Exhibit C
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STOCK PURCHASE AGREEMENT
dated May 16, 2002
by and among
MONEYLINE NETWORKS, LLC,
B2BVIDEO NETWORK CORP.,
and
VIDEO NETWORK COMMUNICATIONS, INC.
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TABLE OF CONTENTS
Page
ARTICLE 1. PURCHASE AND SALE OF SHARES; WARRANTS.
1.1 Agreement to Purchase and Sell....................................4
1.2 The Closing.......................................................5
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF VNCI.
2.1 Corporate Organization............................................6
2.2 Due Authorization.................................................7
2.3 Consents and Approvals............................................7
2.4 No Violations.....................................................8
2.5 Capitalization; Subsidiaries......................................9
2.6 Intellectual Property............................................10
2.7 Litigation.......................................................12
2.8 Customers and Suppliers..........................................12
2.9 Financial Statements.............................................13
2.10 Reports..........................................................13
2.11 Absence of Certain Changes.......................................13
2.12 Liabilities......................................................14
2.13 Compliance with Laws; Permits....................................14
2.14 Tax Matters......................................................15
2.15 Affiliated Transactions..........................................17
2.16 Employees, Employee Benefit Plans; ERISA.........................18
2.17 Contracts........................................................22
2.18 Brokers and Finders..............................................23
2.19 Books and Records................................................23
2.20 Board Approval; State Statutes...................................23
2.21 Representations and Warranties by VNCI in Transaction
Agreements.......................................................24
2.22 Full Disclosure..................................................24
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF B2B.
3.1 Corporate Organization...........................................24
3.2 Due Authorization................................................24
3.3 Consents and Approvals...........................................25
3.4 No Violations....................................................25
3.5 Capitalization; Joint Ventures...................................26
3.6 Intellectual Property............................................26
3.7 Litigation.......................................................29
3.8 Customers and Suppliers..........................................29
3.9 Financial Statements.............................................29
3.10 Absence of Certain Changes.......................................29
3.11 Liabilities......................................................30
3.12 Compliance with Laws; Permits....................................30
3.13 Tax Matters......................................................30
3.14 Affiliated Transactions..........................................32
3.15 Employees, Employee Benefit Plans; ERISA.........................33
3.16 Contracts........................................................36
3.17 Brokers and Finders..............................................37
3.18 Books and Records................................................37
3.19 Approvals; State Statutes........................................37
3.20 Representations and Warranties by B2B in Merger Agreement........38
3.21 Full Disclosure..................................................38
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF MONEYLINE.
4.1 Organization.....................................................39
4.2 Authority........................................................39
4.3 Consents; No Violation...........................................39
4.4 Investment Representation........................................40
4.5 Brokers and Finders..............................................40
4.6 Availability of Funds............................................40
ARTICLE 5. COVENANTS.
5.1 Public Announcements.............................................40
5.2 Board of Directors...............................................40
5.3 Further Assurances...............................................41
5.4 Transaction Fees and Expenses....................................41
5.5 Director Indemnification Agreements..............................42
5.6 Technology License Agreements....................................42
5.7 Significant Transactions.........................................42
5.8 Annual Report Filing.............................................42
ARTICLE 6. INDEMNIFICATION; SURVIVAL.
6.1 Indemnification Obligations......................................42
6.2 Indemnification Procedures.......................................43
6.3 Limitations on Indemnification...................................44
6.4 Survival of Representations, Warranties and Covenants............44
ARTICLE 7. CONDITIONS TO CLOSING.
7.1 Conditions to Obligations of Moneyline...........................45
ARTICLE 8. MISCELLANEOUS PROVISIONS.
8.1 Entire Agreement; Assignment.....................................47
8.2 Notices .........................................................48
8.3 Interpretation...................................................49
8.4 Amendments and Waivers...........................................50
8.5 Severability.....................................................50
8.6 Governing Law; Jurisdiction and Venue............................50
8.7 Schedules and Exhibits...........................................50
8.8 No Third Party Beneficiaries.....................................50
8.9 WAIVER OF JURY TRIAL.............................................51
8.10 Counterparts.....................................................51
8.11 Acknowledgements.................................................51
EXHIBITS TO AGREEMENT
Exhibit A.....................................Form of Subscription Agreement
Exhibit B...................................................Merger Agreement
Exhibit C.............................................Stockholders Agreement
Exhibit D.......................................Strategic Alliance Agreement
Exhibit E..................................................Warrant Agreement
Exhibit F........................Form of Restricted Stock Purchase Agreement
Exhibit G......................................Form of B2B Conversion Notice
Exhibit H.....................................Form of VNCI Conversion Notice
Exhibit I.....................Form of Director, Officer and Employee Release
Exhibit J.................................Form of VNCI/B2B/Moneyline Release
Exhibit K..................................Form of EBC Agreement and Release
Exhibit L..............................................VNCI Fairness Opinion
Exhibit M...............................................B2B Fairness Opinion
Exhibit N......................................................Press Release
Exhibit O.........................Form of Director Indemnification Agreement
Exhibit P........................Form of Technology License Agreement (VNCI)
Exhibit Q.........................Form of Technology License Agreement (B2B)
Exhibit R.......................................Form of Xxxxx, Xxxxx Opinion
Exhibit S....................................Form of Xxxxxxxx Xxxxxx Opinion
Exhibit T................................Form of Xxxxxxxx Xxxxxx Tax Opinion
Exhibit U....................................Form of Potter Xxxxxxxx Opinion
Exhibit V..............................Form of Xxxxx, Xxxxx Reliance Letter
SCHEDULES TO AGREEMENT
Schedule A........................................ B2B Security Conversions
Schedule 1.1(b)...........................................List of Investors
Schedule 1.2(b)(vi)............................................Resignations
Schedule 1.2(b)(vii)(A)..............................B2B Conversion Notices
Schedule 1.2(b)(vii)(B).............................VNCI Conversion Notices
Schedule 1.2(b)(viii)........................Director and Officer Releasors
Schedule 2.1....................................Subsidiaries; Jurisdictions
Schedule 2.3.........................................Consents and Approvals
Schedule 2.5(a)..............................................Capitalization
Schedule 2.5(b)...................................Subsidiary Capitalization
Schedule 2.6(b).......................................Intellectual Property
Schedule 2.6(c)....................................................Software
Schedule 2.6(d)..........................................License Agreements
Schedule 2.6(e)..........................Intellectual Property Encumbrances
Schedule 2.6(f)...........................Validity of Intellectual Property
Schedule 2.6(g)................................Intellectual Property Claims
Schedule 2.6(k)........................................Proprietary Software
Schedule 2.7.....................................................Litigation
Schedule 2.8......................................................Customers
Schedule 2.11...............................VNCI Absence of Certain Changes
Schedule 2.12(a)................................................Liabilities
Schedule 2.12(b)...........................List of Post-Closing Liabilities
Schedule 2.14(a)......................................................Taxes
Schedule 2.14(a)(i)........................................ Contested Taxes
Schedule 2.15(a)....................................Affiliated Transactions
Schedule 2.15(b).....................................Affiliated Liabilities
Schedule 2.16(a).......................................Labor and Employment
Schedule 2.16(c)...................................................WARN Act
Schedule 2.16(d)...........................................Employment Plans
Schedule 2.16(k)......................................Payments to Employees
Schedule 2.16(n).....................Employment Arrangements and Agreements
Schedule 2.16(o)......................................Option Holders (VNCI)
Schedule 2.16(p).....................Equity Based Awards Other Than Options
Schedule 2.17(a)........................................ Material Contracts
Schedule 2.17(b)................................Certain Contract Provisions
Schedule 2.18....................................Brokers and Finders (VNCI)
Schedule 3.1..................................................Jurisdictions
Schedule 3.3.....................................B2B Consents and Approvals
Schedule 3.4..................................................No Violations
Schedule 3.5(a)..........................................B2B Capitalization
Schedule 3.5(b)..........................................B2B Joint Ventures
Schedule 3.6(b)...................................B2B Intellectual Property
Schedule 3.6(c)................................................B2B Software
Schedule 3.6(d)......................................B2B License Agreements
Schedule 3.6(e)......................B2B Intellectual Property Encumbrances
Schedule 3.6(f).......................B2B Validity of Intellectual Property
Schedule 3.6(g)............................B2B Intellectual Property Claims
Schedule 3.6(k)....................................B2B Proprietary Software
Schedule 3.7.................................................B2B Litigation
Schedule 3.8..................................................B2B Customers
Schedule 3.10................................B2B Absence of Certain Changes
Schedule 3.11(a)............................................B2B Liabilities
Schedule 3.11(b)..........................List of Post-Closing Indebtedness
Schedule 3.13(a)......................................................Taxes
Schedule 3.14(a)....................................Affiliated Transactions
Schedule 3.14(b).....................................Affiliated Liabilities
Schedule 3.15(a).......................................Labor and Employment
Schedule 3.15(c)...................................................WARN Act
Schedule 3.15(d)...........................................Employment Plans
Schedule 3.15(k)......................................Payments to Employees
Schedule 3.15(n).....................Employment Arrangements and Agreements
Schedule 3.15(o).......................................Option Holders (B2B)
Schedule 3.16(a).........................................Material Contracts
Schedule 3.16(b)................................Certain Contract Provisions
Schedule 3.17.....................................Brokers and Finders (B2B)
Schedule 3.19(a)..............................................Merger Voting
Schedule 5.4(a)........................................Transaction Expenses
Schedule 5.5............................Director Indemnification Agreements
Schedule 7.1(g)....................................................Warrants
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement"), dated as
of May 16, 2002, is made among Moneyline Networks, LLC, a Delaware limited
liability company ("Moneyline"), B2BVideo Network Corp., a Delaware
corporation ("B2B"), and Video Network Communications, Inc., a Delaware
corporation ("VNCI").
R E C I T A L S
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, VNCI wishes to sell to Moneyline and Moneyline
wishes to purchase from VNCI an aggregate of twenty-five million
(25,000,000) newly-issued shares (the "Moneyline Shares") of VNCI's common
stock, par value $0.01 per share (the "Common Stock");
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement and a Subscription Agreement, the form of which is
attached as Exhibit A hereto, VNCI wishes to sell to certain individuals
and entities (collectively, the "Investors") introduced to VNCI by
EarlyBirdCapital, Inc. ("EBC") and the Investors wish to purchase from VNCI
an aggregate of 7,750,000 newly-issued shares (the "Investor Shares" and
together with the Moneyline Shares, the "Shares") of Common Stock;
WHEREAS, Moneyline, B2B and VNCI desire to provide for
the purchase and sale of the Shares and to establish certain rights and
obligations in connection therewith;
WHEREAS, One Equity Partners LLC, a Delaware limited
liability company, or its affiliates (together, "OEP") has provided the
funding to Moneyline in connection with the transactions contemplated
herein;
WHEREAS, concurrently with this Agreement, and as a
condition and an inducement to the willingness of Moneyline to enter into
this Agreement, VNCI and B2B, have entered into an Agreement and Plan of
Merger attached as Exhibit B hereto (the "Merger Agreement") pursuant to
which, among other transactions, B2B Merger Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of VNCI, will be merged with and
into B2B (the "Merger") with B2B surviving. As a result of the Merger (i)
each share of Common Stock, par value $0.01 per share, of B2B (the "B2B
Common Stock") (other than the 750,000 shares owned by VNCI), each share of
Series A Convertible Preferred Stock, par value $0.01 per share, of X0X
("X0X Series A Preferred Stock"), and each share of Series B Convertible
Preferred Stock, par value $0.01 per share, of X0X ("X0X Series B Preferred
Stock"), issued and outstanding immediately prior to the Closing Date (as
defined below) shall be converted into and become 3,000,000 fully paid and
nonassessable shares of Common Stock; (ii) purchase options to purchase B2B
Series A Preferred Stock issued and outstanding immediately prior to the
Closing Date shall be converted into and become options to purchase an
aggregate of 139,123 shares of Common Stock of VNCI; (iii) purchase options
to purchase 2.75 Units of B2B, each Unit consisting of (A) 50,000 shares of
B2B Series B Preferred Stock and (B) warrants to purchase 50,000 shares of
B2B Common Stock, issued and outstanding immediately prior to the Closing
Date shall be converted into and become options to purchase an aggregate of
185,497 shares of Common Stock and warrants to purchase 46,374 shares of
Common Stock of VNCI; (iv) warrants to purchase in the aggregate 6,625,000
shares of B2B Common Stock issued and outstanding immediately prior to the
Closing Date shall be converted into and become warrants to purchase in the
aggregate 1,165,328 shares of Common Stock (assuming termination of certain
warrants); and (v) each option to purchase 2,099,000 shares of B2B Common
Stock issued pursuant to and outside of B2B's 2000 Performance Equity Plan
issued and outstanding immediately prior to the Closing Date shall be
converted and become options to purchase 707,925 shares of Common Stock,
all as set forth on Schedule A hereto.
WHEREAS, each of the Board of Directors of B2B (the "B2B
Board of Directors") and the stockholders of B2B has approved and consented
to the Merger and the other transactions and matters contemplated by the
Merger Agreement;
WHEREAS, concurrently with the execution of this
Agreement, and as a condition and an inducement to the willingness of
Moneyline to enter into this Agreement, each holder (the "B2B Noteholders")
of $2,500,000 aggregate principal amount of senior secured promissory notes
of B2B (the "B2B Promissory Notes") issued and outstanding immediately
prior to the Closing Date shall convert such senior secured promissory
notes into 4,276,023 shares of Common Stock (the "B2B Conversion Shares");
WHEREAS, concurrently with the execution of this
Agreement, and as a condition and an inducement to the willingness of
Moneyline to enter into this Agreement, Moneyline, OEP and VNCI will
execute a Stockholders Agreement, dated May 16, 2002, in the form attached
as Exhibit C hereto (the "Stockholders Agreement"), which sets forth their
agreement concerning, among other things, the corporate governance of VNCI
following the consummation of the sale of Shares;
WHEREAS, concurrently with the execution of this
Agreement, VNCI and Moneyline will execute a Strategic Alliance Agreement,
dated as of May 16, 2002, in the form attached as Exhibit D hereto (the
"Strategic Alliance Agreement");
WHEREAS, concurrently with the execution of this
Agreement and as a condition and an inducement to the willingness of
Moneyline to enter into this Agreement and the Strategic Alliance
Agreement, VNCI will issue to Moneyline a warrant to purchase 11,250,000
shares of Common Stock at a price of $0.60 per share (subject to
adjustment) pursuant to the Warrant Agreement attached as Exhibit E hereto
(the "Warrant Agreement" and together with the Merger Agreement, the
Stockholders Agreement, the Strategic Alliance Agreement and the Warrant
Agreement, the "Transaction Agreements");
WHEREAS, Sanmina Corp. has entered into a release (the
"Sanmina Release") with respect to all of its outstanding claims in
consideration of a payment from VNCI on the date hereof of $1,100,000;
WHEREAS, Xxxx Xxxxxxx LLP has entered into a release (the
"Xxxx Xxxxxxx Release") with respect to its claim in consideration of a
payment from VNCI on the date hereof of $250,000;
WHEREAS, concurrently with the execution of this
Agreement and as a condition and an inducement to the willingness of
Moneyline to enter into this Agreement, all of the holders of certain
outstanding promissory notes of VNCI (the "Noteholders") in the aggregate
principal amount of $3,723,981 (the "Promissory Notes") will convert the
Promissory Notes into 6,444,823 shares of Common Stock (the "Note
Conversion Shares");
WHEREAS, concurrently with the execution of this
Agreement and as a condition and an inducement to the willingness of
Moneyline to enter into this Agreement, holders of outstanding warrants to
purchase 3,169,800 shares of B2B Common Stock shall terminate such
warrants;
WHEREAS, concurrently with the execution of this
Agreement and as a condition and an inducement to the willingness of
Moneyline to enter into this Agreement, holders of outstanding warrants to
purchase 280,000 shares of Common Stock shall terminate such warrants;
WHEREAS, the Board of Directors of VNCI (the "Board of
Directors") has approved and consented to (i) the sale of the Shares by
VNCI to Moneyline on the terms set forth herein, and (ii) the transactions
and matters contemplated by the Subscription Agreement, the Merger
Agreement, the Stockholders Agreement, the Strategic Alliance Agreement,
the Technology License Agreement, the Director Indemnification Agreement
(as hereinafter defined) and the Warrant Agreement (collectively, the
"Related Transactions"); and
WHEREAS, subsequent to the consummation of the
transactions contemplated hereby and the Related Transactions, VNCI shall
offer certain officers of VNCI and its subsidiaries the opportunity to
purchase shares of Common Stock pursuant to a Restricted Stock Purchase
Agreement in the form of Exhibit F hereto.
NOW, THEREFORE, in consideration of the foregoing, the
agreements hereafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:
ARTICLE 1. PURCHASE AND SALE OF SHARES; WARRANTS.
1.1 Agreement to Purchase and Sell.
(a) Concurrently with the execution of this Agreement,
VNCI shall sell to Moneyline and Moneyline shall purchase from VNCI the
Moneyline Shares for a price per Share equal to $.60 or an aggregate
purchase price of $15,000,000 (the "Moneyline Issuance Price"). Moneyline
shall pay the Moneyline Issuance Price to VNCI in cash by wire transfer to
an account or accounts designated by VNCI.
(b) Concurrently with the execution of this Agreement,
VNCI shall issue to Moneyline warrants to purchase twenty-five million
(25,000,000) shares of Common Stock pursuant to the Warrant Agreement.
(c) Concurrently with the execution of this Agreement,
VNCI shall sell to each of the Investors and each of the Investors shall
purchase from VNCI the amount of Investor Shares set forth opposite such
Investor's name on Schedule 1.1(b) for a price per Share equal to $.60 or
an aggregate purchase price of $4,650,000 (the "Investors Issuance Price"
and together with the Moneyline Issuance Price, the "Issuance Price"). Each
of the Investors shall pay the Investors Issuance Price to VNCI in cash by
wire transfer to an account or accounts designated by VNCI.
(d) Concurrently with the execution of this Agreement,
(i) the Noteholders shall convert the Promissory Notes into the Note
Conversion Shares, and (ii) the B2B Noteholders shall convert the B2B
Promissory Notes into the B2B Conversion Shares.
1.2 The Closing.
(a) The closing (the "Closing") of the purchase and sale
of the Shares hereunder shall take place at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 0 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:00
a.m. on May 16, 2002 (the "Closing Date").
(b) At the Closing, VNCI shall deliver or cause to be
delivered to Moneyline:
(i) one or more certificates representing the
Moneyline Shares being sold by VNCI;
(ii) an executed Warrant Agreement, dated as of the
Closing Date;
(iii) a certificate certifying the existence and
good standing of VNCI issued by the Secretary of State of Delaware as of a
recent date;
(iv) a certificate from the appropriate officers of
VNCI certifying as to matters contemplated by Section 7.1(a);
(v) a certificate from the appropriate officers of
B2B certifying as to matters contemplated by Section 7.1(c);
(vi) executed resignations, dated as of the Closing
Date, from those directors and officers of VNCI and B2B as set forth on
Schedule 1.2(b)(vi);
(vii) executed conversion notices (A) in the form
of Exhibit G hereto and dated as of the Closing Date, from those persons
set forth on Schedule 1.2(b)(vii)(A) with respect to the B2B Promissory
Notes dated October 3, 2001, October 12, 2001, December 12, 2001, February
20, 2002, April 8, 2002, April 16, 2002 and/or May 2, 2002, and (B) in the
form of Exhibit H hereto and dated as of the Closing Date, from those
persons set forth on Schedule 1.2(b)(vii)(B) with respect to the Promissory
Notes (collectively, the "Conversion Notices");
(viii) executed releases, (A) in the form of
Exhibit I hereto and dated as of the Closing Date, from those officers,
directors and employees of VNCI and B2B and other entities set forth on
Schedule 1.2(b)(viii) (collectively, the "Director, Officer and Employee
Releases") and (B) in the form of Exhibit J hereto and dated as of the
Closing Date, from VNCI, B2B and Moneyline (the "VNCI/B2B/Moneyline
Release");
(ix) an executed release, in the form of Exhibit K
hereto and dated as of the Closing Date, from EBC (together with the
Director, Officer and Employee Releases and the VNCI/B2B/Moneyline Release,
the "Releases");
(x) an executed Sanmina Release;
(xi) and executed Xxxx Xxxxxxx Release;
(xii) an opinion, dated as of the Closing Date, and
in the form attached to as Exhibit L, from Capitalink LC as to the
fairness, from a financial point of view, to the stockholders of VNCI of
the transactions contemplated by this Agreement and the Merger Agreement
(the "VNCI Fairness Opinion"); and
(xiii) an opinion, dated as of May 13, 2002, and
in the form attached to as Exhibit M, from Xxxxxxx & Co. Inc. as to the
fairness, from a financial point of view, to the stockholders of B2B of the
transactions contemplated by this Agreement and the Merger Agreement (the
"B2B Fairness Opinion").
(c) At the Closing, VNCI shall deliver or cause to be
delivered to each Investor one or more certificates representing the
Investor Shares being sold by VNCI to such Investor against receipt by VNCI
of the portion of the Investors Issuance Price payable for such Investors
Shares;
(d) At the Closing, VNCI shall deliver or cause to be
delivered to each B2B Noteholder one or more certificates representing the
B2B Conversion Shares against receipt by VNCI of such B2B Noteholder's B2B
Promissory Notes;
(e) At the Closing, VNCI shall deliver or cause to be
delivered to each Noteholder one or more certificates representing the Note
Conversion Shares against receipt by VNCI of such Noteholder's Promissory
Notes;
(f) At the Closing, Moneyline shall deliver or cause to
be delivered to VNCI $15,000,000 (the "Moneyline Consideration").
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF VNCI.
VNCI hereby represents and warrants to Moneyline, as of
the date hereof, the following:
2.1 Corporate Organization.
Each of VNCI and the subsidiaries of VNCI set forth on
Schedule 2.1, which constitute all of the subsidiaries of VNCI (each, a
"Subsidiary" and, collectively, the "Subsidiaries"), is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate power and
authority to own, lease, operate or otherwise hold its properties and
assets and to carry on its business as now being conducted. Each of VNCI
and the Subsidiaries is duly qualified or licensed and in good standing as
a foreign corporation, authorized to do business under the laws of each
jurisdiction where the character of the properties owned, leased or used by
it or the nature of its activities makes such qualification or licensing
necessary, except where non-qualification would not be a Material Adverse
Effect (as defined in Section 2.3 hereof). Schedule 2.1 sets forth a
complete and correct list of all jurisdictions in which each of VNCI and
the Subsidiaries is qualified or licensed to do business. As used in this
Agreement, the "subsidiary" of any person shall mean (a) any corporation,
association, partnership, limited liability company or other business
entity of which more than 50% of the total voting power of shares of
capital stock or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such person, (b) any partnership of
which such person is a general partner, or (c) any other person in which
such person, directly or indirectly, has more than 50% of the outstanding
partnership or similar ownership interests or has the power, by contract or
otherwise, to direct or cause the direction of the policies, management and
affairs thereof.
2.2 Due Authorization.
VNCI has full power and authority necessary to execute,
deliver and perform its obligations under this Agreement and each of the
Transaction Agreements and to carry out its respective obligations
hereunder and thereunder. The execution and delivery by VNCI of this
Agreement and the Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby by VNCI has been duly
authorized by all necessary corporate action on the part of VNCI. This
Agreement and the Transaction Agreements have been duly and validly
executed and delivered by VNCI and constitute the valid and legally binding
obligations of VNCI, enforceable against VNCI in accordance with their
respective terms, except as may be limited by any applicable bankruptcy,
reorganization, insolvency, or other laws affecting creditors' rights
generally or by general principles of equity.
2.3 Consents and Approvals.
(a) No vote or approval of holders of any class or series
of the Company's capital stock is required (i) to approve the issuance of
the Shares or warrants to purchase shares of Common Stock pursuant to the
Warrant Agreement or (ii) to approve and adopt this Agreement, the
Strategic Alliance Agreement, the Stockholders Agreement or the Technology
License Agreement.
(b) Except as set forth on Schedule 2.3, no consent,
approval, authorization of, declaration, filing, or registration with, any
court, governmental, regulatory or administrative body, agency or
authority, department, commission, agency, self-regulatory organization,
instrumentality or arbitrator whether federal, state, local or foreign
(each, a "Governmental Authority" and collectively, the "Governmental
Authorities"), is required to be made or obtained by VNCI in connection
with the execution, delivery, and performance of this Agreement or any of
the Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby, except for consents, approvals,
authorizations, declarations, filings and registrations the lack of which
would not have a Material Adverse Effect. For purposes of this Agreement, a
"Material Adverse Effect" shall mean any event, change or development which
has had or could be expected to have, individually or in the aggregate, a
material adverse effect, either in the short-term or in the long-term, on
the business, results of operations, assets, liabilities or condition
(financial or otherwise) of VNCI and the Subsidiaries taken as a whole
(including VNCI's or B2B's ability to consummate the transactions
contemplated by this Agreement and the Transaction Agreements).
2.4 No Violations.
Neither the execution, delivery or performance by VNCI of
this Agreement and the Transaction Agreements nor the consummation of the
transactions contemplated hereby and thereby, will (i) conflict with or
result in a breach of any provision of the certificate of incorporation or
by-laws or similar organizational documents of VNCI or any Subsidiary; (ii)
violate, or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or give rise to a right of
termination, cancellation, modification or acceleration of the performance
required by or a loss of a benefit under, any note, bond, mortgage,
indenture, deed of trust, loan or credit agreement, lease, license, permit,
agreement, commitment, contract or other instrument or obligation to which
VNCI or any Subsidiary is a party or by which its respective properties or
assets are bound or affected; (iii) violate any order, judgment, writ,
injunction, decree, statute, rule or regulation (each, an "Order")
applicable to VNCI or any Subsidiary, or by which its respective properties
or assets is bound or affected; or (iv) result in the creation of any
liens, charges, pledges, security interests, claims, mortgages, options,
rights of first refusal, encumbrances and other prescriptions,
restrictions, conditions or covenants or similar rights whatsoever (each,
an "Encumbrance").
2.5 Capitalization; Subsidiaries.
(a) The authorized capital stock of VNCI consists solely
of 90,000,000 shares of Common Stock and 2,500,000 shares of Preferred
Stock (the "Preferred Stock"). Schedule 2.5(a) sets forth (i) the issued
and outstanding shares of capital stock of VNCI as of the date hereof, and
(ii) the issued and outstanding shares of capital stock of VNCI after
giving effect to the transactions contemplated hereby and the Related
Transactions. No other class of capital stock of VNCI is authorized or
outstanding and there are no securities convertible into or exchangeable
for any shares of its capital stock. All of the outstanding shares of
capital stock of VNCI have been duly authorized and validly issued and are
fully paid and non-assessable and not subject to any preemptive or similar
rights. Except as set forth on Schedule 2.5(a), there are no (i) warrants,
options, agreements, calls, conversion rights, exchange rights, preemptive
rights or other rights or commitments or understandings which call for the
issuance, sale, pledge or other disposition of any shares of capital stock
of VNCI or any securities convertible into or other rights to acquire, any
shares of capital stock of VNCI or obligate VNCI to grant, offer or enter
into any of the foregoing; or (ii) bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into securities
having the right to vote) on any matters on which stockholders may vote,
issued or outstanding. Schedule 2.5(a) sets forth each holder of any of the
securities listed in the immediately preceding sentence and the amounts of
such securities held. Except as set forth on Schedule 2.5(a), none of the
outstanding shares of capital stock of VNCI is subject to any voting trust,
transfer restrictions or other similar arrangements that relates to the
voting or control of such capital stock or partnership interests or rights.
Upon the Closing, Moneyline will be the sole owner of all right, title and
interest in (i) the Moneyline Shares and (ii) warrants for 11,250,000
shares of Common Stock on the terms set forth in the Warrant Agreement.
(b) Except as set forth on Schedule 2.5(b) hereto, all of
the outstanding shares of capital stock or any other ownership interests of
each of the Subsidiaries are duly authorized and validly issued, fully
paid, nonassessable and free of preemptive rights and are owned, directly
or indirectly, by VNCI, free and clear of all Encumbrances. There is no
subscription, option, warrant, call, right agreement or commitment relating
to the issuance, sale, delivery, transfer or redemption by VNCI or the
Subsidiaries (including any right of conversion or exchange under any
outstanding security or other instrument) of the capital stock or
partnership interests or any other ownership interests of the Subsidiaries.
Except for the Subsidiaries, VNCI does not have, directly or indirectly,
any joint venture, partnership or similar relationship with, or any
ownership interest in, any person.
2.6 Intellectual Property.
(a) As used in this Agreement, the term "Intellectual
Property" means the following items that are held for use or used in the
businesses of VNCI and the Subsidiaries as conducted as of the date hereof
or as presently contemplated to be conducted and any licenses to use any of
the following: all trademarks, service marks, trade names, Internet domain
names, designs, logos, slogans and general intangibles of like nature,
together with the goodwill, registrations and applications relating to the
foregoing, and any material unregistered trademarks or service marks
(collectively, "Trademarks"); patents, patent applications and any
continuations, divisionals, continuations-in-part, renewals, reissues for
any of the foregoing (collectively, "Patents"); copyrights (including
registrations and applications for any of the foregoing and material common
law or unregistered copyrights) (collectively, "Copyrights"); computer
programs, including any and all software implementations of algorithms,
models and methodologies whether in source code or object code form,
databases and compilations, including any and all data and collections of
data, all documentation, including user manuals and training materials,
related to any of the foregoing and the content and information contained
on any Web site (collectively, "Software"); confidential information,
technology, know-how, inventions, processes, formulae, algorithms, models
and methodologies (collectively, "Trade Secrets").
(b) Schedule 2.6(b) sets forth, with respect to all
Intellectual Property owned or licensed by VNCI and the Subsidiaries, a
complete and accurate list, of all U.S. and foreign: (i) Patents; (ii)
Trademarks (including Internet domain name registrations); and (iii)
Copyrights.
(c) Schedule 2.6(c) lists all contracts for Software
(other than readily available commercial Software programs having an
acquisition price of less than $1,000) that is licensed, leased or
otherwise used by any of VNCI or the Subsidiaries (collectively, "Third
Party Software"), and all Software that is owned by any of VNCI or the
Subsidiaries (collectively, "Proprietary Software"), and identifies which
Software is owned, licensed, leased, or otherwise used, as the case may be.
(d) Schedule 2.6(d) sets forth a complete and accurate
list of all agreements granting, obtaining, or restricting any rights to
use or to practice any rights under any Intellectual Property to which any
of VNCI or the Subsidiaries (as applicable) is a party or otherwise bound,
as licensee or licensor thereunder, including, without limitation,
agreements for Third Party Software, agreements for Proprietary Software,
other license agreements, settlement agreements and covenants not to xxx
(collectively, "License Agreements"). No royalties, honoraria or other fees
are payable by any of VNCI or the Subsidiaries to any third parties for the
use of or right to use any Intellectual Property except pursuant to the
License Agreements. VNCI and the Subsidiaries have not licensed or
sublicensed any of their rights in any Intellectual Property, or received
or been granted any such rights, other than pursuant to the License
Agreements.
(e) Except as set forth on Schedule 2.6(e), VNCI and the
Subsidiaries own or have the right to use all Intellectual Property, free
and clear of all Encumbrances, and each of VNCI and the Subsidiaries (as
applicable) are listed in the records of the appropriate United States,
state, or foreign registry as the sole current owner of record for each
application and registration listed in Schedule 2.6(b).
(f) Except as set forth on Schedule 2.6(f), any
Intellectual Property owned or used by any of VNCI or the Subsidiaries has
been duly maintained, is valid and subsisting, is in full force and effect
and has not been cancelled, expired or abandoned.
(g) Except as set forth on Schedule 2.6(g), there is no
pending or threatened claim, suit, arbitration or other adversarial
proceeding before any court, agency, arbitral tribunal, or registration
authority, in any jurisdiction, and none of VNCI or the Subsidiaries has
received written notice regarding any of the foregoing, involving: (i) the
Intellectual Property owned by any of VNCI or the Subsidiaries, (ii) the
Intellectual Property licensed to any of VNCI or the Subsidiaries, (A)
alleging that the activities or the conduct of the businesses of VNCI and
the Subsidiaries infringe upon, violate, or constitute the unauthorized use
of the intellectual property rights of any third party, or (B) challenging
the ownership rights of any of VNCI or the Subsidiaries in, or validity,
enforceability, and registrability of, any Intellectual Property.
(h) No third party is misappropriating, infringing,
diluting or violating any Intellectual Property owned by any of VNCI or the
Subsidiaries.
(i) The License Agreements are valid and binding
obligations of VNCI or Subsidiary (as applicable) enforceable in accordance
with their respective terms, except as may be limited by any applicable
bankruptcy, reorganization, insolvency, or other laws affecting creditors'
rights generally or by general principles of equity, and to VNCI's
knowledge there exists no event or condition which will result in a
violation or breach of, or constitute a default by any of VNCI or the
Subsidiaries or the other party thereto, under any such License Agreement.
VNCI will not, as a result of the execution of and delivery of this
Agreement and the Transaction Agreements and the transactions contemplated
hereby and thereby, be in breach of or suffer any loss of rights under any
License Agreement.
(j) Each of VNCI and the Subsidiaries takes reasonable
measures to protect the confidentiality of Trade Secrets. To VNCI's
knowledge, no Trade Secret of any of VNCI or the Subsidiaries has been
disclosed or authorized to be disclosed to any third party other than
pursuant to a written nondisclosure agreement that adequately protects the
proprietary interests of VNCI and the Subsidiaries in and to such Trade
Secrets.
(k) Except as set forth on Schedule 2.6(k), all
Proprietary Software set forth on Schedule 2.6(c) was either developed (i)
by employees of VNCI and the Subsidiaries within the scope of their
employment, or (ii) by independent contractors who have assigned all of
their rights to any of VNCI or the Subsidiaries pursuant to a written
agreement.
(l) To VNCI's knowledge, there is no material defect in
design, manufacture, materials or workmanship, including any failure to
warn or alleged breach of express or implied warranty or representation,
relating to any product manufactured, distributed or sold by or on behalf
of VNCI. To VNCI's knowledge, there is no material impediment to any
upgrade of any product currently manufactured, distributed or sold by or on
behalf of VNCI that VNCI is currently developing.
2.7 Litigation.
Except as set forth on Schedule 2.7, (i) there is no
claim, action, suit, inquiry, judicial or administrative proceeding,
arbitration or investigation (each, an "Action") pending or, to VNCI's
knowledge, threatened, by or against any of VNCI or the Subsidiaries before
any court, arbitrator or administrative or governmental body, and (ii)
there is no Order of any Governmental Authorities outstanding against any
of VNCI or the Subsidiaries. There is no Action pending or threatened
against any of VNCI or the Subsidiaries which (i) challenges the
transactions contemplated hereby or by the Transaction Agreements; (ii)
would prevent or materially interfere with or delay the consummation of the
transactions contemplated hereby and by the Transaction Agreements; or
(iii) seeks damages in connection with the transactions contemplated hereby
or by any of the Transaction Agreements.
2.8 Customers and Suppliers.
Except as set forth on Schedule 2.8, none of VNCI or the
Subsidiaries has received any notice that any current customer or supplier
of any of VNCI or the Subsidiaries will terminate or adversely and
materially modify its business relationship with VNCI or such Subsidiary.
Schedule 2.8 sets forth a complete and correct list of the ten (10) largest
customers (by net sales) and five (5) largest suppliers (by dollar volume)
of VNCI for the fiscal year ended December 31, 2001.
2.9 Financial Statements.
VNCI has delivered to Moneyline true, correct and
complete copies of the unaudited consolidated financial statements of VNCI
as of and for the 12-month period ended December 31, 2001 and the three
month period ended March 31, 2002 (collectively, the "Financial
Statements"). The Financial Statements (including the footnotes thereto)
present fairly in all material respects the financial position of VNCI and
the Subsidiaries as of the dates thereof and their results of operations
and cash flows for the periods then ended, in accordance with generally
accepted accounting principles applied on a consistent basis ("GAAP")
throughout the period.
2.10 Reports.
Other than VNCI's Form 10-K for the period ending
December 31, 2001, the filings required to be made by VNCI and its
Subsidiaries since December 31, 1998 under the Securities Act of 1933, as
amended (the "Securities Act") and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), have been filed with the Securities and
Exchange Commission (the "SEC") including all forms, statements, reports,
all documents, exhibits, amendments and supplements appertaining thereto,
and complied, as of their respective dates, in all material respects with
all applicable requirements of the appropriate statutes and the rules and
regulations thereunder. "VNCI SEC Reports" shall mean each report,
schedule, registration statement and definitive proxy statement filed with
the SEC by VNCI pursuant to the requirements of the Securities Act or
Exchange Act since December 31, 1998 (as such documents have since the time
of their filing been amended). As of their respective dates, the VNCI SEC
Reports did 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 light of the circumstances under which they were
made, not misleading. True, accurate and complete copies of the Articles of
Incorporation and by-laws of VNCI, as in effect on the date hereof, are
included (or incorporated by reference) in the VNCI SEC Reports.
2.11 Absence of Certain Changes.
Since December 31, 2001, other than as disclosed in
Schedule 2.11 or the VNCI SEC Reports, VNCI has conducted its business in
the ordinary and usual course and consistent with past practice, and has
not: (i) entered into or terminated any material transaction, contract or
commitment which is not in the ordinary course of business and consistent
with past practice; (ii) incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any indebtedness or any other
liability, including purchase money indebtedness, except trade or business
obligations or indebtedness incurred in the ordinary course of business and
consistent with past practice or compromised, settled or otherwise
discharged any audit or claim with respect to Taxes in the aggregate not in
excess of $10,000; (iii) authorized, issued, pledged or otherwise
encumbered or sold any shares of its capital stock, or issued, sold or
created any securities convertible into, or options or other rights with
respect to, or warrants to purchase or rights to subscribe to, any shares
of its capital stock; (iv) declared, set aside, paid or made any dividend
or other distribution with respect to its capital stock, whether payable in
cash, stock or property, or redeemed any shares of capital stock; (v)
suffered any damage, destruction or other casualty or loss (whether or not
covered by insurance); (vi) increased the compensation payable or to become
payable by VNCI to any of its officers or employees or increased any bonus,
insurance, pension or other employee benefit plan, payment or arrangement
made by VNCI, for or with any such officers or employees; (vii) acquired or
disposed of any substantial assets; (viii) changed its certificate of
incorporation or by-laws or similar documents; (ix) made any change in a
Tax or financial accounting practice or made or changed any Tax election
except as required by GAAP or applicable Law; (x) suffered a Material
Adverse Effect or the occurrence of any event or circumstances that would
be reasonably likely to result in a Material Adverse Effect; or (xi)
entered into an agreement to do, or which would result in, any of the
foregoing.
2.12 Liabilities.
(a) Schedule 2.12(a) sets forth all material liabilities
of VNCI and the Subsidiaries, whether accrued, contingent, absolute,
determined, indeterminable or otherwise, which have been created since
December 31, 2001.
(b) Set forth on Schedule 2.12(b) is a list of all
indebtedness of VNCI which will be outstanding after the closing.
2.13 Compliance with Laws; Permits.
(a) Each of VNCI and the Subsidiaries is not in violation
in any material respect of any Orders and has complied in all material
respects with all applicable laws, statutes, regulations or other
requirements (collectively, "Laws") of any Governmental Authority.
(b) Each of VNCI, the Subsidiaries and their respective
employees has all material licenses, franchises, permits and authorizations
of any Governmental Authority as are material or necessary for the lawful
conduct of the business of VNCI and the Subsidiaries (collectively,
"Permits"), and such Permits are in full force and effect. None of VNCI,
the Subsidiaries or any of such employees has received any notice of
revocation of, or default under, any Permits.
2.14 Tax Matters.
(a) Except as set forth on Schedule 2.14(a):
(i) Each of VNCI and the Subsidiaries has (i)
timely filed all Tax Returns required to be filed by it and all such Tax
Returns are true, correct and complete in all material respects, (ii) paid
in full all material Taxes required to be paid by it, and (iii) established
in its most recent Financial Statements reserves that are adequate, in
accordance with GAAP, for the payment of any Taxes not yet due and payable
or which are being contested in good faith. Schedule 2.14(a)(i) sets forth
all Taxes which are being contested in good faith. Since the date of VNCI's
most recent Financial Statements, none of VNCI or the Subsidiaries has
incurred any liability for material Taxes other than in the ordinary course
of business consistent with past practice;
(ii) There are no Encumbrances for material Taxes
upon any assets of any of VNCI or the Subsidiaries, except statutory
Encumbrances for Taxes not yet due and payable;
(iii) No deficiency for any Taxes has been proposed
in writing, asserted in writing or assessed in writing by any Tax authority
against any of VNCI or any of the Subsidiaries that has not been resolved
and paid in full. No waiver, extension or comparable consent given by any
of VNCI or any of the Subsidiaries regarding the application of the statute
of limitations with respect to any Taxes or Tax Return is outstanding, nor
is any written request for any such waiver or consent pending;
(iv) Each of VNCI and the Subsidiaries has complied
with all applicable Laws relating to the withholding of material Taxes and
has timely withheld and paid over to the relevant Tax authority all
material amounts required to be so withheld and paid over for all periods
under all applicable Laws, including withholding in connection with
payments to employees, independent contractors, creditors, stockholders,
partners or other third parties;
(v) None of VNCI or the Subsidiaries has granted
any power of attorney which is currently in force with respect to Taxes or
Tax Returns;
(vi) None of VNCI or the Subsidiaries has been a
member of any federal, state, local or foreign consolidated, unitary,
combined or similar group other than a group with VNCI as its common
parent;
(vii) To the knowledge of VNCI and its
Subsidiaries, there are no federal, state, local or foreign audits,
actions, suits, proceedings, investigations, claims or administrative
proceedings relating to Taxes or any Tax Returns of any of VNCI or any of
the Subsidiaries now pending, and none of VNCI or any of the Subsidiaries
has received any notice of any proposed audits, investigations, claims or
administrative proceedings relating to Taxes or any Tax Returns;
(viii) None of VNCI or the Subsidiaries has agreed
or is required to make any adjustments under section 481(a) of the Internal
Revenue Code of 1986, as amended (the "Code") (or any similar provision of
state, local and foreign Law) by reason of a change in accounting method or
otherwise for any Tax period for which the applicable statute of
limitations, including all valid extensions thereof, has not yet expired;
(ix) None of VNCI or the Subsidiaries has received
a ruling from any Tax authority. No closing agreement pursuant to section
7121 of the Code (or any similar provision of state, local or foreign Law)
has been entered into by or with respect to any of VNCI or a Subsidiary;
(x) None of VNCI or the Subsidiaries has filed a
consent pursuant to section 341(f) of the Code (or any predecessor
provision) or has agreed to have section 341(f)(2) of the Code apply to the
disposition of a subsection (f) asset (as such term is defined in section
341(f)(4) of the Code) owned by any of VNCI or the Subsidiaries;
(xi) No jurisdiction where any of VNCI or the
Subsidiaries does not file a Tax Return has made a written claim that any
of VNCI or the Subsidiaries is required to file a Tax Return for such
jurisdiction;
(xii) Other than the Transaction Agreements, none
of VNCI or the Subsidiaries (i) is a party to, is bound by or has any
obligation under, any Tax sharing agreement, Tax indemnification agreement
or similar contract or arrangement or (ii) has any potential liability or
obligation to any person as a result of, or pursuant to, any such
agreement, contract or arrangement;
(xiii) Each of the Subsidiaries is a "United States
person" (as defined under section 7701(a)(30) of the Code); and
(b) Other than any Tax Returns which have not yet been
required to be filed, each of VNCI and the Subsidiaries has made available
to Moneyline true and correct copies of the United States federal income
Tax Return and any state, local or foreign Tax Return for any jurisdiction
that represents five percent (5%) or more of the taxable income of VNCI and
the Subsidiaries as filed by any of VNCI or the Subsidiaries for each of
the taxable years ended December 31, 2000, 1999 and 1998.
(c) VNCI and the Subsidiaries have previously delivered
or made available to Moneyline complete and accurate copies of each of (i)
all audit reports, letter rulings, technical advice memoranda, and similar
documents issued by any Tax authority relating to the United States
federal, state, local or foreign Taxes due from or with respect to any of
VNCI or the Subsidiaries, and (ii) any closing agreements entered into by
any of VNCI or the Subsidiaries with any Tax authority in each case
existing on the date hereof. Each of VNCI and the Subsidiaries will deliver
to Moneyline all materials with respect to the foregoing for all matters
arising after the date hereof.
(d) As used in this Agreement, (i) "Tax" or "Taxes" means
(x) any and all taxes, assessments, customs, duties, levies, fees, tariffs,
imposts, deficiencies and other governmental charges of any kind whatsoever
(including, but not limited to, taxes on or with respect to net or gross
income, franchise, profits, gross receipts, capital, sales, use, ad
valorem, value added, transfer, real property transfer, transfer gains,
inventory, capital stock, license, payroll, employment, social security,
unemployment, severance, occupation, real or personal property, estimated
taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles,
alternative minimum, doing business, withholding and stamp), together with
any interest thereon, penalties, fines, damages costs, fees, additions to
tax or additional amounts with respect thereto, and (ii) the term "Tax
Return" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
2.15 Affiliated Transactions.
(a) Except as set forth on Schedule 2.15(a) or in the SEC
Reports, no officer, director, or employee of any of VNCI or the
Subsidiaries, or a relative, spouse (or relative of such spouse), director,
officer, stockholder or affiliate of the foregoing:
(i) has any direct or indirect financial interest
in any competitor, supplier or customer of any of VNCI or the Subsidiaries;
provided, however, that the ownership of securities representing no more
than one percent (1%) of the outstanding voting power of any competitor,
supplier or customer, which securities are listed on any national
securities exchange or traded actively in the national over-the-counter
market, shall not be deemed to be a "financial interest" so long as the
person owning such securities has no other connection or relationship with
such competitor, supplier or customer;
(ii) owns, directly or indirectly, in whole or in
part, or has any interest in any tangible or intangible property which any
of VNCI or the Subsidiaries uses or has used in the conduct of the business
of VNCI and the Subsidiaries or otherwise; or
(iii) has borrowed money or other property of any
of VNCI or the Subsidiaries.
(b) Except as set forth on Schedule 2.15(b), VNCI and the
Subsidiaries have no liabilities, debts or any other obligation of any
nature whatsoever to any of Moneyline or EBC or any officer, director or
employee of any of VNCI or the Subsidiaries or to any relative, spouse (or
relative of such spouse), stockholder, director, officer or affiliate of
any of the foregoing, other than, in the case of any such officer or
employee of a VNCI or Subsidiary, in respect of accrued wages, the
reimbursement of expenses and the extension of benefits to such person made
in the ordinary course of business consistent with past practice.
2.16 Employees, Employee Benefit Plans; ERISA.
(a) Except as set forth on Schedule 2.16(a), there is no
(i) collective bargaining agreement or any other agreement with any labor
organization to which any of VNCI or the Subsidiaries is a party applicable
to the employees of any of VNCI or the Subsidiaries; (ii) unfair labor
practice complaint or charge pending or threatened against any of VNCI or
the Subsidiaries before the National Labor Relations Board or any other
federal, state, local or foreign agency; (iii) pending or, to VNCI's
knowledge, threatened strike, slowdown, work stoppage, lockout or other
collective labor action by or with respect to any employees of any of VNCI
or the Subsidiaries; (iv) grievance, unfair dismissal or arbitration
proceeding pending against any of VNCI or the Subsidiaries; (v) pending, or
to VNCI's knowledge, threatened complaint, charge, lawsuit or other
proceeding against any of VNCI or the Subsidiaries by employees of any of
VNCI or the Subsidiaries alleging discrimination, (vi) pending or, to
VNCI's knowledge, threatened representation question or union organizing
activities with respect to any employees of any of VNCI or the
Subsidiaries; (vii) pending or, to VNCI's knowledge, threatened notice of
the intent of any federal, state, local or foreign agency responsible for
the enforcement of labor or employment Laws, including, but not limited to,
occupational safety and health, to conduct an investigation and no such
investigation is in progress with respect to any employees of any of VNCI
or the Subsidiaries; (viii) complaint, charge, lawsuit or other proceeding
pending or, to VNCI's knowledge, threatened in any forum by or on behalf of
any present or former employee of any of VNCI or the Subsidiaries, any
applicant for employment or classes of the foregoing alleging breach of any
express or implied contract or employment, any Law governing employment or
the termination thereof or other discriminatory, wrongful or tortious
conduct concerning the employment relationship; and (ix) written personnel
policy, rule or procedure applicable to employees of any of VNCI or the
Subsidiaries, other than those set forth on Schedule 2.16(a). VNCI and the
Subsidiaries are, and since January 1, 1998 have been, in compliance in all
material respects with all applicable Laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of
work, and occupational safety and health.
(b) VNCI and the Subsidiaries have at all times properly
classified each of their respective employees as employees and each of
their independent contractors as independent contractors, as applicable.
There is no action, suit or investigation pending or threatened against any
of VNCI or the Subsidiaries by any person challenging or questioning the
classification by any of VNCI or the Subsidiaries of any person as an
independent contractor, including any claim for unpaid benefits, for or on
behalf of, any such persons.
(c) Within the 12 months preceding the date of this
Agreement, there has not been (i) a "plant closing" (as defined in the
Worker Adjustment and Restraining Notification Act (the "WARN Act")
affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of any of VNCI or the
Subsidiaries; or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of any of VNCI or the
Subsidiaries; nor have any of VNCI or the Subsidiaries been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state, local or foreign Law.
Except as set forth on Schedule 2.16(c), the employees of VNCI and the
Subsidiaries have not suffered an "employment loss" (as defined in the WARN
Act) since six (6) months prior to the date of this Agreement.
(d) Schedule 2.16(d) contains a true and complete list of
(i) each deferred compensation and each bonus or other incentive
compensation, stock purchase, stock option and other equity compensation
plan, program, agreement or arrangement; (ii) each severance or termination
pay, medical, surgical, hospitalization, life insurance and other "welfare"
plan, fund or program (within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA); (iii) each
profit-sharing, stock bonus or other "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA); (iv) each employment,
termination or severance agreement; and (v) each other employee benefit
plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by
any of VNCI, any of the Subsidiaries, or by any trade or business, whether
or not incorporated (an "ERISA Affiliate), that together with VNCI would be
deemed a "single employer" within the meaning of Section 4001(b) of ERISA,
or to which any of VNCI, any of the Subsidiaries, or an ERISA Affiliate is
party, whether written or oral, for the benefit of any employee or former
employee of any of VNCI or the Subsidiaries (each, a "Plan"). No Plan is
subject to Section 302 or Title IV of ERISA or section 412 of the Code and
none of VNCI, any of the Subsidiaries, or any ERISA Affiliate has
sponsored, maintained, contributed to or been required to contribute to any
such plan within the past six (6) years prior to the date hereof. None of
VNCI, any of the Subsidiaries or any ERISA Affiliate has any formal plan or
commitment to (i) create any additional Plan, or (ii) materially modify or
change any existing Plan. No Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(e) True and complete copies of the following documents
relating to each Plan, where applicable, have been delivered or made
available to Moneyline: (i) the Plan document, including all amendments
thereto; (ii) the most recent summary plan description required under ERISA
with respect thereto, summary of material modifications and all material
employee communications relating to such Plan; (iii) a copy of the annual
report, if required under ERISA, with respect to each such Plan for the
last two (2) years; (iv) a copy of the actuarial report, if required under
ERISA, with respect to each such Plan for the last two (2) years; (v) if
the Plan is funded through a trust or any other funding vehicle, a copy of
the trust or other funding agreement (including all amendments thereto) and
the latest financial statements thereof; and (vi) the most recent
determination letter received from the Internal Revenue Service with
respect to each Plan that is intended to be qualified under section 401 of
the Code.
(f) No liability under Title IV of ERISA has been
incurred by any of VNCI or the Subsidiaries or any ERISA Affiliate since
the effective date of ERISA that has not been satisfied in full, and no
condition exists that presents a material risk to any VNCI or Subsidiary or
any ERISA Affiliate of incurring a liability under such Title, other than
liability for premiums due the Pension Benefit Guaranty Corporation
("PBGC"), which payments have been or will be made when due.
(g) There are no pending or, to VNCI's knowledge,
threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of, or against, any of the Plans or any trust related
thereto.
(h) None of VNCI, any of the Subsidiaries, any of the
Plans, any trust created thereunder or any trustee, fiduciary or
administrator thereof have engaged in a transaction or have taken or failed
to take any action in connection with which any of the Plans, any such
trust, any trustee, fiduciary or administrator thereof, or any party
dealing with the Plans or any such trust could be subject to either a civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a Tax (as
defined below) imposed pursuant to section 4975, 4976 or 4980B of the Code.
(i) Each of the Plans has been established, operated and
administered in all material respects in accordance with its terms and
applicable Laws, including but not limited to ERISA and the Code. All
contributions that are required to be made to the Plans have been timely
made or have been properly accrued.
(j) Each of the Plans that is intended to be "qualified"
within the meaning of section 401(a) of the Code is so qualified and no
circumstances exist that could result in the disqualification of such Plan
and the trusts maintained thereunder are exempt from taxation under section
501(a) of the Code. Each Plan intended to satisfy the requirements of
section 501(c)(9) has satisfied such requirements.
(k) Except as set forth in Schedule 2.16(k), the
consummation of the transactions contemplated by this Agreement and the
Transaction Agreements will not, either alone or in combination with
another event, (i) entitle any current or former employee or officer of any
of VNCI, any of the Subsidiaries, or any ERISA Affiliate to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer.
(l) No amounts payable under the Plans or any other
agreement or arrangement to which any of VNCI or the Subsidiaries is a
party will fail to be deductible for federal income tax purposes by virtue
of section 280G of the Code.
(m) No Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with
respect to current or former employees after retirement or other
termination of service (other than (i) coverage mandated by applicable Law,
(ii) death benefits or retirement benefits under any "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, or (iii)
benefits, the full cost of which is borne by the current or former employee
(or his or her beneficiary)). No condition exists that would prevent any of
VNCI or the Subsidiaries from amending or terminating any Plan providing
health or medical benefits in respect of any active or former employee of
any of VNCI or the Subsidiaries.
(n) Except as set forth on Schedule 2.16(n), none of VNCI
or any of the Subsidiaries is a party to (i) any employee benefit
arrangements which contain "change of control," retention bonus or similar
provisions, (ii) any severance agreements, arrangements or understandings
with employees of any of VNCI or the Subsidiaries, or (iii) any oral or
written employment contracts or agreements.
(o) At the Closing Date, those employees of VNCI set
forth in Schedule 2.16(o) shall hold options to purchase shares of Common
Stock in the amount, and at such price, as set forth opposite their name in
Schedule 2.16(o).
(p) Except as set forth on Schedule 2.16(p), as of the
Closing Date, no equity-based awards, other than options to purchase Common
Stock, have been granted under any of the Plans.
(q) As of the Closing Date, no Plan, other than the VNCI
1999 Stock Incentive Plan, allows for the granting of options to purchase
Common Stock. Each Plan, other than the VNCI 1999 Stock Incentive Plan,
that previously allowed for the granting of options to purchase Common
Stock has been terminated except with respect to option grants made prior
to such terminations.
2.17 Contracts.
(a) Except as set forth in Schedule 2.17(a), VNCI, or any
Subsidiary, is not a party to, or bound by, any (i) indenture, mortgage,
note, installment obligation, agreement or other instrument relating to the
borrowing of money, in excess of $10,000; (ii) license or distribution
agreement; or (iii) agreements, commitments, purchase orders, or contracts,
to which VNCI or a Subsidiary is a party or to which VNCI or a Subsidiary
is bound (any of (i), (ii) or (iii), a "Contract") which (x) involve the
annual payment or receipt by or to VNCI or a Subsidiary, of more than
$10,000, (y) are not cancelable by VNCI or a Subsidiary on less than sixty
(60) days' notice, or (z) otherwise materially affect the business of VNCI
or a Subsidiary (including all non-competition and management agreements
and arrangements) (collectively, the "Material Contracts"). Each of the
Material Contracts is a legal, valid and binding obligation of VNCI or a
Subsidiary, as applicable, enforceable by and against it in accordance with
its terms, except as may be limited by any applicable bankruptcy,
reorganization, insolvency, or other laws affecting creditors' rights
generally or by general principles of equity. There is not, under any of
the agreements or other obligations specified in Schedule 2.17(a), any
event of default or event which, with notice of lapse of time or both,
would constitute an event of default on the part of VNCI or a Subsidiary.
(b) Schedule 2.17(b) sets forth all Contracts containing
any provision or term relating to (i) a change of control of VNCI, (ii)
non-competition obligations of VNCI, (iii) management agreements and
arrangements and (iv) agreements to register shares of capital stock of
VNCI or other registration rights agreements.
2.18 Brokers and Finders.
Except as set forth on Schedule 2.18, upon the
consummation of the transactions contemplated by this Agreement and the
Transaction Agreements, no agent, broker, investment banker or other Person
is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from VNCI in connection with any of the
transactions contemplated by this Agreement and the Transaction Agreements.
2.19 Books and Records.
The books of account, minute books, stock record books,
and other records of each of VNCI and the Subsidiaries, all of which have
been made available to Moneyline, are complete and correct in all material
respects and have been maintained substantially in accordance with sound
business practices, including the maintenance of an adequate system of
internal controls. The minute books of each of VNCI and the Subsidiaries
contain accurate and substantially complete records of all meetings held
of, and corporate or partnership action taken by, the stockholders and the
board of directors (and any committees thereof) (or equivalent bodies) of
each of VNCI and the Subsidiaries.
2.20 Board Approval; State Statutes.
(a) The Board of Directors, at a meeting duly called and
held, has consented to (i) the sale of the Shares to each of Moneyline and
the Investors pursuant to this Agreement and the other transactions
contemplated hereby, and (ii) each of the Transaction Agreements and the
transactions contemplated thereby, and has not amended, rescinded or
modified such consents as of the Closing Date.
(b) The Board of Directors has taken all actions
necessary or advisable so that the restrictions contained in Section 203 of
the DGCL applicable to a "business combination" (as defined in such
Section) will not apply to the execution of this Agreement, any of the
Transaction Agreements and the transactions contemplated hereby and
thereby. The execution, delivery and the performance of this Agreement and
the Transaction Agreements will not cause to be applicable to VNCI any
"fair price," "moratorium," "control share acquisition" or other similar
antitakeover statute or regulation enacted under state or federal laws.
(c) No state statute granting appraisal rights to
stockholders of VNCI is applicable to this Agreement, the Transaction
Agreements and the transactions contemplated hereby and thereby.
2.21 Representations and Warranties by VNCI in Transaction
Agreements.
The representations and warranties made by VNCI in each
of the Transaction Agreements shall be true and correct, in each case as of
the date of such Transaction Agreement and as of the Closing Date as if
made at and as of such date.
2.22 Full Disclosure.
The information furnished by VNCI and the Subsidiaries to
Moneyline in connection with this Agreement and the Transaction Agreements
does not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements made, in light of the
circumstances under which they were made, not false or misleading.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF B2B.
B2B hereby represents and warrants to Moneyline, as of
the date hereof, the following:
3.1 Corporate Organization.
B2B is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and has
all requisite corporate power and authority to own, lease, operate or
otherwise hold its properties and assets and to carry on its business as
now being conducted. B2B is duly qualified or licensed and in good standing
as a foreign corporation, authorized to do business under the laws of each
jurisdiction where the character of the properties owned, leased or used by
it or the nature of its activities makes such qualification or licensing
necessary, except where non-qualification would not be a B2B Material
Adverse Effect (as defined in Section 3.3 hereof). Schedule 3.1 sets forth
a complete and correct list of all jurisdictions in which B2B is qualified
or licensed to do business.
3.2 Due Authorization.
B2B has full power and authority necessary to execute,
deliver and perform its obligations under this Agreement and the Merger
Agreement and to carry out its respective obligations thereunder. The
execution and delivery by B2B of this Agreement and the Merger Agreement
and the consummation of the transactions contemplated thereby has been duly
authorized by all necessary corporate action on the part of B2B. Each of
this Agreement and the Merger Agreement has been duly and validly executed
and delivered by B2B and constitutes the valid and legally binding
obligations of B2B, enforceable against B2B in accordance with their
respective terms, except as may be limited by applicable bankruptcy,
reorganization, insolvency, or other laws affecting creditors' rights
generally or by general principles of equity.
3.3 Consents and Approvals.
Except as set forth on Schedule 3.3, no consent,
approval, authorization of, declaration, filing, or registration with, any
Governmental Authority, is required to be made or obtained by B2B in
connection with the execution, delivery, and performance of this Agreement
and the Merger Agreement and the consummation of the transactions
contemplated hereby and thereby, except for (i) consents, approvals,
authorizations, declarations, filings and registrations the lack of which
would not reasonably be expected to have a B2B Material Adverse Effect (as
defined below), (ii) the filing and recordation of the Certificate of
Merger with the Secretary of State of Delaware as required by the laws of
the State of Delaware, and (iii) the notice, required by Section 262 of the
DGCL, to be given to those B2B stockholders whom did not consent to the
Merger Agreement and the Merger. For purposes of this Agreement, a "B2B
Material Adverse Effect" shall mean any event, change or development which
has had or could reasonably be expected to have, individually or in the
aggregate, a material adverse effect, either in the short-term or in the
long-term, on the business, results of operations, assets, liabilities or
condition (financial or otherwise) of B2B taken as a whole (including B2B's
ability to consummate the transactions contemplated by this Agreement and
the Merger Agreement).
3.4 No Violations.
Neither the execution, delivery or performance by B2B of
this Agreement and the Merger Agreement nor the consummation of the
transactions contemplated hereby and thereby, will (i) conflict with or
result in a breach of any provision of the certificate of incorporation or
by-laws or similar organizational documents of B2B; (ii) except as set
forth in Schedule 3.4, violate, or conflict with, or result in a breach of
any provisions of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or give rise
to a right of termination, cancellation, modification or acceleration of
the performance required by or a loss of a benefit under, any note, bond,
mortgage, indenture, deed of trust, loan or credit agreement, lease,
license, permit, agreement, commitment, contract or other instrument or
obligation to which B2B is a party or by which its properties or assets are
bound or affected; (iii) violate any Order applicable to B2B, or by which
its properties or assets is bound or affected; or (iv) except as set forth
in Schedule 3.4, result in the creation of any Encumbrance.
3.5 Capitalization; Joint Ventures.
(a) The authorized capital stock of B2B consists solely
of 30,000,000 shares of B2B Common Stock, 1,512,500 shares of B2B Series A
Preferred Stock and 2,875,000 shares of B2B Series B Preferred Stock.
Schedule 3.5(a) sets forth the issued and outstanding shares of capital
stock of B2B. No other class of capital stock of B2B is authorized or
outstanding and there are no securities convertible into or exchangeable
for any shares of its capital stock. All of the outstanding shares of
capital stock of B2B have been duly authorized and validly issued and are
fully paid and non-assessable and not subject to any preemptive or similar
rights, except as set forth on Schedule 3.5(a). Except as set forth on
Schedule 3.5(a), there are no (i) warrants, options, agreements, calls,
conversion rights, exchange rights, preemptive rights or other rights or
commitments or understandings which call for the issuance, sale, pledge or
other disposition of any shares of capital stock of B2B or any securities
convertible into or other rights to acquire, any shares of capital stock of
B2B or obligate B2B to grant, offer or enter into any of the foregoing; or
(ii) bonds, debentures, notes or other indebtedness having the right to
vote (or convertible into securities having the right to vote) on any
matters on which stockholders may vote, issued or outstanding. Except as
set forth on Schedule 3.5(a), none of the outstanding shares of capital
stock of B2B is subject to any voting trust, transfer restrictions or other
similar arrangements that relates to the voting or control of such capital
stock or partnership interests or rights. Upon the consummation of the
Merger, VNCI will be the sole owner of all right, title and interest in all
issued and outstanding shares of capital stock of B2B.
(b) Except as set forth on Schedule 3.5(b) hereto, and
excluding its relationship with VNCI, B2B does not have, directly or
indirectly, any joint venture, partnership or similar relationship with, or
any ownership interest in, any person.
3.6 Intellectual Property.
(a) As used in this Agreement, the term "B2B Intellectual
Property" means the following items that are held for use or used in the
businesses of B2B as conducted as of the date hereof and any licenses to
use any of the following: all trademarks, service marks, trade names,
Internet domain names, designs, logos, slogans and general intangibles of
like nature, together with the goodwill, registrations and applications
relating to the foregoing, and any material unregistered trademarks or
service marks (collectively, "B2B Trademarks"); patents, patent
applications and any continuations, divisionals, continuations-in-part,
renewals, reissues for any of the foregoing (collectively, "B2B Patents");
copyrights (including registrations and applications for any of the
foregoing and material common law or unregistered copyrights)
(collectively, "B2B Copyrights"); computer programs, including any and all
software implementations of algorithms, models and methodologies whether in
source code or object code form, databases and compilations, including any
and all data and collections of data, all documentation, including user
manuals and training materials, related to any of the foregoing and the
content and information contained on any Web site (collectively, "B2B
Software"); confidential information, technology, know-how, inventions,
processes, formulae, algorithms, models and methodologies (collectively,
"B2B Trade Secrets").
(b) Schedule 3.6(b) sets forth, with respect to all B2B
Intellectual Property owned or licensed by B2B, a complete and accurate
list, of all U.S. and foreign: (i) B2B Patents; (ii) B2B Trademarks
(including Internet domain name registrations); and (iii) B2B Copyrights.
(c) Schedule 3.6(c) lists all contracts for B2B Software
(other than readily available commercial B2B Software programs having an
acquisition price of less than $1,000) that is licensed, leased or
otherwise used by B2B (collectively, "B2B Third Party Software"), and all
B2B Software that is owned by any of B2B (collectively, "B2B Proprietary
Software"), and identifies which B2B Software is owned, licensed, leased,
or otherwise used, as the case may be.
(d) Schedule 3.6(d) sets forth a complete and accurate
list of all agreements granting, obtaining, or restricting any rights to
use or to practice any rights under any B2B Intellectual Property to which
B2B (as applicable) is a party or otherwise bound, as licensee or licensor
thereunder, including, without limitation, agreements for B2B Third Party
Software, agreements for B2B Proprietary Software, other license
agreements, settlement agreements and covenants not to xxx (collectively,
"B2B License Agreements"). No royalties, honoraria or other fees are
payable by B2B to any third parties for the use of or right to use any B2B
Intellectual Property except pursuant to the B2B License Agreements. B2B
has not licensed or sublicensed any of its rights in any B2B Intellectual
Property, or received or been granted any such rights, other than pursuant
to the B2B License Agreements.
(e) Except as set forth on Schedule 3.6(e), B2B owns or
have the right to use all B2B Intellectual Property, free and clear of all
Encumbrances, and B2B is listed in the records of the appropriate United
States, state, or foreign registry as the sole current owner of record for
each application and registration listed in Schedule 3.6(b).
(f) Any B2B Intellectual Property owned or used by B2B
has been duly maintained, is valid and subsisting, is in full force and
effect and has not been cancelled, expired or abandoned.
(g) There is no pending or threatened claim, suit,
arbitration or other adversarial proceeding before any court, agency,
arbitral tribunal, or registration authority, in any jurisdiction, and B2B
has not received written notice regarding any of the foregoing, involving:
(i) the B2B Intellectual Property owned by B2B (ii) the B2B Intellectual
Property licensed to B2B, (A) alleging that the activities or the conduct
of the businesses of B2B infringe upon, violate, or constitute the
unauthorized use of the intellectual property rights of any third party, or
(B) challenging the ownership rights of B2B in, or validity,
enforceability, and registrability of, any B2B Intellectual Property.
(h) No third party is misappropriating, infringing,
diluting or violating any B2B Intellectual Property owned by B2B.
(i) The B2B License Agreements are valid and binding
obligations of B2B enforceable in accordance with their respective terms,
except as may be limited by applicable bankruptcy, reorganization,
insolvency, or other laws affecting creditors' rights generally or by
general principles of equity, and to B2B's knowledge there exists no event
or condition which will result in a violation or breach of, or constitute a
default by B2B or the other party thereto, under any such B2B License
Agreement. B2B will not, as a result of the execution of and delivery of
this Agreement and Merger Agreement and the transactions contemplated
hereby and thereby, be in breach of or suffer any loss of rights under any
B2B License Agreement.
(j) B2B takes reasonable measures to protect the
confidentiality of B2B Trade Secrets. To B2B's knowledge, no Trade Secret
of B2B has been disclosed or authorized to be disclosed to any third party
other than pursuant to a written nondisclosure agreement that adequately
protects the proprietary interests of B2B in and to such B2B Trade Secrets.
(k) Except as set forth on Schedule 3.6(k), all B2B
Proprietary Software set forth on Schedule 3.6(c) was either developed (i)
by employees of B2B within the scope of their employment, or (ii) by
independent contractors who have assigned all of their rights to B2B
pursuant to a written agreement.
(l) To B2B's knowledge, there is no material defect in
design, manufacture, materials or workmanship, including any failure to
warn or alleged breach of express or implied warranty or representation,
relating to any product manufactured, distributed or sold by or on behalf
of B2B. To B2B's knowledge, there is no material impediment to any upgrade
of any product currently manufactured, distributed or sold by or on behalf
of B2B that B2B is currently developing.
3.7 Litigation.
Except as set forth on Schedule 3.7, (i) there is no
Action pending or, to B2B's knowledge, threatened, by or against B2B before
any court, arbitrator or administrative or governmental body, and (ii)
there is no Order of any Governmental Authorities outstanding against B2B.
There is no Action pending or, to B2B's knowledge, threatened against B2B
which (i) challenges the transactions contemplated by this Agreement or the
Merger Agreement; (ii) would prevent or materially interfere with or delay
the consummation of the transactions contemplated by this Agreement or the
Merger Agreement; or (iii) seeks damages in connection with the
transactions contemplated by this Agreement or the Merger Agreement.
3.8 Customers and Suppliers.
Except as set forth on Schedule 3.8, B2B has not received
any notice that any current customer or supplier of B2B will terminate or
adversely and materially modify its business relationship with B2B.
Schedule 3.8 sets forth a complete and correct list of the ten (10) largest
customers (by net sales) and five (5) largest suppliers (by dollar volume)
of B2B for the fiscal year ended December 31, 2001.
3.9 Financial Statements.
(a) B2B has delivered to Moneyline true, correct and
complete copies of the unaudited consolidated financial statements of B2B
as of and for the 12-month periods ended December 31, 2001, December 31,
2000 and December 31, 1999 and the three month period ending March 31, 2002
(collectively, the " B2B Financial Statements"). The B2B Financial
Statements (including the footnotes and schedules thereto) present fairly
in all material respects the financial position of B2B as of the dates
thereof and its results of operations and cash flows for the periods then
ended, in accordance with GAAP throughout the period.
3.10 Absence of Certain Changes.
Since March 31, 2002, other than as disclosed in Schedule
3.10, B2B has conducted its business in the ordinary and usual course and
consistent with past practice, and has not: (i) entered into or terminated
any material transaction, contract or commitment which is not in the
ordinary course of business and consistent with past practice; (ii)
incurred, or assumed or become subject to, whether directly or by way of
guarantee or otherwise, any indebtedness or any other liability, including
purchase money indebtedness, except trade or business obligations or
indebtedness incurred in the ordinary course of business and consistent
with past practice or compromised, settled or otherwise discharged any
audit or claim with respect to Taxes in the aggregate not in excess of
$10,000; (iii) authorized, issued, pledged or otherwise encumbered or sold
any shares of its capital stock, or issued, sold or created any securities
convertible into, or options or other rights with respect to, or warrants
to purchase or rights to subscribe to, any shares of its capital stock;
(iv) declared, set aside, paid or made any dividend or other distribution
with respect to its capital stock, whether payable in cash, stock or
property, or redeemed any shares of capital stock; (v) suffered any damage,
destruction or other casualty or loss (whether or not covered by
insurance); (vi) increased the compensation payable or to become payable by
B2B to any of its officers or employees or increased any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made by B2B,
for or with any such officers or employees; (vii) acquired or disposed of
any substantial assets; (viii) changed its certificate of incorporation or
by-laws or similar documents; (ix) made any change in a Tax or financial
accounting practice or made or changed any Tax election except as required
by GAAP or applicable Law; (x) suffered a B2B Material Adverse Effect or
the occurrence of any event or circumstances that would be reasonably
likely to result in a B2B Material Adverse Effect; or (xi) entered into an
agreement to do any of the foregoing.
3.11 Liabilities.
(a) Schedule 3.11(a) sets forth all material liabilities
of B2B, whether accrued, contingent, absolute, determined, indeterminable
or otherwise, which have been created since March 31, 2002.
(b) Set forth on Schedule 3.11(b) is a list of all
indebtedness, for money borrowed, of B2B which will be outstanding after
the Closing.
3.12 Compliance with Laws; Permits.
(a) B2B is not in violation in any material respect of
any Orders and has complied in all material respects with all applicable
Laws of any Governmental Authority.
(b) B2B and its employees has all material Permits, and
such Permits are in full force and effect. Neither B2B nor any of such
employees has received any notice of revocation of, or default under, any
Permits.
3.13 Tax Matters.
(a) Except as set forth on Schedule 3.13(a):
(i) B2B has (i) timely filed all Tax Returns
required to be filed by it and all such Tax Returns are true, correct and
complete in all material respects, (ii) paid in full all material Taxes
required to be paid by it, and (iii) established in its most recent B2B
Financial Statement reserves that are adequate for the payment of any Taxes
not yet due and payable or which are being contested in good faith. Since
the date of B2B 's most recent B2B Financial Statement, B2B has not
incurred any liability for material Taxes other than in the ordinary course
of business consistent with past practice;
(ii) There are no Encumbrances for material Taxes
upon any assets of B2B, except statutory Encumbrances for Taxes not yet due
and payable;
(iii) No deficiency for any Taxes has been proposed
in writing, asserted in writing or assessed in writing by any Tax authority
against B2B that has not been resolved and paid in full. No waiver,
extension or comparable consent given by B2B regarding the application of
the statute of limitations with respect to any Taxes or Tax Return is
outstanding, nor is any written request for any such waiver or consent
pending;
(iv) B2B has complied with all applicable Laws
relating to the withholding of material Taxes and has timely withheld and
paid over to the relevant Tax authority all material amounts required to be
so withheld and paid over for all periods under all applicable Laws,
including withholding in connection with payments to employees, independent
contractors, creditors, stockholders, partners or other third parties;
(v) B2B has not granted any power of attorney which
is currently in force with respect to Taxes or Tax Returns;
(vi) B2B has not been a member of any federal,
state, local or foreign consolidated, unitary, combined or similar group
other than a group with B2B as its common parent;
(vii) To the knowledge of B2B, there are no
federal, state, local or foreign audits, actions, suits, proceedings,
investigations, claims or administrative proceedings relating to Taxes or
any Tax Returns of B2B now pending, and B2B has not received any notice of
any proposed audits, investigations, claims or administrative proceedings
relating to Taxes or any Tax Returns;
(viii) B2B has not agreed or is required to make
any adjustments under section 481(a) of the Code (or any similar provision
of state, local and foreign Law) by reason of a change in accounting method
or otherwise for any Tax period for which the applicable statute of
limitations, including all valid extensions thereof, has not yet expired;
(ix) B2B has not received a ruling from any Tax
authority. No closing agreement pursuant to section 7121 of the Code (or
any similar provision of state, local or foreign Law) has been entered into
by or with respect to B2B;
(x) B2B has not filed a consent pursuant to section
341(f) of the Code (or any predecessor provision) or has agreed to have
section 341(f)(2) of the Code apply to the disposition of a subsection (f)
asset (as such term is defined in section 341(f)(4) of the Code) owned by
B2B;
(xi) No jurisdiction where B2B does not file a Tax
Return has made a written claim that B2B is required to file a Tax Return
for such jurisdiction;
(xii) Other than the Transaction Agreements, B2B
(i) is not a party to, is not bound by and does not have any obligation
under, any Tax sharing agreement, Tax indemnification agreement or similar
contract or arrangement and (ii) does not have any potential liability or
obligation to any person as a result of, or pursuant to, any such
agreement, contract or arrangement;
(b) Other than any Tax Returns which have not yet been
required to be filed, B2B has made available to Moneyline true and correct
copies of the United States federal income Tax Return and any state, local
or foreign Tax Return for any jurisdiction that represents five percent
(5%) or more of the taxable income of B2B as filed by B2B for each of the
taxable years ended December 31, 2000, 1999 and 1998.
(c) B2B has previously delivered or made available to
Moneyline complete and accurate copies of each of (i) all audit reports,
letter rulings, technical advice memoranda, and similar documents issued by
any Tax authority relating to the United States federal, state, local or
foreign Taxes due from or with respect to B2B, and (ii) any closing
agreements entered into by B2B with any Tax authority in each case existing
on the date hereof.
3.14 Affiliated Transactions.
(a) Except as set forth on Schedule 3.14(a), no officer,
director, or employee of B2B, or a relative, spouse (or relative of such
spouse), director, officer, stockholder or affiliate of the foregoing:
(i) has any direct or indirect financial interest
in any competitor, supplier or customer of B2B, other than VNCI; provided,
however, that the ownership of securities representing no more than one
percent (1%) of the outstanding voting power of any competitor, supplier or
customer, which securities are listed on any national securities exchange
or traded actively in the national over-the-counter market, shall not be
deemed to be a "financial interest" so long as the person owning such
securities has no other connection or relationship with such competitor,
supplier or customer;
(ii) owns, directly or indirectly, in whole or in
part, or has any interest in any tangible or intangible property which B2B
uses or has used in the conduct of the business of B2B or otherwise; or
(iii) has borrowed money or other property of B2B.
(b) Except as set forth on Schedule 3.14(b), B2B has no
liabilities, debts or any other obligation of any nature whatsoever to any
of Moneyline or any officer, director or employee of B2B or to any
relative, spouse (or relative of such spouse), stockholder, director,
officer or affiliate of any of the foregoing, other than, in the case of
any such officer or employee of B2B, in respect of accrued wages, the
reimbursement of expenses and the extension of benefits to such person made
in the ordinary course of business consistent with past practice.
3.15 Employees, Employee Benefit Plans; ERISA.
(a) Except as set forth on Schedule 3.15(a), there is no
(i) collective bargaining agreement or any other agreement with any labor
organization to which B2B is a party applicable to the employees of B2B;
(ii) unfair labor practice complaint or charge pending or, to B2B's
knowledge, threatened against B2B before the National Labor Relations Board
or any other federal, state, local or foreign agency; (iii) pending or, to
B2B's knowledge, threatened strike, slowdown, work stoppage, lockout or
other collective labor action by or with respect to any employees of B2B;
(iv) grievance, unfair dismissal or arbitration proceeding pending against
B2B; (v) pending or, to B2B's knowledge, threatened complaint, charge,
lawsuit or other proceeding against B2B by employees of B2B alleging
discrimination, (vi) pending or, to B2B's knowledge, threatened
representation question or union organizing activities with respect to any
employees of B2B; (vii) pending or, to B2B's knowledge, threatened notice
of the intent of any federal, state, local or foreign agency responsible
for the enforcement of labor or employment Laws, including, but not limited
to, occupational safety and health, to conduct an investigation and no such
investigation is in progress with respect to any employees of B2B; (viii)
complaint, charge, lawsuit or other proceeding pending or, to B2B's
knowledge, threatened in any forum by or on behalf of any present or former
employee of B2B, any applicant for employment or classes of the foregoing
alleging breach of any express or implied contract or employment, any Law
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct concerning the employment relationship; and
(ix) material written personnel policy, rule or procedure applicable to
employees of B2B, other than those set forth on Schedule 3.15(a). B2B is,
and since December 1, 1999 has been, in compliance in all material respects
with all applicable Laws respecting employment and employment practices,
terms and conditions of employment, wages, hours of work, and occupational
safety and health.
(b) B2B has at all times properly classified each of
their respective employees as employees and each of their independent
contractors as independent contractors, as applicable. There is no action,
suit or investigation pending or, to the knowledge of B2B, threatened
against B2B by any person challenging or questioning the classification by
B2B of any person as an independent contractor, including any claim for
unpaid benefits, for or on behalf of, any such persons.
(c) Within the 12 months preceding the date of this
Agreement, there has not been (i) a "plant closing" (as defined in the WARN
ACT) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of B2B; or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment
or facility of B2B; nor has B2B been affected by any transaction or engaged
in layoffs or employment terminations sufficient in number to trigger
application of any similar state, local or foreign Law. Except as set forth
on Schedule 3.15(c), the employees of B2B have not suffered an "employment
loss" (as defined in the WARN Act) since six (6) months prior to the date
of this Agreement.
(d) Schedule 3.15(d) contains a true and complete list of
(i) each deferred compensation and each bonus or other incentive
compensation, stock purchase, stock option and other equity compensation
plan, program, agreement or arrangement; (ii) each severance or termination
pay, medical, surgical, hospitalization, life insurance and other "welfare"
plan, fund or program (within the meaning of Section 3(1) of ERISA; (iii)
each profit-sharing, stock bonus or other "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA); (iv) each employment,
termination or severance agreement; and (v) each other employee benefit
plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by
B2B or by any trade or business, whether or not incorporated (a "B2B ERISA
Affiliate"), that together with B2B would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA, or to which B2B or an ERISA
Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of B2B (each, a "B2B Plan"). No B2B Plan is
subject to Section 302 or Title IV of ERISA or section 412 of the Code and
none of B2B or any B2B ERISA Affiliate has sponsored, maintained,
contributed to or been required to contribute to any such plan within the
past six (6) years prior to the date hereof. None of B2B or any B2B ERISA
Affiliate has any formal plan or commitment to (i) create any additional
B2B Plan, or (ii) materially modify or change any existing B2B Plan. No B2B
Plan is a "multiemployer plan" within the meaning of Section 3(37) of
ERISA.
(e) True and complete copies of the following documents
relating to each B2B Plan, where applicable, have been delivered or made
available to Moneyline: (i) the B2B Plan document, including all amendments
thereto; (ii) the most recent summary plan description required under ERISA
with respect thereto, summary of material modifications and all material
employee communications relating to such B2B Plan; (iii) a copy of the
annual report, if required under ERISA, with respect to each such B2B Plan
for the last two (2) years; (iv) a copy of the actuarial report, if
required under ERISA, with respect to each such B2B Plan for the last two
(2) years; (v) if the B2B Plan is funded through a trust or any other
funding vehicle, a copy of the trust or other funding agreement (including
all amendments thereto) and the latest financial statements thereof; and
(vi) the most recent determination letter received from the Internal
Revenue Service with respect to each B2B Plan that is intended to be
qualified under section 401 of the Code.
(f) No liability under Title IV of ERISA has been
incurred by B2B or any ERISA Affiliate since the effective date of ERISA
that has not been satisfied in full, and no condition exists that presents
a material risk to any of B2B or any B2B ERISA Affiliate of incurring a
liability under such Title, other than liability for premiums due the PBGC,
which payments have been or will be made when due.
(g) There are no pending or, to B2B's knowledge,
threatened or anticipated claims (other than routine claims for benefits)
by, on behalf of, or against, any of the B2B Plans or any trust related
thereto.
(h) None of B2B, any of the B2B Plans, any trust created
thereunder or any trustee, fiduciary or administrator thereof have engaged
in a transaction or have taken or failed to take any action in connection
with which any of the B2B Plans, any such trust, any trustee, fiduciary or
administrator thereof, or any party dealing with the B2B Plans or any such
trust could be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a Tax imposed pursuant to section 4975,
4976 or 4980B of the Code.
(i) Each of the B2B Plans has been established, operated
and administered in all material respects in accordance with its terms and
applicable Laws, including but not limited to ERISA and the Code. All
contributions that are required to be made to the B2B Plans have been
timely made or have been properly accrued.
(j) Each of the B2B Plans that is intended to be
"qualified" within the meaning of section 401(a) of the Code is so
qualified and no circumstances exist that could result in the
disqualification of such B2B Plan and the trusts maintained thereunder are
exempt from taxation under section 501(a) of the Code. Each B2B Plan
intended to satisfy the requirements of section 501(c)(9) has satisfied
such requirements.
(k) Except as set forth on Schedule 3.15(k), the
consummation of the transactions contemplated by this Agreement and the
Transaction Agreements will not, either alone or in combination with
another event, (i) entitle any current or former employee or officer of any
of B2B or any B2B ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer.
(l) No amounts payable under the B2B Plans or any other
agreement or arrangement to which B2B is a party will fail to be deductible
for federal income tax purposes by virtue of section 280G of the Code.
(m) No B2B Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with
respect to current or former employees after retirement or other
termination of service (other than (i) coverage mandated by applicable Law,
(ii) death benefits or retirement benefits under any "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, or (iii)
benefits, the full cost of which is borne by the current or former employee
(or his or her beneficiary)). No condition exists that would prevent B2B
from amending or terminating any B2B Plan providing health or medical
benefits in respect of any active or former employee of B2B.
(n) Except as set forth on Schedule 3.15(n), B2B is not a
party to (i) any employee benefit arrangements which contain "change of
control," retention bonus or similar provisions, (ii) any severance
agreements, arrangements or understandings with employees of B2B, or (iii)
any oral or written employment contracts or agreements.
(o) At the Closing Date, those employees of B2B set forth
in Schedule 3.15(o) shall hold options to purchase shares of Common Stock
in the amount, and at such price, set forth opposite their name in Schedule
3.15(o).
3.16 Contracts.
(a) Except as set forth in Schedule 3.16(a), B2B is not a
party to, or bound by, any (i) indenture, mortgage, note, installment
obligation, agreement or other instrument relating to the borrowing of
money, in excess of $10,000; (ii) license or distribution agreement; or
(iii) agreements, commitments, purchase orders, or contracts, to which B2B
is a party or to which B2B is bound (any of (i), (ii) or (iii), a ("B2B
Contract") which (i) involve the annual payment or receipt by or to B2B, of
more than $10,000, (ii) are not cancelable by B2B on less than sixty (60)
days' notice, or (iii) otherwise materially affect the business of B2B
(including all non-competition and management agreements and arrangements)
(collectively, the " B2B Material Contracts"). Each of the B2B Material
Contracts is a legal, valid and binding obligation of B2B, enforceable by
and against it in accordance with its terms, except as may be limited by
applicable bankruptcy, reorganization, insolvency, or other laws affecting
creditors' rights generally or by general principles of equity. There is
not, under any of the agreements or other obligations specified in Schedule
3.16(a), any event of default or event which, with notice of lapse of time
or both, would constitute an event of default on the part of B2B.
(b) Schedule 3.16(b) sets forth all B2B Contracts
containing any provision or term relating to (i) a change of control of
X0X, (xx) xxx-xxxxxxxxxxx xxxxxxxxxxx xx X0X, (xxx) management agreements
and arrangements and (iv) agreements to register shares of capital stock of
B2B or other registration rights agreements.
3.17 Brokers and Finders.
Except as set forth on Schedule 3.17, upon the
consummation of the transactions contemplated by this Agreement and the
Transaction Agreements, no agent, broker, investment banker or other Person
is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from B2B in connection with any of the
transactions contemplated by this Agreement and the Transaction Agreements.
3.18 Books and Records.
The books of account, minute books, stock record books,
and other records of B2B, all of which have been made available to
Moneyline, are complete and correct in all material respects and have been
maintained substantially in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. The
minute books of B2B contain accurate and substantially complete records of
all meetings held of, and corporate or partnership action taken by, the
stockholders and the board of directors (and any committees thereof) (or
equivalent bodies) of B2B.
3.19 Approvals; State Statutes.
(a) The B2B Board of Directors, at a meeting duly called
and held, has consented to the Merger and other transactions and matters
contemplated by this Agreement and the Merger Agreement, and has not
amended, rescinded or modified such consents as of the Closing Date. The
Merger Agreement has been approved by a vote of at least 95% of each class
of capital stock of B2B entitled to vote on the Merger and Schedule 3.19(a)
sets forth the votes of each class of B2B capital stock in favor of the
Merger.
(b) The Board of Directors has taken all actions
necessary or advisable so that the restrictions contained in Section 203 of
the DGCL applicable to a "business combination" (as defined in such
Section) will not apply to the execution of this Agreement, any of the
Transaction Agreements and the transactions contemplated hereby and
thereby. The execution, delivery and the performance of this Agreement and
the Transaction Agreements will not cause to be applicable to B2B any "fair
price," "moratorium," "control share acquisition" or other similar
antitakeover statute or regulation enacted under state or federal laws.
(c) The stockholders of B2B who have voted in favor of
the Merger Agreement (i) have duly consented to the Merger and the other
transactions and matters contemplated by the Merger Agreement in accordance
with Section 228 of the DGCL, and (ii) do not have any appraisal rights
pursuant to Section 262 of the DGCL with respect to any shares of the
capital stock of B2B.
3.20 Representations and Warranties by B2B in Merger Agreement.
The representations and warranties made by B2B in the
Merger Agreement shall be true and correct, as of the date of the Merger
Agreement, and as of the Closing Date as if made at and as of such date.
3.21 Full Disclosure.
The information furnished by B2B to Moneyline in
connection with this Agreement and the Transaction Agreements does not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made, in light of the
circumstances under which they were made, not false or misleading.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF MONEYLINE.
Moneyline hereby represents and warrants to VNCI, as of
the date hereof, the following:
4.1 Organization.
Moneyline is a limited liability company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and has all requisite power and authority to carry on its
business as now being conducted.
4.2 Authority.
Moneyline has full power and authority necessary to
execute, deliver and perform its obligations under this Agreement and each
of the Transaction Agreements to which it is a party and to carry out its
respective obligations hereunder and thereunder. The execution and delivery
by Moneyline of this Agreement and the Transaction Agreements to which it
is a party and the consummation of the transactions contemplated hereby and
thereby by Moneyline has been duly authorized by all necessary action on
the part of Moneyline. Moneyline has duly and validly executed and
delivered this Agreement and the Transaction Agreements to which it is a
party and such agreements constitute the valid and legally binding
obligations of Moneyline, enforceable against Moneyline in accordance with
their respective terms.
4.3 Consents; No Violation.
Neither the execution, delivery or performance by
Moneyline of this Agreement and the Transaction Agreements to which it is a
party nor the consummation of the transactions contemplated hereby and
thereby, will (i) conflict with or result in a breach of any provision of
the certificate of formation or limited liability company agreement of
Moneyline; (ii) violate, or conflict with, or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or give rise to a
right of termination, cancellation, modification or acceleration of the
performance required by or a loss of a benefit under, any material note,
bond, mortgage, indenture, deed of trust, lease, license, agreement,
commitment, contract or other instrument or obligation to which Moneyline
is a party or by which its respective properties are bound or affected;
(iii) violate any Order applicable to Moneyline or by which its properties
is bound or affected; (iv) result in the creation of any material
Encumbrance; or (v) require any consent, approval or authorization of,
notification to, filing with, or exemption or waiver by, any Governmental
Authority or any other Person on the part of Moneyline.
4.4 Investment Representation.
Moneyline is accepting the Moneyline Shares being
acquired by it hereunder for investment purposes only and without any view
to distribute, resell or otherwise transfer the same, except in compliance
with applicable securities laws.
4.5 Brokers and Finders.
Upon the consummation of the transactions contemplated by
this Agreement and the Transaction Agreements, no agent, broker, investment
banker or other Person is or will be entitled to any broker's or finder's
fee or any other commission or similar fee from Moneyline in connection
with any of the transactions contemplated by this Agreement and the
Transaction Agreements.
4.6 Availability of Funds.
Moneyline has available sufficient funds to pay the
Moneyline Consideration.
ARTICLE 5. COVENANTS.
5.1 Public Announcements.
The parties hereto agree that no press release, public
announcement or response to any press inquiry concerning this Agreement or
any of the Transaction Agreements or the transactions contemplated hereby
and thereby shall be made without advance approval thereof by the other
parties hereto; provided that if any announcement is required by Law or the
rules of any securities exchange or market to be made by any party hereto,
prior to making such announcement, such party will, to the extent
practicable, deliver a draft of such announcement to the other parties
hereto and shall give the other parties reasonable opportunity to comment
thereon. Upon execution hereof and upon the Closing, VNCI and Moneyline
shall issue a press release, in the form attached as Exhibit N hereto,
regarding this Agreement and the Transaction Agreements and the
transactions contemplated hereby and thereby, and VNCI shall file an 8-K
attaching this Agreement and the Transaction Agreements as exhibits
thereto.
5.2 Board of Directors.
(a) Immediately following the Closing, VNCI and the Board
of Directors shall exercise all authority under applicable law necessary to
duly appoint Xxxxx Xxxxx, Xxxxxxxxx Xxxxx and Xxxxxxxx Xxxxxx
(collectively, the "Moneyline Directors") to the Board of Directors and
upon such appointments the Board of Directors shall consist of a total of
six directors, comprised of the Moneyline Directors and 3 other directors,
all of whom were existing members of the Board of Directors immediately
prior to the Closing.
(b) Upon the Closing, VNCI shall file, or caused to be
filed, with the SEC, all filings required by Rule 14f-1 of the Exchange Act
in order to cause the appointment of Xxxxxxx Xxxxxx to the Board of
Directors. On the eleventh day following such filing, VNCI and the Board of
Directors shall exercise all authority under applicable law necessary to
duly appoint Xxxxxxx Xxxxxx to the Board of Directors on such date.
5.3 Further Assurances.
Any time after the Closing, VNCI shall, or cause its
proper officers and directors to, from time to time, at the reasonable
request of Moneyline, execute and deliver such other instruments of
conveyance and transfer and to take such other actions as Moneyline may
reasonably request, in order to consummate the transactions contemplated
hereby and by the Transaction Agreements and to vest in Moneyline, the
Noteholders or the B2B Noteholders, the right, title and interest in and to
the number of Moneyline Shares, Note Conversion Shares, or the B2B
Conversion Shares, as applicable.
5.4 Transaction Fees and Expenses.
(a) Except as provided in this Section 5.4, each party
hereto shall be responsible for all of its respective legal, accounting,
advisory and other fees and expenses ("Transaction Expenses") incurred in
connection with this Agreement and the Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby. The
Transaction Expenses incurred by VNCI and the Subsidiaries shall be paid by
VNCI at closing, are set forth in Schedule 5.4(a). The Transaction Expenses
incurred by B2B shall be paid by VNCI at closing and are set forth in
Schedule 5.4(a), and together with the Transaction Expenses incurred by
VNCI and the Subsidiaries shall not exceed $2,000,000.
(b) Any and all sales, use, transfer, stamp, duties,
gains, recording or similar Taxes ("Transfer Taxes") arising pursuant to
the purchase and sale of Shares under this Agreement shall be paid by VNCI.
(c) Any Tax Returns that must be filed in connection with
any Transfer Taxes shall be prepared and filed when due by the party
primarily or customarily responsible under the applicable Law for filing
such Tax Returns. If such party is Moneyline, VNCI shall pay to Moneyline
in immediately available funds, the Transfer Taxes reported on such Tax
returns prior to the due date for such Tax Returns.
5.5 Director Indemnification Agreements.
Concurrently with the execution of this Agreement, VNCI
shall enter into indemnification agreements in the form attached as Exhibit
O hereto, with those individuals set forth on Schedule 5.5.
5.6 Technology License Agreements.
Concurrently with the execution of this Agreement, (i)
VNCI and Moneyline shall enter into a license agreement with respect to the
technology of VNCI in the form of Exhibit P hereto and (ii) B2B and
Moneyline shall enter into a license agreement with respect to the
technology of B2B in the form of Exhibit Q hereto.
5.7 Significant Transactions.
During the period commencing on the Closing Date and
terminating on the date of the due appointment of Xxxxxxx Xxxxxx to the
Board of Directors, the Company shall not enter into, or agree to enter
into, any Significant Transaction (as such term is defined in the
Stockholders Agreement).
5.8 Annual Report Filing.
On the date hereof, VNCI shall cause its Annual Report on
Form 10-K to be duly filed with the SEC.
ARTICLE 6. INDEMNIFICATION; SURVIVAL.
-------------------------
6.1 Indemnification Obligations.
(a) VNCI shall indemnify, defend and hold harmless OEP
and Moneyline, each of their respective subsidiaries and affiliates, their
successors and assigns, and their officers, directors, stockholders,
employees and affiliates from and against and shall reimburse the same for
and in respect of any and all losses, costs, fines, liabilities, claims,
penalties, damages and expenses (including all legal fees and expenses) of
any nature or kind, known or unknown, fixed, accrued, absolute or
contingent, liquidated or unliquidated (collectively "Losses") which may be
claimed or assessed against any of them or to which any of them may be
subject in connection with any and all claims, suits or asserted Losses
which arise from or are related to (i) any misrepresentation or breach of
any representation or warranty made by VNCI in this Agreement or any of the
Transaction Agreements; or (ii) any breach of any covenant or agreement
made by VNCI in this Agreement or any of the Transaction Agreements.
(b) Moneyline shall indemnify, defend and hold harmless
VNCI, its subsidiaries and affiliates, its successors and assigns, and its
officers, directors, stockholders, employees and affiliates from and
against and shall reimburse the same for and in respect of any and all
Losses which may be claimed or assessed against any of them or to which any
of them may be subject in connection with any and all claims, suits or
asserted Losses which arise from or are related to (i) any
misrepresentation or breach of any representation or warranty made by
Moneyline in this Agreement or any of the Transaction Agreements; or (ii)
any breach of any covenant or agreement made by Moneyline in this Agreement
or any of the Transaction Agreements.
6.2 Indemnification Procedures.
(a) Notice. A party entitled to indemnification under
this Article 6 (an "Indemnified Party") agrees to give each party obligated
to provide indemnification pursuant to this Article 6 (an "Indemnifying
Party") prompt written notice (the "Claim Notice") of any claim, assertion,
event, condition or proceeding by or in respect of any third party (each, a
"Third Party Claim") of which it has knowledge concerning any liability or
damage as to which it may request indemnification hereunder, provided,
however, that failure of the Indemnified Party to give the Claim Notice
will not relieve the Indemnifying Party from liability hereunder unless
solely and to the extent the Indemnifying Party did not otherwise learn of
such Third Party Claim and such failure results in the forfeiture by the
Indemnifying Party of substantial rights and defenses, and will not in any
event relieve the Indemnifying Party from any obligations to the
Indemnified Party other than the indemnification obligation provided
herein. A Claim Notice shall describe the Third Party Claim in reasonable
detail and shall indicate the amount (estimated if necessary) of the Loss
that has been or may be sustained by or is claimed against such Indemnified
Party.
(b) Conduct of Defense. An Indemnifying Party shall have
the right, upon written notice to the Indemnified Party (the "Defense
Notice") within five (5) days of its receipt from the Indemnified Party of
the Claim Notice, to conduct at its expense the defense against such Third
Party Claim in its own name, or, if necessary, in the name of the
Indemnified Party. When the Indemnifying Party assumes the defense, the
Indemnified Party shall have the right to approve the defense counsel and
the Indemnified Party will have no liability for any compromise or
settlement of any such claim that is effected without its prior written
consent, unless the sole relief provided is monetary damages that are paid
in full by the Indemnifying Party and such compromise or settlement
includes a release of each Indemnified Party from any liabilities arising
out of such Third Party Claim. In the event that the Indemnifying Party
does deliver a Defense Notice and thereby elects to conduct the defense of
such Third Party Claim, the Indemnified Party will, at the Indemnifying
Party's sole expense, cooperate with and make available to the Indemnifying
Party such assistance, personnel, witnesses and materials as the
Indemnifying Party may reasonably request. Regardless of which party
defends such Third Party Claim, the other party shall have the right at its
expense to participate in the defense assisted by counsel of its own
choosing. In the event that the Indemnifying Party shall fail to give the
Defense Notice within the time prescribed by this Section 6.2(b), the
Indemnified Party shall have the sole right to conduct such defense and the
Indemnified Party may pay, compromise or defend such claim or proceeding at
the Indemnifying Party's expense. In the event any Indemnified Party should
have a claim against any Indemnifying Party hereunder which does not
involve a Third Party Claim, the Indemnified Party shall promptly transmit
to the Indemnifying Party a written notice (the "Indemnity Notice")
describing in reasonable detail the nature of the claim and the basis of
the Indemnified Party's request for indemnification under this Agreement,
provided, however, that failure of the Indemnified Party to give the
Indemnity Notice will not relieve the Indemnifying Party from liability
hereunder unless solely and to the extent the Indemnifying Party did not
otherwise learn of such claim and such failure results in the forfeiture by
the Indemnifying Party of substantial rights and defenses, and will not in
any event relieve the Indemnifying Party from any obligations to the
Indemnified Party other than the indemnification obligation provided
herein.
6.3 Limitations on Indemnification.
Notwithstanding anything to the contrary in this
Agreement, (i) the maximum aggregate liability of VNCI pursuant to Section
6.1(a)(i) shall be the Issuance Price; and (ii)the maximum aggregate
liability of Moneyline pursuant to Section 6.1(b) shall be the Moneyline
Consideration. No claim may be made against VNCI by Moneyline for
indemnification with respect to breaches of representations and warranties
pursuant to Section 6.1(a)(i) with respect to any Losses unless the
aggregate amount of the Losses incurred by Moneyline thereunder exceeds
$250,000. Any amount payable by an Indemnifying Party pursuant to this
Article 6, shall be calculated net of any payments that the Indemnified
Party has received under any insurance policy with respect to such Losses.
6.4 Survival of Representations, Warranties and Covenants.
Except as set forth in this Section 6.4, the
representations and warranties of the parties contained herein shall
survive until the second anniversary of the Closing (the "Expiration
Date"), and no party may seek indemnification under this Article 6 with
respect to a breach of a representation or warranty after the Expiration
Date; provided, however, that the representations and warranties contained
in Sections 2.1, 2.2, 2.5, 2.6, 2.14, 2.15, 2.16, 3.1, 3.2, 3,5, 3.6, 3.13,
3.14 and 3.15 shall survive until 90 days after the applicable statute of
limitations (including any and all valid extensions thereof) and a party
may seek indemnification with respect to a breach of such representation or
warranty any time prior to the expiration of such statute of limitations.
Notwithstanding anything to the contrary contained herein, all
representations and warranties made by each of VNCI, B2B and Moneyline in
this Agreement or in any schedule or other document delivered pursuant
hereto, and the liability with respect thereto, shall not terminate with
respect to any claim, whether or not fixed as to liability or liquidated as
to amount, with respect to which such party has been given written notice
stating the nature of the claim prior to the date on which such
representation or warranty expires. The parties' respective covenants and
agreements contained in this Agreement or in any certificate, schedule,
list, exhibit, agreement, document or other writing delivered pursuant
hereto or in connection with the transactions contemplated hereby shall
survive indefinitely unless otherwise set forth herein or therein.
Notwithstanding anything to the contrary in this Agreement, (a) no
investigation by, or knowledge of, a party shall affect the
representations, warranties, covenants and agreements of the other parties
under this Agreement or in any certificate, schedule, list, exhibit,
agreement, document or other writing delivered pursuant hereto or in
connection with the transactions contemplated hereby and by the Transaction
Agreements furnished or to be furnished to the other parties and (b) such
representations, warranties, covenants and agreements shall not be affected
or deemed waived by reason of the Closing or of the fact that the other
party or parties knew or should have known that any of the same is or might
be inaccurate in any respect.
ARTICLE 7. CONDITIONS TO CLOSING.
7.1 Conditions to Obligations of Moneyline.
The obligations of Moneyline under this Agreement are
subject to the satisfaction or waiver in writing at or prior to the Closing
Date of the following conditions:
(a) (i) VNCI shall have performed in all material
respects its obligations under this Agreement and the Transaction
Agreements required to be performed by it at or prior to the Closing Date
and (ii) the representations and warranties of VNCI contained in this
Agreement shall be true and correct in all respects as of the Closing Date
as if made at and as of such dates.
(b) Moneyline shall have received a certificate, signed
by the chief executive officer and chief financial officer of VNCI, dated
the Closing Date, to the effect that, to the best of such officers'
knowledge, the condition set forth in Section 7.1(a) has been satisfied.
(c) (i) B2B shall have performed in all material respects
its obligations under this Agreement and the Merger Agreement required to
be performed by it at or prior to the Closing Date and (ii) the
representations and warranties of B2B contained in this Agreement shall be
true and correct in all respects as of the Closing Date as if made at and
as of such dates.
(d) Moneyline shall have received a certificate, signed
by the chief executive officer and chief operating officer of B2B, dated
the Closing Date, to the effect that, to the best of such officers'
knowledge, the condition set forth in Section 7.1(c) has been satisfied.
(e) VNCI shall have caused to be delivered to Moneyline
(i) the opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
special counsel to VNCI, or such other counsel reasonably acceptable to
Moneyline, in the form of opinion attached hereto as Exhibit R; (ii) the
opinion of Xxxxxxxx Xxxxxx, special counsel to B2B, or such other counsel
reasonably acceptable to Moneyline, in the form of opinion attached hereto
as Exhibit S; (iii) the opinion of Xxxxxxxx Xxxxxx, special tax counsel to
B2B, or such other counsel reasonably acceptable to Moneyline, in the form
of opinion attached hereto as Exhibit T; (iv) the opinion of Potter
Xxxxxxxx & Xxxxxxx LLP, special Delaware counsel to B2B, or such other
counsel reasonably acceptable to Moneyline, in the form of opinion attached
hereto as Exhibit U; and (v) the reliance letter of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., special counsel to VNCI, or such other
counsel reasonably acceptable to Moneyline, regarding such special
counsel's opinion pursuant to the Merger Agreement, in the form of letter
attached hereto as Exhibit V. The failure of VNCI to deliver any opinion or
letter required by this Section 7.1(e) shall constitute a breach of Section
5.3 by VNCI.
(f) The Stockholders Agreement shall have been executed
by VNCI and remain in full force and effect as of the Closing Date.
(g) (i) The Promissory Notes shall have been converted
into shares of Common Stock by the Noteholders concurrently with the
Closing and evidence of each such conversion shall have been delivered to
Moneyline; (ii) each of the Conversion Notices shall have been executed and
delivered to Moneyline and shall be in full force and effect as of the
Closing Date; (iii) the B2B Promissory Notes shall have been converted into
shares of Common Stock by the holders thereof pursuant to such Conversion
Notice immediately prior to or concurrently with the Closing; and (iv) the
holders set forth on Schedule 7.1(g) of the warrants set forth on Schedule
7.1(g) shall have agreed to terminate such warrants and satisfactory
evidence thereof shall have been delivered to Moneyline.
(h) Each of the Releases shall have been executed and
delivered to Moneyline and shall be in full force and effect as of the
Closing Date.
(i) The Sanmina Release shall have been executed and
delivered to VNCI and be in full force and effect as of the Closing Date.
(j) The Xxxx Xxxxxxx Release shall have been executed and
delivered to VNCI and be in full force and effect as of the Closing Date.
(k) Holders of the Promissory Notes have executed an
authorization for VNCI to file all necessary filings required to terminate
such holders' security interests in the intellectual property of VNCI,
including, without limitation, any filings required by the Uniform
Commercial Code and any required filings, recordations, assignments and
releases with the United States Patent and Trademark Office, the United
States Copyright Office and the corresponding offices in the applicable
foreign jurisdictions.
(l) VNCI shall have delivered to Moneyline a final and
binding settlement executed by both parties with respect to that litigation
entitled Hamouth Family Trust v. VNCI, filed February 11, 2002 in the
Delaware Court of Chancery.
(m) Concurrently with this Agreement, the Board of
Directors shall have caused the termination of each of VNCI's 1999 Stock
Incentive Plan, 1996 Stock Incentive Plan and 1994 Stock Incentive Plan.
(n) All closing deliveries of Section 1.2(b) shall have
been made.
(o) The Subscription Agreements shall have been executed
by the Investors and VNCI and remain in full force and effect as of the
Closing Date.
(p) The Director Indemnification Agreements shall have
been executed by VNCI and the individual directors.
ARTICLE 8. MISCELLANEOUS PROVISIONS.
8.1 Entire Agreement; Assignment.
This Agreement (including the Exhibits and the
Schedules and the other documents and instruments referred to herein)
constitutes the entire agreement and supersedes all other prior agreements
and understandings, both written and oral, between the parties, with
respect to the subject matter hereof. This Agreement and the rights and
obligations may not be assigned in whole or in part by any party hereto,
including by operation of law or otherwise except (a) with the written
consent of the other parties hereto (b) by Moneyline to one or more direct
or indirect subsidiaries or other Affiliates of it, which assignment shall
not relieve Moneyline of any of its obligations hereunder, or (c) by
Moneyline as collateral security to any entity providing direct or indirect
financing to Moneyline or any of its Affiliates.
8.2 Notices
All notices, requests, consents, instructions and other
communications required or permitted to be given hereunder shall be in
writing and shall be deemed given upon (a) confirmation of receipt of a
facsimile transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand, or (c) the expiration of three (3)
business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective
parties at the following addresses (or such other address for a party as
shall be specified by like notice):
(a) if to Moneyline, to:
MONEYLINE NETWORKS, LLC
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxx
Fax: 000-000-0000
and
ONE EQUITY PARTNERS LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Fax: 000-000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Coco, Esq.
Fax: 000-000-0000
(b) if to VNCI, to:
Video Network Communications, Inc.
00 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx, Esq.
Fax: 000-000-0000
(c) if to B2B, to:
B2BVIDEO NETWORK CORP.
000 Xxxxx 00 Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx Xxxxxx, Esq.
Fax: 000-000-0000
or such other address or persons as the parties may from time to time
designate in writing in the manner provided in this Section 8.2. Copies of
all notices pursuant to this Section 8.2 shall also be sent to
EarlyBirdCapital, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
Attention: Investment Banking Department.
8.3 Interpretation.
The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. As used in this Agreement, "Person" shall
mean any individual, corporation, partnership, limited liability company,
joint venture, estate, trust, association, division, organization, labor
union or entity of any kind whatsoever, including any Governmental
Authority. References to a Person are also to its permitted successors and
assigns.
8.4 Amendments and Waivers
This Agreement may be amended, superseded, cancelled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by each of Moneyline and VNCI or, in the case of a
waiver, by the party waiving compliance or his or her representative. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any waiver on the
part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege.
8.5 Severability
This Agreement shall be deemed severable and the
invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other
term or provision hereof.
8.6 Governing Law; Jurisdiction and Venue
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
choice of law principles. Except as set forth herein, each party hereto
hereby agrees that any proceeding relating to this agreement and the
transactions contemplated hereby shall be brought in a State Court of New
York or a federal court located in the City of New York. Each party hereto
hereby consents to personal jurisdiction in any such action brought in any
such New York or federal court, consents to service of process by
registered mail made upon such party and such party's agent and waives any
objection to venue in any such New York or federal court and any claim that
any such New York or federal court is an inconvenient forum.
8.7 Schedules and Exhibits.
The Schedules and Exhibits attached hereto are a part of
this Agreement as if fully set forth herein.
8.8 No Third Party Beneficiaries
Except as expressly contemplated in this Agreement, this
Agreement shall be binding upon and inure solely to the benefit of each
party hereto and nothing in this Agreement is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
8.9 WAIVER OF JURY TRIAL
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, AND (iii) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.9.
8.10 Counterparts.
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
8.11 Acknowledgements.
The parties hereto acknowledge and agree that (i) each
party has reviewed and negotiated the terms and provisions of this
Agreement and has had the opportunity to contribute to its revision, and
(ii) each party has been represented by counsel in reviewing and
negotiating such terms and provisions. Accordingly, the rule of
construction to the effect that ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this
Agreement. Rather, the terms of this Agreement shall be construed fairly as
to both parties hereto and not in favor or against either party.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
MONEYLINE NETWORKS, LLC
By: /s/ Xxxxxxxxx Xxxxx
---------------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Executive Vice President, Corporate
Development and General Counsel
VIDEO NETWORK COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
B2BVIDEO NETWORK CORP.
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
