, Inc., a Delaware corporation (the
"Company"), Counsel Communications LLC, a Delaware limited liability company
("Counsel"), I-Link Incorporated, a Florida corporation (the "Purchaser"),
I-Link Acquisition Corp., a Delaware corporation (the "Merger Sub"), and the
other shareholders of the Company as listed on the signature pages hereof.
W I T N E S S E T H:
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WHEREAS, the respective Boards of Directors of the Company, the
Purchaser and Merger Sub have approved and adopted the merger of the Company
with and into Merger Sub on the terms and subject to the conditions set forth
herein; and
WHEREAS, pursuant to the Merger, the outstanding shares of the common
stock of the Company, $0.001 par value per share (the "Company Common Stock")
will be converted into the right to receive the consideration described below.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
Section 1.1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the respective meanings set forth below.
"Affiliate" means, with respect to any Person, any other Person who,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"GAAP" means generally accepted accounting principles as in effect in
the United States on the date of this Agreement.
"Governmental Authority" means any national, federal, state,
provincial, county, municipal or local government, foreign or domestic, or the
government of any political subdivision of any of the foregoing, or any entity,
authority, agency, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of or
pertaining to government, including any authority or other quasi-governmental
entity established to perform any of such functions.
"Material Adverse Change" means, with respect to any Person, a material
adverse change in the business, financial condition or results of operations of
such Person.
"Person" means an individual, partnership, limited liability company,
corporation, joint stock company, unincorporated organization or association,
trust or joint venture, or a governmental agency or political subdivision
thereof.
"Purchaser Common Stock" means the common stock, par value $0.007 per
share, of the Purchaser.
"Restricted Stock" means any shares of Common Stock of the Purchaser
issued in connection with the consummation of the transactions contemplated by
this Agreement.
"Securities Act" means the Securities Act of 1933 or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"Taxes" means any and all taxes, charges, fees, levies or other like
assessments (and all related interest, additions to tax and penalties),
including, income, transfer, gains, gross receipts, excise, inventory, property
(real, personal or intangible), customs duty, sales, use, license, withholding
(including backup withholding), payroll, employment, capital stock or franchise
taxes and escheat liability, imposed by the United States, or any state, local
or foreign government, or any subdivision or agency of any of the foregoing,
whether computed on a unitary, combined or any other basis.
"Tax Return" means any report, return, information reports or returns
or other information with respect to Taxes (including any attached schedules or
any amendments to such report return or other information) required to be filed
with or supplied to any taxing authority.
Section 1.2. INTERPRETATION. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereto,"
"hereof" and words of similar import refer to this Agreement as a whole and not
to any particular Section or paragraph hereof; (ii) words importing the
masculine gender shall also include the feminine and neutral genders, and vice
versa; and (iii) words importing the singular shall also include the plural, and
vice versa.
ARTICLE II
The Merger
Section 2.1. THE MERGER. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 2.2), the Merger
Sub shall be merged with and into the Company (the "Merger") and the separate
corporate existence of the Merger Sub shall thereupon cease. The Company shall
be the surviving corporation in the Merger and shall continue to be governed by
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the Delaware General Corporation Law (the "DGCL"). The separate corporate
existence of the Company with all its rights, privileges, powers and franchises
shall continue unaffected by the Merger. The Merger shall have the effects
specified in the DGCL. From and after the Effective Time, the Company is
sometimes referred to herein as the "Surviving Corporation."
Section 2.2. CERTIFICATE OF MERGER. On the Closing Date (as defined in
Section 2.13), the parties hereto shall cause a certificate of merger (the
"Certificate of Merger"), meeting the requirements of Section 251 of the DGCL,
to be properly executed and filed in accordance with the DGCL. The Merger shall
be effective at the time and on the date of the filing of the Certificate of
Merger in accordance with the DGCL, or at such other time and date specified in
the Certificate of Merger (the "Effective Time").
Section 2.3. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Company in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation until
amended in accordance with applicable law.
Section 2.4. BY-LAWS. The by-laws of the Company in effect immediately
prior to the Effective Time shall be the by-laws of the Surviving Corporation
until amended in accordance with applicable law.
Section 2.5. OFFICERS. The officers of the Surviving Corporation from
and after the Effective Time shall be designated by the Purchaser and will hold
office until their successors are duly elected or appointed and qualify in the
manner provided in the certificate of incorporation or by-laws of the Surviving
Corporation or as otherwise provided by law, or until their earlier death,
resignation or removal.
Section 2.6. DIRECTORS. The directors of the Surviving Corporation from
and after the Effective Time shall be designated by the Purchaser and will serve
until their successors are duly elected or appointed and qualify in the manner
provided in the certificate of incorporation or by-laws of the Surviving
Corporation or as otherwise provided by law, or until their earlier death,
resignation or removal.
Section 2.7. CONVERSION OF SHARES. The aggregate amount of
consideration payable pursuant to this Section 2.7 is hereinafter referred to as
the "Merger Consideration," and is calculated based on a $0.56 per share
valuation of Purchaser Common Stock to be delivered as the Merger Consideration
(with the result that the shareholders of the Company will own 17,454,333 shares
of the outstanding Purchaser Common Stock immediately following the Merger.
Subject to the terms and conditions of this Agreement, as of the Effective Time
(and as elected by each stockholder of the Company prior to the Effective Time),
by virtue of the Merger and without any action on the part of the Merger Sub,
the Company or the holder of any shares of the Company Common Stock, the
following shall occur:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held in the Company's
treasury), shall, by virtue of the Merger and without any action on the part of
the holders thereof, be converted into the right to receive 0.1313 (the
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"Exchange Ratio") of a share of Purchaser Common Stock (subject to adjustment as
provided herein), such that immediately after the Effective Time 17,454,333
shares of the Purchaser will be owned by the Company's shareholders, as
indicated on Exhibit A attached hereto.
(b) All shares of Company Common Stock converted in accordance
with Section 2.7(a) shall, when so converted, no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock (a
"Certificate") shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration payable with respect thereto. Each
share of Company Stock held in the treasury of the Company shall, by virtue of
the Merger and without any action on the part of the holders thereof, be
canceled, retired and cease to exist and no payment shall be made with respect
thereto.
(c) Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Merger Sub or the Purchaser, be
converted into one share of common stock of the Surviving Corporation.
Section 2.8. PAYMENT OF MERGER CONSIDERATION. On the Closing Date, the
Purchaser shall deliver the Merger Consideration payable to Counsel and the
other Company shareholders registered in their respective names. The Merger
Consideration is subject to adjustment as set forth in Section 2.9.
Section 2.9. ADJUSTMENTS. In the event that, subsequent to the date of
this Agreement and prior to the Effective Time, the outstanding shares of
Purchaser Common Stock or Company Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities through reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other like changes in the
Purchaser's or the Company's capitalization, then an appropriate and
proportionate adjustment shall be made in the terms of the consideration
provided for in this Article II.
Section 2.10 FRACTIONAL SHARES. No fraction of a share of Purchaser
Common Stock will be issued, but in lieu thereof, each holder of shares of
Company Common Stock who would otherwise be entitled to a fraction of a share of
Purchaser Common Stock (after aggregating all fractional shares of Purchaser
Common Stock to be received by such holder) shall be entitled to receive from
Purchaser an amount of cash (rounded down to the nearest whole cent) equal to
the product of (i) such fraction, multiplied by (ii) the value ascribed to each
share of Company Common Stock pursuant to this Agreement.
Section 2.11. EXCHANGE OF CERTIFICATES.
(a) At the Closing, Counsel and the other Company shareholders
shall surrender its Certificate or Certificates, with such stock powers executed
in blank or otherwise in proper form for transfer to the Purchaser as the
Purchaser may reasonably request in exchange for the portion of the Merger
Consideration into which the shares of Company Common Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon such surrender, Counsel and the other Company shareholders shall
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be entitled to receive in exchange therefor the Merger Consideration to which
Counsel and the other Company shareholders shall have become entitled pursuant
to the provisions of this Article II and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on any cash
constituting Merger Consideration and any unpaid dividends and distributions, if
any, payable to holders of Certificates. Until surrendered in accordance with
the provisions of this Section 2.11, each Certificate (other than Certificates
canceled pursuant to Section 2.7(b)) shall represent for all purposes only the
right to receive the Merger Consideration provided for by this Agreement,
without interest.
(b) No dividends or other distributions declared after the
Effective Time with respect to the Purchaser Common Stock and payable to the
holders of record thereof shall be paid to the holder of any unsurrendered
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article II. After the surrender of a Certificate in
accordance with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of the Purchaser
Common Stock, if any, represented by such Certificate.
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration as provided for, and in accordance with, the provisions of this
Section 2.11.
(d) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Purchaser, the posting by such person of a bond in such amount as the
Purchaser reasonably may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Purchaser will issue in
exchange for such lost, stolen or destroyed Certificate the cash and shares of
Purchaser Common Stock deliverable in respect thereof pursuant to this
Agreement.
Section 2.12. CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place as soon as practicable following the
satisfaction or waiver (to the extent waivable) of the conditions set forth in
Article VI or at such other time and place (including via exchange of facsmile
documents) as the parties may agree. The time and date of the Closing is herein
referred to as the "Closing Date."
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ARTICLE III
Representations and Warranties Regarding the Company
The Company hereby represents and warrants to the Purchaser and the Merger Sub
that:
Section 3.1. ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full power and authority, corporate and other,
to own, lease and operate its properties and assets and to carry on its business
as currently conducted.
Section 3.2. AUTHORIZATION. The Company has full power and authority
(corporate and other) and legal capacity to execute and deliver this Agreement
and each other agreement, document, instrument or certificate contemplated by
this Agreement or to be executed by the Company in connection with the
consummation of the transactions contemplated by this Agreement (this Agreement,
together with all such other agreements, documents, instruments and certificates
required to be executed by the Company being referred to herein, collectively,
as the "COMPANY DOCUMENTS"), and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement by
the Company has been duly authorized by the Board of Directors of the Company,
and no further corporate action on the part of the Company or its shareholders
is necessary to authorize this Agreement and the performance of the transactions
contemplated hereby. This Agreement has been, and each of the other Company
Documents will be at or prior to Closing, duly and validly executed and
delivered by the Company and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each of the other Company Documents when so executed and delivered will
constitute, legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section 3.3. CAPITALIZATION. (a) As of the date hereof:
(i) all of the issued and outstanding shares of capital stock
of the Company were duly authorized for issuance and are validly issued, fully
paid and non-assessable;
(ii) EXHIBIT A fully and accurately describes the capital
structure of the Company and, except as set forth on EXHIBIT A, there are no
outstanding securities of the Company convertible into or evidencing the right
to purchase or subscribe for any shares of capital stock of the Company, there
are no outstanding or authorized options, warrants, calls, subscription rights,
commitments or other agreements of any character requiring, and there are no
securities outstanding which upon conversion or exchange would require, the
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issuance, sale or transfer of any additional shares of capital stock of the
Company or other equity securities of the Company or other securities
convertible into, exchangeable for or evidencing the right to subscribe for or
purchase shares of capital stock of the Company or other equity securities of
the Company, or any stock appreciation rights, phantom stock or similar equity
equivalent rights issued by or binding upon the Company;
(iii) there are no voting trusts or other voting agreements
with respect to the capital stock of the Company or other ownership interests of
the Company or any agreement relating to the issuance, sale, redemption,
transfer or other disposition of any such interests of the Company to which the
Company is a party, or of which the Company has knowledge.; and
(iv) the Company controls the voting capital stock of Nexbell
Communications, Inc. ("Nexbell") and CPT-1 Holdings Inc.
Section 3.4. CORPORATE RECORDS; CONFLICTS; CONSENTS. The execution and
delivery by the Company of this Agreement and the other Company Documents, the
consummation of the transactions contemplated hereby or thereby, or compliance
by the Company with any of the provisions hereof or thereof will not (i)
conflict with, or result in the breach of, any provision of the Articles of
Incorporation or Bylaws of the Company; (ii) conflict with, violate, result in
the breach or termination of, or constitute a default under any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which the Company is a party or by which the Company or its properties or assets
are bound; (iii) violate any statute, rule, regulation, order or decree of any
Governmental Authority by which the Company is bound; or (iv) result in the
creation of any Lien (except as contemplated herein) upon the properties or
assets of the Company except, in case of clauses (ii), (iii) and (iv), for such
violations, breaches or defaults as would not, individually or in the aggregate,
have a Material Adverse Change. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any Person,
including without limitation any Governmental Authority, is required on the part
of the Company in connection with the execution, delivery and performance of
this Agreement or the other Company Documents, or the compliance by the Company
with any of the provisions hereof or thereof.
Section 3.5. REPORTS AND FINANCIAL STATEMENTS. (a) The Company and its
subsidiaries have been and are in compliance with all federal, state and local
laws, statutes, ordinances, rules and regulations (including without limitation
the Securities Act and the Securities Exchange Act of 1934, as amended) as of
the date hereof, the failure to comply with which could materially adversely
affect the business, assets, operations, earnings, prospects or condition
(financial or otherwise) of the Company or which would subject any officer or
director of the Company to civil or criminal penalties or imprisonment. The
Company has materially complied with the rules and regulations of all
governmental agencies having authority over its business or its operations,
including without limitation, agencies concerned with intra-state and interstate
commerce, occupational safety, environmental protection and employment
practices, except where the failure to comply would not have a material adverse
effect on the business, operations, earnings, assets or condition (financial or
otherwise) of the Company. The Company has no knowledge of and has not received
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any notice of violation of any such rule or regulation during the two years
prior to the date hereof which could result in any liability of the Company for
penalties of damages or which could subject the Company to any injunction or
government writ, order or decree. To the best of the Company's knowledge, there
are no facts, events or conditions that could interfere with, prevent continued
compliance with or give rise to any material liability under any federal, state
or local governmental laws, statutes, ordinances or regulations applicable to
the business, operations, earnings, assets or condition (financial or otherwise)
of the Company.
(b) The audited financial statements of Nexbell for the year
ended July 31, 2000 and any unaudited interim financial statements of Nexbell
through and including January 31, 2001 (collectively, the "COMPANY FINANCIAL
STATEMENTS") have been prepared in accordance with the United States generally
accepted accounting principles ("GAAP") applied on a basis consistent with prior
periods and fairly presented the consolidated financial position of Nexbell as
of the dates thereof (subject, in the case of unaudited interim statements to
normal year-end adjustments and the absence of certain footnote disclosures).
(c) As of the date of this Agreement, except as set forth in
the Company Financial Statements or as previously disclosed in writing to the
Purchaser and prior to the date of this Agreement, to the Company's knowledge
neither the Company nor any of its subsidiaries is a party to or bound by (i)
any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) or (ii) any non-competition agreement or any other
agreement or arrangement that materially limits the Company or any of its
subsidiaries or any of their respective affiliates, or that would, after the
date hereof similarly limit Nexbell or the Company or any successor thereto,
from engaging or competing in any line of business or in any geographic area
after giving effect to the transactions contemplated hereby.
Section 3.6. ABSENCE OF UNDISCLOSED LIABILITIES; AFFILIATE
TRANSACTIONS.
(a) Except for matters reflected or reserved against in the
balance sheet as of July 31, 2000 and January 31, 2001 included in the Company
Financial Statements or as previously disclosed in writing to the Purchaser,
neither the Company nor any of the Company Subsidiaries had at such date or has
incurred since that date any liabilities, obligations (whether absolute,
accrued, contingent or otherwise) or contingencies of any nature, except (i)
liabilities, obligations or contingencies (A) which are accrued or reserved
against in the Company Financial Statements or reflected in the notes thereto or
(B) which were incurred after July 31, 2000 and January 31, 2001 in the ordinary
course of business and consistent with past practices; or (ii) liabilities,
obligations or contingencies which are of a nature not required to be reflected
in the consolidated financial statements of the Company and the Company
Subsidiaries prepared in accordance with GAAP consistently applied and which
were incurred in the ordinary course of business. The Company and its
subsidiaries are current in the payment of all taxes.
(b) There are no other transactions, agreements, arrangements
or understandings between the Company or the Company Subsidiaries, on the one
hand, and the Company's affiliates (other than wholly-owned subsidiaries of the
Company) or other Persons, on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K promulgated under the Securities Act.
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Section 3.7. INTELLECTUAL PROPERTY. The Company owns, or has the right
to use (or believes, after due inquiry, that it can obtain the right to use on
reasonable commercial terms), all patents, patent applications, trademarks,
service names, trade names, copyrights, licenses, trade secrets or other
proprietary rights necessary to conduct its business as now being conducted and
as proposed to be conducted to the Company's knowledge without any conflict or
infringement of the rights of others and, except as set forth on Schedule 3.7
the Company has not received a notice that it is infringing upon or otherwise
acting adversely to the right or claimed right of any person under or with
respect to any of the foregoing, and to the Company's knowledge there is no
basis for any such claim. The Company has no patents or patent applications
issued, pending or issuable. The Company is not aware of any violation by a
third party of any of the Company's or its subsidiaries' patents, trademarks,
service marks, trade names, copyrights, trade secrets or other proprietary
rights. The Company is not aware that any of its employees is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
that would conflict with the Company's business as now being conducted and as
proposed to be conducted. Neither the execution nor delivery of this Agreement,
nor the conduct of the Company's business will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any employee is now obligated.
Section 3.8. LEGAL PROCEEDINGS. There are no legal proceedings pending
or, to the knowledge of the Company or its Affiliates, threatened that are
reasonably likely to prohibit or restrain the ability of the Company or its
Affiliates to enter into this Agreement or consummate the transactions
contemplated hereby or which otherwise would result in a Material Adverse
Change.
Section 3.9. NO MISREPRESENTATION. This Agreement (including the
Exhibits hereto) as of the date hereof contains no untrue statement of a
material fact nor omits a material fact necessary in order to make the
statements contained herein not misleading.
ARTICLE IV
Representations and Warranties Regarding the Purchaser and the Merger Sub
The Purchaser and the Merger Sub, jointly and severally, hereby represent and
warrant to the Company that:
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Section 4.1. ORGANIZATION AND GOOD STANDING. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida and the Merger Sub is a corporation duly organized
existing and in good standing under the laws of Delaware. The Purchaser and
Merger Sub have full power and authority (corporate and other) to own, lease and
operate its properties and assets and to carry on their business as currently
conducted.
Section 4.2. AUTHORIZATION. The Purchaser and Merger Sub have full
power and authority (corporate and other) and legal capacity to execute and
deliver this Agreement and each other agreement, document, instrument or
certificate contemplated by this Agreement or to be executed by the Purchaser
and/or the Merger Sub in connection with the consummation of the transactions
contemplated by this Agreement (this Agreement, together with all such other
agreements, documents, instruments and certificates required to be executed by
the Purchaser and the Merger Sub being referred to herein, collectively, as the
"PURCHASER AND MERGER SUB DOCUMENTS"), and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement by the Purchaser and the Merger Sub have been duly authorized by the
Board of Directors of the Purchaser and Merger Sub, and no further corporate
action on the part of the Purchaser and the Merger Sub or its shareholders is
necessary to authorize this Agreement and the performance of the transactions
contemplated hereby. This Agreement has been, and each of the other Purchaser
and Merger Sub Documents will be at or prior to Closing, duly and validly
executed and delivered by the Purchaser and the Merger Sub and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of the other Purchaser and the Merger Sub
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of the Purchaser and the Merger Sub, enforceable against the
Purchaser and the Merger Sub in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section 4.3. CAPITALIZATION. (a) As of the date hereof:
(i) all of the issued and outstanding shares of
capital stock of the Purchaser and the Merger Sub were duly authorized for
issuance and are validly issued, fully paid and non-assessable;
(ii) EXHIBIT B fully and accurately describes the
capital structure of the Purchaser and the Merger Sub and, except as set forth
on EXHIBIT B, there are no outstanding securities of the Purchaser and the
Merger Sub convertible into or evidencing the right to purchase or subscribe for
any shares of capital stock of the Purchaser and the Merger Sub, there are no
outstanding or authorized options, warrants, calls, subscription rights,
commitments or other agreements of any character requiring, and there are no
securities outstanding which upon conversion or exchange would require, the
issuance, sale or transfer of any additional shares of capital stock of the
Purchaser and the Merger Sub or other equity securities of the Purchaser and the
Merger Sub or other securities convertible into, exchangeable for or evidencing
the right to subscribe for or purchase shares of capital stock of the Purchaser
and the Merger Sub or other equity securities of the Purchaser, or any stock
appreciation rights, phantom stock or similar equity equivalent rights issued by
or binding upon the Purchaser and the Merger Sub; and
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(iii) there are no voting trusts or other voting
agreements with respect to the capital stock of the Purchaser and/or the Merger
Sub or other ownership interests of the Purchaser and the Merger Sub or any
agreement relating to the issuance, sale, redemption, transfer or other
disposition of any such interests of the Purchaser and/or the Merger Sub to
which the Purchaser and/or the Merger Sub are parties, or of which the Purchaser
and the Merger Sub have knowledge.
(b) Upon the consummation of the transactions contemplated
hereby, all of the Purchaser Common Stock issued as Merger Consideration
hereunder will have been and will be duly authorized, validly issued, fully paid
and nonassessable, and free and clear of all liens. All shares of Purchaser
Common Stock shall have been issued in material compliance with all applicable
federal and state securities laws and regulations.
Section 4.4. CORPORATE RECORDS; CONFLICTS; CONSENTS. Except as set
forth in the attached Schedule 4.4, the execution and delivery by the Purchaser
and the Merger Sub of this Agreement and the other Purchaser and the Merger Sub
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by the Purchaser and the Merger Sub with any of the provisions
hereof or thereof will not (i) conflict with, or result in the breach of, any
provision of the Articles of Incorporation or Bylaws of the Purchaser or the
Merger Sub; (ii) conflict with, violate, result in the breach or termination of,
or constitute a default under any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which the Purchaser or the Merger
Sub is a party or by which the Purchaser or the Merger Sub or their properties
or assets are bound; (iii) violate any statute, rule, regulation, order or
decree of any Governmental Authority by which the Purchaser and/or the Merger
Sub is bound; or (iv) result in the creation of any Lien (except as contemplated
herein) upon the properties or assets of the Purchaser and/or the Merger Sub
except, in case of clauses (ii), (iii) and (iv), for such violations, breaches
or defaults as would not, individually or in the aggregate, have a Material
Adverse Change. No consent, waiver, approval, order, permit or authorization of,
or declaration or filing with, or notification to, any Person, including without
limitation any Governmental Authority, is required on the part of the Purchaser
and/or the Merger Sub in connection with the execution, delivery and performance
of this Agreement or the other Purchaser and the Merger Sub Documents, or the
compliance by the Purchaser and the Merger Sub with any of the provisions hereof
or thereof.
Section 4.5. REPORTS AND FINANCIAL STATEMENTS.
(a) Since January 1, 1996, the Purchaser has filed with the
Securities and Exchange Commission (the "SEC") all forms, statements, reports
and documents (including all exhibits, post-effective amendments and supplements
thereto) required to be filed by it under each of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
respective rules and regulations promulgated thereunder, all of which, as
amended (if applicable), complied in all material respects, when filed with all
applicable requirements of the appropriate act and the rules and regulations
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thereunder. The Purchaser has previously delivered or made available to Company
copies (including all exhibits, post-effective amendments and supplements
thereto) of its (i) Annual Reports on Form 10-K for the years ended December 31,
2000, December 31, 1999 and December 31, 1998, as filed with the SEC; (ii)
definitive proxy and information statements relating to all meetings of its
stockholders (whether annual or special) from December 31, 1998 until the date
hereof; and (iii) all other reports, including quarterly reports, and
registration statements filed by the Purchaser with the SEC since December 31,
1998 (other than registration statements filed on Form S-8) (the documents
referred to in clauses (i), (ii) and (iii) being referred to as the "PURCHASER
SEC REPORTS"). As of their respective dates (or to the extent amended or
superseded by a subsequent filing, with respect to the information in such
subsequent filing, or as of the date of the subsequent filing), the Purchaser
SEC Reports did not or will not (as the case may be) 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
consolidated financial statements of the Purchaser included in the Purchaser's
Annual Report on Form 10-K for the years ended December 31, 2000, December 31,
1999 and December 31, 1998 (collectively, the "PURCHASER FINANCIAL STATEMENTS")
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a basis consistent with prior periods
and fairly presented the consolidated financial position of the Purchaser and
the Purchaser Subsidiaries as of the dates thereof and the related consolidated
statement of operations, cash flows and stockholders' equity included in the
Purchaser SEC Reports fairly presented the consolidated results of operations of
the Purchaser and the Purchaser Subsidiaries for the respective periods then
ended (subject, in the case of unaudited interim statements to normal year-end
adjustments and the absence of certain footnote disclosures).
(b) The audited consolidated financial statements of the
Purchaser included in the Purchaser's Annual Report on Form 10-K for the years
ended December 31, 2000, December 31, 1999 and December 31, 1998 and any interim
financial statements of the Purchaser since December 31, 2000 (collectively, the
"PURCHASER FINANCIAL STATEMENTS") have been prepared in accordance with the
United States generally accepted accounting principles ("GAAP") applied on a
basis consistent with prior periods and fairly presented the consolidated
financial position of the Purchaser as of the dates thereof and the related
consolidated statement of operations, cash flows and stockholders' equity
included in the Purchaser SEC Reports fairly presented the consolidated results
of operations of the Purchaser for the respective periods then ended (subject,
in the case of unaudited interim statements to normal year-end adjustments and
the absence of certain footnote disclosures).
(c) As of the date of this Agreement, except as set forth in
the Purchaser's Annual Report for the year ended December 31, 2000 or in any
other Purchaser SEC Report filed since that Annual Report or as previously
disclosed in writing to the Company and prior to the date of this Agreement,
neither the Purchaser nor any of its subsidiaries is a party to or bound by (i)
any "material contract" (as such term is defined in Item 601(b)(10) of
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Regulation S-K of the SEC) or (ii) any non-competition agreement or any other
agreement or arrangement that limits the Purchaser or any of its subsidiaries or
any of their respective affiliates, or that would, after the date hereof
similarly limit the Purchaser or the Company or any successor thereto, from
engaging or competing in any line of business or in any geographic area after
giving effect to the transactions contemplated hereby.
Section 4.6. ABSENCE OF UNDISCLOSED LIABILITIES; AFFILIATE
TRANSACTIONS.
(a) Except for matters reflected or reserved against in the
balance sheet for the period ended December 31, 2000 included in the Purchaser
Financial Statements or as previously disclosed in writing to the Company,
neither the Purchaser nor any of the Purchaser Subsidiaries (including the
Merger Sub) had at such date or has incurred since that date any liabilities,
obligations (whether absolute, accrued, contingent or otherwise) or
contingencies of any nature, except (i) liabilities, obligations or
contingencies (A) which are accrued or reserved against in the Purchaser
Financial Statements or reflected in the notes thereto or (B) which were
incurred after December 31, 2000 in the ordinary course of business and
consistent with past practices; or (ii) liabilities, obligations or
contingencies which are of a nature not required to be reflected in the
consolidated financial statements of the Purchaser and the Purchaser
Subsidiaries prepared in accordance with GAAP consistently applied and which
were incurred in the ordinary course of business. The Purchaser and the Merger
Sub are current in the payment of all taxes.
(b) Except as specifically disclosed in the Purchaser SEC
Reports filed prior to the date of this Agreement or as previously disclosed in
writing to the Company, there are no other transactions, agreements,
arrangements or understandings between the Purchaser or the Purchaser
Subsidiaries (including the Merger Sub), on the one hand, and the Purchaser's
affiliates (other than wholly-owned subsidiaries of the Purchaser) or other
Persons, on the other hand, that would be required to be disclosed under Item
404 of Regulation S-K promulgated under the Securities Act.
Section 4.7. INTELLECTUAL PROPERTY. The Purchaser and the Merger Sub
own, or have the right to use (or believes, after due inquiry, that it can
obtain the right to use on reasonable commercial terms), all patents, patent
applications, trademarks, service names, trade names, copyrights, licenses,
trade secrets or other proprietary rights necessary to conduct their business as
now being conducted and as proposed to be conducted to the Purchaser's and
Merger Sub's knowledge without any conflict or infringement of the rights of
others and the Purchaser, except as disclosed on Schedule 4.7, has not received
a notice that it is infringing upon or otherwise acting adversely to the right
or claimed right of any person under or with respect to any of the foregoing,
and to the Purchaser's and the Merger Sub's knowledge there is no basis for any
such claim. The Purchaser and the Merger Sub have disclosed to Counsel a
complete list of patents and pending patent applications of the Purchaser and
the Merger Sub. Neither the Purchaser nor the Merger Sub is aware of any
violation by a third party of any of the Purchaser's or Merger Sub's patents,
trademarks, service marks, trade names, copyrights, trade secrets or other
proprietary rights. Neither the Purchaser nor the Merger Sub is aware that any
of its employees is obligated under any contract (including licenses, covenants
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or commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Purchaser and/or the Merger Sub or that would conflict with
the Purchaser's and the Merger Sub's business as now being conducted and as
proposed to be conducted. Neither the execution nor delivery of this Agreement,
nor the conduct of the Purchaser's and Merger Sub's businesses will, to the
Purchaser's and Merger Sub's knowledge, conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any employee is now obligated.
Section 4.8. LEGAL PROCEEDINGS. Except as set forth in the attached
Schedule 4.8, there are no Legal Proceedings pending or, to the knowledge of the
Purchaser and the Merger Sub, threatened that are reasonably likely to prohibit
or restrain the ability of the Purchaser and the Merger Sub to enter into this
Agreement or consummate the transactions contemplated hereby or which otherwise
would result in a Material Adverse Change.
Section 4.9. NO MISREPRESENTATION. Neither this Agreement (including
the Exhibits hereto), nor (as of the date hereof) any Purchaser SEC Report
contains any untrue statement of a material fact nor omits a material fact
necessary in order to make the statements contained herein or therein not
misleading.
ARTICLE V
Covenants and Agreements
Section 5.1. ACCESS AND INFORMATION. Prior to the Closing, each of the
parties shall be entitled to make or cause to be made such investigation of the
other party hereto, and the financial and legal condition thereof, as such
investigating party deems reasonably necessary or advisable, and the other party
hereto shall cooperate with any such investigation. In furtherance of the
foregoing, but not in limitation thereof, each party shall permit the other
party hereto and its agents and representatives or cause them to be permitted to
have full and complete access to its premises, books and records upon reasonable
notice during regular business hours and shall furnish such financial and
operating data, projections, forecasts, business plans, strategic plans and
other data relating to itself and its business as the other party hereto shall
reasonably request from time to time. Prior to the Closing, the parties hereto
agree that except as otherwise required by law, any and all public announcements
or other communications concerning this Agreement and the transactions
contemplated hereby shall be subject to the prior written approval of each of
the parties hereto.
Section 5.2. COMPANY AFFIRMATIVE COVENANTS. Prior to the Closing,
except as otherwise expressly provided herein, the Company shall, except as
otherwise contemplated by this Agreement, conduct its business only in the
ordinary and regular course of business.
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Section 5.3. COMPANY NEGATIVE COVENANTS. Prior to the Closing, without
the prior written consent of the Purchaser, except as otherwise expressly
provided herein, the Company shall not enter into any contract, agreement or
commitment (other than in the ordinary course of business) which, if entered
into prior to the date of this Agreement, would cause any representation or
warranty of the Company or Counsel to be untrue in any material respect or be
required to be disclosed on any Schedule delivered pursuant to Article III
hereof.
Section 5.4 PURCHASER AND MERGER SUB NEGATIVE COVENANTS. Prior to the
Closing, without the prior written consent of the Company, except as otherwise
expressly provided herein, the Purchaser will conduct its business only in the
ordinary and regular course of business consistent with past practices and the
Merger Sub will not conduct any material business or incur any material
liabilities.
Section 5.5. CLOSING DOCUMENTS. The Company shall, prior to or on the
Closing Date, execute and deliver, or cause to be executed and delivered to the
Purchaser, the documents or instruments described in Section 6.2. The Purchaser
and Merger Sub shall, prior to or on the Closing Date, execute and deliver, or
cause to be executed and delivered, to the Company, the documents or instruments
described in Section 6.3.
Section 5.6. BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms and
conditions herein provided, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement. Each of the parties hereto will use its respective best
efforts to obtain consents of all Governmental Authorities and third parties
necessary to the consummation of the transactions contemplated by this
Agreement. In the event that at any time after Closing any further action is
reasonably necessary to carry out the purposes of this Agreement, each of the
parties hereto shall take all such action without any further consideration
therefor.
Section 5.7. REORGANIZATION TREATMENT. Neither the Purchaser nor the
Company shall intentionally take, or fail to take or cause to be taken or not be
taken, any action within its control, whether before or after the Effective
Time, which it has reason to believe after consultation with its advisors would
disqualify the Merger as a "reorganization" within the meaning of Section 368(a)
of the Code.
Section 5.8. APPROVAL BY PURCHASER. The Purchaser, in its capacity as
the sole stockholder of Merger Sub, shall vote the shares of Merger Sub to
approve and adopt the Merger, this Agreement and the transactions contemplated
hereby, and shall cause Merger Sub to take any and all actions as may be
necessary or appropriate to consummate the Merger and the other transactions
contemplated hereby in accordance with the terms hereof.
Section 5.9. REGISTRATION RIGHT AND OTHER BENEFITS. Counsel shall be
afforded the same registration rights and other benefits with respect to the
Restricted Stock issued by the Purchaser hereunder as are set forth in the
Securities Support Agreement dated as of March ___, 2001 by and among Counsel
and the Purchaser, including the Exhibits attached thereto.
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Section 5.10 EXPENSE REIMBURSEMENT. Promptly upon demand, whether prior
to, or subsequent to, the Closing, the Purchaser hereby agrees to reimburse
Counsel and its Affiliates for their expenses in connection with this
transaction and any and all out-of-pocket expenses incurred by Counsel and its
Affiliates with respect to the Company and/or the Purchaser on an ongoing basis
in the course of their activities as Affiliates with the Purchaser, provided
however that amounts related to engagements by Counsel of third party advisors
related to activities of the Company, where such amounts are in excess of
$5,000, shall be pre-approved by the Purchaser.
ARTICLE VI
Conditions to Closing
Section 6.1. MUTUAL CONDITION. The respective obligations of each party
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment at or prior to Closing of the condition that no Governmental
Authority of competent jurisdiction shall have (i) enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order which is in effect; or (ii) commenced or threatened any action or
proceeding, which in the case of either clause (i) or (ii) would prohibit
consummation of the transactions contemplated by this Agreement.
Section 6.2. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND MERGER SUB.
The obligations of the Purchaser and Merger Sub to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment prior to or
at Closing of each of the following conditions:
(a) All representations and warranties made by the Company and
Counsel in this Agreement and the Schedules hereto shall be true, correct and
complete on the date hereof and as of the Closing Date as though such
representations and warranties were made as of the Closing Date (except for
representations and warranties made as of a specified date, which shall have
been true, correct and complete as of such specified date), and the Company
shall have duly performed or complied with all of the covenants, obligations and
conditions to be performed or complied with by them under the terms of this
Agreement on or prior to or at Closing.
(b) The Purchaser shall have received a certificate from the
Secretary or the Assistant Secretary of the Company in form reasonably
satisfactory to the Purchaser attesting to the matters described in clause (a)
above.
(c) The Company shall have delivered such other closing
documents as shall be requested by the Purchaser in form and substance
reasonably acceptable to the Purchaser's counsel, including the following:
(i) a certificate of the Secretary or Assistant
Secretary of the Company, dated the Closing Date, as to the incumbency of any
officer of the Company executing this Agreement or any document related thereto
and covering such other matters as the Purchaser may reasonably request;
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(ii) a certified copy of (A) the Certificate of
Incorporation and by-laws of the Company and all amendments thereto, (B) the
resolutions of the Company's Board of Directors authorizing the execution,
delivery and consummation of this Agreement and the transactions contemplated
hereby and thereby and (C) the written consent of a majority of the holders of
Company Common Stock authorizing the execution, delivery and consummation of
this Agreement and the Merger;
(iii) such other documents or instruments as the
Purchaser reasonably requests to effect the authorization and validity of the
transactions contemplated hereby.
Section 6.3. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing of each
of the following conditions:
(a) All representations and warranties made by the Purchaser
and Merger Sub in this Agreement shall be true, correct and complete on the date
hereof and as of the Closing Date as though such representations and warranties
were made as of the Closing Date except for representations and warranties as of
a specified date, which shall have been true, correct and complete as of such
specified date), and the Purchaser and Merger Sub shall have duly performed or
complied with all of the covenants, obligations and conditions to be performed
or complied with by it under the terms of this Agreement on or prior to or at
the Closing.
(b) The Company shall have received a certificate from a duly
authorized officer of the Purchaser and the Merger Sub in form reasonably
satisfactory to the Company attesting to the matters described in clause (a)
above.
(c) Prior to or at the Closing, the Purchaser and the Merger
Sub shall have delivered to the Company such closing documents as shall be
reasonably requested by the Company in form and substance reasonably acceptable
to its counsel, including the following:
(i) certificates of the Secretary or Assistant
Secretary of each of the Purchaser and Merger Sub, dated the Closing Date, as to
the incumbency of any officer of the Purchaser or Merger Sub, as applicable,
executing this Agreement or any document related thereto and covering such other
matters as the Company may reasonably request;
(ii) certified copies of (1) the Certificate of
Incorporation and by-laws of each of the Purchaser and Merger Sub and all
amendments thereto, and (2) the resolutions of the Board of Directors of each of
the Purchaser and Merger Sub authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereby and
thereby; and
(iii) such other documents or instruments as the
Company reasonably requests to effect the transactions contemplated hereby.
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ARTICLE VII
Termination
Section 7.1. TERMINATION. This Agreement may be terminated at any time
prior to Closing as follows:
(a) by joint consent of the Company and the Purchaser;
(b) by the Company, if the Purchaser or Merger Sub shall
breach in any material respect any of their respective representations,
warranties or obligations contained in this Agreement;
(c) by the Purchaser if the Company and Counsel shall breach
in any material respect any of their respective representations, warranties or
obligations contained in this Agreement;
(d) by either the Purchaser or the Company, if any
authorization, consent, waiver or approval required for the consummation of the
transactions contemplated hereby shall impose any condition or requirement,
which condition or requirement such party determines, in its good faith
judgment, to be materially burdensome or to deny to such party in any material
respect the benefits intended to be obtained by such party pursuant to the
transactions contemplated by this Agreement; or
(e) by either the Purchaser or the Company if the transactions
contemplated by this Agreement shall not have been consummated on or before the
date that is ninety (90) days from the date of this Agreement (or such later
date as may be agreed upon in writing by the parties hereto).
Section 7.1. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 7.1 hereof, all rights and obligations of the parties
hereunder shall terminate and no party shall have any liability to the other
party, except for obligations of the parties hereto in Sections 5.1 and 9.2,
which shall survive the termination of this Agreement, and except nothing herein
will relieve any party from liability for any breach of any representation,
warranty, agreement or covenant contained herein prior to such termination.
ARTICLE VIII
Survival of Representations and Warranties; Indemnification
Section 8.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties provided for in this Agreement shall survive the
Closing for a period of three (3) years (the "Survival Period").
Section 8.2. INDEMNIFICATION. (a) Counsel shall indemnify and hold
harmless the Purchaser, its Affiliates, officers, directors, employees, agents,
counsel and representatives, and any Person claiming by or through any of them,
against and in respect of any and all claims, costs, expenses, damages,
liabilities, losses or deficiencies (including, without limitation, counsel's
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fees and other costs and expenses incident to any suit, action or proceeding)
(the "Damages") arising out of, resulting from or incurred in connection with
any inaccuracy in any representation or the breach of any warranty made by the
Company in this Agreement for the applicable Survival Period (disregarding, for
this purpose, any materiality limitation contained therein).
(b) The Purchaser shall indemnify and hold harmless, each of
the Company and Counsel and the other holders of Company Common Stock, their
respective Affiliates, agents , counsel and representatives, and any Person
claiming by or through any of them, against and in respect of any and all
Damages arising out of, resulting from or incurred in connection with (i) any
inaccuracy in any representation or the breach of any warranty made by the
Purchaser; or the Merger Sub in this Agreement for the applicable Survival
Period, (disregarding, for this purpose, any materiality limitation contained
therein), or (ii) the breach by the Purchaser or the Merger Sub of any covenant
or agreement to be performed by either of them hereunder.
(c) Any Person providing indemnification pursuant to the
provisions of this Section 8.2 is hereinafter referred to as an "Indemnifying
Party" and any Person entitled to be indemnified pursuant to the provisions of
this Section 8.2 is hereinafter referred to as an "Indemnified Party."
Section 8.3. PROCEDURES FOR THIRD PARTY CLAIMS. In the case of any
claim for indemnification arising from a claim of a third party (a "Third Party
Claim"), an Indemnified Party shall give prompt written notice to the
Indemnifying Party of any claim or demand of which such Indemnified Party has
knowledge and as to which it may request indemnification hereunder.
Notwithstanding the provisions of this Section 8.3, the Indemnifying Party's and
its Affiliates' aggregate liability for any such Third Party Claim shall in any
event be limited to the amount set forth in Section 8.4 of this Agreement. The
Indemnifying Party shall have the right to defend and to direct the defense
against any such Third Party Claim, in its name or in the name of the
Indemnified Party, as the case may be, at the expense of the Indemnifying Party,
and with counsel selected by the Indemnifying Party unless (i) such Third Party
Claim seeks an order, injunction or other equitable relief against the
Indemnified Party, or (ii) the Indemnified Party shall have reasonably concluded
that (x) there is a conflict of interest between the Indemnified Party and the
Indemnifying Party in the conduct of the defense of such Third Party Claim or
(y) the Indemnified Party has one or more defenses not available to the
Indemnifying Party. Notwithstanding anything in this Agreement to the contrary,
the Indemnified Party shall, at the expense of the Indemnifying Party, cooperate
with the Indemnifying Party, and keep the Indemnifying Party fully informed, in
the defense of such Third Party Claim. The Indemnified Party shall have the
right to participate in the defense of any Third Party Claim with counsel
employed at its own expense; PROVIDED, HOWEVER, that, in the case of any Third
Party Claim described in clause (i) or (ii) of the second preceding sentence or
as to which the Indemnifying Party shall not in fact have employed counsel to
assume the defense of such Third Party Claim, the reasonable fees and
disbursements of such counsel shall be at the expense of the Indemnifying Party.
The Indemnifying Party shall have no indemnification obligations with respect to
any Third Party Claim which shall be settled by the Indemnified Party without
the prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
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Section 8.4. PROCEDURES FOR INTER-PARTY CLAIMS. In the event that an
Indemnified Party determines that it has a claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such claim and any relevant facts
and circumstances relating thereto. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its books and records for the
purpose of allowing the Indemnifying Party a reasonable opportunity to verify
any such claim for Damages. The Indemnified Party and the Indemnifying Party
shall negotiate in good faith regarding the resolution of any disputed claims
for Damages. Promptly following the final determination of the amount of any
Damages claimed by the Indemnified Party, the Indemnifying Party shall pay such
Damages to the Indemnified Party by wire transfer or check made payable to the
order of the Indemnified Party, without interest. In the event that the
Indemnified Party is required to institute legal proceedings in order to recover
Damages hereunder, the cost of such proceedings (including costs of
investigation and reasonable attorneys' fees and disbursements) shall be added
to the amount of Damages payable to the Indemnified Party. No Indemnifying
Party's and its Affiliates' aggregate liability, i.e. the amount of Damages
payable, under this Section 8.4, shall exceed $ (excluding (i) liabilities for
taxes (ii) liabilities arising from knowing misrepresentations or fraud and
(iii) claims for breach of the representations and warranties contained in
Section 3.5).
Section 8.5. PAYMENT OF DAMAGES. To the extent that Counsel is liable
for any Damages as the Indemnifying Party hereunder, such Damages be shall be
funded solely from Merger Shares returned by Counsel in an amount such that the
total Merger Shares so returned by Counsel shall equal the amount of such
Damages, with the value of such shares to be the higher of the fair market value
thereof or $0.56 per share.
ARTICLE IX
Miscellaneous
Section 9.1. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered or express air mail, postage prepaid,
and shall be deemed given when so delivered personally, or by facsimile, or if
mailed, five days after the date of mailing, as follows:
If to the Purchaser: I-Link Incorporated
00000 X. Xxxxxxxxx Xxxx Xxxxx Xxxxx 000
Xxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000 0000
Attention: Xxxx Xxxxxxx, President
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With a copy to: Xx Xxxxxxx Xxxxxxxxxxx Xxxxx & Xxxxx
Xxxxx 000, 0000 X Xxxxxx, X.X.
Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx 00000
Telephone: (000)000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xx Xxxxxxx
If to the Company: WebToTel Inc.
c/o Counsel Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx, Chairman
With a copy to: Xxxxxxxx Xxxxx & Deutsch LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 9.2. EXPENSES. Except as otherwise specifically provided in
this Agreement (including, without limitation, Section 5.10 hereof, which
provides for payment by the Purchaser of Counsel's and its Affiliates'
expenses), each party will pay its own expenses incident to this Agreement and
the transactions contemplated hereby, including legal and accounting fees and
disbursements. Any payments for sales, transfer or other taxes or fees
applicable to the conveyance and transfer to the holders of Company Common Stock
of the Merger Consideration shall be borne by the Purchaser. The provisions of
this Section shall survive any termination of this Agreement.
Section 9.3. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of Delaware, without reference to the choice of law principles thereof.
Each of the parties hereto irrevocably submits to the non-exclusive jurisdiction
of the courts of the State of Delaware and the United States District Court for
the District of Delaware for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
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Section 9.4. ASSIGNMENT; SUCCESSORS AND ASSIGNS; NO THIRD PARTY RIGHTS.
Except as otherwise provided herein, this Agreement may not be assigned by
operation of law or otherwise, and any attempted assignment shall be null and
void. The Purchaser may assign all of its rights under this Agreement to any
Affiliate; PROVIDED such Affiliate assumes all of the obligations of the
Purchaser hereunder; and PROVIDED further that the Purchaser shall remain liable
for such Affiliate's failure to meet any of the obligations of Purchaser
hereunder. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective heirs, successors, assigns and legal
representatives and is not intended, nor shall be construed, to give any Person,
other than the parties hereto and their respective heirs, successors, assigns
and legal representatives, any legal or equitable right, remedy or claim
hereunder.
Section 9.5. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 9.6. TITLES AND HEADINGS. The headings in this Agreement are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 9.7. ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits attached thereto, constitutes the entire agreement among the
parties with respect to the matters covered hereby and supersedes all previous
written, oral or implied understandings among them with respect to such matters.
Section 9.8. AMENDMENT AND MODIFICATION. This Agreement may only be
amended or modified in writing signed by the party against whom enforcement of
such amendment or modification is sought.
Section 9.9 WAIVER. Any of the terms or conditions of this Agreement
may be waived at any time by the party or parties entitled to the benefit
thereof, but only by a writing signed by the party or parties waiving such terms
or conditions.
Section 9.10. SEVERABILITY. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
Section 9.11. NO STRICT CONSTRUCTION. Each party hereto acknowledges
that this Agreement has been prepared jointly by the parties hereto, and shall
not be strictly construed against either party.
-22-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
I-LINK INCORPORATED
By:________________________
Title:
I-LINK ACQUISITION CORP.
By:________________________
Title:
WEBTOTEL INC.
By:________________________
Title:
COUNSEL COMMUNICATIONS LLC
By:________________________
Title:
-23-
OTHER SHAREHOLDERS OF COMPANY:
DHR INTERNATIONAL
By:________________________
Title:
---------------------------
Xxxxx Xxxxxx
-24-
EXHIBIT A
CAPITALIZATION OF WEBTOTEL
PRE-MERGER POST-MERGER
---------- -----------
NUMBER OF
NUMBER OF WEBTOTEL % OWNERSHIP OF I-LINK
SHAREHOLDER SHARES WEBTOTEL SHARES
----------- ------ -------- ------
Counsel Communications LLC 132,833,042 99.89% 17,434,489
DHR International 83,154 0.06% 10,914
Xxxxx Xxxxxx 68,038 0.05% 8,930
------ ----- ----------
132,984,233 100.00% 17,454,333
-00-
XXXXXXX X
XXXXXXXXXXXXXX XX X-XXXX INCORPORATED
FULLY-DILUTED SHARES AS
OF 4/18/01
--------------------------
SHARES %
--------------------------
Common Stock 28,198,092 21.8%
Series N and Series C Preferred Stock 1,230,340 1.0%
Serues F Warrants 408,000 0.3%
Options 13,939,643 10.8%
Other Warrant Holders 430,322 0.3%
Winter Harbor Common Shares 5,000,000 3.9%
Counsel Communications LLC
Common Stock 61,966,057 48.0%
Senior Secured Convertible Note(1) 17,943,179 13.9%
--------------------------
Counsel Communications LLC 79,909,236 61.9%
--------------------------
TOTAL FULLY DILUTED SHARES 129,115,633 100.0%
-------------------------------------------------------------------------------
(1) Assumes full funding of Counsel $10 million Note, of which approximately
$6 million is funded, plus accrued interest.
-26-
SCHEDULE 3.7
WEBTOTEL INTELLECTUAL PROPERTY EXCEPTIONS
Nexbell has received a cease and desist letter from SBC Communications
regarding the use of the Nexbell name.
-27-
SCHEDULE 4.4
I-LINK CONFLICTS/CONSENTS
-28-
SCHEDULE 4.7
I-LINK INTELLECTUAL PROPERTY EXCEPTIONS
-29-
SCHEDULE 4.8
I-LINK LEGAL PROCEEDINGS
-30-
