EXHIBIT 2.4
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement"), dated as of December
13, 2005, is by and among Spheris Holding III, Inc., a Delaware corporation
("Holdings"), Spheris Operations, Inc., a Tennessee corporation ("Parent"),
Spheris Merger Sub, Inc., a California corporation ("Merger Sub"), Vianeta
Communications, a California corporation ("Vianeta"), and the Principal
Shareholders listed on Exhibit A attached hereto (each a "Principal Shareholder"
and, collectively, the "Principal Shareholders"). Capitalized terms used herein
are defined in this Agreement or as set forth in Exhibit B attached hereto.
RECITALS:
WHEREAS, Merger Sub is a wholly-owned subsidiary of Parent;
WHEREAS, the respective Boards of Directors of Holdings, Parent, Merger
Sub, and Vianeta have approved this Agreement and the consummation of the
transactions contemplated hereby, pursuant to which (i) Merger Sub will merge
with and into Vianeta, with Vianeta continuing as the surviving corporation and
as a wholly-owned subsidiary of Parent, and (ii) the shareholders of Vianeta
will receive the merger consideration set forth herein; and
WHEREAS, Holdings, Parent, Merger Sub, Vianeta and the Principal
Shareholders desire to make certain representations, warranties, covenants and
agreements in connection with the Merger (as defined herein) and also to
prescribe various conditions of the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
set forth herein, and subject to and on the terms and conditions set forth
herein, the parties hereby agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.1 THE MERGER. At the Effective Time, in accordance with this
Agreement and the California General Corporation Law ("CGCL"), Merger Sub will
merge with and into Vianeta (the "Merger"), the separate corporate existence of
Merger Sub will cease, and Vianeta will continue as the surviving corporation
(the "Surviving Corporation"). From and after the Effective Time, the Surviving
Corporation will possess all the rights, privileges, immunities and franchises
of, and will be subject to all liabilities, obligations and penalties of,
Vianeta and Merger Sub, all with the effect set forth in the CGCL.
SECTION 1.2 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation of Merger Sub in effect immediately prior to the Effective Time
will be the Articles of Incorporation of the Surviving Corporation, until duly
amended in accordance with applicable law. The Bylaws of Merger Sub in effect
immediately prior to the Effective Time will be the Bylaws of the Surviving
Corporation, until duly amended in accordance with applicable law.
SECTION 1.3 DIRECTORS AND OFFICERS. The directors of Merger Sub immediately
prior to the Effective Time will be the directors of the Surviving Corporation
and will hold office from the Effective Time until their respective successors
are duly elected and qualified in the manner provided in the Articles of
Incorporation and Bylaws of the Surviving Corporation or as otherwise provided
by applicable law. The officers of Merger Sub immediately prior to the Effective
Time will be the officers of the Surviving Corporation and will hold office from
the Effective Time until their respective successors are duly appointed and
qualified in the manner provided in the Articles of Incorporation and Bylaws of
the Surviving Corporation or as otherwise provided by applicable law.
SECTION 1.4 CONVERSION OF SECURITIES.
(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of Vianeta, Merger Sub, or the respective shareholders
thereof, each share of capital stock of Vianeta that is issued and outstanding
as of the Effective Time (other than shares held in Vianeta's treasury) will be
converted into the right to receive the Per-Share Merger Consideration, as
determined pursuant to Section 1.4(d) below. Each share of Vianeta capital stock
when converted in accordance with this Section 1.4(a), will no longer be
outstanding, will automatically be cancelled and will cease to exist, and each
certificate previously representing any such shares will thereafter represent
the right to receive the Per-Share Merger Consideration in respect of each such
share.
(b) Each share of Vianeta held in Vianeta's treasury as of the
Effective Time will be cancelled and retired and all rights in respect thereof
will cease to exist, without any conversion thereof or payment of any
consideration in respect thereof.
(c) As of the Effective Time, by virtue of the Merger and without any
action on the part of Vianeta, Merger Sub or the respective shareholders
thereof, each share of common stock of Merger Sub, no par value per share (the
"Merger Sub Common Stock"), that is issued and outstanding as of the Effective
Time will be converted into one validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation. Each share of Merger Sub
Common Stock issued and outstanding immediately prior to the Effective Time,
when converted in accordance with this Section 1.4(c), will no longer be
outstanding, will automatically be cancelled and will cease to exist.
(d) The merger consideration will consist of: (i) an amount equal to
$8,500,000 minus an estimated Section 338 Election Tax Amount, which shall be
$411,000 or such other amount as mutually agreed to by the parties prior to the
Closing (the "Estimated Section 338 Election Tax Amount"), payable in cash by
Parent to the holders of Vianeta capital stock as set forth on Schedule 1.4(d)
attached hereto (as such amount may be adjusted pursuant to Section 1.9 (the
"Cash Consideration")); (ii) 500,000 shares of Spheris Holding III, Inc. common
stock (the "Stock Consideration") payable to the holders of Vianeta capital
stock as set forth on Schedule 1.4(d); (iii) $1,500,000 in cash payable by wire
transfer (the "Technology Consideration") as set forth on Schedule 1.4(d) as
additional consideration for the intellectual property rights to Vianeta's
technologies upon (A) the successful release of Vianeta's "Panther" upgrade, and
(B) the successful implementation of four speech recognition accounts to
Parent's customers, as such objectives are defined and set forth in Exhibit C,
and (iv) payments based on
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software sales to the existing customer pipeline of Vianeta in the amounts and
percentages and according to the terms set forth on Exhibit D not to exceed
$2,000,000 in cash in the aggregate, to be paid by wire transfer on the first
anniversary of the Closing Date as set forth on Schedule 1.4(d) (the "Sales
Consideration") (together with (i), (ii) and (iii), the "Merger Consideration").
Each share of Vianeta capital stock will be converted into the right to receive
the specific portion of the Cash Consideration, Stock Consideration, Technology
Consideration and Sales Consideration as set forth on Schedule 1.4(d) (such
amount as set forth on Schedule 1.4(d), the "Per-Share Merger Consideration").
(e) At the Effective Time, Parent shall place into escrow with an
escrow agent to be mutually agreed upon by the parties (the "Escrow Agent"),
pursuant to the terms of the Escrow Agreement attached hereto as Exhibit E (the
"Escrow Agreement"), One Million Dollars ($1,000,000) to be delivered as Merger
Consideration which would otherwise be payable to shareholders of Vianeta
capital stock (such cash, plus any accrued interest thereon, the "Escrow
Amount"). The Escrow Amount shall be held in escrow by the Escrow Agent and
distributed to and in accordance with the terms of the Escrow Agreement, for the
purpose of providing payment with respect to claims for indemnification made by
Parent Indemnified Persons pursuant to Section 9.1 and payment of the
adjustments to the Cash Consideration pursuant to Section 1.9. Distributions
made in accordance with the terms of Section 1.9 shall not affect the Escrow
Amount. In the event of any inconsistency between the description contained in
this Section 1.4(e) regarding the distribution of the Escrow Amount and the
terms of the Escrow Agreement, the terms of the Escrow Agreement shall control.
SECTION 1.5 CHANGES IN VIANETA CAPITAL STOCK. If between the date of this
Agreement and the Effective Time, the outstanding shares of Vianeta capital
stock have been changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Per-Share Merger
Consideration will be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares.
SECTION 1.6 DELIVERY OF STOCK CERTIFICATES; PAYMENT OF MERGER
CONSIDERATION.
(a) At the Effective Time, Vianeta shall use reasonable efforts to
cause to be delivered to Parent certificates representing the shares of Vianeta
capital stock entitled to the Cash Consideration and the Stock Consideration
(the "Converted Vianeta Preferred Shares"), together with letters of transmittal
in respect thereof executed by the holders of the Converted Vianeta Preferred
Shares, specifying that delivery will be effected, and that risk of loss and
title will pass, upon delivery of such certificates to Parent at the Effective
Time.
(b) Subject to Section 1.7(b), at the Effective Time, Parent will pay
to each holder of Converted Vianeta Preferred Shares who has delivered a
certificate reflecting Converted Vianeta Preferred Shares together with a letter
of transmittal in respect thereof, (i) the Cash Consideration to the holders of
Converted Vianeta Preferred Shares by wire transfer to the accounts of such
holders specified in writing prior to the Effective Time, which amount will be
paid to such holders in the amounts and percentages set forth on Schedule
1.4(d), and (ii) the Stock Consideration by delivery of shares of common stock
of Holdings to the holders of
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Converted Vianeta Preferred Shares in the amounts and percentages as set forth
on Schedule 1.4(d).
SECTION 1.7 APPROVAL OF MERGER; APPRAISAL RIGHTS.
(a) By his, her or its execution of this Agreement, each Principal
Shareholder consents to the terms of the Merger and to the taking of shareholder
action to approve the Merger at a meeting, acknowledges that he, she or it is
aware of his, her or its rights under the CGCL to dissent to the Merger and
demand payment for his, her or its shares of Vianeta capital stock, and waives
such rights to dissent and demand payment. The Principal Shareholders hereby
covenant with, and represent and warrant to, the Parent that Vianeta will,
promptly after the execution hereof, send written notice to its shareholders in
accordance with the Bylaws of Vianeta and Section 603 of the CGCL. Such notice
shall contain a notice of appraisal rights in accordance with Chapter 13 of the
CGCL.
(b) Notwithstanding Section 1.6(b), Vianeta capital stock outstanding
immediately prior to the Effective Time and held by a shareholder that has not
voted in favor of the Merger ("Non-Consenting Shares") shall be converted into a
right to receive only (x) the applicable portion of the Merger Consideration (as
set forth on Schedule 1.4(d)) when and if such shareholder (a "Non-Consenting
Shareholder") fails to make, perfect or withdraws or otherwise loses its right
to appraisal pursuant to Chapter 13 of the CGCL, without interest thereon, or
(y) the amount such Non-Consenting Shareholder is finally determined to be
entitled to pursuant to the appraisal process under Chapter 13 of the CGCL. Each
party shall give the other parties prompt notice of any demands received by such
party for appraisal of Vianeta capital stock, and the Parent shall conduct, and
the Shareholder Representative shall have the right to participate in, all
negotiations and proceedings with respect to such demands. Parent shall not,
except with the prior written consent of the Shareholder Representative (not to
be unreasonably withheld or delayed), enter into any settlement or compromise
with respect to any such demands.
SECTION 1.8 OPTIONS AND WARRANTS; CONVERTIBLE NOTES. At the Effective Time,
each option and warrant to purchase Vianeta capital stock, to the extent
outstanding and not exercised prior to the Effective Time, shall be cancelled
and terminated. Each note convertible into shares of Vianeta series B preferred
stock, to the extent outstanding, shall be automatically converted into shares
of Vianeta series B preferred stock immediately prior to the Effective Time.
SECTION 1.9 ADJUSTMENTS TO PURCHASE PRICE.
(a) Vianeta Cash Balance Adjustment. The Cash Consideration shall be
subject to adjustment as described below:
(i) The Closing Date Balance Sheet delivered pursuant to Section
5.7 shall identify cash and cash equivalents (the "Closing Cash Amount"). The
Closing Date Balance Sheet shall be prepared using the same accounting
principles, practices and methodologies, consistently applied, that were used to
prepare the Vianeta financial statements attached hereto pursuant to Section
3.4.
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(A) If the Closing Cash Amount is less than $400,000, the
Cash Consideration shall be reduced by the difference between the Closing
Cash Amount and $400,000.
(B) If the Closing Cash Amount is greater than $400,000, the
Cash Consideration shall be increased by the difference between the Closing
Cash Amount and $400,000.
(ii) Within forty-five (45) days after the Closing Date, Parent
will prepare and deliver to the Shareholder Representative a balance sheet of
the Company as of the opening of business on the Closing Date (the "Final
Closing Date Balance Sheet"), including a calculation of the Closing Cash Amount
as of the Closing Date (the "Closing Date Closing Cash Amount"). The Final
Closing Date Balance Sheet shall be prepared in accordance with GAAP, and using
the same accounting principles, practices and methodologies, consistently
applied, that were used to prepare the Vianeta financial statements attached
hereto pursuant to Section 3.4.
(iii) The Shareholder Representative shall have a period
commencing upon delivery of the Final Closing Date Balance Sheet by Parent and
expiring thirty (30) days after such delivery date to review the Final Closing
Date Balance Sheet. During such period, Parent shall permit the Shareholder
Representative and its agents or representatives to have reasonable access,
during normal business hours, to, and to examine, all work papers and schedules
that are or were necessary to prepare and/or review the schedule. In the event
the Shareholder Representative disputes the determination of the Closing Date
Closing Cash Amount, the Shareholder Representative shall, within thirty (30)
days after delivery of the Final Closing Date Balance Sheet, deliver a notice to
Parent (the "Cash Adjustment Dispute Notice"), setting forth in reasonable
detail the component or components which are in dispute and the basis of such
dispute. If the Shareholder Representative fails to deliver a Cash Adjustment
Dispute Notice to Parent within thirty (30) days after Parent's delivery of the
Final Closing Date Balance Sheet, then the Shareholder Representative shall be
bound by the calculation of the Closing Date Closing Cash Amount that
accompanied the Final Closing Date Balance Sheet, and the Closing Date Closing
Cash Amount shall be deemed to be the Final Closing Date Closing Cash Amount (as
defined below), and any required payments shall be made pursuant to Section
1.9(a)(iv) below based on such Final Closing Date Closing Cash Amount. If the
Shareholder Representative delivers the Cash Adjustment Dispute Notice within
such thirty (30) day period, then the Shareholder Representative and Parent will
negotiate in good faith (with the assistance of their respective independent
accountants and counsel, if desired) to resolve any such dispute within fifteen
(15) days after receipt by the Parent of the Cash Adjustment Dispute Notice. If
Parent and the Shareholder Representative fail to resolve any such dispute
within fifteen (15) days after receipt by Parent of the Cash Adjustment Dispute
Notice, they shall submit the dispute to either an accounting firm mutually
agreed to by the Shareholder Representative and Parent (the "Reviewing
Accountant") to review the Closing Date Closing Cash Amount set forth on the
Final Closing Date Balance Sheet. Parent and the Shareholder Representative
shall make available to the Reviewing Accountant all work papers and all other
information and material in their possession relating to the matters in the Cash
Adjustment Dispute Notice. The Reviewing Accountant shall be instructed to use
its reasonable best efforts to deliver its determination as promptly as
practicable after such submission of the dispute to the Reviewing Accountant.
The parties hereby expressly agree that the determination of the Reviewing
Accountant shall be xxxxx
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and binding on the parties (absent fraud or manifest bad faith by the Reviewing
Accountant). The Closing Date Closing Cash Amount on the Final Closing Date
Balance Sheet as determined by Parent (if not disputed), or as modified (if at
all) by agreement of Parent and the Shareholder Representative or by decision of
the Reviewing Accountant, shall be referred to herein as the "Final Closing Date
Closing Cash Amount." Each party shall bear its own expenses and the fees and
expenses of its own representatives and experts, including its independent
accountants, in connection with the preparation, review, dispute (if any) and
final determination of the Final Closing Date Closing Cash Amount. The costs,
expenses and fees of the Reviewing Accountant shall be borne by the Shareholder
Representative, on the one hand, and Parent, on the other hand, based on the
percentage which the portion of the contested amount(s) not awarded to such
party bears to the amount actually contested by such party.
(iv) Within fifteen (15) days after the Final Closing Date
Closing Cash Amount has become final and binding on the parties pursuant to this
Section 1.9(a), the Cash Consideration will be adjusted as follows:
(A) If the Final Closing Date Closing Cash Amount is greater
than the Closing Cash Amount, Parent shall be obligated to pay a dollar
amount equal to such difference to the Shareholder Representative on behalf
of the Vianeta shareholders.
(B) If the Final Closing Date Closing Cash Amount is less
than the Closing Cash Amount, Parent shall be entitled to payment of a
dollar amount equal to such deficit out of the Escrow Amount.
(b) Section 338 Election Tax Amount Adjustments. The Cash
Consideration shall be subject to adjustment as described below:
(i) Within ten (10) days after the filing of the tax return
reflecting the Section 338 Election Tax Amount, Parent will prepare and deliver
to the Shareholder Representative the Section 338 Election Tax Amount as of the
Closing Date (the "Closing Date 338 Election Tax Amount") prepared using the
same accounting principles, practices and methodologies, consistently applied,
that were used to prepare the Estimated Section 338 Election Tax Amount.
(ii) The Shareholder Representative shall have a period
commencing upon delivery of the Closing Date 338 Election Tax Amount by Parent
and expiring thirty (30) days after such delivery date to review the Closing
Date 338 Election Tax Amount. During such period, Parent shall permit the
Shareholder Representative and its agents or representatives to have reasonable
access, during normal business hours, to, and to examine, all work papers and
schedules that are or were necessary to prepare and/or review the schedule. In
the event the Shareholder Representative disputes the determination of the
Closing Date 338 Election Tax Amount, the Shareholder Representative shall,
within thirty (30) days after delivery of the Closing Date 338 Election Tax
Amount, deliver a notice to Parent (the "Tax Adjustment Dispute Notice"),
setting forth in reasonable detail the component or components which are in
dispute and the basis of such dispute. If the Shareholder Representative fails
to deliver a Tax Adjustment Dispute Notice to Parent within thirty (30) days
after Parent's delivery of the Closing Date 338 Election Tax Amount, then the
Shareholder Representative shall be bound by
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the calculation of the Closing Date 338 Election Tax Amount and Closing Date 338
Election Tax Amount shall be deemed to be the Final Closing Date 338 Election
Tax Amount (as defined below), and any required payments shall be made pursuant
to Section 1.9(a)(iv) below based on such Final Closing Date 338 Election Tax
Amount. If the Shareholder Representative delivers the Tax Adjustment Dispute
Notice within such thirty (30) day period, then the Shareholder Representative
and Parent will negotiate in good faith (with the assistance of their respective
independent accountants and counsel, if desired) to resolve any such dispute
within fifteen (15) days after receipt by the Parent of the Tax Adjustment
Dispute Notice. If Parent and the Shareholder Representative fail to resolve any
such dispute within fifteen (15) days after receipt by Parent of the Tax
Adjustment Dispute Notice, they shall submit the dispute to either an accounting
firm mutually agreed to by the Shareholder Representative and Parent (the
"Reviewing Accountant") to review the Closing Date 338 Election Tax Amount.
Parent and the Shareholder Representative shall make available to the Reviewing
Accountant all work papers and all other information and material in their
possession relating to the matters in the Tax Adjustment Dispute Notice. The
Reviewing Accountant shall be instructed to use its reasonable best efforts to
deliver its determination as promptly as practicable after such submission of
the dispute to the Reviewing Accountant. The parties hereby expressly agree that
the determination of the Reviewing Accountant shall be final and binding on the
parties (absent fraud or manifest bad faith by the Reviewing Accountant). The
Final Closing Date 338 Election Tax Amount as determined by Parent (if not
disputed), or as modified (if at all) by agreement of Parent and the Shareholder
Representative or by decision of the Reviewing Accountant, shall be referred to
respectively herein as the "Final Closing Date 338 Election Tax Amount"). Each
party shall bear its own expenses and the fees and expenses of its own
representatives and experts, including its independent accountants, in
connection with the preparation, review, dispute (if any) and final
determination of the Final Closing Date 338 Election Tax Amount. The costs,
expenses and fees of the Reviewing Accountant shall be borne by the Shareholder
Representative, on the one hand, and Parent, on the other hand, based on the
percentage which the portion of the contested amount(s) not awarded to such
party bears to the amount actually contested by such party.
(iii) Within fifteen (15) days after the Final Closing Date 338
Election Tax Amount has become final and binding on the parties pursuant to this
Section 1.9(a), the Cash Consideration will be adjusted as follows:
(A) If the Final Closing Date 338 Election Tax Amount is
greater than the Estimated Section 338 Election Tax Amount, Parent shall be
entitled to payment of a dollar amount equal to such deficit out of the
Escrow Amount.
(B) If the Final Closing Date 338 Election Tax Amount is
less than the Estimated Section 338 Election Tax Amount, Parent shall pay a
dollar amount equal to such difference to the Shareholder Representative on
behalf of the Vianeta shareholders.
ARTICLE II.
CLOSING
SECTION 2.1 CLOSING. The closing of the transactions contemplated hereby
(the "Closing") will take place at the Nashville offices of Bass, Xxxxx & Xxxx
PLC at 10:00 a.m.
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(Central Standard Time), on the third Business Day following the satisfaction or
waiver of the conditions precedent set forth in Article VII, or at such other
time and place as the parties mutually agree. For purposes of this Agreement,
(i) "Closing Date" means the date on which the Closing occurs, and (ii)
"Business Day" means any day other than Saturday or Sunday or any other day on
which banks in New York are permitted or required to be closed.
SECTION 2.2 EFFECTIVE TIME. Upon the terms and conditions of this
Agreement, the Parent or Merger Sub shall deliver to the Secretary of State of
the State of California a copy of this agreement with an officers' certificate
of Parent, Merger Sub and Vianeta as required by Section 1103 of the CGCL (the
"Agreement of Merger") contemporaneously with, or immediately after, the
Closing, and shall make all other filings or recordings as may be required under
the CGCL and any other applicable law in order to effect the Merger. The Merger
will become effective at the time of the filing of the Agreement of Merger with
the Secretary of State of the State of California in accordance with the CGCL,
or at such later time as the parties may agree and as is provided in the
Agreement of Merger. The date and time at which the Merger will so become
effective is herein referred to as the "Effective Time."
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF VIANETA AND THE PRINCIPAL
SHAREHOLDERS
Except as disclosed in the Vianeta Disclosure Schedules attached hereto,
each of Vianeta and the Principal Shareholders represents to Holdings, Parent
and Merger Sub as follows:
SECTION 3.1 ORGANIZATION AND GOOD STANDING.
(a) Vianeta is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of California, with full corporate
power and authority to conduct its business as it is now being conducted.
Vianeta is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except where the
failure to be so qualified or to be in good standing would not have,
individually or in the aggregate, a Material Adverse Effect. Schedule 3.1(a)
contains a complete and accurate list of each jurisdiction where Vianeta is
qualified to do business as a foreign corporation.
(b) Vianeta has made available to Parent true and correct copies of
the Articles of Incorporation and Bylaws of Vianeta.
SECTION 3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the valid and binding obligation of
each of Vianeta and the Principal Shareholders, enforceable against Vianeta and
the Principal Shareholders in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights or by principles of equity. Upon the execution and delivery by
each of Vianeta and the Principal Shareholders of each document to be executed
or delivered by Vianeta or the Principal Shareholders at Closing pursuant to
Section
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7.2(j) (collectively, the "Vianeta Closing Documents"), each of the Vianeta
Closing Documents will constitute the valid and binding obligation of Vianeta
and the Principal Shareholders (to which such Principal Shareholder is a party),
enforceable against Vianeta and the Principal Shareholders (as applicable) in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights or
by principles of equity. Other than authorization and approval by the
shareholders of Vianeta, Vianeta has all requisite corporate power and authority
to execute and deliver this Agreement and the Vianeta Closing Documents and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by Vianeta and the consummation by Vianeta of the
transactions contemplated hereby have been duly authorized by Vianeta's Board of
Directors, and subject to the approval by Vianeta's shareholders under the CGCL,
no other corporate action on the part of Vianeta is necessary to authorize the
execution and delivery by Vianeta of this Agreement or the consummation of the
transactions contemplated hereby. Each of the Principal Shareholders has all
requisite legal power and authority to execute and deliver this Agreement and
the Vianeta Closing Documents (to which such Principal Shareholder is a party)
and to consummate the transactions contemplated hereby and thereby. No other
legal action on the part of the Principal Shareholders is necessary to authorize
the execution and delivery by the Principal Shareholders of this Agreement or
the consummation of the transactions contemplated hereby.
(b) Except as set forth in Schedule 3.2(b), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) conflict with or violate the Articles of Incorporation or Bylaws
of Vianeta, (ii) conflict with or violate any federal, state, local or municipal
laws, ordinances, codes or regulations ("Legal Requirements") applicable to
Vianeta, or any order, injunction, judgment, decree, ruling, assessment or
arbitration award ("Orders") of any Governmental Authority or arbitrator to
which Vianeta or any of its respective assets are subject, (iii) breach any
provision of, give any Person the right to consent to or notice of the
consummation of the transactions contemplated hereby, or give any Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or payment under, or to cancel, terminate or modify,
any Material Contract (each such contract, a "Required Consent"); (iv) result in
the imposition or creation of any lien, charge, pledge, claim, encumbrance or
security interest ("Liens") upon or with respect to any of the assets of Vianeta
or (v) cause Vianeta to become subject to, or become liable for, the payment of
any Tax (as defined below), except, in any such case other than subsection
(b)(i), for such conflicts, violations, breaches, Liens or Taxes that,
individually or in the aggregate, would not have a Material Adverse Effect. For
purposes of this Agreement, (x) "Governmental Authority" means any federal,
state, local or municipal court, legislature, executive or regulatory authority,
agency or commission, or other governmental entity, authority or
instrumentality; and (y) "Person" means any individual, partnership, limited
partnership, corporation, business trust, limited liability company, limited
liability partnership, joint stock company, trust, unincorporated association,
joint venture or other entity, or any Governmental Authority. No consent,
approval, waiver or other action by any Person under any contract, agreement,
indenture, lease, instrument or other document to which any Principal
Shareholder is a party or by which it is bound is required or necessary for the
execution, delivery and performance of this Agreement and the other Vianeta
Closing Documents (to which such Principal Shareholder is a party) by such
Principal Shareholder or the consummation of the transactions contemplated
hereby and thereby.
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(c) Except (i) for filing and recordation of appropriate merger
documents and the giving of notices as required by the CGCL, (ii) the Required
Consents, (iii) the Required Vianeta Shareholder Vote and (iv) as set forth in
Schedule 3.2(c), Vianeta is not and will not be required to give any notice to
or obtain any consent from any Governmental Authority or from any other Person
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 3.3 CAPITALIZATION.
(a) The authorized capital stock of Vianeta consists of 145,181,720
shares of capital stock, consisting of 80,000,000 shares of Vianeta common
stock, 7,596,804 shares of series A preferred stock and 57,584,916 shares of
series B preferred stock. As of the date hereof, 4,153,197 shares of Vianeta
common stock, 7,596,804 shares of series A preferred stock and 57,584,916 shares
of series B preferred stock are issued and outstanding and are owned by the
shareholders of Vianeta as set forth in Schedule 3.3. All of the issued and
outstanding shares of Vianeta capital stock have been duly authorized and
validly issued and are fully paid and non-assessable. Except as set forth in
Schedule 3.3, there are no options, warrants, calls, subscriptions, convertible
securities, convertible notes, or other rights, agreements or commitments that
obligate Vianeta to issue, transfer or sell any shares of capital stock of
Vianeta. There is no obligation, contingent or otherwise, of Vianeta to
repurchase, redeem or otherwise acquire any shares of capital stock of Vianeta.
Vianeta does not, directly or indirectly, own, and has not agreed to purchase or
otherwise acquire, the capital stock or other equity interests of, or any
interest convertible into or exchangeable or exercisable for capital stock or
other equity interests of, any Person. Except as set forth in Schedule 3.3,
there are no registration rights agreements, voting trusts, shareholders
agreements, proxies or other agreements to which Vianeta is a party or among
Vianeta's shareholders with respect to the registration, voting or transfer of
Vianeta's capital stock. Except as set forth in Schedule 3.3, no preemptive
rights, rights of first refusal or similar rights exist with respect to
Vianeta's capital stock, and no such rights arise or become exercisable by
virtue of or in connection with the Merger. There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to Vianeta.
(b) Each of the Principal Shareholders has good title to the shares of
capital stock listed next to such Principal Shareholder's name on Schedule 3.3
free and clear of all Liens and has possession of the original certificate
representing such shares.
SECTION 3.4 FINANCIAL STATEMENTS.
(a) Attached as Schedule 3.4(a) are true and complete copies of (a)
the balance sheet of Vianeta as of December 31, 2004, and the related statements
of income, changes in shareholders' equity and cash flows for the fiscal year
then ended and (b) the balance sheet of Vianeta (the "Interim Balance Sheet") as
of October 31, 2005 (the "Interim Balance Sheet Date") and the related
statements of income, changes in shareholder' equity and cash flows for the ten
(10) months then ended. Such financial statements and notes fairly present in
all material respects the financial condition and the results of operations,
changes in shareholders' equity, and cash flows of Vianeta as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with generally accepted accounting principles for financial
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reporting in the United States ("GAAP") applied on a consistent basis, except as
noted therein and except for the absence of footnotes and other presentation
items and for normal year-end adjustments. Such financial statements have been
prepared from the books and records of Vianeta.
(b) Except as set forth in Schedule 3.4(b), Vianeta does not have any
obligations or liabilities (whether accrued, absolute, contingent or otherwise)
required to be reflected as liabilities on a balance sheet prepared in
accordance with GAAP other than (i) liabilities and obligations disclosed on the
Interim Balance Sheet; and (ii) liabilities and obligations incurred in the
ordinary course of business since the Interim Balance Sheet Date that would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.5 MATERIAL ADVERSE EFFECT. Since the Interim Balance Sheet Date,
there has not been any Material Adverse Effect. For purposes of this Agreement,
"Material Adverse Effect" means any circumstance involving a change in or effect
on the business of Vianeta (the "Vianeta Business") (a) that is, or is
reasonably likely in the future to be, individually or in the aggregate,
materially adverse to the business, results of operations, assets, liabilities
or financial condition of the Vianeta Business, or (b) that is reasonably likely
to prevent or materially delay or impair the ability of Vianeta to consummate
the transactions contemplated by this Agreement.
SECTION 3.6 REAL PROPERTY.
(a) Vianeta does not own any real property.
(b) Schedule 3.6(b) lists (i) all real property with respect to which
Vianeta holds a leasehold interest or sub-leasehold interest, or otherwise has a
license to use (the "Vianeta Leased Real Property"), and (ii) each agreement
under which Vianeta leases or otherwise has the right to use any Vianeta Leased
Real Property, listing, with respect to each such agreement, the date of the
agreement and any amendments thereto, the names of the parties to the agreement
and the addresses of the Vianeta Leased Real Property. Except as set forth in
Schedule 3.6(b), Vianeta has not entered into any subleases, arrangements,
licenses or other agreements relating to the use or occupancy of all or any
portion of the Vianeta Leased Real Property by any Person other than Vianeta.
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, (i) the Vianeta Leased Real Property conforms to all
applicable fire, safety, zoning and building laws and ordinances, and other
applicable Legal Requirements, and (ii) there are no pending or, to the
Knowledge of Vianeta, threatened eminent domain, condemnation, zoning or other
Proceedings affecting the Vianeta Leased Real Property that would result in the
taking of all or any part of the Vianeta Leased Real Property or that would
prevent or hinder the continued use of the Vianeta Leased Real Property as
currently used in the conduct of the Vianeta Business. All Vianeta Leased Real
Property has adequate rights of access to dedicated public ways and is served by
water, electric, sewer and other necessary facilities and services.
SECTION 3.7 TANGIBLE PERSONAL PROPERTY. Vianeta has good title to, free and
clear of all Liens (other than Permitted Liens), or a valid right to use, all
material machinery, equipment and tangible personal property used or held for
use in connection with the Vianeta Business
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(including all tangible personal property reflected in the Interim Balance Sheet
or acquired since the Interim Balance Sheet Date) (the "Vianeta Tangible
Personal Property"). For purposes of this Agreement, "Permitted Liens" means (i)
any Lien for Taxes not yet due and payable, (ii) any landlord's, carriers',
warehousemen's, mechanics', materialmen's or similar Liens, and (iii) any Liens
identified on Schedule 3.7. The Vianeta Tangible Personal Property is in good
repair and good operating condition, ordinary wear and tear excepted, is
suitable for the purposes for which it is presently used, is free from latent
and patent defects and is in Vianeta's possession.
SECTION 3.8 TAXES. Except as set forth in Schedule 3.8:
(a) Vianeta has timely filed all federal, state, local and municipal
tax returns (including any information returns), declarations, reports,
statements, schedules, notices or forms (the "Tax Returns") required to have
been filed with any Governmental Authority, except for those Tax Returns for
which the time for filing has been validly extended and which are set forth on
Schedule 3.8(a). The Tax Returns are true and complete in all material respects.
(b) Vianeta has timely paid all federal, state, local and municipal
taxes (whether imposed directly or through withholding and whether or not shown
on any Tax Return), including any interest, additions to tax or penalties
applicable thereto ("Taxes"), due from Vianeta to any Governmental Authority,
except for amounts being contested in good faith by appropriate Proceedings and
except where the failure to pay such Taxes would not have a Material Adverse
Effect. All Taxes that Vianeta is or was required by applicable Legal
Requirements to withhold or collect have been withheld or collected and, to the
extent required, have been properly paid on a timely basis to the appropriate
Governmental Authority. The unpaid Taxes of Vianeta (computed consistent with
Vianeta's historical accounting principles and practices, provided that such
principles and practices are consistent with applicable Tax law) do not, or will
not as the case may be, as of the Interim Balance Sheet Date and the date of
issuance of the Closing Date Balance Sheet, exceed the reserve for Taxes (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and tax income) set forth on the face of the Interim Balance Sheet
or Closing Date Balance Sheet, respectively, (rather than in any notes thereto),
and the reserve for Taxes set forth on the face of the Closing Date Balance
Sheet will be established consistent with Vianeta's historical practice.
(c) No examination or audit of any Tax Return of Vianeta by any taxing
authority, court or other Governmental Authority is currently in progress or, to
the Knowledge of Vianeta, threatened. No assessment or other Proceeding by any
taxing authority, court or other Governmental Authority is pending, or to the
Knowledge of Vianeta, threatened, with respect to the Taxes or Tax Returns of
Vianeta. Vianeta has not received from any foreign, federal, state, or local
taxing authority (including jurisdictions where Vianeta has not filed Tax
Returns) any written (i) notice indicating an intent to open an audit or other
review, (ii) request for information related to Tax matters, or (iii) notice of
deficiency or proposed adjustment for any amount of Tax proposed, asserted, or
assessed by any taxing authority against Vianeta. Schedule 3.8 lists all
federal, state, local and foreign income Tax Returns filed with respect to
Vianeta for taxable periods ended on or after December 31, 2002, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. Vianeta has delivered to Parent correct and
complete copies of all federal income Tax Returns, examination
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reports and statements of deficiencies assessed against or agreed to by Vianeta
filed or received since December 31, 2002.
(d) There are no outstanding agreements, waivers or arrangements
extending the statutory period of limitations applicable to any claim for or the
period for the collection or assessment of Taxes due by Vianeta for any taxable
period. No claim has ever been made by an authority in a jurisdiction where
Vianeta does not file Tax Returns that Vianeta is or may be subject to taxation
by that jurisdiction. There are no liens for Taxes (other than Taxes not yet due
and payable) upon any of the assets of Vianeta.
(e) Vianeta does not have any liability for Taxes of any Person other
than Vianeta (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of applicable law); or (ii) as a transferee or successor. Vianeta has
not been a member of an "affiliated group" within the meaning of Section 1504(a)
of the Internal Revenue Code of 1986, as amended (the "Code"). Vianeta is not a
party to any Tax allocation agreement, Tax sharing agreement, or Tax indemnity
agreement.
(f) None of the assets of Vianeta is "tax-exempt use property" within
the meaning of Section 168(h) of the Code.
(g) No closing agreement pursuant to Section 7121 of the Code or any
similar provision of applicable law has been entered into with respect to
Vianeta or any of its respective assets.
(h) Vianeta will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any (A) change in
method of accounting for a taxable period ending on or prior to the Closing
Date; (B) installment sale or open transaction disposition made on or prior to
the Closing Date; or (C) prepaid amount received on or prior to the Closing
Date.
(i) Vianeta has not distributed stock of another person, or has had
its stock distributed by another person, in a transaction that was purported or
intended to be governed in whole or in part by Code Section 355 or Code Section
361.
(j) Vianeta has not undergone an "ownership change" within the meaning
of Section 382 of the Code at any time prior to the Merger.
SECTION 3.9 EMPLOYEES.
(a) There is no collective bargaining agreement in effect between
Vianeta and any labor unions or organizations representing any of the employees
of Vianeta. Since January 1, 2004 (the "Compliance Date"), Vianeta has not
experienced any organized slowdown, work interruption, strike or work stoppage
by its employees, and there is no strike, labor dispute or union organization
activities pending or, to the Knowledge of Vianeta, threatened affecting
Vianeta.
(b) Vianeta is in compliance, and has been in compliance since the
Compliance Date, with all applicable Legal Requirements regarding employment and
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employment practices, terms and conditions of employment, wages and hours,
anti-discrimination and occupational health and safety, including laws
concerning unfair labor practices within the meaning of Section 8 of the
National Labor Relations Act, as amended, and the employment of non-residents
under the Immigration Reform and Control Act of 1986, as amended, except for any
such non-compliance that would not have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.9(c), Vianeta is not a party to
any employment, non-competition or severance contract or agreement with any
employee of Vianeta.
(d) Schedule 3.9(d) sets forth a complete and accurate list of (i)
each employee of Vianeta, including each employee on leave of absence, and (ii)
each director of Vianeta, giving, with respect to each such individual, name,
job title, current annual salary with Vianeta, any bonuses paid by Vianeta in
addition to such annual salary during the twelve (12) months preceding the date
of this Agreement and vacation leave that is accrued but unused (in each case,
to the extent applicable).
SECTION 3.10 EMPLOYEE BENEFITS.
(a) Schedule 3.10(a) lists all employment, consulting, executive
compensation, bonus, deferred compensation, incentive compensation, stock
purchase, stock option or other equity-based, retention, change in control,
severance or termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plans, programs, agreements or arrangements, and each other fringe or
other employee benefit plan, program, agreement or arrangement (including any
"employee benefit plan", within the meaning of Section 3(3) of ERISA),
sponsored, maintained or contributed to or required to be contributed to by
Vianeta or by any ERISA Affiliate for the benefit of any employee or former
employee of Vianeta, or with respect to which Vianeta otherwise has any
liabilities or obligations (the "Employee Benefit Plans"). For purposes of this
Agreement, (i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and (ii) "ERISA Affiliate" means any entity that is considered
a single employer with Vianeta under Section 414 of the Code.
(b) With respect to each of the Employee Benefit Plans, Vianeta has
made available to Parent complete copies of each of the following documents; (i)
a copy of each Employee Benefit Plan (including any amendments thereto); (ii) a
copy of the three most recent Forms 5500 and annual reports, if any, required
under ERISA or the Code; (iii) a copy of the most recent Summary Plan
Description, if any, required under ERISA; and (iv) if the Employee Benefit Plan
is intended to be qualified under Section 401(a) of the Code, the most recent
determination letter received from the Internal Revenue Service.
(c) No Employee Benefit Plan is a "multiemployer plan," as such term
is defined in Section 3(37) of ERISA, or a plan that is subject to Title IV of
ERISA.
(d) None of the Employee Benefit Plans that are "welfare benefit
plans," within the meaning of Section 3(1) of ERISA, provide for continuing
benefits or coverage after termination or retirement from employment, except for
COBRA rights under a "group health plan" as defined in Section 4980B(g) of the
Code and Section 607 of ERISA.
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(e) Each Employee Benefit Plan is and has been maintained and
administered in compliance with its terms and with the applicable requirements
of ERISA, the Code and any other applicable Legal Requirements, other than any
such non-compliance that would not have a Material Adverse Effect. Vianeta has
not and, to Vianeta's Knowledge, no other Person, including an ERISA Affiliate,
has engaged in any transaction with respect to any Employee Benefit Plan that
would be reasonably likely to subject Vianeta to any Tax or penalty (civil or
otherwise) imposed by ERISA, the Code or other applicable Legal Requirements
that would have a Material Adverse Effect. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has received a
determination from the Internal Revenue Service that it is so qualified and the
related trusts are exempt from tax under Section 501(a) of the Code. There are
no facts or circumstances that would be reasonably likely to adversely affect
the qualified status of any such Employee Benefit Plan.
(f) All required or declared Vianeta contributions (or premium
payments) to, or in respect of, all Employee Benefit Plans have been properly
made within the time limits prescribed by applicable Legal Requirements, and
Vianeta has deposited all amounts withheld from employees for pension, welfare
or other benefits into the appropriate trusts or accounts (to the extent such
amounts are required to be so deposited).
(g) Each Employee Benefit Plan which is subject to the requirements of
the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA"), the Family
Medical Leave Act of 1993 ("FMLA") and the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA") has been maintained in all material
respects in compliance with COBRA, FMLA and HIPAA, including all notice
requirements, and no tax payable on account of Section 4980B or any other
section of the Code has been or is expected to be incurred by Vianeta.
(h) Schedule 3.10(h) lists all former employees of Vianeta or any of
its ERISA Affiliates and their beneficiaries who currently have elected or are
currently eligible to elect COBRA continuation coverage under any Employee
Benefit Plan offering health insurance or medical benefits.
(i) All reporting and disclosure obligations imposed under ERISA and
the Code have been satisfied in all material respects with respect to each
Employee Benefit Plan.
(j) Except as set forth in Schedule 3.10(j), the consummation of the
transactions contemplated hereby will not (i) result in an increase in or
accelerate the vesting of any of the benefits available under any Employee
Benefit Plan, or (ii) result in the payment or series of payments by Vianeta or
an employee of Vianeta to any employee or other Person of an "excess parachute
payment" within the meaning of Section 280G of the Code.
(k) There are no pending or, to the Knowledge of Vianeta, threatened,
Proceedings that have been asserted relating to any Employee Benefit Plan by any
employee or beneficiary covered under any Employee Benefit Plan or otherwise
involving any Employee Benefit Plan (other than routine claims for benefits). No
examination or audit of any Employee Benefit Plan by any Governmental Authority
is currently in progress or, to the Knowledge of Vianeta, threatened. Vianeta is
not a party to any agreement or understanding with the Pension Benefit Guaranty
Corporation, the Internal Revenue Service or the Department of Labor.
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SECTION 3.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in
Schedule 3.11, (i) Vianeta is, and since the Compliance Date, has been, in
compliance in all material respects with all applicable Legal Requirements, and
(ii) Vianeta has not received, at any time since the Compliance Date, any
written notice or other written communication from any Governmental Authority
regarding any actual or alleged violation of any applicable Legal Requirements
(excluding, for purposes of clause (i) and clause (ii) of this Section 3.11,
Vianeta's (a) compliance with the Code and other Legal Requirements regarding
Tax matters, which is covered under Section 3.8, (b) compliance with ERISA and
other Legal Requirements regarding employee benefit matters, which is covered
under Section 3.10, and (c) compliance with Environmental Laws, which is covered
under Section 3.14).
SECTION 3.12 GOVERNMENTAL AUTHORIZATIONS. Schedule 3.12 contains a true and
complete list of each authorization, license or permit issued or granted by or
under the authority of any Governmental Authority or pursuant to any Legal
Requirement (but specifically excluding any general business licenses) (the
"Governmental Authorizations") that is held by Vianeta. Each such Governmental
Authorization is valid and in full force and effect. Except as set forth in
Schedule 3.12, Vianeta is, and since the Compliance Date, has been, in
compliance in all material respects with all such Governmental Authorizations.
Except as set forth in Schedule 3.12, Vianeta has not received, at any time
since the Compliance Date, any written notice or other written communication
from any Governmental Authority regarding (i) any actual or alleged violation of
or failure to comply with any term or requirement of any such Governmental
Authorization, or (ii) any actual, proposed or potential revocation, suspension,
cancellation or termination of, or modification to any such Governmental
Authorization, other than, in either such case, any non-compliance, violations,
revocations, suspensions, cancellations or terminations that, individually or in
the aggregate, would not have a Material Adverse Effect. The Governmental
Authorizations listed in Schedule 3.12 collectively constitute all of the
Governmental Authorizations necessary to permit Vianeta to lawfully conduct and
operate the Vianeta Business in the manner it is currently conducted, except
where the absence of any Governmental Authorizations, individually or in the
aggregate, would not have a Material Adverse Effect.
SECTION 3.13 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Schedule 3.13(a), since the Compliance
Date, there have been no claims, actions, suits, proceedings or, to the
Knowledge of Vianeta, investigations, commenced, brought, conducted, or heard by
or before, or otherwise involving, any Governmental Authority (a "Proceeding")
pending or, to the Knowledge of Vianeta, threatened by or against Vianeta, that
challenge, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the transactions contemplated hereby or
that otherwise relate to the Vianeta Business.
(b) Except as set forth in Schedule 3.13(b), there are no Orders
outstanding or, to the Knowledge of Vianeta, threatened, against Vianeta.
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SECTION 3.14 ENVIRONMENTAL MATTERS.
(a) Vianeta is and has been in compliance with all Environmental Laws,
except where any such non-compliance, individually or in the aggregate, would
not have a Material Adverse Effect. To the Knowledge of Vianeta, there has not
been any emission, disposal, discharge or other release of any Hazardous
Materials from any Vianeta Leased Real Property or, during the period of
Vianeta's ownership or lease thereof, from any property formerly owned or leased
by Vianeta.
(b) Vianeta has not received any citation, notice or other
communication in writing regarding any alleged or actual violation of any
Environmental Law or any alleged or actual obligation to undertake or bear the
cost of any liabilities under any Environmental Law. There are no Orders or
Proceedings pending or, to the Knowledge of Vianeta, threatened, against Vianeta
relating to any alleged or actual violation of any Environmental Law or any
alleged or actual obligation to undertake or bear the cost any liabilities under
any Environmental Law.
(c) For purposes of this Agreement:
(i) "Environmental Laws" means all federal, state and local Legal
Requirements concerning pollution or the protection of the environment as such
requirements are enacted and in effect on or prior to the Closing Date.
(ii) "Hazardous Materials" means any pollutant, contaminant,
waste, petroleum, petroleum products, asbestos or asbestos-containing material,
polychlorinated biphenyls, urea formaldehyde, including, without limitation, all
substances defined or regulated as "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted hazardous
waste," "biohazardous waste," "biomedical waste," "medical waste," "sharps,"
"contaminant," "pollutant," "toxic waste" or "toxic substance" under any
Environmental Law.
SECTION 3.15 INSURANCE. Schedule 3.15 contains a true and complete list of
all policies of property, fire and casualty, products liability, workers'
compensation and other forms of insurance held by Vianeta as of the date hereof
including any life insurance policies covering the life of any employee of
Vianeta for which Vianeta has paid the premiums. All such policies are in full
force and effect, no notice of default termination has been received in respect
thereof, and all premiums due thereupon have been paid. Vianeta has not received
any notice of (a) cancellation or intent to cancel, or (b) an increase or intent
to increase premiums with respect to such insurance policies, and is not aware
of any basis for any such action. True and complete copies of such insurance
policies have been made available to Parent.
SECTION 3.16 MATERIAL CONTRACTS; NO DEFAULTS.
(a) Schedule 3.16(a) lists each of the following contracts and
agreements to which Vianeta is party or is bound as of the date hereof,
excluding the agreements disclosed in Schedule 3.6(b), Schedule 3.9(c) and
Schedule 3.17(b) (such contracts and agreements listed on Schedule 3.16(a),
together with the agreements disclosed in Schedule 3.6(b), Schedule 3.9(c) and
Schedule 3.17(b), the "Material Contracts"):
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(i) any contract or agreement of Vianeta having a value per
contract, or involving payments by or to Vianeta, of at least (x) $25,000 on an
annual basis, or (y) $50,000 in the aggregate;
(ii) any contract or agreement with a Material Customer (as
defined in Section 3.19);
(iii) any joint venture, partnership or other similar agreement
involving coinvestment with a third party to which Vianeta is a party;
(iv) any contract or agreement requiring capital expenditures
after the date hereof in the aggregate amount of at least $25,000;
(v) any contract or agreement involving the sale of any assets of
Vianeta, or the acquisition of any assets of any Person by Vianeta (whether by
merger, sale of stock, sale of assets or otherwise), in either case, for
consideration of at least $25,000;
(vi) any note, indenture, loan agreement, credit agreement,
financing agreement or other evidence of indebtedness relating to the borrowing
of money by Vianeta, any guaranty made by Vianeta in favor of any Person
guarantying obligations or any letter of credit issued for the account of
Vianeta under which Vianeta has obligations;
(vii) any contract or agreement with any Governmental Authority;
(viii) any contract or agreement containing covenants that in any
way purport to restrict the business activity of Vianeta or limit the freedom of
Vianeta to engage in any line of business or to compete with any Person; and
(ix) each amendment, supplement, and modification in respect of
any of the foregoing.
(b) Except as set forth in Schedule 3.16(b):
(i) Each Material Contract (A) is in full force and effect, and
(B) is a valid and binding agreement of Vianeta and all other parties thereto,
enforceable against Vianeta and, to the Knowledge of Vianeta, all other parties
thereto in accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application affecting enforcement of creditors' rights or by
principles of equity.
(ii) To the Knowledge of Vianeta, neither Vianeta nor any other
party to any Material Contract is in breach of or default under any Material
Contract.
(iii) Since the Compliance Date, Vianeta has not given to, or
received from, any other party to any Material Contract, any written notice or
other written communication regarding any actual or alleged breach of or default
under any Material Contract by Vianeta or any other party to such Material
Contract.
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(c) True and complete copies of the Material Contracts have been made
available by Vianeta to Parent.
SECTION 3.17 INTELLECTUAL PROPERTY.
(a) Schedule 3.17(a) contains a true and complete list of the
following categories of intellectual property owned by or licensed to Vianeta
(the "Vianeta Intellectual Property"): (i) all registered patents and pending
patent applications (the "Patents"); (ii) all registered trademarks, service
marks, trade names, assumed names, and pending applications therefor (the
"Marks"); (iii) all registered copyrights, and applications therefor, including
registered computer software (excluding off the shelf software components
licensed to Vianeta pursuant to non-negotiable standard form, mass market or
"shrink wrap" licenses) (the "Copyrights"); and (iv) all Internet websites and
Internet domain names, in each case listing, as applicable, (A) the title of the
application or registration, (B) the name of the applicant/registrant and
current owner, (C) the jurisdiction where the application/registration is
located, (D) the application or registration number, (E) filing date, and (F)
whether such Vianeta Intellectual Property is owned or licensed.
(b) Schedule 3.17(b) contains a true and complete list of material
agreements and contracts (excluding (i) off the shelf software components
licensed to or by Vianeta pursuant to nonnegotiable standard form, mass market
"click wrap" or "shrink wrap" licenses) under which Vianeta licenses the Vianeta
Intellectual Property (as a licensor or licensee). Vianeta either owns, free and
clear of all Liens other than Permitted Liens, or holds under a legally
enforceable license, all of the Vianeta Intellectual Property necessary to the
conduct of the Vianeta Business as currently conducted. Vianeta has the right to
use without payment to a third party all of the Vianeta Intellectual Property
and Trade Secrets, other than any payment required under any agreement listed in
Schedule 3.17(b).
(c) The Vianeta Intellectual Property includes all of the intellectual
property necessary to the conduct of the Vianeta Business as currently
conducted. Neither this Agreement nor the transactions contemplated by this
Agreement will result in (i) Parent granting to any Person any right to or with
respect to any Vianeta Intellectual Property or (ii) Parent being bound by, or
subject to, any non-compete or other restriction on the operation or scope of
its business.
(d) Vianeta owns and has good and exclusive title to each item of the
Vianeta Intellectual Property free and clear of any security interest, escrow,
defect in title or other equitable or third-party interest, and has the valid
and enforceable right to use, transfer, license and encumber all such Vianeta
Intellectual Property. All registered Patents, Marks and Copyrights are in
compliance in all material respects with all formal Legal Requirements
(including the payment of any maintenance fees) and are valid and enforceable.
Vianeta has complied with all applicable disclosure requirements and has not
committed any fraudulent act in the application for or maintenance of any
Vianeta Intellectual Property. Vianeta has taken all commercially reasonable and
customary actions to maintain the Vianeta Intellectual Property.
(e) To the Knowledge of Vianeta, no intellectual property of any other
Person infringes upon or misappropriates any Vianeta Intellectual Property or
Trade Secrets.
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(f) The use of the Vianeta Intellectual Property and Trade Secrets in
the Vianeta Business as currently conducted does not infringe upon or
misappropriate any intellectual property rights of any Person and does not
constitute unfair competition or trade practices under the laws of any
jurisdiction. There are no pending or, to the Knowledge of Vianeta, threatened,
Proceedings against Vianeta asserting that the use of the Vianeta Intellectual
Property or Trade Secrets by Vianeta infringes or misappropriates any
intellectual property rights of any Person.
(g) Vianeta has not misappropriated any Trade Secrets of any other
Person. Vianeta has taken reasonable and customary precautions to protect the
secrecy, confidentiality and value of all of their Trade Secrets. For purposes
of this Agreement, "Trade Secrets" means any know-how, trade secrets,
confidential information, customer lists, technical information, data, process
technology, plans, software and proprietary technology developed in the conduct
of the Vianeta Business as currently conducted.
(h) To the extent that any work, invention or material necessary to
the conduct of the Vianeta Business as has been conducted and currently is
conducted has been developed or created by any employee or third party for
Vianeta, Vianeta has entered into a written agreement with such employee or
third party with respect thereto and thereby has obtained ownership of, and is
the exclusive owner of, all intellectual property in such work, including all
Marks, Copyrights, Patents, Trademarks and Trade Secrets, material or invention
by operation of law or by valid assignment. Vianeta has not licensed any
computer software source code included in the Vianeta Intellectual Property to
any Person in source code format. Vianeta has a policy requiring employees and
contractors to execute proprietary information and confidentiality agreements
substantially in their standard forms, and all current and former employees and
contractors of Vianeta have executed such an agreement.
(i) Except as set forth in Schedule 3.17(i), all proprietary software
of Vianeta conforms in all material respects to the specifications and
documentation therefor and is otherwise in compliance with applicable law. No
open source, public source or freeware software, code or other technology, or
any modification or derivative thereof, including, without limitation, any
version of any software licensed pursuant to any GNU general public license or
limited general public license, is incorporated into any Vianeta Intellectual
Property.
(j) Except as set forth in Schedule 3.17(j), nothing has been done or,
to the Knowledge of Vianeta, omitted to be done by Vianeta which would
jeopardize the validity or enforceability of any Vianeta Intellectual Property
or Trade Secrets. To the Knowledge of Vianeta, Vianeta is not barred from
seeking patents on material potentially patentable inventions by "on-sale" or
similar bars to patentability or by failure to apply for a patent on such
inventions within the time required.
SECTION 3.18 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Schedule 3.18, since the Interim Balance Sheet Date, (i) Vianeta has conducted
the Vianeta Business in the ordinary course of business, and (ii) Vianeta has
not taken any action that, if taken during the period from the date of this
Agreement through the Closing Date, would require the prior consent of Parent
pursuant to the provisions of Section 5.2.
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SECTION 3.19 CUSTOMERS. Schedule 3.19 sets forth a true and complete list
of each of the top ten (10) customers of Vianeta (by volume in dollars of sales
to such customers) for the twelve-month period immediately preceding the Interim
Balance Sheet Date (the "Material Customers"), and the amount of revenues
accounted for by such customers during such period. Since the Interim Balance
Sheet Date, there has been no material adverse change in the business
relationship of Vianeta with any Material Customer. Vianeta has not received any
notice, and Vianeta does not have any Knowledge, that any Material Customer has
any intention to terminate or materially reduce services purchased from Vianeta
on account of the transactions contemplated hereby or otherwise.
SECTION 3.20 TRANSACTIONS WITH RELATED PERSONS. Except as set forth in
Schedule 3.20, (i) no shareholder, member, director or officer of Vianeta (any
such individual, a "Related Person"), or, to the Knowledge of Vianeta, any
Affiliate or member of the immediate family of any Related Person, is involved
in any business arrangement or relationship with Vianeta other than employment
arrangements entered into in the ordinary course of business, and (ii) no
Related Person or, to the Knowledge of Vianeta, any Affiliate or member of the
immediate family of any Related Person, owns any property or right, tangible or
intangible, used by Vianeta in the current conduct of the Vianeta Business. For
purposes of this Agreement, "Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under common control
with such Person.
SECTION 3.21 BROKERS OR FINDERS. Except as set forth in Schedule 3.21,
Vianeta has not incurred, and will not incur, any liability for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
the transactions contemplated hereby.
SECTION 3.22 ACCOUNTS RECEIVABLE. All accounts receivable that are
reflected on the Interim Balance Sheet or on the accounting records of Vianeta
as of the Closing Date represent or will represent valid obligations arising
from sales actually made or services actually performed by Vianeta in the
ordinary course of business. There is no contest, claim, defense or right of set
off other than returns in the ordinary course of business, with any account
debtor of an account receivable relating to the amount or validity of such
account receivable.
SECTION 3.23 SUFFICIENCY OF ASSETS. The assets of Vianeta constitute all of
the assets, tangible and intangible, of any nature whatsoever, used in or
necessary to operate the Vianeta Business in the manner presently conducted by
Vianeta.
SECTION 3.24 REQUIRED VIANETA SHAREHOLDER VOTE. The affirmative approval of
the holders of a majority of the outstanding shares of Vianeta common stock and
the holders of a majority of the outstanding Vianeta series A preferred stock
and series B preferred stock voting together as a class present in person or by
proxy at a shareholders' meeting duly called (the "Required Vianeta Shareholder
Vote") is the only approval required by Vianeta to approve this Agreement and
the Merger.
SECTION 3.25 DISCLOSURE. No representation or warranty or other statement
made by Vianeta in this Agreement, the Vianeta Closing Documents and any other
document or agreement delivered or to be delivered by Vianeta in connection with
the transactions contemplated hereby contains or will contain any untrue
statement or omits or will omit to state a
21
material fact necessary to make any of them, in light of the circumstances in
which it was made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF HOLDINGS, PARENT AND MERGER SUB
Except as disclosed in the Parent Disclosure Schedules attached hereto
(together with the Vianeta Disclosure Schedules, the "Disclosure Schedules"),
each of Holdings, Parent and Merger Sub jointly and severally represent and
warrant to Vianeta as follows:
SECTION 4.1 ORGANIZATION AND GOOD STANDING.
(a) Each of Holdings and Parent is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
with full corporate power and authority to conduct its business as it is now
being conducted.
(b) Parent has made available to Vianeta true and correct copies of
the Charter and Bylaws of Holdings and Parent.
SECTION 4.2 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of 1,000 shares of
common stock, no par value per share, all of which are issued and outstanding.
The authorized capital stock of Holdings consists of 300,000,000 shares of
common stock, par value of $0.01 per share, 13,738,655 shares of which are
issued and outstanding and 120,000,000 shares of preferred stock, par value
$0.01 per share, 102,600,000 shares of which are issued and outstanding. All of
the issued and outstanding shares of Holdings and Parent capital stock have been
duly authorized and validly issued and are fully paid and non-assessable. Except
as set forth on Schedule 4.2, there are no options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments that obligate Parent to issue, transfer or sell any shares of
capital stock of Holdings or Parent. There is no obligation, contingent or
otherwise, of Holdings or Parent to repurchase, redeem or otherwise acquire any
shares of capital stock of Holdings or Parent. Except as set forth on Schedule
4.2, each of Holdings and Parent does not, directly or indirectly, own, and has
not agreed to purchase or otherwise acquire, the capital stock or other equity
interests of, or any interest convertible into or exchangeable or exercisable
for capital stock or other equity interests of, any Person. Except as set forth
on Schedule 4.2, there are no registration rights agreements, voting trusts,
shareholders agreements, proxies or other agreements to which Holdings or Parent
is a party or among Holdings' or Parent's shareholders with respect to the
registration, voting or transfer of Holdings' or Parent's capital stock. Except
as set forth on Schedule 4.2, no preemptive rights, rights of first refusal or
similar rights exist with respect to Holdings' or Parent's capital stock, and no
such rights arise or become exercisable by virtue of or in connection with the
Merger. There are no outstanding stock
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appreciation, phantom stock, profit participation or other similar rights with
respect to Holdings or Parent.
SECTION 4.3 AUTHORITY AND NO CONFLICT.
(a) This Agreement constitutes the valid and binding obligation of
Holdings, Parent and Merger Sub, enforceable against Holdings, Parent and Merger
Sub in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by principles
of equity. Upon the execution and delivery by Holdings, Parent and Merger Sub of
each document to be executed and delivered at Closing by Holdings, Parent and
Merger Sub pursuant to Section 7.3(d) (collectively, the "Parent Closing
Documents"), each of the Parent Closing Documents will constitute the valid and
binding obligation of Holdings, Parent and Merger Sub, as applicable,
enforceable against Holdings, Parent and Merger Sub, as applicable, in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights or
by principles of equity. Holdings, Parent and Merger Sub have all requisite
corporate power and authority to execute and deliver this Agreement and the
Parent Closing Documents and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized
and approved by Holdings, Parent and Merger Sub (including, but not limited to,
approval of this Agreement by the preferred shareholders of Holdings, Spheris
Inc. as the sole shareholder of Parent and Parent as the sole shareholder of
Merger Sub), and no other corporate action on the part of Holdings, Parent or
Merger Sub or their respective shareholders is required to authorize the
execution and delivery of this Agreement by Holdings, Parent or Merger Sub or
the consummation of the transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) conflict with or
violate the Charter or Articles of Incorporation, as applicable, or Bylaws of
Holdings, Parent or Merger Sub, (ii) conflict with or violate any Legal
Requirements applicable to Holdings, Parent or Merger Sub or any Orders of any
Governmental Authority or arbitrator to which Holdings, Parent or Merger Sub or
any of their respective assets are subject, or (iii) breach any provision of, or
give any Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any contract or agreement of Holdings, Parent or Merger
Sub.
(c) Except (i) for filing and recordation of appropriate merger
documents as required by the CGCL and (ii) the vote of the shareholders of each
of Holdings, Parent and Merger Sub, none of Holdings, Parent nor Merger Sub is
or will be required to give any notice to or obtain any consent from any
Governmental Authority or from any other Person in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
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SECTION 4.4 FINANCIAL STATEMENTS.
(a) Attached as Schedule 4.4(a) are true and complete copies of (a)
the balance sheet of the consolidated group to which Parent is a party (the
"Parent Group") as of December 31, 2004, and the related statements of income,
changes in shareholders' equity and cash flows for the fiscal years then ended
and (b) the balance sheet of the consolidated group to which Parent is a party
(the "Parent Interim Balance Sheet") as of September 30, 2005 and the related
statements of income, changes in shareholder' equity and cash flows for the nine
(9) months then ended. Such financial statements and notes fairly present in all
material respects the financial condition and the results of operations, changes
in shareholders' equity, and cash flows of the Parent Group is a party as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with generally accepted accounting principles for
financial reporting in the United States ("GAAP") applied on a consistent basis,
except as noted therein and except for the absence of footnotes and other
presentation items and for normal year-end adjustments. Such financial
statements have been prepared from the books and records of the Parent Group.
Also attached as Schedule 4.4(a) are true and complete copies of the balance
sheet of the Parent Group as of October 31, 2005 (the "Parent Interim Balance
Sheet Date") and the related statement of income, changes in shareholder's
equity and cash flows for the ten (10) months then ended, which financial
statements have prepared in the ordinary course of Parent's business and in
accordance with the books and records of Parent. Such financial statements
fairly present in all material respects the financial condition and the results
of operations, changes in shareholders' equity, and cash flows of the Parent
Group as at the respective dates of and for the periods referred to in such
financial statements.
(b) Except as set forth in Schedule 4.4(b), the Parent Group does not
have any obligations or liabilities (whether accrued, absolute, contingent or
otherwise) required to be reflected as liabilities on a balance sheet prepared
in accordance with GAAP other than (i) liabilities and obligations disclosed on
the Parent Interim Balance Sheet Date; and (ii) liabilities and obligations
incurred in the ordinary course of business since the Parent Interim Balance
Sheet that would not, individually or in the aggregate, have a Parent Material
Adverse Effect.
SECTION 4.5 MATERIAL ADVERSE EFFECT. Since the Interim Balance Sheet Date,
there has not been any Parent Material Adverse Effect. For purposes of this
Agreement, "Parent Material Adverse Effect" means any circumstance involving
change in or effect on the business of Holdings, Parent or Merger Sub (the
"Parent Business") (a) that is, or is reasonably likely in the future to be,
individually or in the aggregate, materially adverse to the business, results of
operations, assets, liabilities or financial condition of the Parent Business,
or (b) that is reasonably likely to prevent or materially delay or impair the
ability of Parent or Merger Sub to consummate the transactions contemplated by
this Agreement.
SECTION 4.6 TAXES. Each of Holdings and Parent has timely filed all Tax
Returns required to have been filed with any Governmental Authority, except for
those Tax Returns for which the time for filing has been validly extended, and
those Tax Returns with respect to which a failure to file would not have a
Parent Material Adverse Effect. The Tax Returns are true and complete in all
material respects.
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SECTION 4.7 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in
Schedule 4.7, (i) each of Holdings and Parent is, and since the Compliance Date,
has been, in compliance in all material respects with all applicable Legal
Requirements, and (ii) neither Holdings nor Parent have received, at any time
since the Compliance Date, any written notice or other written communication
from any Governmental Authority regarding any actual or alleged violation of any
applicable Legal Requirements (excluding, for purposes of clause (i) and clause
(ii) of this Section 4.7 and Holdings' or Parent's compliance with the Code and
other Legal Requirements regarding Tax matters, which is covered under Section
4.6).
SECTION 4.8 LEGAL PROCEEDINGS; ORDERS. There are no Proceedings pending or,
to the Knowledge of Parent, threatened against Holdings, Parent or Merger Sub
that challenge, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the transactions contemplated
hereby. There are no Orders outstanding or, to the Knowledge of Parent,
threatened, against Holdings, Parent or Merger Sub that challenge, or that may
have the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the transactions contemplated hereby.
SECTION 4.9 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since the Parent Interim
Balance Sheet Date, each of Holdings and Parent has conducted the Parent
Business in the ordinary course of business.
SECTION 4.10 BROKERS OR FINDERS. Holdings, Parent and Merger Sub have not
incurred, and will not incur, any liability for brokerage or finders' fees or
agents' commissions or other similar payment in connection with the transactions
contemplated hereby.
SECTION 4.11 DISCLOSURE. No representation or warranty or other statement
made by Holdings, Parent or Merger Sub in this Agreement, the Parent Closing
Documents and any other document or agreement delivered or to be delivered by
Holdings, Parent or Merger Sub in connection with the transactions contemplated
hereby contains or will contain any untrue statement or omits or will omit to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
ARTICLE V.
PRE-CLOSING COVENANTS
SECTION 5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the Closing Date, and upon reasonable advance notice received from Parent,
Vianeta will (a) afford Holdings, Parent, Merger Sub and their agents and
representatives full access, during regular business hours, to Vianeta's
facilities, contracts, books and records, and other documents and data, such
rights of access to be exercised in a manner that does not unreasonably
interfere with the operations of Vianeta, (b) furnish or make available to
Holdings, Parent, Merger Sub, and their agents and representatives copies of all
such contracts, books and records, and other existing document and data that
Parent may reasonably request, and (c) otherwise cooperate and assist, to the
extent reasonably requested by Parent, with Parent's investigation of the
properties, assets and financial condition of Vianeta. Parent will be provided
access prior to Closing to Vianeta's employees, Material Customers, significant
suppliers and other Persons having
25
business relations with Vianeta, at such times and in the manner mutually agreed
to by Vianeta and Parent.
SECTION 5.2 OPERATION OF THE BUSINESS OF VIANETA. Except as contemplated by
this Agreement or with the prior written consent of Parent, between the date of
this Agreement and the Closing Date, Vianeta shall conduct the Vianeta Business
in the ordinary course of business and shall use commercially reasonable efforts
to preserve intact the current business organization of Vianeta, keep available
the services of Vianeta's officers, employees, and agents, and maintain
Vianeta's relations and good will with suppliers, customers, landlords,
creditors, employees, agents and others having business relationships with
Vianeta. Without limiting the generality of the foregoing, between the date of
this Agreement and the Closing Date, Vianeta shall not without the prior written
consent of Parent take any of the following actions:
(a) issue, sell, repurchase, redeem or acquire any shares of capital
stock of Vianeta or grant or enter into any rights, warrants, options,
agreements or commitments with respect to the issuance of such capital stock;
(b) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or other combination thereof) in
respect of any shares of capital stock of Vianeta;
(c) adjust, split, combine, subdivide or reclassify any shares of
capital stock of Vianeta;
(d) amend the Articles of Incorporation or Bylaws of Vianeta;
(e) other than in the ordinary course of business or as contemplated
by this Agreement, pay or increase in any material respect any bonuses, salaries
or other compensation payable to any director, officer or employee of Vianeta;
(f) adopt any Employee Benefit Plan, or amend or increase the payments
under any Employee Benefit Plan in any material respect;
(g) enter into, amend in any material respect, or terminate (other
than any termination as the result of the expiration of the term of any
agreement), or waive or assign any material right under (i) any Material
Contract or (ii) any contract or agreement with any Related Person or, to the
Knowledge of Vianeta, any immediate family member or Affiliate thereof;
(h) acquire any assets or properties in excess of $10,000 in the
aggregate or lease any assets or properties requiring rental payments in excess
of $10,000 in the aggregate;
(i) make any loans or advances to any Person, except for advances to
employees or officers of Vianeta for expenses incurred in the ordinary course of
business and consistent with current policy;
(j) sell, lease or otherwise dispose of any assets or properties of
Vianeta other than (i) in the ordinary course of business, and (ii) dispositions
of obsolete or unsaleable inventory or equipment.
26
(k) incur, assume or guarantee any (i) indebtedness for borrowed money
(not including any obligations under any operating leases or capitalized leases)
or (ii) indebtedness evidenced by any note, bond, debenture or other debt
security, in excess of $10,000 in the aggregate.
(l) permit or allow any of the assets of Vianeta to be subject to a
Lien, other than a Permitted Lien;
(m) cancel, waive, settle or comprise any Proceeding disclosed in
Schedule 3.13(a);
(n) cancel, waive or settle any claims or rights with a value to
Vianeta in excess of $10,000;
(o) make any material change in the accounting or tax methods used by
Vianeta; or
(p) enter into any agreement, whether oral or written, to do any of
the foregoing.
SECTION 5.3 REQUIRED APPROVALS.
(a) Between the date of this Agreement and the Closing Date, each
party shall use commercially reasonable efforts to obtain all consents and
approvals of Governmental Authorities and other Persons required to be obtained
in connection with the consummation of the transactions contemplated by this
Agreement prior to the Closing, including the Required Consents.
(b) Each party shall bear its own costs for filing and other fees
payable to Governmental Authorities.
(c) As promptly as practicable, Vianeta shall (i) solicit written
consents for the purposes of approving this Agreement and the Merger, (ii)
recommend such approvals to its shareholders, and (iii) use its reasonable
efforts to obtain such approvals of its shareholders. Each Principal Shareholder
shall vote or cause to be voted with respect to all shares directly or
indirectly owned by such Principal Shareholder in favor of such approvals.
SECTION 5.4 NOTIFICATION. Between the date of this Agreement and the
Closing Date, each party shall give prompt notice to the other parties at such
time that such party becomes aware of the occurrence, or non-occurrence, of any
event the occurrence or nonoccurrence of which would be reasonably likely to
cause (i) any representation or warranty of any party contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Closing, or (ii) any party to fail to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder. If any such fact or condition requires any change to the
Disclosure Schedules, such party shall promptly deliver to the other party a
supplement to the Schedules specifying such change. The delivery of any notice
or supplement pursuant to this Section 5.4, in and of itself, will not create
any presumption that the delivery of such notice or supplement constitutes or
evidences the existence of a Material
27
Adverse Effect or Parent Material Adverse Effect or any breach by Vianeta or
Holdings, Parent or Merger Sub of any provision of this Agreement, it being
understood that any determination as to whether such a Material Adverse Effect
or Parent Material Adverse Effect or breach exists will be made on the basis of
all relevant information. In addition, between the date of this Agreement and
the Closing Date, Parent or Vianeta, as the case may be, shall promptly notify
the other party of the occurrence of any breach of any covenant of such party in
this Article V or of the occurrence of any event that may make the satisfaction
of any conditions in Article VII impossible or unlikely. No disclosure pursuant
to this Section 5.4 will prevent or cure any breach of any representation or
warranty or covenant set forth herein.
SECTION 5.5 COMMERCIALLY REASONABLE EFFORTS. Between the date of this
Agreement and the Closing Date, each party will use commercially reasonable
efforts to cause the conditions in Article VII to be satisfied.
SECTION 5.6 EXCLUSIVE DEALING.
(a) From the date of this Agreement through the Effective Time or
until such time that this Agreement is terminated pursuant to Section 8.1,
Vianeta shall not, and shall not authorize or permit any director, officer,
employee or agent of Vianeta, directly or indirectly, to (i) solicit, initiate
or encourage (including by way of furnishing or disclosing non-public
information) any inquiries or the making of any proposal with respect to any
merger, consolidation or other business combination involving Vianeta or the
acquisition of all or any significant part of the assets or capital stock of
Vianeta (an "Acquisition Transaction") or (ii) negotiate, explore or otherwise
engage in discussions with any Person (other than Parent and Merger Sub and
their representatives and agents) with respect to any Acquisition Transaction,
or which may reasonably be expected to lead to a proposal for an Acquisition
Transaction, or enter into any contract or understanding with respect to any
such Acquisition Transaction.
(b) As of the date hereof, Vianeta shall, and shall cause its
Affiliates, officers, directors, employees and agents, to, immediately cease and
cause to be terminated any existing activities, discussions and negotiations
with any Person (other than Parent and Merger Sub and their representatives)
conducted heretofore with respect to any Acquisition Transaction. Vianeta shall
advise Parent promptly of any inquiries or proposals received by, any such
information requested from, and any requests for negotiations or discussions
sought to be initiated or continued with, Vianeta and its Affiliates, officers,
directors, employees and agents, in each case from a Person (other than Parent
and Merger Sub and their representatives) with respect to an Acquisition
Transaction. Vianeta shall keep Parent reasonably informed of the status of
(including any change to the material terms of) any such proposal for an
Acquisition Transaction or inquiry.
SECTION 5.7 INTERIM FINANCIAL STATEMENTS. Until the Closing Date, Vianeta
shall deliver to Parent within fifteen (15) days after the end of each month an
unaudited balance sheet of Vianeta as of the last day of such month and the
related unaudited income statements for the month then ended prepared in a
manner consistent with Vianeta's current practices and, in any case, shall cause
an estimated unaudited balance sheet of Vianeta as of the Closing Date (the
"Closing Date Balance Sheet") to be delivered to Parent at least five (5)
business days prior to the Closing Date.
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SECTION 5.8 EMPLOYEE BENEFIT PLANS. Immediately prior to or in connection
with the Closing, Vianeta shall terminate to the satisfaction of Parent the
Vianeta 2000 Stock Plan, as amended, and the Vianeta Compensation Plan for the
sale of its products and services.
ARTICLE VI.
OTHER AGREEMENTS
SECTION 6.1 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the transactions contemplated hereby
will be issued, if at all, at such time and in such manner as determined by
Parent. To the extent Parent determines to make a public announcement, Parent
will, to the extent reasonably possible, provide notice thereof to Vianeta not
less than two (2) Business Days prior to such disclosure and attempt, to the
extent reasonably possible, to clear such announcement, statement or
acknowledgement with Vianeta. Except as set forth in the preceding sentence,
prior to the Closing, each party and its representatives and agents will keep
this Agreement and any information about the transactions contemplated hereby
strictly confidential and shall not make any disclosure of this Agreement to any
other Person. Parent and Vianeta will consult with each other concerning the
means by which Vianeta's employees, customers, and suppliers and others having
dealings with Vianeta will be informed of the transactions contemplated hereby.
SECTION 6.2 CONFIDENTIALITY AGREEMENT. The confidentiality agreement dated
as of June 17, 2005, entered into by and between an affiliate of Parent and
Vianeta (the "Confidentiality Agreement") will remain in full force and effect
following the date of this Agreement, whether or not the Closing occurs, in
accordance with the terms thereof.
SECTION 6.3 REPAYMENT OF THE VIANETA LOANS AND PAYMENT OF EMPLOYEE
RETENTION BONUSES. At the Closing, prior to payment of the Merger Consideration
to the Vianeta Shareholders entitled thereto, Parent will
(a) repay in full, out of the Merger Consideration, the loans of
Vianeta set forth on Schedule 6.3(a) in the amounts set forth on Schedule 6.3(a)
(the "Vianeta Loans"); and
(b) pay in full, out of the Merger Consideration, the employee
retention bonuses of Vianeta employees set forth on Schedule 6.3(b) in the
amounts set forth on Schedule 6.3(b) (the "Vianeta Employee Retention Bonuses").
SECTION 6.4 TAX MATTERS.
(a) Tax Periods Ending on or Before the Closing Date.
(i) The Principal Shareholders shall cooperate in the preparation
and filing of all Tax Returns for Vianeta for all periods ending on or prior to
the Closing Date (the "Pre-Closing Tax Period") which are filed after the
Closing Date (the "Vianeta Post-Closing Tax Returns").
(ii) The Principal Shareholders shall permit Parent to review and
comment on each such Vianeta Post-Closing Tax Return prior to filing and shall
make such revisions to such returns as are reasonably requested by Parent to the
extent consistent with
29
applicable law; provided that to the extent the revisions requested by Parent
increase the Principal Shareholder's tax liability and are not required in order
for such return to be in compliance with law, the Principal Shareholders shall
have no obligation to make such revisions.
(b) Cooperation on Tax Matters.
(i) Parent, Vianeta and the Principal Shareholders shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax returns pursuant to this Section 6.4 and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Vianeta and the Principal Shareholders and
Parent agree (A) to retain all books and records with respect to Tax matters
pertinent to Vianeta relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the extent
notified by Parent or the Shareholder Representative, any extensions thereof) of
the respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Vianeta, the
Principal Shareholders or Parent, as the case may be, shall allow the other
party to take possession of such books and records.
(ii) Parent and the Principal Shareholders further agree, upon
request, to use commercially reasonable efforts to obtain any certificate or
other document from any Governmental Authority or any other person as may be
necessary to mitigate, reduce or eliminate any Tax that could be made imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
(c) Tax Sharing Agreements. All tax sharing agreements or similar
agreements, if any, with respect to or involving Vianeta shall be terminated as
of the Closing Date and, after the Closing Date, Vianeta shall not be bound
thereby or have any liability thereunder.
(d) Section 338(g) Election. The parties hereto acknowledge that
Parent will make an election under Section 338(g) of the Code (and any
corresponding elections under state, local or foreign tax law) with respect to
its acquisition of the stock of Vianeta pursuant to this Agreement (the "Section
338 Election") and agree to take any and all actions consistent with such
election. Any Tax that is imposed on Parent or Vianeta that is directly
attributable to the transaction described in Section 338(a) of the Code (and any
corresponding provision under state, local or foreign tax law) resulting from
such Section 338 Election, and that is computed taking into account, to the
extent permitted by law, all deductions, losses and credits available to Parent
or Vianeta, as applicable, including without limitation, any net operating
losses of Vianeta (the "Section 338 Election Tax Amount"), shall be treated as
having been incurred in a Pre-Closing Tax Period, and the Principal Shareholders
shall indemnify Parent or Vianeta for any such Taxes in accordance with, and to
the extent provided for by, Article 9 hereof.
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SECTION 6.5 FAIRNESS HEARING.
(a) As soon as practicable after the execution of this Agreement, and
in any event within ten (10) days hereof, (i) Holdings and Parent shall prepare,
with the cooperation of the Vianeta, the application for permit (the "Permit
Application") in connection with the Hearing (as defined below) and the notice
sent to the Vianeta security holders pursuant to, and meeting the requirements
of Article 2 of Subchapter 1 of the California Administrative Code, Title 10,
Chapter 3, Subchapter 2, as amended (the "Hearing Notice"), concerning the
hearing (the "Hearing") held by the California Commissioner to consider the
terms and conditions of this Agreement and the Merger and the fairness of such
terms and conditions pursuant to Section 25142 of the California Corporate
Securities Law of 1968, as amended, and the rules promulgated thereunder
("California Securities Law"), and (ii) Vianeta shall prepare, with the
cooperation of Parent, an information statement relating to this Agreement and
the transactions contemplated hereby (the "Information Statement"). Each of
Vianeta, Holdings and Parent shall use its reasonable best efforts to cause the
Permit Application, the Hearing Notice and the Information Statement to comply
with all requirements of applicable federal and state securities laws. Each of
Vianeta, Holdings and Parent shall provide promptly to the other such
information concerning its business and financial statements and affairs as, in
the reasonable judgment of the providing party or its counsel, may be required
or appropriate for inclusion in the Permit Application, the Hearing Notice or
the Information Statement, or in any amendments or supplements thereto, and to
cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation of the Permit Application, the Hearing Notice and
the Information Statement. The Information Statement shall constitute a
disclosure document for the offer and issuance of the shares of common stock of
Holdings to be received by the Vianeta securityholders in the Merger and a proxy
statement for solicitation of stockholder approval of the Merger. Whenever any
event occurs that is required to be set forth in an amendment or supplement to
the Information Statement, Vianeta, Holdings and Parent shall cooperate in
delivering any such amendment or supplement to all Vianeta securityholders
and/or filing any such amendment or supplement with the California Commissioner
of Corporations (the "California Commissioner") or its staff and/or any other
government officials. Anything to the contrary contained herein notwithstanding,
Vianeta shall not include in the Information Statement any information with
respect to Parent or its affiliates or associates, the form and content of which
information shall not have been approved by Parent prior to such inclusion;
provided, however, that Parent shall not withhold approval of any information
required to be included by federal or state law or the California Commissioner.
(b) Each of Holdings, Parent and Vianeta shall use its reasonable best
efforts (i) to cause to be filed with the California Commissioner, as soon as
practicable following the execution of this Agreement, and in any event within
ten (10) days hereof, the Permit Application and the Hearing Notice, (ii) to
respond to any additional requests by or questions from the California
Commissioner and make such changes as reasonably requested by the California
Commissioner, and (iii) to obtain, as soon as practicable following the
execution of this Agreement, the permit approving the fairness of this Agreement
and the Merger pursuant to Section 25121 of California Securities Law such that
the issuance of the common stock of Holdings in connection with the Merger shall
be exempt pursuant to Section 3(a)(10) of the Securities Act from the
registration requirements of Section 5 of the Securities Act (the "Permit").
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(c) As soon as permitted by the California Commissioner, Vianeta shall
deliver by personal delivery or reputable overnight courier the Hearing Notice
to all Vianeta securityholders entitled to receive such notice under California
Securities Law. Vianeta, Holdings and Parent shall notify each other promptly of
the receipt of any comments from the California Commissioner or its staff and of
any request by the California Commissioner or its staff or any other government
officials for amendments or supplements to any of the documents filed therewith
or any other filing or for additional information and shall provide each other
with copies of all correspondence between such party or any of its
representatives, on the one hand, and the California Commissioner, or its staff
or any other government officials, on the other hand, with respect to the
filing. If the California Commissioner issues the Permit, then as soon as
practicable thereafter Vianeta shall deliver by personal delivery or reputable
overnight courier the Information Statement to all Vianeta securityholders.
Except for the delivery of the Information Statement in accordance with the
terms hereof, Vianeta shall not, directly or indirectly, solicit the vote of any
holder of Vianeta capital stock in connection with the Merger in violation of
any applicable federal or state securities laws.
(d) The information relating to Vianeta, Holdings and Parent included
in the Hearing Notice, the Permit Application and the Information Statement
shall not, at the time the Hearing Notice is delivered to Vianeta
securityholders, at the time the Information Statement is delivered to Vianeta
securityholders, and at all times subsequent thereto (through and including the
Effective Time), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Vianeta shall promptly advise Holdings and Parent, and
Holdings and Parent shall promptly advise Vianeta, in writing, if at any time
prior to the Effective Time any of Vianeta, Holdings or Parent shall obtain
knowledge of any facts that might make it necessary or appropriate to amend or
supplement the Hearing Notice, the Permit Application, and/or the Information
Statement, in order to make the statements contained or incorporated by
reference therein not misleading or to comply with applicable law. Vianeta
Holdings and Parent shall cooperate in delivering any such amendment or
supplement to all Vianeta securityholders and/or filing any such amendment or
supplement with the California Commissioner or its staff and/or any other
government officials.
(e) If Parent and Vianeta determine in writing that the Permit cannot
be obtained, or cannot reasonably be expected to be obtained, in time to permit
the Closing to occur on or before February 28, 2006, or if the California
Commissioner notifies Holdings, Parent or Vianeta of the California
Commissioner's determination not to grant the Hearing, not to permit the mailing
of the Notice of Hearing and/or not to issue the Permit, then each of Holdings,
Parent and Vianeta shall use its reasonable best efforts to cause the issuance
of the shares of common stock of Holdings to be issued in the Merger pursuant to
an exemption under Regulation D promulgated under the Securities Act.
(f) Holdings and Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the common stock of Holdings in connection with
the Merger. Vianeta shall use its reasonable best efforts to assist Holdings and
Parent as may be necessary to comply with the securities and blue sky laws of
all jurisdictions which are applicable in connection with the issuance of common
stock of Holdings in connection with the Merger.
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SECTION 6.6 POST-CLOSING OPERATION OF VIANETA. During the period from the
Closing Date until the first anniversary thereof, Parent shall act in good faith
with respect to the Technology Consideration and the Sales Consideration in
Section 1.4(d) and shall not take any actions specifically designed to hinder or
prevent the holders of Vianeta Converted Preferred Shares from receiving the
Technology Consideration and the Sales Consideration; provided that Parent shall
be entitled to conduct its business in the ordinary course and take any actions
that it believes to be in the best interests of its business as a whole, even if
such actions could have a negative effect on the Technology Consideration or
Sales Consideration. In the event that, after the Closing, Parent sells the
Vianeta Business (by way of merger, consolidation, sale of substantially all of
the assets of the Surviving Corporation or the Vianeta Business or otherwise) to
a third party, the Technology Consideration and the Sales Consideration shall
become immediately due and payable upon the consummation of any such transaction
or action, as applicable.
ARTICLE VII.
CONDITIONS TO CLOSING
SECTION 7.1 MUTUAL CONDITIONS. The obligations of each party to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
at or prior to the Closing of each of the following conditions (any of which may
be waived in writing, in whole or in part, by such party):
(a) Material Consents. All Required Consents and all other consents
required to be obtained from, and all declarations or filings required to be
made with, any Governmental Authority or other Person in connection with the
transactions contemplated hereby that are identified on Exhibit F must have
obtained.
(b) No Injunctions or Legal Prohibitions. No temporary, preliminary or
permanent injunction or other Order issued by any Governmental Authority that
prevents the consummation of the transactions contemplated hereby shall have
been issued since the date of this Agreement and remain in effect, and no Legal
Requirement shall have been enacted, promulgated or enforced since the date of
this Agreement by any Governmental Authority that makes the consummation of the
transactions contemplated hereby illegal.
(c) Fairness Hearing Determination. The Permit shall have been issued
by the California Commissioner and no stop order suspending the effectiveness of
the Permit or any part thereof shall have been issued and no proceeding for that
purpose, no similar proceeding in respect of the Permit shall have been
initiated or threatened by the Department of Corporations of the State of
California, and all requests for additional information on the part of the
Department of Corporations of the State of California shall have been complied
with to the reasonable satisfaction of the parties hereto.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF HOLDINGS, PARENT AND MERGER SUB.
The obligations of Holdings, Parent and Merger Sub to consummate the
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing of each of the following conditions (any of which may be
waived in writing, in whole or in part, by Holdings, Parent and Merger Sub):
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(a) Representations and Warranties. The representations and warranties
in Article III must be true and correct in all respects without regard to any
materiality or Material Adverse Effect qualifications set forth therein as of
the date when made and at and as of the Closing Date, as though such
representations and warranties were made at and as of such date (except that
representations and warranties that are made as of a specific date will be true
and correct as of such date), other than such breaches of representations and
warranties that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(b) Covenants. All of the covenants and obligations that Vianeta and
the Principal Shareholders are required to perform or to comply with pursuant to
this Agreement at or prior to the Closing must have been duly performed and
complied with in all material respects.
(c) Consents. Vianeta will have obtained all of the Required Consents
other than those Required Consents for which Parent has specifically waived.
(d) No Proceedings. Since the date of this Agreement, there must not
have been commenced or threatened against Holdings, Parent or Merger Sub, or
against any Affiliate thereof, any Proceeding (i) involving any challenge to, or
seeking Damages or other relief in connection with, the transactions
contemplated hereby, or (ii) that may have the effect of preventing, delaying,
making illegal, imposing limitations or conditions on, or otherwise interfering
with, any of the transactions contemplated hereby.
(e) No Claim regarding Stock Ownership or Sales Proceeds. There must
not have been made or threatened by any Person any claim asserting that such
Person (i) is the holder or the beneficial owner of, or has the right to acquire
or to obtain beneficial ownership of, any stock of, or any other voting, equity
or ownership interest in, Vianeta, or (ii) is entitled to all or any portion of
the Cash Consideration or the Stock Consideration except as set forth on
Schedule 1.4(d).
(f) No Conflict. Neither the consummation nor the performance of the
transactions contemplated hereby will, directly or indirectly (with or without
notice or lapse of time), conflict with or result in a violation of, or cause
Holdings, Parent or Merger Sub or any Affiliate thereof to suffer any material
adverse consequence under, any Order issued by any court or other Governmental
Authority since the date of this Agreement or any Legal Requirement enacted or
promulgated since the date of this Agreement.
(g) Officers and Directors. Each of the officers and directors of
Vianeta must have resigned effective as of the Closing.
(h) Approval of Shareholders; Appraisal Rights. Vianeta shall have
duly obtained the Required Vianeta Shareholder Vote approving this Agreement and
the Merger and the consummation of the transactions contemplated hereby.
Shareholders holding no more than an aggregate of five percent (5%) of the
outstanding Vianeta common stock on an as-converted basis shall have asserted
appraisal rights.
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(i) Agreement of Merger. The Agreement of Merger shall have been
accepted by the Secretary of State of California.
(j) Formation of Entity. A Special Purpose Entity (the "Special
Purpose Entity") into which each of the Vianeta shareholders shall have
contributed his, her or its shares of Vianeta capital stock and which shall
receive the Merger Consideration pursuant to Section 1.4(d) shall have been
validly organized and shall have executed an addendum to this Agreement by which
such Special Purpose Entity shall have become an additional Principal
Shareholder.
(k) Closing Deliveries. Vianeta must have caused the following
documents to be delivered (or tendered subject only to Closing) to Parent and
Merger Sub:
(i) employment agreements in substantially the form of Exhibit G
(containing the non-competition, nonsolicitation and confidentiality provisions
set forth therein) (the "Employment Agreements"), executed by Xxxxx Xxxxxx and
Xxxxxx Xxxxx;
(ii) an opinion of Xxxxxx Xxxxx & Bockius LLP in substantially
the form of Exhibit H, dated the Closing Date;
(iii) the Articles of Incorporation and all amendments thereto of
Vianeta, and a certificate of good standing of Vianeta, in each case duly
certified as of dated not earlier than the fifth Business Day prior to Closing
by the Secretary of State of California;
(iv) the Escrow Agreement executed by Vianeta and the Shareholder
Representative;
(v) a certificate, dated as of the Closing Date, executed by a
duly authorized officer of the Vianeta, certifying as to the satisfaction of the
conditions set forth in Sections 7.2(a) and (b);
(vi) a certificate of the Secretary of Vianeta certifying and
attaching copies of the Bylaws of Vianeta, certifying and attaching all
requisite resolutions or actions of Vianeta's board of directors and
shareholders approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and certifying to the
incumbency of the officers of Vianeta executing this Agreement and any other
document relating to the transactions contemplated hereby;
(vii) a subscription agreement, in a form reasonably satisfactory
to Parent and Vianeta and containing obligations of Holdings relating to the
availability of Rule 144 of the Securities Act substantially similar to
Holdings' obligations set forth in that certain Registration rights Agreement
dated as of November 5, 2004, executed by the Special Purpose Entity formed by
Vianeta who will receive shares of Holdings' common stock pursuant to this
Agreement; and
(viii) all material documentation relating to the formation and
operation of the Special Purpose Entity.
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SECTION 7.3 CONDITIONS TO OBLIGATIONS OF VIANETA. The obligations of
Vianeta to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or prior to the Closing of each of the following
conditions (any of which may be waived in writing, in whole or in part, by
Vianeta):
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub in Article IV must be true and correct in all respects
without regard to any materiality or Material Adverse Effect qualification set
forth therein as of the date when made and at and as of the Closing Date, as
though such representations and warranties were made at and as of such date
(except that representations and warranties that are made as of a specific date
will be true and correct as of such date), other than such breaches of
representations and warranties that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(b) Covenants. All of the covenants and obligations that Holdings,
Parent and Merger Sub are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing must have been duly performed and complied
with in all material respects.
(c) Shareholder Approval. The Shareholders of Vianeta shall have taken
all necessary action to approve the Merger under the Articles of Incorporation,
Bylaws and the CGCL.
(d) Closing Deliveries. Holdings, Parent and Merger Sub must have
caused the following documents to be delivered (or tendered subject only to
Closing) to Vianeta:
(i) the Charter or Articles of Incorporation, as applicable, and
all amendments thereto of Holdings, Parent and Merger Sub, and a certificate of
good standing of each of Holdings, Parent and Merger Sub, in each case duly
certified as of and dated not earlier than the fifth Business Day prior to
Closing by the Secretary of State of Tennessee and California, as applicable;
(ii) the Escrow Agreement executed by Parent and Merger Sub;
(iii) a certificate, dated as of the Closing Date, executed by
duly authorized officers of Holdings, Parent and Merger Sub, certifying the
satisfaction of the conditions set forth in Sections 7.3(a) and (b);
(iv) a certificate of the Secretary of Parent certifying and
attaching copies of the Bylaws of Parent, certifying and attaching all requisite
resolutions or actions of Parent's board of directors approving the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, and certifying to the incumbency of the officers of Parent
executing this Agreement and any other document relating to the transactions
contemplated hereby;
(v) a certificate of the Secretary of Holdings certifying and
attaching copies of the Bylaws of Holdings, certifying and attaching all
requisite resolutions or actions of Holdings' board of directors approving the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and certifying to the incumbency of the
36
officers of Holdings executing this Agreement and any other document relating to
the transactions contemplated hereby; and
(vi) a certificate of the Secretary of Merger Sub certifying and
attaching copies of the Bylaws of Merger Sub, certifying and attaching all
requisite resolutions or actions of Merger Sub's board of directors and
Shareholders approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and certifying to the
incumbency of the officers of Merger Sub executing this Agreement and any other
document relating to the transactions contemplated hereby.
(vii) A list of four customers of Parent, mutually agreed upon by
Vianeta, for which the successful implementation of Vianeta's speech recognition
is required pursuant to the Technology Consideration set forth in Exhibit C.
ARTICLE VIII.
TERMINATION
SECTION 8.1 TERMINATION EVENTS. By written notice given prior to or at the
Closing, subject to Section 8.2, this Agreement may be terminated as follows:
(a) by Parent, in the event Vianeta breaches any representation,
warranty or covenant contained in this Agreement, and such breach (i)
individually or in combination with any other breach, would cause any condition
set forth in Section 7.1 or Section 7.2 not to be satisfied, and (ii) is not
cured within thirty (30) days following delivery of written notice of such
breach from Parent to Vianeta;
(b) by Vianeta, in the event Holdings, Parent or Merger Sub breaches
any representation, warranty or covenant contained in this Agreement, and such
breach (i) individually or in combination with any other breach, would cause any
condition set forth in Section 7.1 or Section 7.3 not to be satisfied, and (ii)
is not cured within thirty (30) days following delivery of written notice of
such breach from Vianeta to Parent;
(c) by Parent or Vianeta, if any temporary, preliminary or permanent
injunction or other Order has been issued since the date of this Agreement by
any Governmental Authority that prevents the consummation of the transactions
contemplated hereby and such Order has become final and nonappealable, or if any
Legal Requirement has been enacted, promulgated or enforced since the date of
this Agreement by any Governmental Authority that makes the consummation of the
transactions contemplated hereby illegal.
(d) by Parent or Vianeta, if the satisfaction of any of the conditions
to such party's obligation to close the transactions contemplated hereby as set
forth in Article VII becomes impossible (other than through the failure of the
terminating party to comply with its obligations under this Agreement) and such
party has not waived such condition on or before such date;
(e) by mutual consent of Parent and Vianeta;
37
(f) by Parent or Vianeta, if the Closing has not occurred on or before
March 31, 2006, or such later date as the parties may agree upon, unless the
terminating party is in material breach of this Agreement.
SECTION 8.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 8.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of such right of termination will not be an
election of remedies. If the Agreement is terminated pursuant to Section 8.1,
all obligations of the parties under this Agreement will terminate, except that
the obligations in Section 6.1, Section 6.2, this Section 8.2, and Article X
will survive; provided, however, that termination of this Agreement will not
preclude a party from bringing a claim against any other party to this Agreement
for a breach arising prior to such termination pursuant to the terms and
conditions set forth herein.
ARTICLE IX.
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION BY VIANETA AND THE PRINCIPAL SHAREHOLDERS.
Subject to the terms and conditions of this Article IX, Vianeta and the
Principal Shareholders shall jointly and severally indemnify and hold harmless
Holdings, Parent and Merger Sub and their respective Affiliates, Shareholders,
officers, directors, employees and agents (collectively, the "Parent Indemnified
Persons"), and shall reimburse the Parent Indemnified Persons for, any losses,
liabilities, claims, damages and expenses (including reasonable attorneys' fees
and expenses) (collectively, "Damages"), arising, directly or indirectly, from
or in connection with:
(a) any breach of any representation or warranty made by Vianeta in
this Agreement or any certificate or document delivered by Vianeta (other than
breaches of Section 3.3, 3.8 or 3.17 which are addressed in (c), (d) and (e)
below) pursuant to this Agreement after taking into account the last sentence of
Section 9.3;
(b) any breach of or failure to comply with any covenant or obligation
of Vianeta in this Agreement or in any certificate or document delivered by
Vianeta pursuant to this Agreement;
(c) the exercise by Non-Consenting Shareholders, or other Persons
claiming to be equity holders of Vianeta, of rights under the CGCL (it being
understood by the parties that Damages under this clause (c) shall include the
excess (if any) of the amounts received by a Non-Consenting Shareholder, or
other Person, pursuant to the exercise of such rights over the amount such
Non-Consenting Shareholder, or other Person, would have received pursuant to
this Agreement had the Non-Consenting Shareholder, or other Person, not
exercised such rights under the CGCL); or any claim or allegation of the breach
of the representation and warranty made by Vianeta in Section 3.3 of this
Agreement;
(d) any claim or allegation that the Vianeta Intellectual Property or
Trade Secrets violate, infringe or misappropriate the intellectual property or
proprietary rights of any third party or any other breach of Section 3.17 of
this Agreement; or
(e) any Tax of Vianeta accruing for periods prior to the Closing or
any other breach of Section 3.8 of this Agreement.
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SECTION 9.2 INDEMNIFICATION AND REIMBURSEMENT BY HOLDINGS, PARENT AND
MERGER SUB. Subject to the terms and conditions of this Article IX, Holdings,
Parent and Merger Sub shall jointly and severally indemnify and hold harmless
Vianeta and its Affiliates, officers, directors, employees and agents
(collectively, the "Vianeta Indemnified Persons") and shall reimburse the
Vianeta Indemnified Persons for, any Damages arising, directly or indirectly,
from or in connection with:
(a) any breach of any representation or warranty made by Holdings,
Parent or Merger Sub in this Agreement or any certificate or document delivered
by Holdings, Parent or Merger pursuant to this Agreement after taking into
account the last sentence of Section 9.4; or
(b) any breach of or failure to comply with any covenant or obligation
of Holdings, Parent or Merger Sub in this Agreement or in any certificate or
document delivered by Holdings, Parent or Merger Sub pursuant to this Agreement.
SECTION 9.3 LIMITATIONS ON INDEMNIFICATION BY VIANETA AND THE PRINCIPAL
SHAREHOLDERS. The obligation of each of Vianeta and the Principal Shareholders
to indemnify the Parent Indemnified Persons pursuant to Section 9.1(a) is
subject to the following limitations and qualifications:
(a) Vianeta and the Principal Shareholders will have no
indemnification liability under Section 9.1(a) until the total amount of Damages
incurred by the Parent Indemnified Persons hereunder exceeds $100,000 (the
"Deductible"), and then only for the amount by which such Damages exceed the
Deductible.
(b) The Escrow Amount shall be the sole and exclusive remedy of the
Parent Indemnified Persons from and after the Effective Time for any claims
arising under Sections 9.1(a) and (e) of this Agreement, in which case Vianeta
and the Principal Shareholders will have no indemnification liability with
respect to such representations under Section 9.1(a) or (e) to the extent that
all such Damages incurred by the Parent Indemnified Persons hereunder exceed the
Escrow Amount (the "Cap"). In no event will any adjustments paid to Parent out
of the Escrow Amount pursuant to Section 1.9 have any effect on, or reduce, the
Escrow Amount or the Cap available to satisfy claims arising under Section
9.1(a) or (e).
Notwithstanding the foregoing, the Deductible and the Cap will not apply (i) for
any breaches of any representation or warranty of which Vianeta or any of the
Principal Shareholders had actual knowledge at any time prior to the date on
which such representation and warranty is made, (ii) to indemnification claims
pursuant to Sections 9.1(b), (c) or (d), or (iii) claims based on fraud or
intentional misconduct; provided, further, that the Deductible will not apply to
breaches of Section 9.1(e). For purposes of this Article IX, all representations
and warranties of Vianeta in Article III shall be construed as if the term
"material" and any reference to "Material Adverse Effect" and variations thereof
were omitted from such representations and warranties.
SECTION 9.4 LIMITATIONS ON INDEMNIFICATION BY PARENT AND MERGER SUB. The
obligation of Holdings, Parent and Merger Sub to indemnify the Vianeta
Indemnified Persons pursuant to Section 9.2(a) is subject to the following
limitations and qualifications:
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(a) Holdings, Parent and Merger Sub will have no indemnification
liability under Section 9.2(a) until the total amount of Damages incurred by the
Vianeta Indemnified Persons hereunder exceeds the Deductible, and then only for
the amount by which such Damages exceed the Deductible.
(b) Holdings, Parent and Merger Sub will have no indemnification
liability under Section 9.2(a) to the extent that all Damages incurred by the
Vianeta Indemnified Persons hereunder exceed the Cap.
Notwithstanding the foregoing, the Deductible and the Cap will not apply (i) for
any breaches of any representation or warranty of which Holdings, Parent or
Merger Sub had actual knowledge at any time prior to the date on which such
representation and warranty is made, (ii) to indemnification claims pursuant to
Section 9.2(b), or (iii) claims based on fraud or intentional misconduct. For
purposes of this Article IX, all representations and warranties of Holdings,
Parent and Merger Sub in Article IV shall be construed as if the term "material"
and any reference to "Material Adverse Effect" and variations thereof were
omitted from such representations and warranties.
SECTION 9.5 TIME LIMITATIONS.
(a) If the Closing occurs, Vianeta and the Principal Shareholders will
have no indemnification liability under this Article IX with respect to (i) any
representation or warranty of Vianeta or the Principal Shareholders, or (ii) any
covenant or obligation to be performed and complied with by Vianeta or the
Principal Shareholders on or prior to the Closing Date, unless on or before the
date that is eighteen (18) months after the Closing Date (or, in the case of any
claim made with respect to Section 3.3 (Capitalization), Section 3.8 (Taxes),
Section 3.10 (Employee Benefits), or Section 3.14 (Environmental Matters) on or
before the expiration of the applicable statute of limitations, or in the case
of any claim made with respect to Section 3.17 (Intellectual Property), on or
before the sooner to occur of the expiration of the applicable statute of
limitations and the fifth anniversary of the Closing Date), Parent notifies the
Shareholder Representative of a claim specifying the factual basis of that claim
in reasonable detail to the extent then known by Parent.
(b) If the Closing occurs, Holdings, Parent or Merger Sub will have no
indemnification liability under this Article IX with respect to (i) any
representation or warranty of Holdings, Parent or Merger, or (ii) any covenant
or obligation to be performed and complied with by Holdings, Parent or Merger
Sub on or prior to the Closing Date, unless on or before the date that is
eighteen (18) months after the Closing Date, the Shareholder Representative
notifies Parent of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by the Shareholder Representative.
SECTION 9.6 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified Person under Section 9.1
or 9.2 (an "Indemnified Person") of notice of the assertion of any third-party
claim against such Indemnified Person in respect of which the Indemnified Person
desires to seek indemnification from an indemnifying person (an "Indemnifying
Person") pursuant to the terms of this Article
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IX, (i) in the case of any claim brought against any Parent Indemnified Person,
Parent shall give written notice of the assertion of such third-party claim to
(A) Vianeta, in the case such notice is delivered prior to the Closing or
following the termination of this Agreement, or (B) the Shareholder
Representative, in the case such notice is delivered on or after the Closing,
and (ii) in the case of any claim brought against any Vianeta Indemnified
Person, Vianeta (in the event such notice is delivered prior to the Closing or
following the termination of this Agreement) or the Shareholder Representative
(in the event such notice is delivered on or after the Closing) shall give
written notice to Parent of the assertion of such third-party claim (any such
indemnification notice, an "Indemnification Notice" the recipient of such notice
pursuant to clauses (i) or (ii) above, the "Indemnifying Person Representative")
of the assertion of such third-party claim; provided, however, that the failure
to notify the Indemnifying Person Representative will not relieve any
Indemnifying Person of any liability that it may have to any Indemnified Person,
except to the extent that the defense of such third-party claim is prejudiced by
the Indemnified Person's failure to give such notice.
(b) If an Indemnified Person provides an Indemnification Notice to the
Indemnifying Person Representative, the Indemnifying Person Representative will
be entitled to participate in the defense of such third-party claim and, to the
extent that the Indemnifying Person Representative wishes, by providing written
notice thereof to the Indemnified Person within ten (10) Business Days of the
delivery of the Indemnification Notice to the Indemnified Person Representative,
to assume the defense of such third-party claim with counsel reasonably
satisfactory to the Indemnified Person; provided, however, that the Indemnifying
Person Representative will not have the right to assume the defense of such
third-party claim in the event (x) (i) the third-party claim relates to or
arises in connection with any alleged criminal liability of the Indemnified
Person, (ii) the third-party claim seeks injunctive or equitable relief against
the Indemnified Person or (iii) the Indemnifying Person is also a Person against
whom the third-party claim is made and the Indemnified Person reasonably
determines that joint representation would be inappropriate, and (y) the
Indemnified Person notifies the Indemnifying Person Representative in the
Indemnification Notice that the facts described in clause (i), (ii) or (iii)
above are applicable and that the Indemnified Person is electing to assume the
defense of such third-party claim.
(c) After notice from the Indemnifying Person Representative to the
Indemnified Person of its election to assume the defense of such third-party
claim pursuant to Section 9.6(b) above, the Indemnifying Person will not, so
long as the Indemnifying Person Representative diligently conducts such defense,
be liable to the Indemnified Person under this Article IX for any fees of other
counsel or any other expenses of the Indemnified Persons with respect to the
defense of such third-party claim, in each case subsequently incurred by the
Indemnified Person in connection with the defense of such third-party claim. If
the Indemnifying Person Representative assumes the defense of a third-party
claim, no compromise or settlement of such third-party claims may be effected by
the Indemnifying Person Representative without the Indemnified Person's written
consent (which may not be unreasonably withheld, delayed or conditioned) unless
(x) there is no finding or admission of any violation of Legal Requirements or
the rights of any other Person by any Indemnified Person, and (y) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Person, and the Indemnified Person will have no liability with respect to any
compromise or settlement of such third-party claims effected without its
consent.
41
(d) If (i) notice is given to the Indemnifying Person Representative
of the assertion of any third-party claim and the Indemnifying Person
Representative does not, within ten (10) Business Days after the Indemnified
Person's notice is given, give notice to the Indemnified Person of its election
to assume the defense of such third-party claim pursuant to Section 9.6(b)
above, or (ii) the Indemnified Person elects to assume the defense of such
third-party claim in the Indemnification Notice in accordance with Section
9.6(b) above, no compromise or settlement of such third-party claim may be
effected by the Indemnified Person without the Indemnifying Person
Representative's written consent (which may not be unreasonably withheld,
delayed or conditioned) unless (x) there is no finding or admission of any
violation of Legal Requirements or the rights of any other Person by any
Indemnifying Person, and (y) the sole relief provided is monetary damages that
are paid in full by the Indemnified Person, and the Indemnifying Persons will
have no liability with respect to any compromise or settlement of such
third-party claims effected without its consent.
(e) With respect to any third-party claim subject to indemnification
under this Article IX: (i) both the Indemnified Person and the Indemnifying
Person Representative, as the case may be, shall keep the other Person fully
informed in all material respects of the status of such third-party claim and
any related Proceedings at all stages thereof where such Person is not
represented by its own counsel, and (ii) the parties agree (each at its own
expense) to render to each other such assistance as they may reasonably require
of each other and to cooperate in good faith with each other in order to ensure
the proper and adequate defense of any third-party claim.
(f) With respect to any third-party claim subject to indemnification
under this Article IX, the parties shall cooperate in such a manner as to
preserve in full (to the extent possible) the confidentiality of all
confidential information and the attorney-client and work-product privileges. In
connection therewith, each party agrees that: (i) it will use commercially
reasonable efforts, in respect of any third-party claim in which it has assumed
or has participated in the defense, to avoid production of confidential
information (consistent with applicable law and rules of procedure), and (ii)
all communications between any parties hereto and counsel responsible for or
participating in the defense of any third-party claim will, to the extent
possible, be made so as to preserve any applicable attorney-client or
work-product privilege.
SECTION 9.7 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
SECTION 9.8 TREATMENT OF INDEMNITY PAYMENTS. Any payment made pursuant to
this Article IX will be treated as an adjustment to the Merger Consideration for
all Tax purposes.
SECTION 9.9 EXCLUSIVE REMEDY. The right to indemnification in this Article
IX will be the exclusive remedy of the parties hereto with respect to the
subject matter hereof provided, however, that the foregoing restriction will not
limit claims for injunctive relief or claims based upon the fraud in the
inducement of any party.
42
ARTICLE X.
GENERAL PROVISIONS
SECTION 10.1 EXPENSES. Each party to this Agreement shall bear its
respective costs and expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the transactions contemplated
hereby, including all fees and expenses of its agents and representatives,
provided that the costs and expenses Vianeta incurs in connection herewith shall
be paid at Closing and shall be paid out of the Merger Consideration as set
forth on Schedule 1.4(d).
SECTION 10.2 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. No party may assign
any of its rights or delegate any of its obligations under this Agreement
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing in this Agreement will be construed to give any Person other than the
parties to this Agreement any legal or equitable right under or with respect to
this Agreement or any provision of this Agreement, except such rights as will
inure to a successor or permitted assignee pursuant to this Section 10.2.
SECTION 10.3 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and must be delivered (i)
personally, (ii) by facsimile with confirmation of transmission by the
transmitting equipment, or (iii) by certified or registered mail (postage
prepaid, return receipt requested), and will be deemed given when so delivered
personally or by facsimile, or if mailed, three (3) days after the date of
mailing, to the addresses and facsimile numbers set forth below (or to such
other addresses and facsimile numbers as a party may designate by notice to the
other parties):
If to Holdings, Parent or Merger Sub:
Spheris Operations Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
If to Vianeta:
43
Vianeta Communications
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx & Xxxxxxx LLP
2 Palo Alto Square
0000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
If to the Shareholder Representative:
X.X. Xxxxxxxxx
c/o Alliance Ventures
0000 Xxxxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
SECTION 10.4 JURY TRIAL WAIVER. THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR IN ANY WAY PERTAINING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER NOW OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. ANY PARTY MAY
FILE A COPY OF THIS SECTION 10.4 WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED AGREEMENT BETWEEN THE PARTIES TO IRREVOCABLY
WAIVE TRIAL BY JURY, AND THAT ANY PROCEEDING OR ACTION WHATSOEVER BETWEEN THE
PARTIES RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY WILL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT
A JURY.
SECTION 10.5 ENTIRE AGREEMENT; MODIFICATION. This Agreement (together with
the Annexes, Schedules and Exhibits attached to this Agreement and the other
documents delivered pursuant to this Agreement) and the Confidentiality
Agreement constitute the entire agreement among the parties and supersede all
prior agreements, whether written or oral, between the parties with respect to
the subject matter hereof and thereof. This Agreement may not be amended except
by a written agreement signed by each of the parties to this Agreement.
SECTION 10.6 WAIVER. No failure or delay by any party in exercising any
right, power or privilege hereunder will operate as a waiver thereof nor will
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
SECTION 10.7 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.
44
SECTION 10.8 HEADINGS; CONSTRUCTION. The headings of Articles and Sections
in this Agreement are provided for convenience only and will not affect its
construction or interpretation. All Annexes, Exhibits and Schedules to this
Agreement are incorporated into and constitute an integral part of this
Agreement as if fully set forth herein. All words used in this Agreement will be
construed to be of such gender or number as the context requires. All references
to documents, instruments or agreements will be deemed to refer as well to all
addenda, exhibits, schedules or amendments thereto.
SECTION 10.9 GOVERNING LAW. This Agreement will be governed by and
construed under the laws of the State of Delaware without regard to any
conflicts of laws principles that would require the application of any other
law.
SECTION 10.10 EXECUTION OF AGREEMENT; COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement. The exchange of copies of this
Agreement and of signature pages by facsimile transmission will constitute
effective execution and delivery of this Agreement as to the parties and may be
used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile or e-mail will be deemed to be their original
signatures for any purpose whatsoever.
SECTION 10.11 FURTHER ASSURANCES. The parties shall cooperate reasonably
with each other and with their respective representatives and agents in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and the parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other parties may reasonably request, for the purpose of carrying out the
intent of this Agreement and the transactions contemplated hereby.
SECTION 10.12 KNOWLEDGE. For purposes of this Agreement, (i) "Knowledge of
Vianeta" and similar terms means the actual knowledge of any Principal
Shareholder or the actual knowledge after reasonable investigation of the
following individuals: Xxxxx Xxxxxx and Xxxxxx Xxxxx, and (ii) "Knowledge of
Holdings", "Knowledge of Parent" and similar terms means the actual knowledge
after reasonable investigation of the following individuals: Xxxxxxx X. Xxxxxxx
and Xxxxxx X. XxXxxxx.
SECTION 10.13 SHAREHOLDER REPRESENTATIVE.
(a) The parties have agreed that it is desirable to designate X.X.
Xxxxxxxxx to serve as the representative of the shareholders of Vianeta (the
"Shareholder Representative") for certain limited purposes as set forth herein.
The approval of this Agreement by the shareholders of Vianeta will constitute
ratification and approval of such designation. The Shareholder Representative
will have such power and authority necessary to carry out the functions assigned
to the Shareholder Representative under this Agreement, including the power and
authority:
(i) to enforce, defend and protect the rights and interests of
the shareholders of Vianeta following the Closing under Article IX of this
Agreement, and to take
45
any and all actions that the Shareholder Representative believes are necessary
or appropriate under Article IX of this Agreement for and on behalf of the
shareholders of Vianeta, including, without limitation, asserting, pursuing or
defending any claim by or against Parent or the Surviving Corporation,
consenting to, compromising or settling any such claim, and conducting
negotiations with Parent or Surviving Corporation; and
(ii) to make, execute, acknowledge and deliver all such other
agreements, notices, requests, instructions and other writings, and, in general,
to do any and all things and to take any and all actions that the Shareholder
Representative may consider necessary or proper in connection with carrying out
the responsibilities of the Shareholder Representative under Article IX of this
Agreement.
(b) The Shareholder Representative will be entitled to engage such
counsel, experts and other agents as the Shareholder Representative deems
necessary or proper in connection with performing its obligations hereunder, and
will be promptly reimbursed by the shareholders of Vianeta for all reasonable
expenses, disbursements and advances incurred by the Shareholder Representative
in such capacity upon demand, pro rata based upon each such shareholder's share
of Vianeta capital stock as of the Closing. Each shareholder of Vianeta shall
indemnify and hold harmless the Shareholder Representative, pro rata based upon
such shareholder's share of all Vianeta capital stock as of the Closing, from
any and all Damages that are incurred by the Shareholder Representative as a
result of actions taken, or actions not taken, by the Shareholder Representative
herein, except to the extent that such Damages arise from the gross negligence
or willful misconduct of the Shareholder Representative.
(c) All amounts received by the Shareholder Representative on behalf
of the shareholders of Vianeta will be promptly paid by the Shareholder
Representative to the shareholders of Vianeta, pro rata based upon such
shareholder's share of Vianeta capital stock as of the Closing; provided,
however, that the Shareholder Representative will be entitled to set off any
amounts payable to the Shareholder Representative under Section 10.13(b) against
amounts otherwise payable to shareholders of Vianeta pursuant to this Section
10.13(c).
(d) Holdings, Parent and Surviving Corporation shall have the right to
rely upon all actions taken or not taken by the Shareholder Representative
pursuant to this Agreement, all of which actions or omissions shall be legally
binding upon the shareholders of Vianeta.
(e) If at any time the Shareholder Representative resigns, dies or
becomes incapable of acting, the shareholders of a majority of Vianeta common
stock and a majority of Vianeta preferred stock as of the Closing shall choose
another holder to act as the Shareholder Representative under this Agreement.
[remainder of page intentionally left blank]
46
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PARENT:
SPHERIS OPERATIONS INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: Secretary
MERGER SUB:
SPHERIS MERGER SUB, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: Secretary
HOLDINGS:
SPHERIS HOLDING III, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Its: Chief Administrator Officer
VIANETA:
VIANETA COMMUNICATIONS
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Its: CEO
PRINCIPAL SHAREHOLDERS:
ALLIANCE VENTURES II, L.P.
By: /s/ X. X. Xxxxxxxxx
------------------------------------
Name: X. X. Xxxxxxxxx
Title: President Alliance Ventures
Management
ALLIANCE VENTURES V, L.P.
By: /s/ X. X. Xxxxxxxxx
------------------------------------
Name: X. X. Xxxxxxxxx
Title: President Alliance Ventures
Management
GALAXY VENTURE PARTNERS III, LLC
By: /s/ X. X. Xxxxxxxxx
------------------------------------
Name: X. X. Xxxxxxxxx
Title: Managing Member
SOLAR VENTURE PARTNERS, L.P.
By: /s/ X. X. Xxxxxxxxx
------------------------------------
Name: X. X. Xxxxxxxxx
Title: General Partner
/s/ C.N. Reddy
----------------------------------------
C.N. Reddy
SIGNATURE PAGE TO THE AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1
TO AGREEMENT AND PLAN OF MERGER
This Amendment (the "Amendment") to the Agreement and Plan of Merger (as
defined below) is entered into as of this 22nd day of February, 2006, by and
among Spheris Holding III, Inc., a Delaware corporation ("Holdings"), Spheris
Operations, Inc., a Tennessee corporation ("Parent"), Spheris Merger Sub, Inc.,
a California corporation ("Merger Sub"), Vianeta Communications, a California
corporation ("Vianeta"), and the Principal Shareholders (as defined in the
Merger Agreement).
RECITALS
A. The parties have entered into an Agreement and Plan of Merger (together
with the Schedules and Exhibits thereto, the "Merger Agreement") dated as of
December 13, 2005.
B. The parties wish to amend the Merger Agreement to reflect the terms of
this Amendment.
C. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Merger Agreement.
NOW, THEREFORE, in consideration of the promises and mutual agreements
expressed herein and in the Merger Agreement, the parties hereto agree as
follows:
1. Amendments.
The first two sentences of Section 1.4(e) of the Merger Agreement
shall be deleted in their entirety and replaced with the following:
"(e) At the Effective Time, Parent shall place into escrow with an
escrow agent to be mutually agreed upon by the parties (the "Escrow
Agent"), pursuant to the terms of the Escrow Agreement attached hereto as
Exhibit E (the "Escrow Agreement"), (i) One Million Dollars ($1,000,000) to
be delivered as Merger Consideration which would otherwise be payable to
shareholders of Vianeta capital stock (such cash, plus any accrued interest
thereon, the "Indemnification Escrow Amount") and (ii) Two Hundred Thousand
Dollars ($200,000) to be delivered as Merger Consideration which would
otherwise be payable to shareholders of Vianeta capital stock (such cash,
plus any accrued interest thereon, the "Tax Escrow Amount," and together
with the Indemnification Escrow Amount, the "Escrow Amount"). The Escrow
Amount shall be held in escrow by the Escrow Agent and distributed to and
in accordance with the terms of the Escrow Agreement, for the purpose of
providing payment with respect to claims for indemnification made by Parent
Indemnified Persons pursuant to Section 9.1 and payment of the adjustments
to the Cash Consideration pursuant to Section 1.9 in the case of the
Indemnification Escrow Amount, and with respect to fees expended to address
sales and use tax issues and related fees paid by Spheris for Vianeta
pre-Closing sales and use taxes in the case of the Tax Escrow Amount."
2. The first paragraph of Section 9.3(b) of the Agreement shall be amended
to add the word "Indemnification" before "Escrow Amount" in the four places
where it appears.
3. The following sentence shall be added to the end of the first paragraph
of Section 9.3(b) of the Agreement:
"Notwithstanding the foregoing, any claims arising regarding fees
expended to address sales and use tax issues and related fees paid for
Vianeta pre-Closing sales and use taxes can and will first be satisfied out
of the Tax Escrow Amount without having any effect on the Cap or
Indemnification Escrow Amount; provided, that Holdings and Parent shall use
commercially reasonable efforts to resolve such claims as soon as
reasonably practicable and in any event within nine (9) months of the
Closing."
4. Exhibit E shall be deleted in its entirety and replaced with Exhibit E
attached to this Amendment.
5. General Provisions.
(a) Effect of Amendment. Except as specifically amended hereby, all of
the terms of the Merger Agreement shall remain in full force and effect.
(b) Entire Agreement; Amendment. This Amendment and the Merger
Agreement and the exhibits thereto embody the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof, and supersede
all prior and contemporaneous agreements and understandings relative to such
subject matter. This Amendment may be modified only by a written amendment
signed by the parties hereto.
(c) Governing Law. This Amendment shall in all respects be construed
in accordance with and governed by the substantive laws of the State of
Delaware, without reference to its choice of law rules.
[Signature Page Follows]
2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
HOLDINGS:
SPHERIS HOLDING III, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Its: Chief Compliance Officer and
General Counsel
-----------------------------------
PARENT:
SPHERIS OPERATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Its: Secretary
-----------------------------------
MERGER SUB:
SPHERIS MERGER SUB, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Its: Secretary
-----------------------------------
VIANETA:
VIANETA COMMUNICATIONS
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
----------------------------------
Its: President
-----------------------------------
PRINCIPAL SHAREHOLDERS:
ALLIANCE VENTURES II, L.P.
By: /s/ X.X. Xxxxxxxxx
------------------------------------
Name: X.X. Xxxxxxxxx
----------------------------------
Its: President
-----------------------------------
ALLIANCE VENTURES V, L.P.
By: /s/ X.X. Xxxxxxxxx
------------------------------------
Name: X.X. Xxxxxxxxx
----------------------------------
Its: President
-----------------------------------
GALAXY VENTURE PARTNERS III, LLC
By: /s/ X.X. Xxxxxxxxx
------------------------------------
Name: X.X. Xxxxxxxxx
----------------------------------
Its: Managing Member
-----------------------------------
SOLAR VENTURE PARTNERS, L.P.
By: /s/ X.X. Xxxxxxxxx
------------------------------------
Name: X.X. Xxxxxxxxx
----------------------------------
Its: General Partner
-----------------------------------
/s/ C.N. Reddy
----------------------------------------
C.N. Reddy
Signature Page - Amendment No. 1 to Agreement and Plan of Merger
4
