AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization (this
"AGREEMENT"), dated as of December 12, 2000, is by and among iBasis, Inc., a
Delaware corporation ("BUYER"); Penguin Acquisition Corp. ("MERGER SUB"), a
Delaware corporation that is a wholly owned subsidiary of Buyer;
PriceInteractive, Inc., a Delaware corporation, (the "COMPANY"); the
Stockholders listed on EXHIBIT A-1 attached hereto (the "PRINCIPAL COMPANY
STOCKHOLDERS"); and Xxxxxx X. Xxxxx and Summit Ventures IV, L.P. in their
capacity as the Stockholder Representatives (as defined in Section 20.3).
WHEREAS, the parties desire that the Company be merged with and into
Merger Sub, subject to the terms and conditions set forth in this Agreement;
WHEREAS, the Board of Directors and stockholders of the Company have
authorized and approved (i) the execution and delivery of this Agreement by
and on behalf of the Company, and (ii) the transactions contemplated hereby,
including the Merger;
WHEREAS, the Boards of Directors of the Buyer and Merger Sub have
authorized and approved (i) the execution and delivery of this Agreement by
and on behalf of the Buyer and Merger Sub, and (ii) the transactions
contemplated hereby, including the Merger;
WHEREAS, the Company has entered into a Voting Agreement with those
stockholders of the Buyer named therein (the "PRINCIPAL BUYER STOCKHOLDERS"),
as of the date hereof (the "BUYER STOCKHOLDER VOTING AGREEMENT"), pursuant to
which such Principal Buyer Stockholders have agreed to vote in favor of the
transactions contemplated hereby at any stockholder meeting of the Buyer
called to consider such transactions or by written consent;
WHEREAS, Buyer, the Company and the Principal Company Stockholders
have entered into a Registration Rights Agreement, dated as of the date
hereof (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which Buyer has
agreed to register the shares of the Buyer's Common Stock, $0.001 par value
per share ("BUYER COMMON STOCK"), issuable in the Merger for resale by the
Company Stockholders pursuant to a registration statement on Form S-3 (the
"REGISTRATION STATEMENT") filed under the Securities Act; and
WHEREAS, in connection with the bridge loan contemplated by Section
5 below, the existing stockholders of the Company and the Buyer have entered
into an amendment to the Amended and Restated Stockholders Agreement, dated
as of August 24, 2000, by and among the Company and the stockholders of the
Company named therein, providing for the Chief Executive Officer of Buyer to
be elected as a director of the Company upon the happening of certain events;
and an amendment to the Amended and Restated Registration Rights Agreement,
dated as of August 24, 2000, by and among the same parties.
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth in this Agreement, the parties hereto hereby agree as
follows:
Certain terms used in this Agreement are defined in Section 19.
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1. CLOSING. Subject to the other provisions of this Agreement, a
closing (the "CLOSING") will be held at the offices of Xxxxxxx Xxxx LLP, 000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, as soon as is reasonably
practicable on or after January 1, 2001 and following satisfaction or waiver
of the conditions set forth in Sections 12 through 14 (the date on which the
Closing actually occurs shall be referred to as the "CLOSING DATE"). On the
Closing Date, Merger Sub and the Company will execute a Certificate of Merger
(the "MERGER CERTIFICATE") substantially in the form of the attached EXHIBIT
1(a) and file the Merger Certificate with the Delaware Secretary of State and
the Recorder for the County of New Castle, Delaware, in order to cause the
merger of the Company with and into Merger Sub (the "MERGER") to be effected
in accordance with the laws of the State of Delaware. The Merger will be
effective under the Delaware General Corporation Law ("DGCL") upon the filing
of the Merger Certificate with the Secretary of State of the State of
Delaware (or such later time as may be agreed by each of the parties hereto,
as specified in the Merger Certificate and in accordance with the provisions
of the applicable law of Delaware) (the "EFFECTIVE TIME"). For all purposes,
all of the document deliveries and other actions to occur at the Closing will
be conclusively presumed to have occurred at the same time, immediately
before the Effective Time.
2. EFFECT OF MERGER. At the Effective Time, automatically and
without further action:
2.1. SURVIVING CORPORATION. The Company will be merged with
and into Merger Sub and the separate existence of the Company will cease.
Merger Sub will continue in existence as the surviving corporation in the
Merger (the "SURVIVING CORPORATION"). The Merger shall have further effects
as set forth in the DGCL.
2.2. CERTIFICATE OF INCORPORATION. At the Effective
Time, the Certificate of Incorporation of the Merger Sub shall be the
Certificate of Incorporation of the Surviving Corporation.
2.3. BY-LAWS. At the Effective Time, the by-laws of the
Merger Sub shall be the by-laws of the Surviving Corporation.
2.4. DIRECTORS AND OFFICERS. From and after the Effective
Time, the respective officers and members of the Board of Directors of the
Surviving Corporation will consist of the respective officers and members of
the Board of Directors of Merger Sub as of immediately prior to the Merger,
each such person to hold office, subject to the applicable provisions of the
Certificate of Incorporation and the by-laws of the Surviving Corporation,
until the next annual meeting of directors or stockholders, as the case may
be, of the Surviving Corporation and until his or her successor will be duly
elected or appointed and will duly qualify.
2.5. CONVERSION OF COMPANY COMMON STOCK AND PREFERRED STOCK.
(a) REDEEMABLE PREFERRED STOCK. Each share of the Company's
1998 Redeemable Preferred Stock, $0.01 par value per share (the "COMPANY
REDEEMABLE PREFERRED STOCK"), issued and outstanding immediately prior to the
Effective Time (other than any Dissenting Shares (as defined in Section 2.7),
and other than any shares of Company
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Redeemable Preferred Stock held directly or indirectly by Buyer or the
Company or any of their respective Subsidiaries), will be converted at the
Effective Time into the right to receive (i) an amount in cash equal to the
RPS Cash Amount Per Share (as defined in Section 19.1) and (ii) such number
of shares of Buyer Common Stock or portion thereof equal to one (1)
multiplied by the Redeemable Preferred Exchange Ratio (as defined in Section
19.1).
(b) COMPANY COMMON STOCK. Each share of the Company's Class
A Common Stock and Class B Common Stock, par value $0.01 per share
(collectively, the "COMPANY COMMON STOCK"), issued and outstanding
immediately before the Effective Time (other than any Dissenting Shares, any
Company Restricted Shares (as defined in Section 10.4(b)), and other than any
shares held directly or indirectly by Buyer or the Company or any of their
respective Subsidiaries), will be converted at the Effective Time into the
right to receive:
(i) such number of shares of Buyer Common Stock or portion
thereof as is equal to one (1) multiplied by the Common Stock Exchange Ratio
(as defined in Section 19.1);
(ii) cash in an amount equal to the Cash Payment Per Share
(as defined in Section 19.1); and
(iii) the payment of cash adjustments in lieu of the
issuance of fractional shares as provided in Section 3.6.
(c) COMPANY RESTRICTED SHARES. Each of the Company
Restricted Shares issued and outstanding immediately prior to the Effective
Time (other than any Dissenting Shares) will be converted at the Effective
Time into a number of shares of Buyer Common Stock or portion thereof equal
to one (1) multiplied by the Common Stock Exchange Ratio, and shall continue
to be subject to the same restrictions, terms and conditions of the
Restricted Stock Award Agreement applicable to such Company Restricted Share.
(d) CONVERTIBLE PREFERRED STOCK.
(i) Each share of the Company's Series A Convertible
Preferred Stock, $0.01 par value per share (the "COMPANY CONVERTIBLE
PREFERRED STOCK"), issued and outstanding immediately prior to the Effective
Time (other than any Dissenting Shares, and other than any shares of Company
Convertible Preferred Stock held directly by Buyer or the Company or any of
their respective Subsidiaries), will be converted at the Effective Time into
such number of shares of Buyer Common Stock or portion thereof and such
amount of cash as would have been issued pursuant to paragraph (b) above if
such share of Company Convertible Preferred Stock had been converted into
Company Common Stock immediately prior to the Effective Time.
(ii) In addition to the number of shares of Buyer Common
Stock and amount of cash issuable in respect of the Merger with respect to
each share of Company Convertible Preferred Stock as set forth in paragraph
(d)(i) above, the right to accrued dividends provided by the Company's
Certificate of Incorporation with respect to each share of the Company
Convertible Preferred Stock issued and outstanding immediately prior to the
Effective Time will
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be converted at the Effective Time into the right to receive such number of
shares of Buyer Common Stock having a value (based on the Closing Date Price
Per Share) equal to such accrued dividend right. The aggregate number of such
shares of Buyer Common Stock issued with respect to such accrued dividend
rights shall be referred to herein as the "CPS DIVIDEND EQUIVALENT SHARE
NUMBER".
2.6. CANCELLATION OF TREASURY STOCK, ETC. At the Effective
Time, each share of Company Common Stock held directly or indirectly by Buyer
or the Company or any of their respective Subsidiaries will be canceled and
will cease to exist, and no payment will be made with respect thereto.
2.7. DISSENTING SHARES. Each share of Company Common Stock,
Company Redeemable Preferred Stock or Company Convertible Preferred Stock
that, immediately before the Effective Time, was held by any person who has
duly exercised the appraisal rights afforded to dissenting stockholders
pursuant to DGCL (such shares, collectively, "DISSENTING SHARES") will be
converted into the right to receive the fair value of such shares as
determined in accordance with the provisions of the DGCL and shall not be
converted into the right to receive shares of Buyer Common Stock and cash in
accordance with Section 2.5.
2.8. OPTIONAL INCREASE IN CONSIDERATION. Notwithstanding
anything to the contrary in this Agreement, the Buyer shall be entitled, in
the exercise of its sole discretion, by notice delivered to the Stockholder
Representatives and the Company on or prior to the Effective Time, to
increase (but not decrease) the Closing Buyer Common Stock Consideration
Number above the number determined by the calculation included in the
definition of such amount set forth in Section 19.1. Subject to Buyer's
obligations under Section 16, in no event shall the Buyer be required to
increase the Closing Buyer Common Stock Consideration Number above the number
determined immediately prior to the Effective Time pursuant to the definition
thereof whether on account of the amount of the Closing Date Price Per Share
pursuant to this Section 2.8 or for any other reason. Any increase in the
Closing Buyer Common Stock Consideration Number pursuant to this Section 2.8
will increase (and not decrease) the consideration payable to the
shareholders of the Company in the Merger in accordance with the terms hereof.
3. PROCEDURES; ESCROWED MERGER CONSIDERATION.
3.1. CERTIFICATES. Immediately after the Effective Time,
stock certificates (each, a "CERTIFICATE," and collectively, the
"CERTIFICATES") representing shares of Company Common Stock, Company
Convertible Preferred Stock or Company Redeemable Preferred Stock that have
been converted into the right to receive shares of Buyer Common Stock in the
Merger will be conclusively deemed to represent such shares of Buyer Common
Stock until validly exchanged pursuant to Section 3.2.
3.2. EXCHANGE OF CERTIFICATES. As promptly as practicable
after the Effective Time, Buyer or its transfer agent for the Buyer Common
Stock will send to each Company Stockholder transmittal materials for use in
exchanging its Certificates for certificates for the
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shares of Buyer Common Stock and Cash Payment Per Share into which such
shares of Company Common Stock have been converted. Upon surrender of a
Certificate to Buyer or its transfer agent, as the case may be, together with
a duly executed letter of transmittal and any other documents reasonably
required by the Buyer, the holder of such Certificate will be entitled to
receive, in exchange therefor, a certificate for the number of shares of
Buyer Common Stock to which such holder is entitled (subject to the escrow
arrangements referred to in Section 3.3), and an amount of cash equal to the
aggregate Cash Payment Per Share for the shares represented by such
Certificate, together with any cash payments required under Section 3.6, and
such Certificate will be canceled .
3.3. ESCROWED MERGER CONSIDERATION. (a) Notwithstanding any
other provision of this Agreement, at the Closing, Buyer, the Principal
Company Stockholders named therein, the Stockholders' Representatives, the
Escrow Agent named therein (the "ESCROW AGENT"), and the holders of Company
Options or Company Restricted Shares named therein (the "ADDITIONAL ESCROW
PARTIES") will execute and deliver an Escrow Agreement in the form of the
attached EXHIBIT 3.3 (the "ESCROW AGREEMENT") (with such additional
revisions, prior to the Closing, as Buyer, the Company and the Stockholder
Representatives may mutually agree after consultation with the Escrow Agent).
A number of the shares of Buyer Common Stock that would otherwise be issuable
in the Merger at the Effective Time to the Principal Company Stockholders and
the Additional Escrow Parties equal to the Indemnification Stock Number shall
not be distributable to the Principal Company Stockholders or the Additional
Escrow Parties but shall instead be deposited with the Escrow Agent in
accordance with the terms of the Escrow Agreement. The Shares of Buyer Common
Stock issued into escrow pursuant to this Section 3.3(a), shall be referred
to herein as the "ESCROWED MERGER CONSIDERATION." Twenty percent (20%) of the
Escrowed Merger Consideration (the "SCHEDULE 16.2 ESCROWED SHARES") shall be
used solely in respect of Schedule 16.2 Costs (as hereinafter defined). The
remaining portion of the Escrowed Merger Consideration which is not Schedule
16.2 Escrowed Shares shall hereinafter be referred to as the "OTHER ESCROWED
MERGER CONSIDERATION". The Escrowed Merger Consideration shall be subtracted
from the shares of Buyer Common Stock otherwise issuable to the Principal
Company Stockholders and the Additional Escrow Parties pursuant to the terms
of this Agreement in accordance with the respective amounts of merger
consideration (without regard to that received by the Summit Parties in
respect of Company Redeemable Preferred Stock or pursuant to Section
2.5(d)(ii)) received at the Closing, measured by value with any shares of
Buyer Common Stock being valued at the Closing Date Price Per Share. Attached
as SCHEDULE 3.3 hereto, for illustrative purposes only, is a model
calculation of the allocation of the Escrowed Merger Consideration among the
Principal Company Stockholders and Additional Escrow Parties, which model is
based on the assumptions set forth therein. The Other Escrowed Merger
Consideration and Third Party License Escrowed Shares shall be held by the
Escrow Agent pursuant to the Escrow Agreement and distributed in accordance
therewith.
(b) Notwithstanding the terms of paragraph (a) of this
Section 3.3, the Buyer shall be entitled, in the exercise of its sole
discretion, by notice delivered to the Stockholder Representatives, the
Company and the Escrow Agent on or prior to the Effective Time, to decrease
(but not increase) the number of shares of Buyer Common Stock included in the
Escrowed Merger Consideration from that determined pursuant to such paragraph
(a). Such decrease shall be applied first to the Other Escrowed Merger
Consideration. In no event shall the
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Buyer be required to decrease pursuant to this paragraph (b) the number of
shares of Buyer Common Stock included in the Escrowed Merger Consideration
below the amount determined pursuant to such paragraph (a), regardless of the
amount of the Closing Date Price Per Share.
3.4. DISTRIBUTIONS. No dividend or other distribution
payable after the Effective Time with respect to Buyer Common Stock will be
paid to the holder of any unsurrendered Certificate until the holder thereof
surrenders such Certificate, at which time such holder will receive all
dividends and distributions, without interest thereon, previously payable but
withheld from such holder pursuant hereto.
3.5. NO TRANSFERS. Immediately after the Effective Time, no
transfers of shares of Company Common Stock, Company Convertible Preferred
Stock or Company Redeemable Preferred Stock will be made in the stock
transfer books of the Company. If, after the Effective Time, Certificates are
presented (for transfer or otherwise) to the Surviving Corporation or its
transfer agent for Company Common Stock, Company Convertible Preferred Stock
or Company Redeemable Preferred Stock, they will be canceled and exchanged
for the shares of Buyer Common Stock and cash consideration deliverable in
respect thereof as determined in accordance with this Agreement (or returned
to the presenting person, if such Certificate represents Dissenting Shares).
3.6. NO FRACTIONAL SHARES. In lieu of the issuance of
fractional shares of Buyer Common Stock, cash adjustments will be paid
(without interest) to the Company Stockholders in respect of any fractional
share of Buyer Common Stock that would otherwise be issuable to them and the
amount of such cash adjustments will be determined by multiplying each
relevant holder's fractional interest by the Closing Date Price Per Share.
For purposes of determining whether, and in what amounts, a particular
Company Stockholder would be entitled to receive cash adjustments under this
section, all of the shares of record held by such holder will be aggregated.
3.7. TERMINATION OF RIGHTS. After the Effective Time,
holders of Company Common Stock, Company Convertible Preferred Stock and
Company Redeemable Preferred Stock will cease to be, and will have no rights
as, stockholders of the Company or the Surviving Corporation, other than (i)
in the case of shares of Company Common Stock and Company Convertible
Preferred Stock, other than Dissenting Shares, the rights to receive shares
of Buyer Common Stock into which such shares have been converted and/or
payments in lieu of fractional shares, as provided in this Agreement, and,
except in the case of any Company Restricted Shares, the right to receive the
Cash Payment Per Share attributable to such shares; (ii) in the case of
Dissenting Shares, the rights afforded to the holders thereof under Section
262 of the DGCL; (iii) in the case of shares of the Company Redeemable
Preferred Stock, the right to receive the cash and stock referred to in
Section 2.5(a); and (iv) rights under this Agreement and the Escrow Agreement.
3.8. ABANDONED PROPERTY. Neither Buyer nor the Company nor
any other person will be liable to any holder or former holder of shares of
Company Common Stock, Company Convertible Preferred Stock or Company
Redeemable Preferred Stock for any shares,
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or any dividends or other distributions with respect thereto, properly
delivered to a public official pursuant to applicable abandoned property,
escheat, or similar laws.
3.9. LOST CERTIFICATES, ETC. In the event that any
Certificate has been lost, stolen, or destroyed, then upon receipt of
appropriate evidence as to such loss, theft, or destruction, and to the
ownership of such Certificate by the person claiming such Certificate to be
lost, stolen, or destroyed, and the receipt by Buyer or its transfer agent
for Buyer Common Stock of an appropriate and customary affidavit of loss or
personal indemnification undertaking documentation, Buyer or such transfer
agent will issue in exchange for such lost, stolen, or destroyed Certificate
the shares of Buyer Common Stock, the Cash Payment Per Share or other cash
payment and the fractional share payment, if any, deliverable in respect
thereof as determined in accordance with this Agreement.
3.10. EXAMPLE CALCULATION OF MERGER CONSIDERATION AND ESCROWED
MERGER CONSIDERATION. Set forth on SCHEDULE 3.10 hereto, for illustrative
purposes only, is a model calculation of (a) the number of shares of Buyer
Common Stock and amount of cash issuable in the Merger with respect to the
Company Redeemable Preferred Stock, Company Common Stock, Company Restricted
Shares and Company Convertible Preferred Stock, as the case may be and (b) the
amount of Escrowed Merger Consideration, which model is based on the assumptions
included therein.
4. COMPANY COMMON STOCK OPTIONS. (a) Immediately after the Effective
Time, the Company's Stock Incentive Plan (the "COMPANY OPTION PLAN") and the
Company Restricted Stock Plan (as defined in Section 10.20 hereof) shall be
assumed by the Buyer. Each option to purchase shares of Company Common Stock
granted under the Company Option Plan (a "COMPANY OPTION") and outstanding at
the Effective Time shall be assumed by Buyer and be converted into (x) an
option (each, a "REPLACEMENT OPTION") to receive, on the terms set forth
below, a number of shares of Buyer Common Stock equal to the number of shares
of Company Common Stock that such option holder had a right to receive
pursuant to such Company Option ("FORMER SHARES"), multiplied by the Common
Stock Exchange Ratio; and (y) a right to receive, upon exercise of the
Replacement Option, cash on the terms set forth below (each, a "REPLACEMENT
CASH RIGHT"). Each Replacement Cash Right shall be a right to receive the
excess of (a) the product of the (i) number of Former Shares and (ii) the
Cash Payment Per Share over (b) the product of (i) the aggregate exercise
price with respect to the correlative Company Option and (ii) the Cash Ratio
(as defined herein), subject to the same vesting, expiration and other terms
as such Company Option, all in accordance with the terms of the applicable
Company Option Plan and stock option agreement governing such Company Option.
The Cash Ratio shall be the ratio of (i) the Cash Payment Per Share to (ii)
the sum of (x) the Cash Payment Per Share and (y) the product of (a) Closing
Date Price Per Share and (b) the Common Stock Exchange Ratio. For purposes of
this Section 4, the "STOCK RATIO" shall be the difference between one (1) and
the Cash Ratio. Each Replacement Option and the related Replacement Cash
Right must be exercised together and may not be exercised separately,
PROVIDED that any Replacement Option may be exercised in part and not in
whole to the extent that the terms of the option grant and the Company Option
Plan so permit. Each such Replacement Option shall (i) have an exercise price
per share of Buyer Common Stock (a "REPLACEMENT EXERCISE PRICE PER SHARE")
equal to the quotient obtained by dividing (1) the product of the Stock Ratio
and the exercise price per share
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of Company Common Stock in effect at the Effective Time of the Company Option
of which such Replacement Option is a replacement, by (2) the Common Stock
Exchange Ratio (and rounding the result up to the nearest whole cent), and
(ii) have the same vesting, expiration and other terms as such Company
Option, all in accordance with the terms of the applicable Company Option
Plan and stock option agreement governing such Company Option, PROVIDED, that
in the event that clause (a) minus clause (b) in the calculation of the
Replacement Cash Right associated with a Replacement Option would yield a
negative amount upon exercise, the Replacement Exercise Price Per Share for
the Replacement Option associated with such Replacement Cash Right shall be
increased by an amount equal to (x) the amount (expressed as a positive
number) by which such negative amount is less than zero DIVIDED BY (y) the
number of shares of Buyer Common Stock that the holder has the right to
receive pursuant to the Replacement Option. In the event that a holder holds
more than one Company Option, each such Company Option shall be converted
into a Replacement Cash Right and a Replacement Option for purposes of
implementing the assumption and conversion provisions of this Section 4. Set
forth on SCHEDULE 4(a) hereto, for illustrative purposes only, is a model
calculation of a Replacement Option and Replacement Cash Right, and the
related Stock Ratio and Replacement Exercise Price Per Share, which is based
on the assumptions included therein.
(b) Immediately after the Effective Time, the Compensation Committee
of the Board of Directors of Buyer shall take such actions as may be
reasonably required to provide that (i) the holders of Replacement Options
shall be permitted to exercise such Replacement Options and the related
Replacement Cash Rights on a "net" basis, whereby the holder of each
Replacement Option and the related Replacement Cash Right shall be entitled
to reduce the cash amount of the exercise price of such Replacement Option by
the amount of any cash issuable upon exercise of such Replacement Cash Right
in lieu of receiving such cash consideration; and (ii) the holders of
Replacement Options shall be permitted to exercise such Replacement Options
on a "cash-less" basis whereby the holder of a Replacement Option shall be
entitled to surrender the Replacement Option to a securities broker selected
by the Buyer who shall sell on a "same-day" basis some or all of the shares
of Buyer Common Stock issuable upon exercise of the Replacement Option and
use the proceeds therefrom to satisfy some or all of the exercise price of
such Replacement Option, PROVIDED, that the Buyer shall not be required to
take any such action with respect to a particular Replacement Option to the
extent that it could adversely affect the characterization of such option as
an "Incentive Stock Option" for purposes of Code Section 422, if applicable.
(c) The Buyer agrees to use its reasonable best efforts to file with
the SEC, no later than the Closing Date, a registration statement on Form S-8
or other appropriate form under the Securities Act to register the maximum
number of shares of Buyer Common Stock issuable upon exercise of the
Replacement Options and to use its reasonable best efforts to cause such
registration statement to remain effective until the exercise or expiration
of such Replacement Options.
(d) Prior to the Effective Time, the Board of Directors of Buyer and
the Company, or an appropriate committee of non-employee directors thereof,
shall adopt a resolution providing that the acquisition of Replacement
Options and Buyer Common Stock pursuant to this Agreement shall be an exempt
transaction for purposes of Section 16 of the Exchange Act by any
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officer or director of the Company who may become a covered person of Buyer
for purposes of such Section 16.
5. BRIDGE FINANCING.
5.1. INITIAL BRIDGE LOAN. Immediately after the execution
of this Agreement, the Buyer shall make a loan of $10,000,000 in cash (the
"INITIAL BRIDGE LOAN") to the Company. The Initial Bridge Loan (and any
Second Bridge Loan, each as defined below) shall be represented by a
Non-Negotiable Subordinated Convertible Promissory Note in the form of
EXHIBIT 5.1 hereto (the "BRIDGE NOTE"). In accordance with the terms of the
Bridge Note, the Company shall, until such time as the Bridge Note may mature
or be converted into shares of Company Common Stock, in accordance with the
terms thereof, use the proceeds of the Initial Bridge Loan only for the
purposes set forth on SCHEDULE 5.1 hereto, which SCHEDULE 5.1 contains the
Company's cost projections through March 31, 2001 (the "PERMITTED USES"). The
Bridge Note shall mature or convert into shares of Company Common Stock in
accordance with the terms thereof.
5.2. SECOND BRIDGE LOAN. (a) In the event that (i) the
Effective Time has not occurred prior to February 28, 2001 (the "SECOND LOAN
DATE"), (ii) the Termination Date (as defined in Section 18(b) hereof) has
been extended by the Buyer to a date beyond the Second Loan Date, and (iii)
this Agreement has not been terminated pursuant to Section 18, the Buyer
shall, at the request of the Company, make an additional loan of $5,000,000
in cash (the "SECOND BRIDGE LOAN" and, collectively with the Initial Bridge
Loan, the "BRIDGE LOANS") to the Company on the Second Loan Date. The Second
Bridge Loan shall be represented by the Bridge Note. In accordance with the
terms of the Bridge Note, the Company shall, until such time as the Bridge
Note may mature or be converted into shares of Company Common Stock, use the
proceeds of the Second Bridge Loan only for the Permitted Uses.
(b) Notwithstanding anything to the contrary in paragraph
5.2(a) above, in no event shall the Buyer be required to make the Second
Bridge Loan unless, at the time the Second Bridge Loan is to be made:
(i) The Company is not in material default or
material breach of the Bridge Note, this Agreement or the Escrow Agreement,
which default or breach, if not a payment default or breach, has not been
cured within ten days after notice thereof to the Company;
(ii) The Company has applied the proceeds of the
Initial Bridge Loan only to the Permitted Uses; and
(iii) The Company shall not have (A) made an
assignment for the benefit of creditors, (B) been adjudicated bankrupt or
insolvent, (C) sought the appointment of, or be the subject of an order
appointing, a trustee, liquidator or receiver as to all or part of its
assets, (D) commenced, approved or consented to, any case or proceeding under
any bankruptcy, reorganization or similar law and, in the case of an
involuntary case or proceeding, such case or proceeding has not been
dismissed within forty-five (45) days following the commencement
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thereof, (E) been the subject of an order for relief in an involuntary case
under federal bankruptcy law; (F) become unable to pay its debts as they
mature; or (G) have permitted to remain undischarged for more than thirty
(30) days any final judgment or execution action against the Company that,
together with other outstanding claims and execution actions against the
Company exceeds $500,000 in the aggregate.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Each of the Principal Company Stockholders and the Company hereby
represents and warrants, severally but not jointly, to Buyer and Merger Sub
as follows, subject in each case to such exceptions as are specifically
contemplated by this Agreement or as are set forth in the attached Disclosure
Schedule of the Company (the "COMPANY DISCLOSURE SCHEDULE"). Notwithstanding
any other provision of this Agreement or the Company Disclosure Schedule,
each exception set forth in the Company Disclosure Schedule will be deemed to
qualify each representation and warranty set forth in this Agreement (i) that
is specifically identified (by cross-reference or otherwise) in the Company
Disclosure Schedule as being qualified by such exception, or (ii) with
respect to which the relevance of such exception is reasonably apparent on
the face of the disclosure of such exception set forth in the Company
Disclosure Schedule, PROVIDED, in either case, that the relevant facts are
set forth in reasonable detail in the Company Disclosure Schedule.
6.1. INCORPORATION; AUTHORITY. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own
or lease and operate its properties and to carry on its business as now
conducted. The Company has delivered to Buyer complete and correct copies of
its Amended Certificate of Incorporation and by-laws, in each case with all
amendments thereto.
6.2. AUTHORIZATION AND ENFORCEABILITY. (a) The Company has
all requisite power and full legal right and authority (including due
approval of its Board of Directors and its stockholders, respectively) to
enter into this Agreement, to perform all of its agreements and obligations
hereunder, and to consummate the Merger and the other transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Company and constitutes a legal, valid, and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by equitable principles and by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
similar laws relating to or affecting the rights of creditors generally.
(b) On or prior to the date of this Agreement, the Board of
Directors of the Company, by resolutions duly adopted by vote of those voting
at a meeting duly called and held and not subsequently rescinded or modified
in any way, has duly (i) determined that this Agreement and the Merger are
fair to and in the best interests of the Company and the Company Stockholders
and (ii) approved this Agreement and the Merger, and determined that the
execution, delivery and performance of this Agreement is advisable.
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(c) On or prior to the date of this Agreement, the Company
Stockholders of the Company, by resolutions duly adopted by vote of those
voting at a meeting duly called and held, or by written consent, and not
subsequently rescinded or modified in any way, has duly approved this
Agreement and the Merger.
6.3. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS,
NON-CONTRAVENTION, ETC. No consent, approval, or authorization of or
registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other person, is required on the part of
the Company in connection with the execution, delivery, and performance of
this Agreement or the consummation of the Merger and the other transactions
contemplated hereby, except (i) for applicable requirements, if any, of the
Exchange Act, the Securities Act, state securities or "blue sky" laws and
state takeover laws, the HSR Act (each as defined in Section 19.1), and
filing and recordation of appropriate merger documents as required by the
DGCL, (ii) as specified in Section 6.3 or Section 6.20 of the Company
Disclosure Schedule and (iii) such consents, approvals, authorizations,
registrations, designations, declarations, and filings) the failure of which
to obtain or make would not, individually or in the aggregate, result in a
Material Adverse Effect on the Company or the Surviving Corporation. Except
as set forth in Section 6.3 of the Company Disclosure Schedule, the
execution, delivery, and performance of this Agreement and the consummation
of such transactions will not violate (a) any provision of the Company's
Amended Certificate of Incorporation or by-laws, (b) any judgment, decree,
order, statute, rule or regulation to which the Company is a party or by or
to which it or any of its assets is bound, subject to or applicable, or (c)
any agreement, instrument or other obligation to which the Company is a party
or by or to which it or any of its assets is bound or subject, except in the
case of clause (c), where such violation would not cause a Material Adverse
Effect on the Company or the Surviving Corporation.
6.4. CAPITALIZATION. The authorized and outstanding capital
stock and other securities of the Company are as set forth in Section 6.4 of
the Company Disclosure Schedule. All of such outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid, and
non-assessable, and all of such outstanding shares and other securities are
owned of record as set forth in Section 6.4 of the Company Disclosure
Schedule, and were issued in compliance with all applicable laws, including
securities laws, and all applicable preemptive or similar rights of any
person. No person has any valid right to rescind any purchase of any shares
of the Company's capital stock or other securities.
There are no agreements or other obligations on the part of
the Company to purchase or sell, and other than as set forth in Section 6.4
of the Company Disclosure Schedule, there are no convertible or exchangeable
securities, options, warrants, or other rights to acquire from the Company
any shares of its capital stock or other securities. Section 6.4 of the
Company Disclosure Schedule sets forth the name of each person who holds any
option, warrant or other right to acquire shares of the Company's capital
stock, the number and type of shares subject to such option, warrant or
right, the per-share exercise price payable therefor, how many of the shares
subject to such option, warrant or other right were "vested" (i.e.,
exercisable) as of the date of this Agreement, how many will vest or become
exercisable upon a "change of control" and whether the holder of such option,
warrant or other right is an employee of the Company.
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6.5. QUALIFICATION. The Company is duly qualified and in
good standing as a foreign corporation in all jurisdictions in which the
character of its owned or leased properties or the nature of its activities
makes such qualification necessary, except where the failure to so qualify
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
6.6. SUBSIDIARIES. Except as set forth in Section 6.6 of
the Company Disclosure Schedule, the Company does not have any Subsidiaries
(as defined in Section 19.1) or own any legal and/or beneficial interests in
any person.
6.7. FINANCIAL STATEMENTS. Included in Section 6.7 of the
Company Disclosure Schedule are copies of (i) the audited balance sheets of
the Company as of December 31, 1997 and 1998, and the related audited
statements of operations, shareholders' equity and cash flows of the Company,
for the fiscal years ended on such dates, accompanied by an audit report of
KPMG LLP, (ii) the audited balance sheet of the Company as of December 31,
1999 (the "MOST RECENT AUDITED BALANCE SHEET"), and the related audited
statements of operations, shareholders' equity and cash flows of the Company,
for the fiscal year ended on such date, accompanied by an audit report of
KPMG LLP, and (iii) the unaudited balance sheet of the Company as of October
31, 2000 (the "MOST RECENT UNAUDITED BALANCE SHEET"), and the related
unaudited statements of operations and cash flows, respectively, of the
Company, for the ten-month period ended on such date. Except as set forth in
Section 6.7 of the Company Disclosure Schedule, each of such financial
statements has been prepared in accordance with GAAP applied on a basis
consistent with prior periods; each of such balance sheets fairly presents in
all material respects the financial condition of the Company as of its
respective date; and each of such statements of operations, shareholders'
equity and cash flows, respectively, fairly presents in all material respects
the results of operations and Shareholders' equity, or cash flows, as the
case may be, of the Company for the period covered thereby; in each case,
subject, with respect to the unaudited financial statements referred to in
clause (iii) of this section, to the absence of footnote disclosure and to
normal, recurring end-of-period adjustments which shall, in the aggregate,
not be material.
6.8. ABSENCE OF CERTAIN CHANGES. Except as set forth in
Section 6.8 of the Company Disclosure Schedule, since the Most Recent Audited
Balance Sheet Date, there has not been: (i) any change in the assets,
liabilities, sales, income, or business of the Company or in its
relationships with suppliers, customers, or lessors, other than changes that
were both in the ordinary course of business or have not had or could not
reasonably be expected to have, either in any case or in the aggregate, a
Material Adverse Effect on the Company; (ii) any acquisition or disposition
by the Company of any material asset or property other than in the ordinary
course of business; (iii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting, either in any case
or in the aggregate, the property or business of the Company; (iv) any
declaration, setting aside or payment of any dividend or any other
distributions in respect of any shares of capital stock of the Company; (v)
any direct or indirect redemption, purchase, or other acquisition by the
Company of any such capital stock or rights to acquire capital stock; (vi)
any increase in the compensation, pension, or other benefits payable or to
become payable by the Company to any of its officers or key employees or
consultants, or any bonus or incentive compensation payments or arrangements
made to or with any of them; (vii)
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any forgiveness or cancellation of any debt or claim by the Company or any
waiver of any right of material value, other than compromises of accounts
receivable in the ordinary course of business; (viii) any entry by the
Company into any transaction with any of its Affiliates (as defined in
Section 19.1); (ix) any incurrence or imposition of any Lien other than any
Permitted Lien (each as defined in Section 19.1) on any of the material
assets, tangible or intangible, of the Company; or (x) any discharge or
satisfaction by the Company of any Lien or payment by the Company of any
obligation or liability (fixed or contingent) other than (A) current
liabilities included in the Most Recent Audited Balance Sheet, (B) current
liabilities to persons other than Affiliates of the Company incurred since
the date of the Most Recent Audited Balance Sheet in the ordinary course of
business, and (C) current liabilities incurred in connection with the
transactions contemplated hereby and disclosed in Section 6.8 of the Company
Disclosure Schedule.
6.9. PROPERTIES AND ASSETS. (a) The assets and properties
of the Company are, and as of the Closing Date will be, adequate and
sufficient to conduct the business of the Company as currently conducted. The
Company has good title to all of its assets and properties, including without
limitation all those reflected in the Most Recent Unaudited Balance Sheet
(except for properties or assets sold, consumed, or otherwise disposed of in
the ordinary course of business since the date of the Most Recent Unaudited
Balance Sheet), all free and clear of Liens other than Permitted Liens. All
such properties and assets, in the aggregate, are in normal condition and
repair, reasonable wear-and-tear and normal maintenance excepted, and,
subject to the Company's need to continue to make capital expenditures
consistent with those reflected in SECTION 5.1 of the Company Disclosure
Schedule, are adequate and sufficient to carry on the business of the Company
as presently conducted. Section 6.9(a) of the Company Disclosure Schedule
sets forth a complete and correct list of all capital assets of the Company
having a net book value in excess of $10,000. To the Company's knowledge (as
defined in Section 19.1), there are no material defects, other than Permitted
Liens, in any such capital assets as to title or condition. The Company owns
all licenses required by law to use all software used by the Company and its
employees in the operation of the business of the Company.
(b) The Company does not own, and has never owned, any real
property. The Company has not received any notice that either the whole or
any portion of any real property leased by it is to be condemned,
requisitioned, or otherwise taken by any public authority or is to be the
subject of any public improvements that may result in special assessments
against or otherwise affect such real property. Section 6.9(b) of the Company
Disclosure Schedule sets forth a complete and correct description of all
leases of real property to which the Company is a party. Complete and correct
copies of all such leases have been delivered to Buyer. Each such lease is
valid and subsisting and no event or condition exists that constitutes, or
after notice or lapse of time or both could constitute, a default thereunder
that would permit the landlord to exercise any remedies. The leasehold
interests of the Company are subject to no Lien, except for Permitted Liens,
and the Company is in quiet possession of the properties covered by such
leases.
-14-
6.10. INTELLECTUAL PROPERTIES.
(a) As used herein: "INTELLECTUAL PROPERTIES" means
intellectual property or proprietary rights of any description including
without limitation (i) rights in any patent, patent application, copyright,
industrial design, URL, domain name, trademark, service xxxx, logo, trade
dress or trade name, (ii) related registrations and applications for
registration, (iii) trade secrets, moral rights or publicity rights, (iv)
inventions, discoveries, or improvements, modification, know-how, technique,
methodology, writing, work of authorship, design or data that are necessary
or useful to operate the business of the Company as currently conducted and
proposed by the Company to be conducted or to market, sell, design, make,
have made, service, maintain, install, operate, use or test the Product(s)
and develop enhanced or new products, whether or not patented, patentable,
copyrightable or reduced to practice, including but not limited to any
inventions, discoveries, improvements, modification, know-how, technique,
methodology, writing, work of authorship, design or data embodied or
disclosed in any: (1) computer source codes (human readable format) and
object codes (machine readable format); (2) specifications; (3)
manufacturing, assembly, test, installation, service and inspection
instructions and procedures; (4) engineering, programming, service and
maintenance notes and logs; (5) technical, operating and service and
maintenance manuals and data; (6) hardware reference manuals; and (7) user
documentation, help files or training materials, and (v) good will related to
any of the foregoing. "PRODUCTS" means all products and services, including
all related software, now being provided by the Company, and those products,
services and software actively proposed to be provided by the Company.
(b) Section 6.10(b) of the Company Disclosure Schedule
lists the major service categories of Company, and the patent, trademark,
copyright and domain name Intellectual Properties (other than off-the-shelf
software programs that have not been customized for its use) material to and
used in or necessary to the business of the Company as now being conducted
and proposed by the Company to be conducted (the "MAJOR INTELLECTUAL
PROPERTIES"). The Company owns, or is licensed or otherwise has the right to
use, all Major Intellectual Properties other than off-the-shelf software
programs that have not been customized for its use (the "COMPANY INTELLECTUAL
PROPERTIES"), free and clear of all liens, claims and encumbrances, except
for such liens, claims and encumbrances as do not materially impair the
Company's ability to use, exploit, license and distribute such Company
Intellectual Properties. Except as otherwise indicated in Section 6.10(b) of
the Company Disclosure Schedule, the Company is not required to pay any
royalties or further consideration for the use of any Company Intellectual
Properties that the Company has licensed from other Persons. The Company
possesses previous versions of any software (other than off-the-shelf
software that has not been customized for its use), whenever a previous
version exists, that are purchased or licensed from third parties and that
are used to provide Products such that the Company can recreate the current
and next most recent versions of any Company Intellectual Properties.
(c) The Company's Products, including all related software,
are free from material defects and perform in substantial accordance with all
published specifications (if any).
(d) Except as set forth in Section 6.10(d) of the Company
Disclosure Schedule, the Company has not granted any third party any right to
manufacture, reproduce,
-15-
distribute or market any of the Company's Products or any adaptations,
translations, or derivative works based on the Company Products or any
portion thereof.
(e) Except as set forth in Section 6.10(d) of the Company
Disclosure Schedule, the Company has not granted any third party any right to
license any of the Company's Products except under valid and binding written
software license agreements.
(f) Except as set forth in Sections 6.10(d) and 6.10(f) of
the Company Disclosure Schedule, no third party has been licensed to use, or
has lawful access to any source code developed in respect of the Company's
Products.
(g) Except as set forth in Section 6.10(g) of the Company
Disclosure Schedule, all of which have been resolved prior to the date of
this Agreement, no product liability or product warranty claims have been
communicated in writing to or threatened in writing against the Company.
(h) In any instance where the Company's rights to Company
Intellectual Properties arise under a license or similar agreement (other
than for off-the-shelf software programs that have not been customized for
its use), this is indicated in Section 6.10(b) of the Company Disclosure
Schedule. No other person has an interest in or right or license to use any
of the Company Intellectual Properties owned by the Company, except as set
forth in Section 6.10(d) of the Company Disclosure Schedule. To the Company's
knowledge, there is and has been no material unauthorized use, disclosure,
infringement or misappropriation of any Company Intellectual Properties owned
by the Company by any third party. To the Company's knowledge, none of the
Company Intellectual Properties owned by the Company or licensed to the
Company on an exclusive basis is being infringed by others, or is subject to
any outstanding order, decree, judgment, or stipulation. Except as set forth
in section 6.10(i) of the Company Disclosure Schedules, no litigation (or
other proceedings in or before any court or other governmental, adjudicatory,
arbitral, or administrative body) relating to the Company Intellectual
Properties owned by the Company or licensed to the Company on an exclusive
basis is pending, or to the Company's knowledge, threatened against the
Company, nor, to the Company's knowledge, is there any valid basis for any
such litigation or proceeding. None of the Company Intellectual Properties
owned by the Company or licensed to the Company on an exclusive basis is
subject to any outstanding order, decree, judgment, or stipulation. The
Company maintains reasonable security measures for the preservation of the
secrecy and proprietary nature of such of its Company Intellectual Properties
that constitute trade secrets or other confidential information.
(i) Except as set forth in Section 6.10(i) of the Company
Disclosure Schedule, to the Company's knowledge, the Company has not
infringed or made unlawful use of, and is not infringing or making unlawful
use of, any Intellectual Properties of any other person. Except as set forth
in Section 6.10(i) of the Company Disclosure Schedule, no litigation (or
other proceedings in or before any court or other governmental, adjudicatory,
arbitratory, or administrative body) charging the Company with infringement
or unlawful use of any Intellectual Properties is pending, or to the
Company's knowledge, threatened against the Company, nor, to the Company's
knowledge, is there any valid basis for any such litigation or proceeding.
-16-
(j) Each person presently or previously employed by the
Company (including independent contractors, if any) with access authorized by
the Company to confidential information relating to the Company Intellectual
Properties has executed a confidentiality and non-disclosure agreement
pursuant to an agreement substantially in the form of agreement previously
provided to Buyer or its representatives and such confidentiality and
non-disclosure agreements constitute valid and binding obligations of the
Company and, to the Company's knowledge, of such person, enforceable in
accordance with their respective terms. All Company Intellectual Properties
that are owned by the Company were written, developed and created solely and
exclusively by employees of the Company (and all rights in and to all Company
Intellectual Properties are owned by the Company) without the assistance of
any third party or entity OR were created by or with the assistance of third
parties who assigned ownership of their rights (including all intellectual
property rights) in such Company Intellectual Properties to the Company by
means of valid and enforceable consultant confidentiality and invention
assignment agreements, copies of which have been delivered to Buyer. All
Company Intellectual Properties that are licensed to the Company (other than
off-the-shelf software programs that have not been customized for its use)
are identified in Schedule 6.10(b), and copies of such license agreements
have been made available to Buyer.
(k) All use, disclosure or appropriation by the Company (or
its employees or agents) of confidential information relating to Intellectual
Properties not otherwise protected by patents, patent applications or
copyright ("CONFIDENTIAL INFORMATION") owned by the Company and licensed to a
third party has been pursuant to the terms of a written agreement between the
Company and such third party. All use, disclosure or appropriation by the
Company (or its employees or agents) of Confidential Information not owned by
the Company has been made pursuant to the terms of a written agreement
between the Company and the owner of such Confidential Information, or is
otherwise lawful.
(l) Section 6.10(b) of the Company Disclosure Schedule
contains an accurate and complete description of all patents and patent
applications, trademarks (with separate listings of registered and
unregistered trademarks), trade names, major Internet Domain Names and
registered or unregistered copyrights in or related to the Company Products
or otherwise included in the Company Intellectual Properties and all
applications and registrations therefor. To the knowledge of Company, all of
Company's patents, patent rights, copyrights, trademark, trade name or
Internet domain name registrations related to or in the Company Products are
valid and in full force and effect; and consummation of the transactions
contemplated by this Agreement will not alter or impair any such rights.
(m) To the Company's knowledge, all of the Company's
material information technology systems and material non information
technology embedded systems (including systems or technology currently under
development) will record, store, process, calculate and present calendar
dates falling on or after (and, if applicable, during spans of time
including) January 1, 2000, and will calculate all information dependant on
or relating to such date in the same manner, and with the same functionality,
data integrity and performance, as the information technology systems and non
information technology embedded systems record, store, process,
-17-
calculate and present calendar dates on or before December 31, 1999, or
calculate and information dependent on or relating to such date.
6.11. INDEBTEDNESS. At the date hereof, the Company has no
Indebtedness (as defined in Section 19.1) outstanding except as set forth in
Section 6.11 of the Company Disclosure Schedule or the Most Recent Audited
Balance Sheet. The Company is not in default with respect to any outstanding
Indebtedness or any agreement, instrument, or other obligation relating
thereto and no such Indebtedness or any agreement, instrument, or other
obligation relating thereto purports to limit the issuance of any securities
by the Company or the operation of its businesses. Complete and correct
copies of all agreements, instruments, and other obligations (including all
amendments, supplements, waivers, and consents) relating to any Indebtedness
of the Company have been furnished to Buyer.
6.12. ABSENCE OF UNDISCLOSED LIABILITIES. Except (a) to the
extent (i) set forth in Section 6.12 of the Company Disclosure Schedule or
reflected or reserved against in the Most Recent Audited Balance Sheet, or
(ii) incurred with persons other than any Affiliate of the Company in the
ordinary course of business after the date of the Most Recent Audited Balance
Sheet, and (b) either to be discharged before the Closing or described in
Section 6.12 of the Company Disclosure Schedule, the Company does not have
any liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise (including without limitation liabilities, as
guarantor or otherwise, in respect of obligations of others) other than
liabilities and obligations with respect to the contracts that would not be
required to be reflected or reserved against in a balance sheet prepared in
accordance with GAAP or referred to in the footnotes thereto, except any such
liabilities and obligations which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company or the Surviving
Corporation.
6.13. TAXES. Except as set forth in Section 6.13 of the
Company Disclosure Schedule:
(a) TAX ATTRIBUTES, ETC. Set forth in Section 6.13(a) of
the Company Disclosure Schedule are the net operating loss, net capital loss,
credit, minimum Tax (as defined in Section 19.1), charitable contribution,
and other Tax carryforwards (by type of carryforward and expiration date, if
any) of the Company.
(b) ELECTIONS. All material elections with respect to Taxes
affecting the Company are described in Section 6.13(b) of the Company
Disclosure Schedule.
(c) FILING OF TAX RETURNS AND PAYMENT OF TAXES. The Company
has timely filed all material Tax Returns (as defined in Section 19.1)
required to be filed by it, each such Tax Return has been prepared in
compliance with all applicable laws and regulations, and all such Tax Returns
are true, accurate and complete in all respects. All Taxes due and payable by
the Company on such Tax Returns have been paid, and the Company will not be
liable for any additional Taxes in respect of any taxable period or any
portion thereof ending on or before the Closing Date in an amount that
exceeds the corresponding reserve therefor, if any, reflected in the
accounting records of the Company (assuming that the parties' intended tax
treatment as set forth in Section 9.7 hereof is correct). The Company has
delivered to Buyer true, correct and
-18-
complete copies of all Tax Returns with respect to income taxes filed by or
with respect to it with respect to taxable periods ended on or after December
31, 1996, and all relevant documents and information with respect thereto,
including without limitation work papers, records, examination reports, and
statements of deficiencies assessed against or agreed to by the Company.
(d) AUDIT HISTORY. With respect to each taxable period of
the Company ended on or before December 31, 1996, each such taxable period
has closed and such taxable period is not subject to review by any relevant
taxing authorities.
(e) DEFICIENCIES. No deficiency or proposed adjustment in
respect of Taxes that has not been settled or otherwise resolved has been
asserted or assessed by any taxing authority against the Company.
(f) LIENS. There are no Liens for Taxes (other than current
Taxes not yet due and payable) on the assets of the Company.
(g) EXTENSIONS TO STATUTE OF LIMITATIONS FOR ASSESSMENT OF
TAXES. The Company has not consented to extend the time in which any Tax may
be assessed or collected by any taxing authority.
(h) EXTENSIONS OF THE TIME FOR FILING TAX RETURNS. The
Company has not requested or been granted an extension of the time for filing
any Tax Return to a date on or after the date hereof.
(i) PENDING PROCEEDINGS. There is no action, suit, taxing
authority proceeding, or audit with respect to any Tax now in progress,
pending, or to the Company's knowledge, threatened, against or with respect
to the Company.
(j) NO FAILURES TO FILE TAX RETURNS. To the Company's
knowledge, no claim has ever been made by a taxing authority in a
jurisdiction where the Company does not pay Tax or file Tax Returns that the
Company is or may be subject to Taxes assessed by such jurisdiction.
(k) MEMBERSHIP IN AFFILIATED GROUPS, ETC. The Company has
never been a member of any affiliated group of corporations (as defined in
Section 1504(a) of the Code), or filed or been included in a combined,
consolidated, or unitary Tax Return.
(l) ADJUSTMENTS UNDER SECTION 481. The Company will not be
required, as a result of a change in method of accounting for any period
ending on or before the Closing Date, to include any adjustment under Section
481(c) of the Code (or any similar or corresponding provision or requirement
under any Tax law) in taxable income for any period ending on or after the
Closing Date.
(l) TAX SHARING, ALLOCATION, OR INDEMNITY AGREEMENTS. The
Company is not a party to or bound by any Tax sharing or allocation agreement
or has any current or potential contractual obligation to indemnify any other
person with respect to Taxes.
-19-
(n) WITHHOLDING TAXES. The Company has withheld and paid
all Taxes required to have been withheld and paid by it in connection with
amounts paid or owing to any employee, creditor or other person.
(o) FOREIGN PERMANENT ESTABLISHMENTS AND BRANCHES. The
Company does not have a permanent establishment in any foreign country with
which the United States of America has a relevant tax treaty, as defined in
such relevant tax treaty, and does not otherwise operate or conduct business
through any branch in any foreign country.
(p) U.S. REAL PROPERTY HOLDING CORPORATION. The Company is
not and has not been a United States real property holding corporation within
the meaning of Code Section 897(c)(2), during the applicable period specified
in Code Section 897(c)(1)(A)(ii).
(q) SAFE HARBOR LEASE PROPERTY. None of the property owned
or used by the Company is subject to a tax benefit transfer lease executed in
accordance with Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended by the Economic Recovery Tax Act of 1981.
(r) TAX-EXEMPT USE PROPERTY. None of the property owned by
the Company is "tax-exempt use property" within the meaning of Section 168(h)
of the Code.
(s) SECURITY FOR TAX-EXEMPT OBLIGATIONS. None of the assets
of the Company directly or indirectly secures any indebtedness, the interest
on which is tax-exempt under Section 103(a) of the Code, and the Company is
not directly or indirectly an obligor or a guarantor with respect to any such
indebtedness.
(t) SECTION 341(f) CONSENT. The Company has not filed a
consent under Code Section 341(f) concerning collapsible corporations.
(u) PARACHUTE PAYMENTS. The Company has not made any
payments, is not obligated to make any payments, and is not a party to any
agreement that under certain circumstances could obligate it to make any
payments, that will not be deductible under Code Sections 162(m) or 280G.
(v) OTHER PERSONS. The Company is not presently liable for
the Taxes of another person (i) under Treasury Regulation Section 1.1502-6
(or comparable provision of state, local or foreign law), (ii) as transferee
or successor or (iii) by contract or indemnity or otherwise.
(w) RULINGS. There are no outstanding rulings of, or
requests for rulings by, any taxing authority addressed to the Company that
are, or if issued would be, binding on the Company.
(x) DIVISIVE TRANSACTIONS. The Company has never been
either a "distributing corporation" or a "controlled corporation" in
connection with a distribution of stock qualifying for tax-free treatment, in
whole or in part, pursuant to Section 355 of the Code.
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(y) DISTRIBUTIONS AND REDEMPTIONS. Other than regular,
normal dividends, the Company has not made and will not make any
distributions with respect to or in redemption of its stock in contemplation
of the Merger or during the period beginning with the commencement of
negotiations (whether formal or informal) regarding the Merger and ending at
the Effective Time (the "Pre-Merger Period").
(z) ACQUISITION OF SUBSTANTIALLY ALL OF THE COMPANY'S
ASSETS. As a result of the Merger, Merger Sub will acquire at least ninety
percent (90%) of the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held by the
Company immediately prior to the Merger. For purposes of this representation,
amounts paid by the Company to dissenters, amount paid by the Company to
stockholders who receive cash or other property, amounts used by the Company
to pay reorganization expenses, and all redemptions and distributions (except
for regular, normal dividends) made by the Company in contemplation of the
Merger or during the Pre-Merger Period will be included as assets of the
Company held immediately prior to the Merger.
(aa) LIABILITIES INCURRED IN THE ORDINARY COURSE. The
liabilities of the Company, if any, assumed by Merger Sub and the liabilities
to which the transferred assets of the Company are subject were incurred by
the Company in the ordinary course of business.
(bb) TRANSFERS OF ASSETS. Other than regular, normal
dividends and dispositions in the ordinary course of business, the Company
has made no transfer of any of its assets in contemplation of the Merger or
during the Pre-Merger Period.
(cc) REORGANIZATION EXPENSES. The Company and the
stockholders of the Company will each pay their respective expenses, if any,
incurred in connection with the Merger.
(dd) NO INTERCORPORATE INDEBTEDNESS. Other than loans made
by Buyer to the Company pursuant to Section 5 of this Agreement, there is,
and at the Effective Time there will be, no intercorporate indebtedness
existing between Buyer and the Company or between Merger Sub and the Company
that was issued, acquired or will be settled at a discount.
(ee) ASSETS EXCEED LIABILITIES. The fair market value of
the assets of the Company transferred to Merger Sub will equal or exceed the
sum of the liabilities assumed by Merger Sub, plus the amount of liabilities,
if any, to which the transferred assets are subject.
(ff) INVESTMENT COMPANY. The Company is not and will not be
at the Effective Time an "investment company" within the meaning of Section
368(a)(2)(F)(iii) of the Code.
(gg) BANKRUPTCY PROCEEDINGS. The Company is not and will
not be at the Effective Time under the jurisdiction of a court in a case
under title 11 of the United States Code or a receivership, foreclosure, or
similar proceeding in a federal or state court.
(hh) SHAREHOLDER COMPENSATION. None of the compensation
received by any stockholder employees of the Company will be separate
consideration for, or allocable to, any of
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their shares of Company stock, and the compensation paid to any stockholder
employees of the Company will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length
for similar services. None of the Merger consideration received by any
shareholder-employees of the Company will be separate consideration for, or
allocable to, an employment agreement, and no part of the consideration
received by any Company shareholder in the Merger will be received by such
shareholder as a creditor, employee, independent contractor or in any
capacity other than that of a shareholder of the Company.
6.14. EMPLOYEE BENEFIT PLANS.
(a) IDENTIFICATION OF PLANS. Except as set forth in Section
6.14 of the Company Disclosure Schedule, the Company does not now maintain or
contribute to, and does not have any outstanding liability to or in respect
of or obligation under, any pension, profit-sharing, deferred compensation,
bonus, stock option, employment, share appreciation right, severance, group
or individual health, dental, medical, life insurance, survivor benefit, or
similar plan, policy, arrangement or agreement, whether formal or informal,
written or oral, for the benefit of any director, officer, consultant or
employee, whether active or terminated, of the Company. Each of the
arrangements set forth on Section 6.14(a) of the Company Disclosure Schedule
is here referred as an "EMPLOYEE BENEFIT PLAN", except that any such
arrangement which is a multi-employer plan shall be treated as an Employee
Benefit Plan only for purposes of Sections 6.14(d)(ii), (vi) and (viii) and
6.14(g) below.
(b) DELIVERY OF DOCUMENTS. The Company has heretofore
delivered to Buyer true, correct and complete copies of each Employee Benefit
Plan, and with respect to each such Plan true, correct and complete copies of
(i) any associated trust, custodial, insurance or service agreements, (ii)
any annual report, actuarial report, or disclosure materials (including
specifically any summary plan descriptions) submitted to any governmental
agency or distributed to participants or beneficiaries thereunder in the
current or any of the three (3) preceding calendar years and (iii) the most
recently received IRS determination letters, if any, and any governmental
advisory opinions, rulings, compliance statements, closing agreements, or
similar materials specific to such Plan.
(c) COMPLIANCE WITH TERMS AND LAW. Each Employee Benefit
Plan is and has heretofore been maintained and operated in compliance with
the terms of such Plan and in compliance, in all material respects, with the
requirements prescribed (whether as a matter of substantive law or as
necessary to secure favorable tax treatment) by any and all applicable
statutes, governmental or court orders, or governmental rules or regulations
in effect from time to time, including but not limited to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the Code and
applicable to such Plan. Each Employee Benefit Plan which is intended to
qualify under Section 401(a) of the Code and each trust or other entity
intended to qualify as a "voluntary employee benefit association" within the
meaning of Section 501(c)(9) of the Code and associated with any Employee
Benefit Plan is expressly identified as such on Section 6.14(a) of the
Company Disclosure Schedule and has been determined to be so qualified by the
IRS and, to the knowledge of the Company, nothing has occurred as to each
which has resulted or is likely to result in the revocation of such
determination or which requires
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or could, to the knowledge of the Company, reasonably be expected to require
action under the compliance resolution programs of the Internal Revenue
Service to preserve such qualification.
(d) ABSENCE OF CERTAIN EVENTS AND ARRANGEMENTS. Except as
set forth on Section 6.14(d) of the Company Disclosure Schedule,
(i) there is no pending or, to the knowledge of
the Company, threatened legal action, proceeding or investigation, other than
routine claims for benefits, concerning any Employee Benefit Plan or to the
knowledge of the Company any fiduciary or service provider thereof and, to
the knowledge of the Company, there is no basis for any such legal action or
proceeding;
(ii) no liability (contingent or otherwise) to the
Pension Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has
been incurred by the Company or any of its Affiliates (other than insurance
premiums satisfied in due course);
(iii) no reportable event, or event or condition
which presents a material risk of termination by the PBGC, has occurred with
respect to any Employee Benefit Plan, or any retirement plan of an Affiliate
of the Company, which is subject to Title IV of ERISA;
(iv) neither the Company nor, to the Company's
knowledge, any other party in interest with respect to any Employee Benefit
Plan, has engaged in a prohibited transaction known to the Company which
could subject the Company directly or indirectly to liability under Section
409 or 502(i) of ERISA or Section 4975 of the Code;
(v) no Employee Benefit Plan provides welfare
benefits subsequent to termination of employment to employees or their
beneficiaries except to the extent required by applicable state insurance
laws and Title I, Part 6 of ERISA;
(vi) the Company has not announced its intention
to modify or terminate any Employee Benefit Plan or adopt any arrangement or
program which, once established, would come within the definition of an
Employee Benefit Plan; and
(vii) the Company has not undertaken to maintain
any Employee Benefit Plan for any period of time and each such Plan is
terminable at the sole discretion of the sponsor thereof, subject only to
such constraints as may imposed by applicable law.
(e) FUNDING OF CERTAIN PLANS. With respect to each Employee
Benefit Plan for which a separate fund of assets is or is required to be
maintained, full and timely payment has been made of all amounts required of
the Company, under the terms of each such Plan or applicable law, as applied
through the Closing Date, and no accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived,
exists with respect to any such Plan. The current value of the assets of each
such Employee Benefit Plan, as of the end of the most recently ended plan
year of that Plan, equals or exceeded the current value of all benefits
liabilities under that Plan.
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(f) EFFECT OF TRANSACTIONS. Except as set forth in Section
6.14(f) of the Company Disclosure Schedule, the execution of this Agreement
and the consummation of the transactions contemplated herein will not, by
itself or in combination in any other event (regardless of whether that other
event has or will occur), result in any payment (whether of severance pay or
otherwise) becoming due from or under any Employee Benefit Plan (including
any employment agreement) to any current or former director, officer,
consultant or employee of the Company or result in the vesting, acceleration
of payment or increases in the amount of any benefit payable to or in respect
of any such current or former director, officer, consultant or employee.
(g) MULTI-EMPLOYER PLANS. No Employee Benefit Plan is a
multi-employer plan.
(h) DEFINITIONS. For purposes of this Section 6.14,
"multi-employer plan", "party in interest" "current value", "reportable
event" and "benefit liability" have the same meaning assigned such terms
under Sections 3, 4043(b) or 4001(a) of ERISA, and "affiliate" means any
entity which under Section 414 of the Code is treated as a single employer
with the Company.
6.15. SAFETY AND ENVIRONMENTAL MATTERS.
(a) ZONING, HEALTH, AND SAFETY. None of the plants,
offices, or properties occupied by the Company are in material violation of
any zoning, health, or safety law or regulation, including without limitation
the Occupational Safety and Health Act of 1970, as amended.
(b) COMPLIANCE. The Company is not in violation or, to the
knowledge of the Company, alleged violation of any judgment, decree, order,
law, license, rule or regulation pertaining to environmental matters,
including without limitation the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("XXXX"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, and applicable
federal, state, foreign, and local statutes, regulations, ordinances, orders,
and decrees relating to health, safety, or the environment (all of the
foregoing, collectively, "ENVIRONMENTAL LAWS").
(c) NOTICES. Except as set forth in Section 6.15 of the
Company Disclosure Schedule, the Company has not received written notice from
any third party, including without limitation any federal, state, foreign, or
local governmental authority, that (i) the Company has been identified by the
United States Environmental Protection Agency (the "EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 000 Xxxxxxxx X (1986); (ii) any hazardous
waste as defined by 42 U.S.C. Section.6903(5), any hazardous substance as
defined by 42 U.S.C. Section. 9601(14), any pollutant or contaminant as
defined by 42 U.S.C. Section. 9601(33) or any toxic substance, oil, or
hazardous material or other chemical or substance regulated by any
Environmental Laws (collectively,
-24-
"HAZARDOUS SUBSTANCES") that the Company has generated, transported, handled,
used, or disposed of has been found in violation of Environmental Laws at any
site at which a federal, state, foreign, or local agency or other third party
has conducted or has ordered that the Company conduct a remedial
investigation, removal, or other response action pursuant to any
Environmental Law; or (iii) the Company is or will be a named party to any
claim, action, cause of action, complaint (contingent or otherwise), or legal
or administrative proceeding arising out of any third party's incurrence of
costs, expenses, losses, or damages of any kind whatsoever in connection with
the release of Hazardous Substances.
(d) HAZARDOUS SUBSTANCES; PERMITS. Except as set forth in
Section 6.15 of the Company Disclosure Schedule, (i) no portion of any real
property presently owned, leased, or operated by the Company (the "COMPANY
PROPERTY") has been used by the Company, or to the Company's knowledge, by
any other person, for the handling, usage, manufacturing, processing,
storage, or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; and no underground tank or other underground
storage receptacle for Hazardous Substances is located on any real property
presently owned, leased, or operated by the Company, (ii) in the course of
the activities conducted by the Company and to the Company's knowledge, those
of any other operators of any real property presently owned, leased, or
operated by the Company, no Hazardous Substances have been generated, stored,
or used on such properties except in accordance with applicable Environmental
Laws; (iii) to the Company's knowledge, there have been no releases (i.e. any
past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing, or dumping) or
threatened releases of Hazardous Substances on, upon, into, or from any real
property presently owned, leased, or operated by the Company; (iv) to the
Company's knowledge, there have been no releases on, upon, from, or into any
real property in the vicinity of any real property presently owned, leased,
or operated by the Company that, through soil or groundwater contamination,
may have come to be located on, any of the real property presently owned,
leased, or operated by the Company; and (v) any Hazardous Substances that
have been generated by the Company, or to the Company's knowledge, any other
person, on any real property presently owned, leased, or operated by the
Company, have been transported offsite only by carriers having an
identification number issued by the EPA and treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities, to the
Company's knowledge, have been and are operating in compliance with such
permits and applicable Environmental Laws. The Company has never owned,
leased or occupied any real property or premises other than the Company
Property.
(e) CLEANUP RESPONSIBILITY. Except as set forth in Section
6.15 of the Company Disclosure Schedule, the Company Property is not, and to
the knowledge of the Company will not be, subject to any environmental
cleanup responsibility law or regulation or environmental restrictive
transfer law or regulation by reason of the Merger or the other transactions
contemplated hereby.
6.16. LABOR RELATIONS. The Company is and has been in
compliance in all material respects with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, nondiscrimination in
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employment, and unfair labor practices. There is no charge or proceeding
pending, or to the Company's knowledge, threatened, against the Company
alleging unlawful discrimination in employment practices or unfair labor
practice before any court or agency, including without limitation the
National Labor Relations Board. There is no labor strike, work slow-down, or
work stoppage pending or to the Company's knowledge threatened against or
involving the Company. No one has petitioned within the last five years or,
to the Company's knowledge, is now petitioning for union representation of
any of the employees of the Company. None of the employees of the Company is
covered by any collective bargaining agreement, and no collective bargaining
agreement is currently being negotiated by the Company. The Company has not
experienced any labor strike, work slowdown, work stoppage or other material
labor difficulty during the last five years.
6.17. LITIGATION. Except as set forth in Section 6.17 of
the Company Disclosure Schedule, no litigation, arbitration, action, suit,
proceeding, or to the Company's knowledge investigation (whether conducted by
any judicial or regulatory body, arbitrator, or other person) is pending or,
to the Company's knowledge, threatened, against the Company.
6.18. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES. The
accounts receivable and other receivables recorded in the records and books
of account of the Company as due to the Company as of the Closing Date,
represent all of the receivables that have arisen from bona fide transactions
in the ordinary course of business in connection with the Company, consistent
with past practice and the extensions of credit reflected by such receivables
have been extended, or will be extended, in the manner consistent with past
trade and credit practices of the Company. Said receivables, less the amount
of any reserve therefore, have been recorded in the records and books of
account of the Company in accordance with GAAP (as defined in Section 19.1),
consistent with past business practices, and, except as set forth in Section
6.18 of the Company Disclosure Schedule, shall be collectible in the ordinary
course of business (net of such reserves). Except as set forth on Section
6.18 of the Company Disclosure Schedule, none of such accounts receivable or
other credits is or will at the Closing Date, be subject to any valid
counterclaim or set off, except to the extent of any such provision for
reserve.
6.19. ACCOUNTS PAYABLE. Accounts payable recorded in the
records and books of account of the Company, represent all of the payables
that have arisen from bona fide transactions in the ordinary course of
business in connection with the Company, consistent with past practice and
the payment of such payables have been made in the manner consistent with
past trade and credit practices of the Company. Except as set forth in
Section 6.19 of the Company Disclosure Schedule, (a) said payables have been
recorded in the records and books of account of the Company in accordance
with GAAP, consistent with past business practices, and (b) no material
account payable is or will at the Closing Date, be payable for a period in
excess of 90 days.
6.20. CONTRACTS. Section 6.20 of the Company Disclosure
Schedule sets forth a complete and accurate list of all material contracts to
which the Company is a party or by or to which it or any of its assets or
properties is bound or subject. As used in this Agreement, the word
"contract" includes every agreement or understanding of any kind, written or
oral, that is legally enforceable by or against or otherwise binding on the
Company, and specifically includes
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without limitation: (a) agreements with any current or former officer,
director, employee, consultant, or stockholder, or any partnership,
corporation, joint venture, or any other entity in which any such person has
an interest and the Company has knowledge of such person's interest (whether
or not material); (b) agreements with any labor union or association
representing any employee; (c) agreements for the provision of services by or
to the Company; (d) bonds or other security agreements provided by any party
in connection with the business of the Company; (e) agreements for the
purchase or other acquisition or the sale or other disposition of assets or
properties, in each case other than in the ordinary course of business, or
for the grant to any person of any preferential rights to purchase any of
such assets or properties; (f) joint venture agreements relating to the
assets, properties, or business of the Company or by or to which it or any of
its assets or properties is bound or subject; (g) agreements under which the
Company agrees to indemnify any party (other than customer contracts entered
into in the ordinary course of business), to share tax liability of any
party, or to refrain from competing with any party; (h) agreements with
regard to Indebtedness; (i) any other contract or other agreement, whether or
not made in the ordinary course of business, or (j) any other contract or
other agreement which represents commitments in excess of $100,000 in the
aggregate. All of the contracts listed in Section 6.20 of the Company
Disclosure Schedule are in full force and effect, and (A) the Company is not
in material default under or material breach of any of them, and (B) to the
Company's knowledge, no other party thereto, is in material default under or
material breach of any of them, nor to the Company's knowledge, does any
event or condition exist that after notice or lapse of time or both could
constitute a material default thereunder or material breach thereof on the
part of the Company, or to the Company's knowledge, any other party thereto.
Except as specifically set forth in Section 6.20 of the Company Disclosure
Schedule, no approval or consent of any person is needed in order that the
contracts listed in Section 6.20 of the Company Disclosure Schedule continue
in full force and effect following the consummation of the Merger and the
other transactions contemplated hereby, and except as set forth in Section
6.20 of the Disclosure Schedule, no such contract includes any provision, the
effect of which may be to terminate (or give rise to a right of termination
under) such contract, to enlarge or accelerate any obligations of the Company
thereunder, or to give additional rights to any other person, upon
consummation of the Merger or the other transactions contemplated hereby. All
of the contracts referred to in Section 6.20 are embodied in written
agreements, true, correct and complete copies of which, including all
amendments, modifications and supplements thereto, have been made available
or delivered to Buyer.
6.21. POTENTIAL CONFLICTS OF INTEREST. Except as set forth
on Section 6.21 of the Company Disclosure Schedule, no officer, director, or
stockholder of the Company (a) owns, directly or indirectly, any interest
(excepting not more than 1% stock holdings for investment purposes in
securities of publicly held and traded companies) in, or is an officer,
director, employee, or consultant of, any person that is a material
competitor, lessor, lessee, or supplier of the Company; (b) owns, directly or
indirectly, in whole or in part, any tangible or intangible property that the
Company is using or the use of which is necessary for the business of the
Company; or (c) to the Company's knowledge, has any cause of action or other
claim whatsoever against, or owes any amount to, the Company, except for
claims in the ordinary course of business, such as for accrued vacation pay,
accrued benefits under Employee Benefit Plans, and similar matters and
agreements. Except as set forth on Section 6.21 of the Company Disclosure
Schedule, no officer, director, employee or stockholder of the Company has
been
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party to any transaction with the Company, other than those relating to
employment in the ordinary course of business that have not been,
individually or in the aggregate, material.
6.22. INSURANCE. Section 6.22 of the Company Disclosure
Schedule lists the policies of theft, fire, liability, workmen's
compensation, life, property and casualty, and other insurance owned or held
by the Company, and describes for each such policy the annual premiums due
thereunder, the deductibles, if any, the coverage amounts and the expiration
dates thereof. Such policies of insurance are maintained with financially
sound and reputable insurance companies, funds, or underwriters, and are of
the kinds, cover such risks, and are in such amounts and with such
deductibles and exclusions, as are consistent, in the reasonable judgment of
the Company, with prudent business practice. In all material respects: all
such policies are in full force and effect, are sufficient for compliance by
the Company with all requirements of law and of all agreements to which the
Company is a party, are valid, outstanding, and enforceable policies and
provide that they will remain in full force and effect through the respective
dates set forth in the Company Disclosure Schedule, and will not in any way
be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement.
6.23. BANK ACCOUNTS, SIGNING AUTHORITY, POWERS OF ATTORNEY.
Section 6.23 of the Company Disclosure Schedule sets forth a complete and
accurate list of all bank, brokerage, and other accounts, and all
safe-deposit boxes, of the Company and the persons with signing or other
authority to act with respect thereto. Except as so listed, the Company does
not have any account or safe deposit box in any bank, and no person has any
power, whether singly or jointly, to sign any checks on behalf of the
Company, to withdraw any money or other property from any bank, brokerage, or
other account of the Company, or to act under any agency or power of attorney
granted by the Company at any time for any purpose. Section 6.23 of the
Company Disclosure Schedule also sets forth, the names of all persons
authorized to borrow money or sign notes on behalf of the Company.
6.24. SUPPLIERS AND CUSTOMERS. Section 6.24(a) of the
Company Disclosure Schedule lists the fifteen (15) largest suppliers of the
Company during the twelve calendar month period immediately preceding the
date of this Agreement. Except as set forth in Section 6.24 (a) and (b) of
the Company Disclosure Schedule, the relationships of the Company with its
suppliers and customers (as a whole) are good commercial working
relationships, and no supplier or customer of material importance to the
Company or material number of Company customers has canceled or otherwise
terminated, or threatened in writing to cancel or terminate, its relationship
with the Company or has during the last such twelve months decreased
materially, or threatened in writing to decrease or limit materially, its
services, supplies, or materials to the Company or its usage or purchase of
the services or products of the Company, except for normal cyclical changes
related to customers' businesses and changes in their business needs. Except
as set forth in Section 6.24 (a) and (b) of the Company Disclosure Schedule,
the Company has no knowledge that any such supplier or any of the customers
listed in Section 6.24(b) of the Company Disclosure Schedule intends to
cancel or otherwise substantially modify its relationship with the Company or
to decrease materially or limit its services, supplies, or materials to the
Company, or its usage or purchase of the Company's services or products,
except for normal cyclical changes related to customers' or suppliers'
businesses, and the consummation of the transactions
-28-
contemplated hereby will not, to the Company's knowledge, adversely affect
the relationship of the Company with any such supplier or customers.
6.25. EMPLOYMENT OF OFFICERS, EMPLOYEES. Section 6.25 of
the Company Disclosure Schedule lists the name, positions, date of hire,
current annual salary and other compensation (including but not limited to
wages, salary, commissions, normal bonus, deferred compensation, and other
extra compensation) payable by the Company to each exempt non-hourly employee
of the Company, including the date and amount of the last raise received by
such employee. Section 6.25 of the Company Disclosure Schedule also lists the
amount of any incentive compensation paid to any employee of the Company
during 1999 and 2000. Except as set forth on Section 6.25 of the Company
Disclosure Schedule, no employee of the Company with base compensation in
excess of $60,000 has informed the Company in writing of his or her intention
to terminate employment with the Company.
6.26. MINUTE BOOKS. Except for meetings of the Board of
Directors since November 1, 2000, the minute books of the Company made
available to Buyer for inspection accurately record therein all material
actions taken by its Board of Directors, all committees thereof, and its
stockholders.
6.27. BROKERS. Except for Broadview, no finder, broker,
agent, or other intermediary has acted for or on behalf of the Company in
connection with the negotiation, preparation, execution, or delivery of this
Agreement or the consummation of the Merger or the other transactions
contemplated hereby.
6.28. COMPLIANCE WITH OTHER AGREEMENTS, LAWS, ETC. The
Company has complied with, and is in compliance with, (i) all laws, statutes,
governmental regulations and all judicial or administrative tribunal orders,
judgments, writs, injunctions, decrees or similar commands applicable to its
business, and (ii) its Amended Certificate of Incorporation and by-laws,
respectively, each as amended to date; in the case of the preceding clause
(i), excepting only any such noncompliances that, both individually and in
the aggregate, have not resulted, and are not reasonably anticipated to
result, in a Material Adverse Effect on the Company or the Surviving
Corporation. The Company has not been charged with, or to its knowledge, been
under investigation with respect to, any violation of any provision of any
federal, state, or local law or administrative regulation. Section 6.28 of
the Company Disclosure Schedule sets forth a complete and correct list of,
all material licenses, permits, and other authorizations of governmental
authorities as are necessary or desirable for the conduct of its businesses
or in connection with the ownership or use of its properties, all of which
are in full force and effect, true and complete copies of all of which have
previously been delivered to Buyer. Except as set forth in Section 6.28 of
the Company Disclosure Schedule, none of such licenses, permits and
authorizations will be affected by the consummation of the Merger and the
other transactions contemplated hereby.
6.29. REGISTRATION RIGHTS. Except as set forth in Section
6.29 of the Company Disclosure Schedule, no person has any right to cause the
Company to effect the registration under the Securities Act of any shares of
Company Common Stock or any other securities of the Company.
-29-
6.30. STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any Company or any Affiliate thereof for
inclusion in the Registration Statement (as defined in Section 9.4) to be
filed by Buyer with the SEC will, when the Registration Statement becomes
effective, be false or misleading with respect to any material fact, or omit
to state any material fact necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by the Company
or any Affiliate thereof for inclusion in any documents to be filed by the
Buyer or the Company or any Affiliate thereof with any regulatory authority
in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. All documents that the Company or any Affiliate thereof
is responsible for filing with any regulatory authority in connection with
the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law.
7. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL COMPANY
STOCKHOLDERS.
In addition to the representations and warranties made by the
Principal Company Stockholders in Section 6, each of the Principal Company
Stockholders hereby further represents and warrants to Buyer, severally and
not jointly, with respect to him-, her-, or itself only, as follows:
7.1. AUTHORIZATION AND ENFORCEABILITY. Such Principal
Company Stockholder has all requisite power and full legal right and
authority (including, in the case of a Principal Company Stockholder who is
not a natural person, due approval of its Board of Directors, stockholders,
managers, and/or other persons exercising similar powers) to enter into this
Agreement, to perform all of such Principal Company Stockholder's agreements
and obligations hereunder, and to consummate the Merger and the other
transactions contemplated hereby. This Agreement has been duly executed and
delivered by such Principal Company Stockholder and constitutes a legal,
valid, and binding obligation of such Principal Company Stockholder,
enforceable against such Principal Company Stockholder in accordance with its
terms, except as such enforceability may be limited by equitable principles
and by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or similar laws relating to or affecting the rights of creditors
generally.
7.2. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS,
NON-CONTRAVENTION, ETC. No consent, approval, or authorization of or
registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other person is required on the part of
such Principal Company Stockholder in connection with this Agreement, the
Merger, or any of the other transactions contemplated hereby which has not
been, or will be at Closing, obtained. The execution, delivery, and
performance of this Agreement and the consummation of such transactions will
not violate (a) in the case of any Principal Company Stockholder who is not a
natural person, any provision of its Certificate of Incorporation, by-laws,
partnership or operating agreement, and/or other constituting documents, (b)
any order, judgment, injunction, award or decree of any court or state or
federal governmental or regulatory body applicable to such
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Principal Company Stockholder, or (c) any judgment, decree, order, statute,
rule, regulation, agreement, instrument, or other obligation to which such
Principal Company Stockholder is a party or by or to which it or any of such
Principal Company Stockholder's assets is bound or subject, except where any
such violations would not, individually or in the aggregate, have a Material
Adverse Effect on the Company or the Surviving Corporation.
7.3. TITLE TO SHARES, ETC. Such Principal Company
Stockholder owns, as of the date hereof, and will own, as of the Closing, in
each case both of record and beneficially, the shares of the Company's
capital stock and other securities of the Company, if any, indicated with
respect to such Stockholder in Section 6.4 of the Company Disclosure
Schedule, all free and clear of Liens. Such Principal Company Stockholder
does not own, either legally or beneficially, any other shares of capital
stock or other securities of the Company.
7.4. INVESTMENT INTENT. Such Principal Company Stockholder
has been advised that the Buyer Common Stock being offered and sold pursuant
to this Agreement has not been registered under the Securities Act or any
relevant state securities laws, but is being offered and sold pursuant to
exemptions from such laws and that the Buyer's reliance upon such exemptions
is predicated in part on such Principal Company Stockholder's representations
to the Buyer as contained herein. Such Principal Company Stockholder
represents, warrants, covenants and agrees that (a) he, she or it is an
"accredited investor" as such term is defined in Rule 501 of SEC promulgated
under the Securities Act with respect to the transaction, (b) the shares of
Buyer Common Stock being acquired hereby are being acquired, for his, her or
its own account and for investment purposes only and without the intention of
reselling or redistributing such shares in a manner inconsistent with the
Securities Act, (c) he, she or it has made no agreement with others regarding
the sale or redistribution of such securities, and (d) his, her or its
financial condition is such that it is not likely that it will be necessary
to dispose of such shares, in the foreseeable future. Such Principal Company
Stockholder further represents, warrants, covenants and agrees that if,
contrary to his, her or its foregoing intentions, he, she or it should later
desire to sell, assign, pledge, transfer or otherwise dispose of the shares
of Buyer Common Stock acquired pursuant to this Agreement, in any manner, he,
she or it shall not do so without first obtaining (i) the opinion of counsel
satisfactory to the Buyer that such proposed disposition or transfer lawfully
may be made without the registration of such securities pursuant to the
Securities Act, and applicable state securities laws or (ii) the registration
of the shares of Buyer Common Stock received pursuant hereto under the
Securities Act. Such Principal Company Stockholder further agrees that, until
registered and sold under the Securities Act, or transferred pursuant to the
provisions of Rule 144 thereunder, or any similar provision as promulgated by
the SEC, the shares of Buyer Common Stock acquired pursuant to this
Agreement, whether upon initial issuance or upon any transfer thereof, shall
bear a legend, prominently stamped or printed thereon, reading as set forth
in the Registration Rights Agreement and the Lock Up Agreements (each as
defined herein).
8. REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB.
Buyer and Merger Sub, jointly and severally, hereby represent and
warrant to the Company and the Principal Company Stockholders as follows,
subject in each case to such exceptions as are specifically contemplated by
this Agreement or as are set forth in the attached
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Disclosure Schedule of the Buyer and Merger Sub (the "BUYER DISCLOSURE
SCHEDULE"). Notwithstanding any other provision of this Agreement or the
Buyer Disclosure Schedule, each exception set forth in the Buyer Disclosure
Schedule will be deemed to qualify each representation and warranty set forth
in this Agreement (i) that is specifically identified (by cross-reference or
otherwise) in the Buyer Disclosure Schedule as being qualified by such
exception, or (ii) with respect to which the relevance of such exception is
reasonably apparent on the face of the disclosure of such exception set forth
in the Buyer Disclosure Schedule PROVIDED, in either case, that the relevant
facts are set forth in reasonable detail in the Buyer Disclosure Schedule.
8.1. INCORPORATION; AUTHORITY. Each of Buyer and Merger Sub is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted. Buyer has delivered to the Company complete and
correct copies of its Amended and Restated Certificate of Incorporation and
Amended and Restated By-laws of Buyer and the Certificate of Incorporation and
by-laws of the Merger Sub, in each case with all amendments thereto.
8.2. AUTHORIZATION AND ENFORCEABILITY. (a) Each of Buyer and
Merger Sub has all requisite power and full legal right and authority (including
due approval of their respective Boards of Directors and in the case of Merger
Sub, its sole stockholder) to enter into this Agreement, to perform all of its
agreements and obligations hereunder, and to consummate the Merger and the other
transactions contemplated hereby, subject to approval of Buyer's shareholders.
This Agreement has been duly executed and delivered by each of Buyer and Merger
Sub and constitutes a legal, valid, and binding obligation of each of them,
enforceable against each of them in accordance with its terms, except as such
enforceability may be limited by equitable principles and by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws
relating to or affecting the rights of creditors generally.
(b) On or prior to the date of this Agreement, the Board of
Directors of Buyer, by resolutions duly adopted by vote of those voting at a
meeting duly called and held and not subsequently rescinded or modified in any
way, has duly (i) determined that this Agreement and the Merger are fair to and
in the best interests of Buyer and its stockholders and approved this Agreement
and the Merger, and determined that the execution, delivery and performance of
this Agreement is advisable, (ii) recommended that the stockholders of Buyer
approve the issuance of Buyer Common Stock pursuant to this Agreement, and (iii)
directed that this Agreement, the Merger and the issuance of such shares be
submitted for consideration by Buyer's stockholders.
8.3. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS,
NON-CONTRAVENTION, ETC. No consent, approval, or authorization of or
registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other person, is required on the part of
Buyer or Merger Sub in connection with the execution, delivery, and performance
of this Agreement or the consummation of the Merger and the other transactions
contemplated hereby, except (i) for applicable requirements, if any, of the
Exchange Act, the Securities Act, state securities or "blue sky" laws and state
takeover laws, the HSR Act (each as defined in Section 19.1), regulations of the
Nasdaq National Market and the filing and recordation of appropriate
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merger documents as required by the DGCL, (ii) as specified in Section 8.3 of
the Buyer Disclosure Schedule and (iii) such consents, approvals,
authorizations, registrations, designations, declarations, and filings) the
failure of which to obtain or make would not, individually or in the
aggregate, result in a Material Adverse Effect on Buyer or Merger Sub. The
execution, delivery, and performance of this Agreement and the consummation
of such transactions will not violate (a) any provision of Buyer's and Merger
Sub's Certificate of Incorporation or by-laws, (b) any order, judgment,
injunction, award or decree of any court or state or federal governmental or
regulatory body applicable to Buyer or Merger Sub, or (c) any judgment,
decree, order, statute, rule, regulation, agreement, instrument or other
obligation to which Buyer or Merger Sub is a party or by or to which either
of them or any of their respective assets is bound, subject to or applicable
except, in the case of clause (c), where such violation would not have a
Material Adverse Effect on the Buyer.
8.4. MERGER SUB. Merger Sub has been organized for the
specific purpose of engaging in the Merger and the other transactions
contemplated hereby and has not incurred any material liabilities, conducted any
material business, or entered into any material contracts or commitments, in
each case except such as are in furtherance of or incidental to such
transactions. The capitalization of Merger Sub consists of 100 shares of common
stock, all of which shares are owned directly by Buyer. At all times prior to
the Merger, Buyer has been, and will continue to be, in Control (as defined in
the next sentence) of Merger Sub. As used in this Section 8.4, "Control" means
control within the meaning of Section 368(c) of the Code.
8.5. BUYER'S SEC STATEMENTS, REPORTS AND DOCUMENTS. Since
November 11, 1999, Buyer has timely filed with the SEC all forms, reports,
registration statements, and documents required to be filed by it under the
Securities Act or Exchange Act. Buyer has delivered to the Company true and
complete copies of (i) the Buyer's Annual Report on Form 10-K for its fiscal
year ended December 31, 1999, (ii) its Quarterly Report on Form 10-Q for its
fiscal quarter ended September 30, 2000 (the "SEPTEMBER 2000 10-Q"), and (iii)
all other forms, reports, registration statements, and documents filed by Buyer
with the SEC since November 11, 1999 (collectively, all of the foregoing
documents, "BUYER'S SEC REPORTS"). As of their respective dates, Buyer's SEC
Reports complied in all material respects with all applicable requirements of
the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder, and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. None of Buyer's SEC Reports is required to be amended
or supplemented as of the date hereof. The financial statements (including any
related notes) of Buyer included in Buyer's SEC Reports were prepared in
conformity with generally accepted accounting principles applied on a consistent
basis (except as otherwise stated in the financial statements or, in the case of
audited statements, the related report of Buyer's independent certified public
accountants) and present fairly, in all material respects, the consolidated
financial position, results of operations, changes in stockholders' equity, and
cash flows, as applicable, of Buyer and its consolidated Subsidiaries as of the
dates and for the periods indicated; subject, in the case of unaudited interim
consolidated financial statements included in the September 2000 10-Q, to
condensation, the absence of footnote disclosure, and normal, recurring
end-of-period adjustments.
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8.6. CAPITALIZATION. The authorized capital stock of Buyer
consists of 85,000,000 shares of Buyer Common Stock, with one vote per share on
all matters on which shareholders are entitled to vote under the DGCL, and
15,000,000 shares of Preferred Stock, $0.001 par value per share. No shares of
such Preferred Stock are issued and outstanding. All of the outstanding shares
of Buyer Common Stock were issued in compliance with all applicable laws,
including securities laws and all applicable preemptive and similar rights of
any person. No person has the right to rescind any purchase of any shares of
Buyer's capital stock or other securities.
As of December 12, 2000 (i) 34,200,458 shares of Buyer Common
Stock were issued and outstanding, all of which were duly authorized, validly
issued, fully paid and non-assessable, and (ii) outstanding options granted
pursuant to the Buyer's 1997 Stock Incentive Plan (the "BUYER STOCK PLAN") are
3,928,547. Since December 12, 2000, no shares of Buyer Common Stock have been
issued except upon the exercise of options granted under the Buyer Stock Plan.
Except (i) as set forth in Section 8.6 of the Buyer Disclosure
Schedule, (ii) as set forth in Buyer's SEC Reports filed prior to the date
hereof, and (iii) for up to 668,499 shares exercisable under stock options
issued or to be issued pursuant to the Buyer Stock Plan, there are no agreements
or other obligations on the part of Buyer to purchase or sell, no convertible or
exchangeable securities, options, warrants or other rights to acquire from Buyer
any shares of its capital stock or other securities.
8.7. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
(a) reflected or reserved against in the balance sheet set forth in September
2000 10-Q, or (b) incurred with persons other than any Affiliate of Buyer in the
ordinary course of business after the filing date of the September 2000 10-Q,
Buyer does not have any liabilities or obligations of any nature (including
obligations or liabilities relating to any violation of law), whether accrued,
absolute, contingent or otherwise (including, without limitation, liabilities,
as guarantor or otherwise, in respect of obligations of others) other than
performance obligations with respect to the contracts that would not be required
to be reflected or reserved against in a balance sheet prepared in accordance
with GAAP or referred to in the footnotes thereto, except such liabilities and
obligations which, individually or in the aggregate, would not have a Material
Adverse Effect on Buyer.
8.8. REGISTRATION RIGHTS. Except as set forth in Section 8.8
of the Buyer Disclosure Schedule or as provided by the Registration Rights
Agreement, no person has any right to cause Buyer to effect the registration
under the Securities Act of any shares of Buyer Common Stock or any other
securities of Buyer.
8.9. STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by Buyer or Merger Sub
or any Affiliate thereof to Company pursuant to this Agreement or any other
document, agreement or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by Buyer or
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Merger Sub or any Affiliate thereof for inclusion in any documents to be
filed by Buyer or Merger Sub or any Affiliate thereof with the SEC or any
other regulatory authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. All documents that Buyer of
Merger Sub or any Affiliate thereof is responsible for filing with any
regulatory authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable law.
8.10. LITIGATION. Except as set forth in Section 8.10 of the
Buyer Disclosure Schedule, no litigation, arbitration, action, suit, proceeding,
or to Buyer's knowledge investigation (whether conducted by any judicial or
regulatory body, arbitrator, or other person) is pending or, to Buyer's
knowledge, threatened, against Buyer or Merger Sub.
8.11. BROKERS. Except for Xxxxxxxxx Xxxxxxxx, no finder,
broker, agent, or other intermediary has acted for or on behalf of Buyer in
connection with the negotiation, preparation, execution, or delivery of this
Agreement or the consummation of the Merger or the other transactions
contemplated hereby.
8.12. ABSENCE OF CERTAIN CHANGES. Since the date of filing of
the September 10-Q, except as set forth in Section 8.12 of the Buyer Disclosure
Schedules there has not been: (i) any change in the assets, liabilities, sales,
income, or business of the Buyer or in its relationships with suppliers,
customers, or lessors, other than changes that (A) were both in the ordinary
course of business and would not have been required to be disclosed pursuant to
the Exchange Act or (B) have not had or could not reasonably be expected to
have, either in any case or in the aggregate, a Material Adverse Effect on
Buyer; (ii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting, either in any case or in the
aggregate, the property or business of Buyer; (iii) any declaration, setting
aside or payment of any dividend or any other distributions in respect of any
shares of capital stock of Buyer; (iv) any direct or indirect redemption,
purchase, or other acquisition by Buyer of any such capital stock or rights to
acquire capital stock; or (v) any forgiveness or cancellation of any debt or
claim by Buyer or any waiver of any right of material value, other than
compromises of accounts receivable in the ordinary course of business.
8.13. EMPLOYEE BENEFIT PLANS.
(a) IDENTIFICATION OF PLANS. Except as set forth in Section
8.13 of the Buyer Disclosure Schedule, Buyer does not now maintain or contribute
to, and does not have any outstanding liability to or in respect of or
obligation under, any pension, profit-sharing, deferred compensation, bonus,
stock option, employment, share appreciation right, severance, group or
individual health, dental, medical, life insurance, survivor benefit, or similar
plan, policy, arrangement or agreement, whether formal or informal, written or
oral, for the benefit of any director, officer, consultant or employee, whether
active or terminated, of Buyer. Each of the arrangements set forth on Section
8.13(a) of the Buyer Disclosure Schedule is here referred as a "BUYER BENEFIT
PLAN", except that any such arrangement which is a multi-employer plan shall be
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treated as a Buyer Benefit Plan only for purposes of Sections 8.13(d)(ii), (vi)
and (viii) and 8.13(g) below.
(b) DELIVERY OF DOCUMENTS. Prior to the Effective Time, Buyer
will deliver to the Company true, correct and complete copies of each Buyer
Benefit Plan, and with respect to each such Plan true, correct and complete
copies of (i) any associated trust, custodial, insurance or service agreements,
(ii) any annual report, actuarial report, or disclosure materials (including
specifically any summary plan descriptions) submitted to any governmental agency
or distributed to participants or beneficiaries thereunder in the current or any
of the three (3) preceding calendar years and (iii) the most recently received
IRS determination letters, if any, and any governmental advisory opinions,
rulings, compliance statements, closing agreements, or similar materials
specific to such Plan.
(c) COMPLIANCE WITH TERMS AND LAW. Each Buyer Benefit Plan is
and has heretofore been maintained and operated in compliance with the terms of
such Plan and in compliance, in all material respects, with the requirements
prescribed (whether as a matter of substantive law or as necessary to secure
favorable tax treatment) by any and all applicable statutes, governmental or
court orders, or governmental rules or regulations in effect from time to time,
including but not limited to the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and the Code and applicable to such Plan. Each Buyer
Benefit Plan which is intended to qualify under Section 401(a) of the Code and
each trust or other entity intended to qualify as a "voluntary employee benefit
association" within the meaning of Section 501(c)(9) of the Code and associated
with any Buyer Benefit Plan is expressly identified as such on Section 8.13(a)
of the Buyer Disclosure Schedule and has been determined to be so qualified by
the IRS and, to the knowledge of Buyer, nothing has occurred as to each which
has resulted or is likely to result in the revocation of such determination or
which requires or could, to the knowledge of Buyer, reasonably be expected to
require action under the compliance resolution programs of the Internal Revenue
Service to preserve such qualification.
(d) ABSENCE OF CERTAIN EVENTS AND ARRANGEMENTS. Except as set
forth on Section 8.13(d) of the Buyer Disclosure Schedule,
(i) there is no pending or, to the knowledge of
Buyer, threatened legal action, proceeding or investigation, other than routine
claims for benefits, concerning any Buyer Benefit Plan or to the knowledge of
Buyer any fiduciary or service provider thereof and, to the knowledge of Buyer,
there is no basis for any such legal action or proceeding;
(ii) no liability (contingent or otherwise) to the
Pension Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has
been incurred by Buyer or any of its Affiliates (other than insurance premiums
satisfied in due course);
(iii) no reportable event, or event or condition
which presents a material risk of termination by the PBGC, has occurred with
respect to any Buyer Benefit Plan, or any retirement plan of an Affiliate of
Buyer, which is subject to Title IV of ERISA;
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(iv) neither Buyer, nor, to Buyer's knowledge, any
other party in interest with respect to any Buyer Benefit Plan, has engaged in a
prohibited transaction known to Buyer which could subject Buyer directly or
indirectly to liability under Section 409 or 502(i) of ERISA or Section 4975 of
the Code;
(v) no Buyer Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their beneficiaries
except to the extent required by applicable state insurance laws and Title I,
Part 6 of ERISA;
(vi) Buyer has not announced its intention to modify
or terminate any Buyer Benefit Plan or adopt any arrangement or program which,
once established, would come within the definition of an Buyer Benefit Plan; and
(vii) Buyer has not undertaken to maintain any Buyer
Benefit Plan for any period of time and each such Plan is terminable at the sole
discretion of the sponsor thereof, subject only to such constraints as may
imposed by applicable law.
(e) FUNDING OF CERTAIN PLANS. With respect to each Buyer
Benefit Plan for which a separate fund of assets is or is required to be
maintained, full and timely payment has been made of all amounts required of
Buyer, under the terms of each such Plan or applicable law, as applied through
the Closing Date, and no accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any such Plan. The current value of the assets of each such Buyer
Benefit Plan, as of the end of the most recently ended plan year of that Plan,
equals or exceeded the current value of all benefits liabilities under that
Plan.
(f) EFFECT OF TRANSACTIONS. Except as set forth in Section
8.13(f) of the Buyer Disclosure Schedule, the execution of this Agreement and
the consummation of the transactions contemplated herein will not, by itself or
in combination in any other event (regardless of whether that other event has or
will occur), result in any payment (whether of severance pay or otherwise)
becoming due from or under any Buyer Benefit Plan (including any employment
agreement) to any current or former director, officer, consultant or employee of
Buyer or result in the vesting, acceleration of payment or increases in the
amount of any benefit payable to or in respect of any such current or former
director, officer, consultant or employee.
(g) MULTI-EMPLOYER PLANS. No Buyer Benefit Plan is a
multi-employer plan.
(h) DEFINITIONS. For purposes of this Section 8.13,
"multi-employer plan", "party in interest" "current value", "reportable event"
and "benefit liability" have the same meaning assigned such terms under Sections
3, 4043(b) or 4001(a) of ERISA, and "affiliate" means any entity which under
Section 414 of the Code is treated as a single employer with Buyer.
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8.14. INTELLECTUAL PROPERTY
(a) As used herein: "INTELLECTUAL PROPERTIES" means
intellectual property or proprietary rights of any description including without
limitation (i) rights in any patent, patent application, copyright, industrial
design, URL, domain name, trademark, service xxxx, logo, trade dress or trade
name, (ii) related registrations and applications for registration, (iii) trade
secrets, moral rights or publicity rights, (iv) inventions, discoveries, or
improvements, modification, know-how, technique, methodology, writing, work of
authorship, design or data that are necessary or useful to operate the business
of the Buyer as currently conducted and proposed by the Buyer to be conducted or
to market, sell, design, make, have made, service, maintain, install, operate,
use or test the Product(s) and develop enhanced or new products, whether or not
patented, patentable, copyrightable or reduced to practice, including but not
limited to any inventions, discoveries, improvements, modification, know-how,
technique, methodology, writing, work of authorship, design or data embodied or
disclosed in any: (1) computer source codes (human readable format) and object
codes (machine readable format); (2) specifications; (3) manufacturing,
assembly, test, installation, service and inspection instructions and
procedures; (4) engineering, programming, service and maintenance notes and
logs; (5) technical, operating and service and maintenance manuals and data; (6)
hardware reference manuals; and (7) user documentation, help files or training
materials, and (v) good will related to any of the foregoing. "PRODUCTS" means
all products and services, including all related software, now being provided by
the Buyer, and those products, services and software actively proposed to be
provided by the Buyer.
(b) Section 8.14(b) of the Buyer Disclosure Schedule lists the
major service categories of Buyer, and the patent, trademark, copyright and
domain name Intellectual Properties (other than off-the-shelf software programs
that have not been customized for its use) material to and used in or necessary
to the business of the Buyer as now being conducted and proposed by the Buyer to
be conducted (the "MAJOR INTELLECTUAL PROPERTIES"). The Buyer owns, or is
licensed or otherwise has the right to use, all Major Intellectual Properties
other than off-the-shelf software programs that have not been customized for its
use (the "BUYER INTELLECTUAL PROPERTIES"), free and clear of all liens, claims
and encumbrances, except for such liens, claims and encumbrances as do not
materially impair the Buyer's ability to use, exploit, license and distribute
such Buyer Intellectual Properties. Except as otherwise indicated in Section
8.14(b) of the Buyer Disclosure Schedule, the Buyer is not required to pay any
royalties or further consideration for the use of any Buyer Intellectual
Properties that the Buyer has licensed from other Persons. The Buyer possesses
previous versions of any software (other than off-the-shelf software that has
not been customized for its use), whenever a previous version exists, that are
purchased or licensed from third parties and that are used to provide Products
such that the Buyer can recreate the current and next most recent versions of
any Buyer Intellectual Properties.
(c) The Buyer's Products, including all related software, are
free from material defects and perform in substantial accordance with all
published specifications (if any).
(d) Except as set forth in Section 8.14(d) of the Buyer
Disclosure Schedule, the Buyer has not granted any third party any right to
manufacture, reproduce, distribute or
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market any of the Buyer's Products or any adaptations, translations, or
derivative works based on the Buyer's Products or any portion thereof.
(e) Except as set forth in Section 8.14(e) of the Buyer
Disclosure Schedule, the Buyer has not granted any third party any right to
license any of the Buyer's Products except under valid and binding written
software license agreements.
(f) Except as set forth in Sections 8.14(d) and 8.14(f) of the
Buyer Disclosure Schedule, no third party has been licensed to use, or has
lawful access to any source code developed in respect of the Buyer's Products.
(g) Except as set forth in Section 8.14(g) of the Buyer
Disclosure Schedule, all of which have been resolved prior to the date of this
Agreement, no product liability or product warranty claims have been
communicated in writing to or threatened in writing against the Buyer.
(h) In any instance where the Buyer's rights to Buyer
Intellectual Properties arise under a license or similar agreement (other than
for off-the-shelf software programs that have not been customized for its use),
this is indicated in Section 8.14(b) of the Buyer Disclosure Schedule. No other
person has an interest in or right or license to use any of the Buyer
Intellectual Properties owned by the Buyer, except as set forth in Section
8.14(d) of the Buyer Disclosure Schedule. To the Buyer's knowledge, there is and
has been no material unauthorized use, disclosure, infringement or
misappropriation of any Buyer Intellectual Properties owned by the Buyer by any
third party. To the Buyer's knowledge, none of the Buyer Intellectual Properties
owned by the Buyer or licensed to the Buyer on an exclusive basis is being
infringed by others, or is subject to any outstanding order, decree, judgment,
or stipulation. Except as set forth in section 8.14(i) of the Buyer Disclosure
Schedules, no litigation (or other proceedings in or before any court or other
governmental, adjudicatory, arbitral, or administrative body) relating to the
Buyer Intellectual Properties owned by the Buyer or licensed to the Buyer on an
exclusive basis is pending, or to the Buyer's knowledge, threatened against the
Buyer, nor, to the Buyer's knowledge, is there any valid basis for any such
litigation or proceeding. None of the Buyer Intellectual Properties owned by the
Buyer or licensed to the Buyer on an exclusive basis is subject to any
outstanding order, decree, judgment, or stipulation. The Buyer maintains
reasonable security measures for the preservation of the secrecy and proprietary
nature of such of its Buyer Intellectual Properties that constitute trade
secrets or other confidential information.
(i) Except as set forth in Section 8.14(i) of the Buyer
Disclosure Schedule, to the Buyer's knowledge, the Buyer has not infringed or
made unlawful use of, and is not infringing or making unlawful use of, any
Intellectual Properties of any other person. Except as set forth in Section
8.14(i) of the Buyer Disclosure Schedule, no litigation (or other proceedings in
or before any court or other governmental, adjudicatory, arbitratory, or
administrative body) charging the Buyer with infringement or unlawful use of any
Intellectual Properties is pending, or to the Buyer's knowledge, threatened
against the Buyer, nor, to the Buyer's knowledge, is there any valid basis for
any such litigation or proceeding.
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(j) Each person presently or previously employed by the Buyer
(including independent contractors, if any) with access authorized by the Buyer
to confidential information relating to the Buyer Intellectual Properties has
executed a confidentiality and non-disclosure agreement pursuant to an agreement
substantially in the form of agreement previously provided to Buyer or its
representatives and such confidentiality and non-disclosure agreements
constitute valid and binding obligations of the Buyer and, to the Buyer's
knowledge, of such person, enforceable in accordance with their respective
terms. All Buyer Intellectual Properties that are owned by the Buyer were
written, developed and created solely and exclusively by employees of the Buyer
(and all rights in and to all Buyer Intellectual Properties are owned by the
Buyer) without the assistance of any third party or entity OR were created by or
with the assistance of third parties who assigned ownership of their rights
(including all intellectual property rights) in such Buyer Intellectual
Properties to the Buyer by means of valid and enforceable consultant
confidentiality and invention assignment agreements, copies of which have been
delivered to Buyer. All Buyer Intellectual Properties that are licensed to the
Buyer (other than off-the-shelf software programs that have not been customized
for its use) are identified in Schedule 8.14(b), and copies of such license
agreements have been made available to Buyer.
(k) All use, disclosure or appropriation by the Buyer (or its
employees or agents) of confidential information relating to Intellectual
Properties not otherwise protected by patents, patent applications or copyright
("CONFIDENTIAL INFORMATION") owned by the Buyer and licensed to a third party
has been pursuant to the terms of a written agreement between the Buyer and such
third party. All use, disclosure or appropriation by the Buyer (or its employees
or agents) of Confidential Information not owned by the Buyer has been made
pursuant to the terms of a written agreement between the Buyer and the owner of
such Confidential Information, or is otherwise lawful.
(l) Section 8.14(b) of the Buyer Disclosure Schedule contains
an accurate and complete description of all patents and patent applications,
trademarks (with separate listings of registered and unregistered trademarks),
trade names, major Internet Domain Names and registered or unregistered
copyrights in or related to the Buyer Products or otherwise included in the
Buyer Intellectual Properties and all applications and registrations therefor.
To the knowledge of Buyer, all of Buyer's patents, patent rights, copyrights,
trademark, trade name or Internet domain name registrations related to or in the
Buyer Products are valid and in full force and effect; and consummation of the
transactions contemplated by this Agreement will not alter or impair any such
rights.
(m) To the Buyer's knowledge, all of the Buyer's material
information technology systems and material non information technology embedded
systems (including systems or technology currently under development) will
record, store, process, calculate and present calendar dates falling on or after
(and, if applicable, during spans of time including) January 1, 2000, and will
calculate all information dependant on or relating to such date in the same
manner, and with the same functionality, data integrity and performance, as the
information technology systems and non information technology embedded systems
record, store, process, calculate and present calendar dates on or before
December 31, 1999, or calculate and information dependent on or relating to such
date.
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8.15 TAX-FREE REORGANIZATION. It is the present intention of
Buyer to continue at least one significant historic business line of the
Company, or to use at least a significant portion of the Company's historic
business assets in a business, in each case within the meaning of Treas.
Reg. Sections 1.368-1(d).
9. MUTUAL COVENANTS; ADDITIONAL AGREEMENTS.
9.1. SATISFACTION OF CONDITIONS. Each of the parties will use
its reasonable best efforts to cause the satisfaction on or before January 30,
2001, of the conditions contained in Sections 12 through 14 of this Agreement
that impose obligations on it or require action on its part or the part of any
of its stockholders or Affiliates.
9.2. FURTHER ASSURANCES. Subject to the terms and conditions
set forth in this Agreement, from time to time both before and after the
Effective Time, each of the parties will use his or its reasonable best efforts,
as promptly as is practicable to take or cause to be taken all actions, and to
do or cause to be done all other things, as are necessary, proper, or advisable
to consummate and make effective the Merger and the other transactions
contemplated hereby. In the event the Secretary of State of the State of
Delaware raises any technical objection to the terms of this Agreement as part
of the Certificate of Merger, the parties hereto agree to restate and amend this
Agreement to eliminate such objection so long as such amendment does not
adversely affect any party hereto.
9.3. HSR ACT. Each of the parties will:
(a) as promptly as is practicable, but in any event within ten
(10) business days following the execution of this Agreement, make its required
filings under the HSR Act;
(b) as promptly as is practicable after receiving any
governmental request under the HSR Act for additional information, documents, or
other materials, use its best reasonable efforts to comply with such request;
(c) cooperate with the other in connection with resolving any
governmental inquiry or investigation relating to their respective HSR Act
filings, the Merger, or any related inquiry or investigation;
(d) promptly inform the other of any communication with, and
any proposed understanding, agreement, or undertaking with any governmental
entity relating to their respective HSR Act filings, the Merger, or any related
inquiry or investigation; and
(e) to the extent reasonably practicable, give the other
reasonable advance notice of, and the opportunity to participate in (directly or
through its representatives), any meeting or conference with any governmental
entity relating to their respective HSR Act filings, the Merger, or any related
inquiry or investigation.
9.4. BUYER STOCKHOLDER MEETING; PROXY STATEMENT. Buyer shall
call a meeting of its stockholders, to be held as soon as reasonably practicable
after the date of this
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Agreement, for the purpose of voting upon adoption of this Agreement and the
Merger and such other related matters as it deems appropriate, including the
election, subject to the consummation of the transactions contemplated
hereby, of Xxxxxx X. Xxxxx as a Class I Director of Buyer. In connection with
such meeting, (i) Buyer shall prepare mail to its stockholders, a proxy
statement and (ii) Company shall furnish to Buyer all information concerning
Company and its stockholders that Buyer may reasonably request in connection
with the preparation of such proxy statement.
9.5. SECURITIES LAWS FILINGS. Buyer and Company shall make all
necessary filings with respect to the Merger under the Securities Laws.
9.6. FUNDING OF MERGER SUB OBLIGATIONS. Buyer shall provide
Merger Sub with the funding necessary to satisfy its obligations under this
Agreement.
9.7. REORGANIZATION TREATMENT. Each of Buyer, Merger Sub,
the Company and the Company Stockholders shall (i) make all reasonable
efforts to cause the Merger to be treated as a reorganization described in
Section 368(a) of the Code and not take any action materially adverse to such
treatment, (ii) not file any return or take any position inconsistent with
the treatment of the Merger as a reorganization described in Section 368(a)
of the Code, (iii) comply with the record-keeping and information reporting
requirements set forth in Treas. Reg. Section 1.368-3 and (iv) not, to the
extent not inconsistent with any applicable law, rule, or regulation, file
any return or take any position inconsistent with the Company's prior
position that the Company Options designated on the Company's books and
records as "INCENTIVE STOCK OPTIONS" qualify as such under Code Section 422.
9.8. TREATMENT OF BRIDGE LOANS. Each of Buyer, Merger Sub and
the Company (i) acknowledges and agrees that the Bridge Loans are indebtedness
of the Company to Buyer, (ii) will treat the Bridge Loans as indebtedness of the
Company for all purposes, and (iii) will reflect the Bridge Loans on their
respective books, records, and tax returns in a manner consistent with such
treatment.
10. CONDUCT OF THE COMPANY'S BUSINESS PENDING THE CLOSING. The Company
covenants and agrees that, from and after the date of this Agreement and until
the Closing, except as otherwise specifically consented to or approved by Buyer
in writing:
10.1. FULL ACCESS. The Company will afford to Buyer and its
authorized representatives, upon reasonable notice, full access during normal
business hours to all properties, books, records, contracts, and documents of
the Company and a full opportunity to make such investigations as they will
desire to make of the Company, and the Company will furnish or cause to be
furnished to Buyer and its authorized representatives all such information with
respect to the affairs and businesses of the Company as Buyer may reasonably
request, except to the extent that such access and opportunity cannot be
provided and such information can be furnished without unreasonably interfering
with the business of the Company.
10.2. CARRY ON IN REGULAR COURSE. The Company will maintain
its owned and leased properties in good operating condition and repair, will
make all necessary renewals,
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additions, and replacements thereto, will carry on its businesses diligently
and substantially in the same manner as heretofore, and will not make or
institute any material new, unusual, or novel methods of manufacture,
purchase, sale, lease, management, accounting, or operation or take or permit
to occur or exist any action or circumstance referred to in Section 6.8
hereof, except to the extent necessary to comply with outstanding contractual
obligations otherwise disclosed in this Agreement or as contemplated by this
Agreement. The Company will not incur any material additional Indebtedness
(as defined in Section 19.1).
10.3. NO DIVIDENDS, ISSUANCES, REPURCHASES, ETC. Except
pursuant to the exercise of Company Options in accordance with the terms
thereof, and as required by the terms of those agreements listed on Schedule
10.3 of the Company Disclosure Schedule, the Company will not declare, set
aside, or pay any dividends (whether in cash, shares of stock, other property,
or otherwise) on, or make any other distribution in respect of, any shares of
its capital stock or other securities, or issue, purchase, redeem, or otherwise
acquire for value any shares of its capital stock or other securities.
10.4. NO COMPENSATION CHANGES OR ADDITIONAL PAYMENTS. (a) The
Company will not increase the compensation payable or to become payable to any
of its officers or directors or (except for increases made in the usual and
ordinary course of business and consistent with past practices) any of its key
employees or agents, or pay or commit to pay at any time in the future any
bonus, insurance, pension, or other benefit plan payment, or arrangement made
to, for, or with any such officers, directors, key employees or agents other
than those payments set forth in Section 10.4 of the Company Disclosure
Schedule, which Section 10.4 describes in reasonable detail the circumstances
under which such payments may be made, nor will it effect any general or uniform
increase in the compensation payable or to become payable to its employees,
including without limitation any increase in the benefits under any bonus or
pension plan or other contract or commitment.
(b) The Company shall not issue any options, warrants or
other securities exercisable for or convertible into shares of Company Common
Stock, or any other security of the Company, except that the Company may, (i)
immediately prior to the Effective Time, pursuant to the Company Restricted
Stock Plan (as defined in Section 10.20), issue up to 2,750,000 shares of
Class A Common Stock of the Company to certain Company employees in the
respective amounts for such employees listed in Section 10.4(b) of the
Company Disclosure Schedule (the "COMPANY RESTRICTED SHARES"), and (ii) from
time to time prior to the Effective Time, issue options to purchase a number
of shares of Company Common Stock that, when added to the number of shares of
Company Common Stock issuable upon the exercise of Company Stock Options
issued on or after November 1, 2000, does not exceed 384,500 shares of
Company Common Stock (the "NEW OPTION NUMBER"), to new hires of the Company
pursuant to the Company Stock Plan, PROVIDED, that, in the event the
Termination Date is extended past February 28, 2001, the Company may issue
additional Company Options to new hires in excess of the New Option Number
upon the consent of the Buyer, such consent not to be unreasonably withheld,
and PROVIDED, FURTHER, (i) any grant or grants of options to purchase in
excess of 40,000 shares of the Company Common Stock in the aggregate to any
single individual may be made only after consultation with, and receipt of
approval from, the Chief Executive Officer of Buyer, which approval may be
withheld by such Chief Executive Officer for any reason or no reason in
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his sole discretion; (ii) such option grants are made within the guidelines
(including exercise price, number of shares and vesting period) set forth in
Section 10.4(b) of the Buyer Disclosure Schedule, and (iii) such option grants
are made with exercise or "strike" prices equal to the fair market value of the
underlying shares of Company Common Stock (giving due consideration to the
execution and delivery of this Agreement and the transactions contemplated
hereby). Any grants of Restricted Shares shall be made pursuant to Restricted
Stock Award Agreements in a form mutually acceptable to Buyer and the Company
(each, a "RESTRICTED STOCK AWARD AGREEMENT").
10.5. CONTRACTS AND COMMITMENTS. Except for those contracts,
commitments or transactions for which the Company has received the prior written
consent of Buyer, the Company will not enter into any material contract or
commitment, or engage in any other transaction, with any of its Affiliates,
other than in the usual and ordinary course of business and consistent with its
normal past business practices.
10.6. PURCHASE AND SALE OF CAPITAL ASSETS. The Company will
not purchase, lease as lessee, license as licensee, or otherwise acquire any
interest in, or sell, lease as lessor, license as licensee, or otherwise dispose
of any interest in, any capital asset(s) other than (i) in the ordinary course
of business, (ii) with respect to dispositions, having a market value of less
than $10,000 in any instance, or less than $50,000 in the aggregate, or (iii) in
the case of acquisitions, as set forth in Section 10.6(iii) of the Company
Disclosure Schedule, or (iv) to the extent necessary in order to comply with
outstanding contractual obligations under agreements specified in Section 6.20
of the Company Disclosure Schedule or as contemplated by this Agreement or the
transactions contemplated hereby.
10.7. NO INVESTMENTS. The Company will not establish any
subsidiary or make or commit to make any investment in any subsidiary or other
person.
10.8. INSURANCE. The Company will maintain with reputable
insurance companies, funds or underwriters adequate insurance (including without
limitation the insurance referred to on Section 6.22 of the Company Disclosure
Schedule) of the kinds, covering such risks, in such amounts, and with such
deductibles and exclusions, as are consistent, in the reasonable judgment of the
Company, with prudent business practice.
10.9. PRESERVATION OF ORGANIZATION. The Company will use its
reasonable best efforts to preserve its business organization intact, to keep
available for the benefit of the Surviving Corporation its present officers and
key employees and consultants, and to preserve for the benefit of the Surviving
Corporation its present business relationships with its material suppliers and
customers and others having business relationships with it.
10.10. NO DEFAULT. The Company will not take or omit to take
any action, or permit any action or omission to act, within the Company's
reasonable control, that would cause a material default under or a material
breach of any of its contracts, commitments, or obligations.
10.11. COMPLIANCE WITH LAWS. The Company will duly comply in
all material respects with all applicable laws, regulations, and orders.
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10.12. ADVICE OF CHANGE. The Company will promptly advise
Buyer in writing of any material adverse change in the business, assets,
condition (financial or otherwise), or operations of the Company.
10.13. NO SOLICITATION OF TRANSACTIONS. (a) The Company shall
not, directly or indirectly, through any representative or otherwise, initiate,
solicit or encourage (including by way of furnishing information), or take any
other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing Transaction
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of its representatives to take any such
action.
(b) For purposes of this Agreement, "COMPETING TRANSACTION"
shall mean any of the following involving the Company (other than the Merger and
the other transactions contemplated in this Agreement): (i) any merger,
consolidation, share exchange, business combination, issuance or purchase of
securities or other similar transaction , (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of the assets of the Company in
a single transaction or series of related transactions; (iii) any tender offer
or exchange offer for the Company's securities or the filing of a registration
statement under the Securities Act in connection with any such exchange offer;
in the case of clause (i), (ii) or (iii) above, which transaction would result
in a third party (or its shareholders) or affiliates acquiring, individually or
in the aggregate, more than 15% of the voting securities of the Company then
outstanding or more than 15% of the assets of the Company and its subsidiaries,
taken as a whole; (iv) any solicitation in opposition to adoption by the
Company's stockholders of this Agreement; or (v) any announcement of an
agreement, proposal, plan or intention to do any of the foregoing, either during
the effectiveness of this Agreement or at any time thereafter.
10.14. CONSENT OF THIRD PARTIES. The Company shall employ its
reasonable best efforts to secure, before the Closing, the consent, in form and
substance reasonably satisfactory to Buyer and Buyer's counsel, to the
consummations of the transactions contemplated by the Agreement by each party to
the contracts, commitments or obligations of the Company listed in Section 10.14
of the Company Disclosure Schedule.
10.15. SATISFACTION OF CONDITIONS PRECEDENT. The Company shall
use its reasonable best efforts to cause the satisfaction of the conditions
precedent contained in Sections 12 and 14 hereof.
10.16. DISCLOSURE SUPPLEMENTS. From time to time before the
Closing, and in any event immediately before the Closing, the Company will
promptly advise Buyer in writing of any matter hereafter arising or becoming
known to it that, if existing, occurring, or known at or before the date of this
Agreement, would have been required to be set forth or described in the Company
Disclosure Schedule, or that is necessary to correct any information in the
Company Disclosure Schedule that is or has become inaccurate (collectively, the
"COMPANY SUPPLEMENTAL DISCLOSURES"), and such Company Supplemental Disclosures
shall be deemed to update the
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information set forth in the Company's and Principal Company Stockholders'
representations and warranties and Company Disclosure Schedule only for
purposes of determining the accuracy of such representations and warranties
as of the Closing Date.
10.17. TAX ELECTIONS. The Company will not make any election
with respect to Taxes or adopt any change in any method of accounting for
federal income tax purposes without the written consent of Buyer.
10.18. 401(k) PLAN. If requested by the Buyer prior to the
Effective Time, the Company shall take all actions reasonably necessary or
appropriate, including any actions required to be taken by the Board of
Directors of the Company, to cause the termination, or other modification as
contemplated by Section 11.8 hereof, of the Company's 401(k) plan, effective as
of the Effective Time.
10.19. AUDIT ROLL-FORWARD. The Company shall use its
reasonable best efforts to cause KPMG, LLP to conduct such procedures as KPMG,
LLP deems reasonably necessary and appropriate as of a preliminary date to allow
the Company and Buyer to prepare, as soon as reasonably practicable after the
Effective Time, financial statements of the Company for the Company's fiscal
year ended December 31, 2000, and an opening balance sheet as of the Effective
Time, each to be prepared in accordance with GAAP.
10.20. COMPANY RESTRICTED STOCK PLAN. As soon as practicable
following the date of this Agreement, the Company shall adopt the Company's 2000
Restricted Stock Plan (the "COMPANY RESTRICTED STOCK PLAN") in the form attached
hereto as Exhibit 10.20.
11. BUYER'S AND MERGER SUB'S COVENANTS. Buyer and Merger Sub covenant
and agree that, except as otherwise specifically consented to or approved by the
Company in writing:
11.1. COMPLIANCE WITH LAWS. Buyer and each of its Subsidiaries
will duly comply in all material respects with all applicable laws, regulations,
and orders.
11.2. ADVICE OF CHANGE. Buyer will promptly advise the Company
in writing of any material adverse effect in the business, assets, condition
(financial or otherwise) or operations of Buyer.
11.3. CONSENT OF THIRD PARTIES. Buyer shall employ its
reasonable best efforts to secure, before the Closing, the consent, in form and
substance reasonably satisfactory to the Company and the Company's counsel, to
the consummation of the transactions contemplated by the Agreement, by each
party to any material contract, commitment or obligation of Buyer, in each case
under which such consent is required and the failure of which to obtain such
consent would be materially adverse to Buyer.
11.4. SATISFACTION OF CONDITIONS PRECEDENT. Buyer shall use
its reasonable best efforts to cause satisfaction of the conditions precedent
contained in Sections 12 and 13 hereof.
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11.5. DISCLOSURE SUPPLEMENTS. From time to time before the
Closing, and in any event immediately before the Closing, Buyer will promptly
advise the Company in writing of any matter hereinafter arising or becoming
known to Buyer that, if occurring, or known to Buyer at or before the date of
this Agreement, would have been required to be set forth or described in the
Buyer Disclosure Schedule, or that is necessary to correct any information in
the Buyer Disclosure Schedule that is or has become inaccurate. (collectively,
the "BUYER SUPPLEMENTAL DISCLOSURES"), and such Buyer Supplemental Disclosures
shall be deemed to update the information set forth in the Buyer's and Principal
Buyer Stockholders' representations and warranties and Buyer Disclosure Schedule
only for purposes of determining the accuracy of such representations and
warranties as of the Closing Date.
11.6. STOCKHOLDERS MEETING. Buyer shall call a special meeting
of Buyer's stockholders, to be held as soon as reasonably practicable after the
date of this Agreement, to consider and vote upon the approval of this Agreement
and the Merger and the other transactions contemplated hereby, including the
election of Xxxxxx X. Xxxxx as a Class I Director of the Buyer. Buyer shall
recommend to its stockholders the approval of this Agreement and the Merger and
the other transactions contemplated hereby and shall use its reasonable best
efforts to solicit and obtain the requisite vote of approval. Nothing in this
Section 11.6 shall be deemed to amend or modify the obligations of any of the
Principal Buyer Stockholders under any separate agreement between the Company
and such Principal Buyer Stockholders, including but not limited to the Buyer
Stockholder Voting Agreement, requiring such Principal Buyer Stockholders to
approve this Agreement and the Merger.
11.7. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The By-Laws of the Surviving Corporation shall contain the respective
provisions that are set forth, as of the date of this Agreement, in Article
Sixth of the Company's Amended Certificate of Incorporation, which provisions
shall not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would affect adversely the rights
thereunder of individuals who at or at any time prior to the Effective Time were
directors, officers, employees, fiduciaries or agents of the Company.
(b) After the Effective Time, Buyer and the Surviving
Corporation shall, to the extent set forth under Article Sixth of the Company's
Amended Certificate of Incorporation, indemnify and hold harmless each current
and former director or officer of the Company and each Subsidiary of the Company
and each such person who served at the request of the Company or any Subsidiary
of the Company as a director, officer, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise (collectively, for purposes of this
Section 11.7 only, the "INDEMNIFIED PARTIES") against all costs and expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, administrative, criminal or investigative,
arising out of or pertaining to any action or omission in their capacities as
officers or directors, in each case occurring before the Effective Time. Without
limiting the foregoing, in the event of any such claim, action, suit, proceeding
or investigation, (i) the Buyer and the Surviving Corporation, as the case may
be, shall pay the reasonable fees and expenses of one counsel selected by any
Indemnified Party, which counsel
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shall be reasonably satisfactory to the Buyer and the Surviving Corporation,
as the case may be, promptly after statements therefor are received (unless
the Surviving Corporation shall elect to defend such action) and (ii) the
Buyer and the Surviving Corporation shall reasonably cooperate in the defense
of any such matter; PROVIDED, HOWEVER, that neither the Buyer nor the
Surviving Corporation shall be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or
delayed). In the event that any claim or claims for indemnification are
asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims shall continue until the disposition
of any and all such claims.
(c) For a period of six years after the Effective Time, Buyer
shall cause to be maintained in effect the current directors and officers
liability insurance policies maintained by the Company (provided that coverage
limits in the aggregate for the entire six year period are not less than the
current annual limits, and provided further that Buyer, with consent of the
Indemnified Parties, which consent shall not be unreasonably withheld, may
substitute policies of at least the same coverage with other terms and
conditions that are no less advantageous to the Indemnified Parties) with
respect to claims arising from facts or events that occurred prior to the
Effective Time; provided, however, that in no event shall Buyer be required to
expend, pursuant to this Section 11.7(c), more than an amount per year equal to
150% of current annual premiums paid by the Company for such insurance;
PROVIDED, FURTHER, however, that if the premiums for such coverage exceed such
amount, Buyer or the Surviving Corporation shall purchase a policy with the
greatest coverage available for such 150% of the current annual premiums spent
by the Company for its fiscal year ending December 31, 2000.
(d) In the event Buyer or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
in such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each case, proper
provision shall be made so that the successors and assigns of Buyer or the
Surviving Corporation, as the case may be, honor the indemnification obligations
set forth in this Section 11.7.
(e) Notwithstanding the foregoing, nothing in Section 11.7
shall limit the Buyer's and the Merger Sub's remedies under Section 16.1 and
16.2 of this Agreement or otherwise and arising in connection with this
Agreement.
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11.8. CERTAIN EMPLOYEE BENEFITS MATTERS.
(a) In the event the Merger is consummated, for a period of
one year following the Effective Time and effective upon the Effective Time,
Buyer shall, or shall cause the Surviving Corporation to, provide medical,
401(k), life and disability benefits, and other employee benefit plans,
generally, to employees of the Surviving Corporation and its subsidiaries that,
in the aggregate, are substantially comparable to the medical, 401(k), life and
disability benefits and other benefits that were provided to such Surviving
Corporation employees under the employee benefit plans of the Company as in
effect immediately prior to the Effective Time and that have been disclosed in
the Company Disclosure Schedule. Without limiting the generality of the
foregoing:
(i) Buyer shall take such action or actions as may be necessary or
appropriate so that, under the iBasis, Inc. 401(k) Retirement Plan (the "iBASIS
PLAN"):
(A) Surviving Corporation employees who were participants in
the Company's 401(k) Retirement Plan (the "COMPANY PLAN") on the day before the
Effective Time shall become eligible to participate in the iBasis Plan as of the
Effective Time; and
(B) Surviving Corporation employees who were participants in
the PriceInteractive Plan on the day before the Effective Time shall, with
respect to their participation thereafter under the iBasis Plan, receive an
employer matching contribution approximating 50% of their pre-tax savings
contributions, to the extent not in excess of 6% of compensation; and
(ii) Buyer shall, or shall cause Surviving Corporation to, use its
reasonable best efforts to cause its medical insurance coverage to provide that,
for the plan year in which the Effective Time occurs, amounts incurred by
Surviving Corporation employees who were participants in the Company medical
plan as of the Effective Time will be recognized by the Buyer or Surviving
Corporation's medical plan for purposes of determining applicable out-of-pocket
deductibles, co-pays and maximums.
Nothing herein shall limit Buyer's authority under the iBasis Plan or Buyer's
medical insurance coverage to modify, amend or terminate either such program at
any time following the Effective Time. Any such modifications, amendments or
terminations within the initial year following the Effective Time shall be
considered in determining whether Buyer is in compliance with the initial
sentence of this Section 11.8(a), however.
(b) OPTION GRANTS. Notwithstanding anything to the contrary in
this Section 11.8, nothing in this Section 11.8 shall be deemed to require the
Buyer to make any option grants under the Buyer's Stock Plan or any other
stock-based plan of the Buyer (including the Company Option Plan, to the extent
assumed by the Buyer), PROVIDED, that the employees of the Surviving Corporation
shall be made eligible for grants of awards under the Buyer's 1999 Employee
Stock Purchase Plan in accordance with the terms thereof; and provided further
that employees of the Surviving Corporation shall be deemed to be employees of
the Buyer for purposes of eligibility to receive stock options pursuant to the
Buyer Stock Plan.
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12. MUTUAL CONDITIONS TO THE PARTIES' OBLIGATIONS. The parties'
obligations to consummate the Merger are subject to the satisfaction (or waiver
by the Company or Buyer, each in its sole discretion) of each of the conditions
set forth in this section on or before the Closing Date. If the Merger is
consummated, such conditions will conclusively be deemed to have been satisfied
or waived.
12.1. NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction, or other order issued by any court
of competent jurisdiction, or other legal restraint or prohibition preventing
the consummation of the Merger, will be in effect, and no petition or request
for any such injunction or other order will be pending.
12.2. PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings
in connection with the transactions contemplated by this Agreement and all
certificates and other documents delivered to such party pursuant to this
Agreement or in connection with the Closing will be reasonably satisfactory to
such party and his or its counsel.
12.3. ESCROW AGREEMENT. Buyer, the Stockholder
Representatives, the Principal Company Stockholders named therein, the Escrow
Agent and the Additional Escrow Parties shall have entered into the Escrow
Agreement substantially in the form attached as EXHIBIT 3.3 hereto.
12.4. GOVERNMENTAL CONSENTS. All consents, approvals, orders
or clearances of any governmental authority (including any approvals or
clearances under the HSR Act), the granting of which is required for the
consummation of the transactions contemplated by this Agreement, shall have been
obtained, and all waiting periods specified under applicable law, the expiration
of which is necessary for such consummation, shall have passed.
12.5. NASDAQ NATIONAL MARKET LISTING. The shares of Buyer
Common Stock into which shares of Company Common Stock will be converted in the
Merger will have been authorized for listing, subject to official notice of
issuance, on the Nasdaq National Market or such other exchange or automated
quotation system on which the Buyer Common Stock is then listed or quoted.
13. CONDITIONS TO THE COMPANY'S AND THE PRINCIPAL COMPANY STOCKHOLDERS'
OBLIGATIONS. The obligations of the Company and each of the Principal Company
Stockholders, respectively, to consummate the Merger are subject to the
satisfaction (or waiver by the Company, in its sole discretion) of each of the
conditions set forth in this section on or before the Closing Date. If the
Merger is consummated, such conditions will conclusively be deemed to have been
satisfied or waived.
13.1. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Buyer and/or Merger Sub in or pursuant to
this Agreement or in any statement, certificate, or other document delivered to
the Company or the Principal Company Stockholders in connection with this
Agreement, the Merger, or any of the other transactions contemplated hereby will
have been true and correct in all material respects (or in the case of
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matters qualified either by materiality or Material Adverse Effect, in all
respects) when made and (after taking into account any supplement to or
amendment of this Agreement or any such statement, certificate or other
document required to correct any information therein that is or has become
inaccurate) will be true and correct in all material respects at and as of
the Closing.
13.2. COMPLIANCE WITH AGREEMENT. Buyer and Merger Sub will
have performed and complied in all material respects with all of their
respective obligations under this Agreement to be performed or complied with by
them before or at the Closing, including without limitation the execution and
delivery of all documents to be executed and delivered by any of them in
connection with this Agreement and/or the consummation of the Merger and the
other transactions contemplated hereby.
13.3. CLOSING CERTIFICATE. Buyer and Merger Sub will have
executed and delivered to the Company, at and as of the Closing, a certificate
(without qualification as to knowledge or materiality) certifying that the
conditions referred to in Sections 13.1 and 13.2 have been satisfied.
13.4. OPINION OF COUNSEL. Xxxxxxx Xxxx LLP, counsel to Buyer
and Merger Sub, will have delivered to the Company a written legal opinion,
dated on and as of the Closing Date, and substantially in the form of the
attached EXHIBIT 13.4.
13.5. NO MATERIAL CHANGE. There shall not have been any
material adverse change in the financial condition, business or assets of Buyer,
PROVIDED, HOWEVER, for the purposes of this Section 13.5, a decrease in the
trading price of Buyer Common Stock as reported on the Nasdaq National Market or
such other exchange or automated quotation system on which the Buyer Common
Stock is then listed or quoted, shall not, in and of itself be deemed to
constitute, a material adverse change.
13.6. REGISTRATION STATEMENT. The Registration Statement shall
be effective under the Securities Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no action,
suit, proceeding or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary approvals
under state securities law or the Securities Act or Exchange Act relating to the
issuance or trading of the shares of Buyer Common Stock issuable pursuant to the
Merger shall have been received.
13.7. TAX OPINION. The Company shall have received an opinion
of Xxxxxxx & Xxxxxx LLP, dated the Closing Date, to the effect that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Code. In rendering its opinion, such counsel shall be entitled to require and
rely upon customary representations contained in certificates of the officers of
the Company, Buyer and Merger Sub. The parties agree that it would be reasonable
for tax counsel not to give such opinion in the event that the equity component
of the consideration in the transaction fell below 45% for purposes of the
continuity of business interest test under Section 368 of the Code and the
regulations and cases thereunder.
13.8. ELECTION OF XXXXXX X. XXXXX. Xxxxxx X. Xxxxx shall have
been elected, subject to the consummation of the transactions contemplated
hereby, as a Class I Director of Buyer.
13.9. MICROSTRATEGY ASSURANCE LETTER. The Buyer shall have
entered into a letter agreement with MicroStrategy Incorporated in the form of
EXHIBIT 13.9 hereto (the "MICROSTRATEGY ASSURANCE LETTER"), and the
MicroStrategy Assurance Letter shall be in full force and effect.
13.10. EMPLOYEE BENEFITS DOCUMENTS.
(a) For each Buyer Benefit Plan that is an "employee benefit
plan" within the meaning of Section 3(3) of ERISA, the Company shall have
received true, correct and complete copies of the following documents: (i) plan
document, and (ii) the three most recent Form 5500s filed by the Buyer Benefit
Plan.
(b) For each Buyer Benefit Plan that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA, the Company shall
have received true, correct and complete copies of the following documents: (i)
summary annual reports for the current or any of the three (3) preceding
calendar years, (ii) the latest summary plan description, and (iii) the most
recently received IRS determination letter.
(c) For each Buyer Benefit Plan that is an "employee benefit
plan" within the meaning of Section 3(3) of ERISA, the Company shall have
received true, correct and complete copies of the following documents or written
confirmation that such documents do not exist: (i) summaries of material
modifications to the latest summary plan description, (ii) any actuarial report
submitted to any governmental agency or distributed to participants or
beneficiaries thereunder in the current or any of the three (3) preceding
calendar years, (iii) any governmental advisory opinions, rulings, compliance
statements, closing agreements, or similar materials specific to such Buyer
Benefit Plan, and (iv) any trust agreement or insurance agreements associated
with a Buyer Benefit Plan.
(d) For each Buyer Benefit Plan that is an "employee welfare
benefit plan" within the meaning of Section 3(3) of ERISA, the Company shall
have received true, correct and complete copies of the following documents or
written confirmation that such documents do not exist: (i) the latest summary
plan description, and (ii) the most recently received IRS determination letter.
13.11. TERMINATION OF 401(k) PLAN. Provided satisfactory
arrangements have been made to avoid the acceleration of outstanding plan loans
(including through acceptance of such loans as part of a rollover to Buyer's
401(k) Plan), on request of Buyer, the Company shall have terminated its 401(k)
Plan immediately prior to the Effective Time.
13.12. MODIFICATIONS OF CERTAIN EMPLOYMENT AGREEMENTS. At the
Effective Time, the Buyer and each of the employees referred to on Section 14.13
of the Buyer Disclosure
Schedule shall have entered into employment agreements as contemplated by
Section 14.13 of the Buyer Disclosure Schedule and such employment agreements
shall be in full force and effect.
14. CONDITIONS TO BUYER'S AND MERGER SUB'S OBLIGATIONS. The
obligations of each of Buyer and Merger Sub, respectively, to consummate the
Merger are subject to the satisfaction (or waiver by Buyer, in its sole
discretion) of each of the conditions set forth in this section on or before
the Closing Date. If the Merger is consummated, such conditions will
conclusively be deemed to have been satisfied or waived.
14.1. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Company and/or any of the Principal
Company Stockholders in or pursuant to this Agreement or in any statement,
certificate, or other document delivered to Buyer in connection with this
Agreement, the Merger, or any of the other transactions contemplated hereby will
have been true and correct in all material respects (or in the case of matters
qualified either by materiality or Material Adverse Effect, in all respects)
when made and (after taking into account any supplement to or amendment of this
Agreement or any such statement, certificate or other document required to
correct any information therein that is or has become inaccurate) will be true
and correct in all material respects at and as of the Closing.
14.2. COMPLIANCE WITH AGREEMENT. The Company and each of the
Principal Company Stockholders will have performed and complied in all material
respects with all of their respective obligations under this Agreement to be
performed or complied with by them before or at the Closing, including without
limitation the execution and delivery of all documents to be executed and
delivered by any of them in connection with this Agreement and/or the
consummation of the Merger and the other transactions contemplated hereby.
14.3. CLOSING CERTIFICATE. The Company will have executed and
delivered to Buyer, at and as of the Closing, a certificate (without
qualification as to knowledge or materiality or otherwise) certifying that the
conditions referred to in Sections 14.1 and 14.2 have been satisfied.
14.4. NO MATERIAL ADVERSE CHANGE. There shall not have been
any material adverse change in the financial condition, business or assets of
the Company.
14.5. OPINION OF COUNSEL. Squire, Xxxxxxx & Xxxxxxx L.L.P,
counsel to the Company, will have delivered to Buyer a written legal opinion
addressed to Buyer, dated on and as of the Closing Date, and substantially in
the form of the attached EXHIBIT 14.5.
14.6. NON-COMPETITION AGREEMENTS. The employees of the Company
referred to on Section 14.13 of the Buyer Disclosure Schedule shall have
executed and delivered to Buyer a Non-Competition Agreement in the form of the
attached EXHIBIT 14.6, with the respective terms referred to on Section 14.13 of
the Buyer Disclosure Schedule.
14.7. LOCK-UP AGREEMENTS. (i) Each Company Stockholder, and
each person owning the right to acquire more than 50,000 shares of Company
Common Stock, other than Xxxx Xxxxxxx, shall have executed and delivered to
Buyer a Lock-Up Agreement in the form of
the attached EXHIBIT 14.7(a) and (ii) Xxxx Xxxxxxx shall have executed and
delivered to Buyer a Lock-Up Agreement in the form of the attached EXHIBIT
14.7(b).
14.8. DISSENTING STOCKHOLDERS. Holders of no more than 5% of
the issued and outstanding Company Common Stock as of the Effective Time shall
have elected to, or continue to have contingent rights to, exercise dissenters
rights under the DGCL as to such shares.
14.9. APPROVAL BY BUYER STOCKHOLDERS. The Buyer Stockholders
shall have authorized and approved this Agreement, the Merger and the
transactions contemplated hereby as required by the DGCL, the Buyer's
certificate of incorporation and by-laws, and the Nasdaq National Market.
14.10. TAX OPINION. Buyer shall have received an opinion of
Xxxxxxx Xxxx LLP, dated the Closing Date, to the effect that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code. In
rendering its opinion, such counsel shall be entitled to require and rely upon
customary representations contained in certificates of the officers of the
Company, Buyer and Merger Sub. The parties agree that it would be reasonable for
tax counsel not to give such opinion in the event that the equity component of
the consideration in the transaction fell below 45% for purposes of the
continuity of business interest test under Section 368 of the Code and the
regulations and cases thereunder.
14.11. FIRPTA CERTIFICATE. On the Closing Date, the Company
shall deliver to Buyer a properly executed statement in a form reasonably
acceptable to Buyer conforming to the requirements of Treas.
Reg.section.1.1445-2(c)(3).
14.12. MODIFICATION OF CERTAIN OPTIONS. Each holder of Company
Options that would not have vested (i.e., become exercisable) on or prior to the
Effective Time, but for the Merger, shall agree that that such Company Options
shall be modified such that such Company Options shall not accelerate as a
result of the Merger or the consummation of the other transactions contemplated
hereby.
14.13. MODIFICATIONS OF CERTAIN EMPLOYMENT AGREEMENTS.
Contemporaneous with and contingent upon the occurrence of the Effective Time,
the Company and each of the employees referred to on Section 14.13 of the Buyer
Disclosure Schedule shall have terminated their existing employment agreements
and entered into new employment agreements as contemplated by Section 14.13 of
the Buyer Disclosure Schedule.
15. OTHER COVENANTS. In order to induce Buyer and Merger Sub to
enter into this Agreement and to consummate the Merger and the other
transactions contemplated hereby, each of the Principal Company Stockholders
hereby severally agrees and covenants (and such covenants will be in addition
and without prejudice to any other confidentiality, inventions,
noncompetition, nonsolicitation, and/or other agreements and covenants to
which any of the Principal Company Stockholders may be subject from time to
time) that, unless Buyer otherwise agrees in writing prior to such action,
such Principal Company Stockholder shall take such actions or refrain from
taking such actions as are set forth below.
15.1. CONFIDENTIAL INFORMATION. Whether or not the Merger is
consummated, such Principal Company Stockholder will maintain the
confidentiality of all confidential, sensitive, or proprietary information of
the Buyer or the Surviving Corporation, including without limitation with
respect to its businesses, finances, affairs, and technology, which will be and
remain the exclusive property of the Buyer or the Surviving Corporation, as the
case may be; and unless previously authorized in writing by Buyer, and except
with respect to information that (a) has otherwise become public through no
action or omission on the part of such Principal Company Stockholder, (b) was
known by such Principal Company Stockholder prior to disclosure, (c) is
independently developed by such Principal Company Stockholder without reference
to any Buyer information, or (d) required to be disclosed by such Principal
Company Stockholder by law, will not disclose any such information to any third
party, or use it for any purpose other than (if applicable) in the discharge of
such Principal Company Stockholder's employment responsibilities in the ordinary
course of the Surviving Corporation's business or to consummate the transactions
contemplated hereby.
15.2. EQUITABLE REMEDIES. Such Principal Company Stockholder
hereby acknowledges that any breach by him or her of his or her obligations
under this Section 15 could cause substantial and irreparable damage to Buyer
and the Surviving Corporation, and that money damages could be an inadequate
remedy therefor, and accordingly, acknowledges and agrees that each of Buyer and
the Surviving Corporation may be entitled to an injunction, specific
performance, and/or other equitable relief to prevent the breach of such
obligations (in addition to all other rights and remedies to which they may be
entitled in respect of any such breach).
16. INDEMNIFICATION.
16.1. INDEMNIFICATION BY BUYER AND MERGER SUB. Subject to the
limitations set forth in Section 16.5 hereof, if the Merger is consummated,
Buyer and the Surviving Corporation, jointly and severally, will indemnify,
defend, and hold harmless each of the Company Stockholders, and each of their
respective directors, officers, employees, representatives, and other
Affiliates, from and against any and all Damages (as defined in Section 19.1)
related to or arising out of or in connection with any breach by Buyer and/or
Merger Sub of any representation, warranty, covenant, agreement, obligation, or
undertaking made by Buyer and/or Merger Sub in this Agreement (including any
schedule or exhibit hereto), or any other agreement, instrument, certificate, or
other document delivered by or on behalf of Buyer and/or Merger Sub in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby.
16.2. INDEMNIFICATION BY EACH PRINCIPAL COMPANY STOCKHOLDER.
Subject to the limitations set forth in Section 16.5 hereof, if the Merger is
consummated, the Principal Company Stockholders, severally and not jointly, will
indemnify, defend and hold harmless Buyer, the Surviving Corporation, and each
of their respective directors, officers, employees, representatives and other
Affiliates, from and against, any and all Damages related to or arising out of
or in connection with any breach by the Company of any representation, warranty,
covenant, agreement, obligation or undertaking made by the Company or such
Principal Company Stockholder in this Agreement (including any schedule or
exhibit hereto), or any other
agreement, instrument, certificate or other document delivered by or on
behalf of the Company or such Principal Company Stockholder at or prior to
the Closing to effect the transactions contemplated by this Agreement. The
costs set forth on SCHEDULE 16.2 hereto (the "SCHEDULE 16.2 COSTS") shall be
indemnifiable pursuant to this Section 16.2.
16.3. CLAIMS.
(a) In the event that any party hereto (the "INDEMNIFIED
PARTY") desires to make a claim against another party hereto (the "INDEMNIFYING
PARTY", which term includes all indemnifying parties if more than one) in
connection with any third-party litigation, arbitration, action, suit,
proceeding, claim or demand at any time instituted against or made upon it for
which it may seek indemnification hereunder (a "THIRD-PARTY CLAIM"), the
Indemnified Party will promptly notify the Indemnifying Party of such
Third-Party Claim and of its claims of indemnification with respect thereto;
PROVIDED, that failure to promptly give such notice will not relieve the
Indemnifying Party of its indemnification obligations under this section except
to the extent, if any, that the Indemnifying Party has actually been prejudiced
thereby.
In the event that any Indemnified Party desires to make an indemnity
claim (other than a Third-Party Claim) against an Indemnified Party, the
Indemnified Party will promptly notify the Indemnifying Party of its claims of
indemnification with respect thereto; PROVIDED, that failure to promptly give
such notice will not relieve the Indemnifying Party of its indemnification
obligations under this section except to the extent, if any, that the
Indemnifying Party has actually been prejudiced thereby.
(b) The Indemnifying Party will have the right to assume the
defense of the Third-Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party by written notice to the Indemnified Party
within twenty days after the Indemnifying Party has received notice of the
Third-Party Claim; PROVIDED, HOWEVER, that the Indemnifying Party must conduct
the defense of the Third-Party Claim actively and diligently thereafter in order
to preserve its rights in this regard; and, PROVIDED, FURTHER, that the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third-Party Claim.
(c) The Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third-Party Claim
without the prior consent of the Indemnified Party (which will not be
unreasonably withheld or delayed) unless the judgment or proposed settlement (i)
includes an unconditional release of all liability of each Indemnified Party
with respect to such Third-Party Claim and (ii) involves only the payment of
money damages by the Indemnifying Party and does not impose an injunction or
other equitable relief upon the Indemnified Party. So long as the Indemnifying
Party has assumed and is conducting the defense of the Third-Party Claim in
accordance with Section 16.3(b) above the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
Third-Party Claim without the prior written consent of the Indemnifying Party
(which will not be unreasonably withheld or delayed).
(d) In the event the Indemnifying Party fails to assume the
defense of the Third-Party Claim in accordance with Section 16.3(b) above, (i)
the Indemnified Party may defend against, and consent to the entry of any
judgment or enter in any settlement with respect to, the Third-Party Claim in
any manner it reasonably may deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, the Indemnifying Party in
connection therewith) and (ii) the Indemnifying Party will remain responsible
for any Damages the Indemnified Party may suffer as a result of such Third-Party
Claim to the extent provided in this Article 16.
16.4. PAYMENT OF CLAIMS. In the event of any bona fide claim
for indemnification hereunder, the Indemnified Party will advise the
Indemnifying Party that is required to provide indemnification therefor in
writing with reasonable specificity of the amount and circumstances surrounding
such claim. With respect to liquidated claims, if within thirty (30) days the
Indemnifying Party has not contested such claim in writing, the Indemnifying
Party will pay and/or the Escrow Agent shall pay, as applicable, the full amount
thereof, subject to the limitations set forth in Section 16.5, within ten (10)
days after the expiration of such period. Any indemnification obligations
pursuant to this Section 16 of the Buyer or Merger Sub shall be paid, at such
party's option (i) in cash, (ii) by issuing Buyer Common Stock (each share of
which shall be valued for such purpose at the Closing Price Per Share on the
date of issuance), or (iii) through a combination of the methods specified in
clauses (i) and (ii).
Subject to the limitations set forth in Section 16.5, any
indemnification obligations pursuant to this Section 16 of any Principal Company
Stockholder who is an Indemnifying Party (other than indemnification obligations
for Unlimited Claims) shall be satisfied solely (a) through the terms and
provisions of the Escrow Agreement and (b) if Buyer elects to reduce the number
of shares of Buyer Common Stock included in the Escrowed Merger Consideration
pursuant to Section 3.3(b) and the amount of Damages for which such Principal
Company Stockholder is liable under Section 16 exceeds the value of the Escrowed
Merger Consideration then held by the Escrow Agent on behalf of such Principal
Company Stockholder, the amount of such excess shall be settled in cash. Subject
to the limitations set forth in Section 16.5, indemnification obligations for
Unlimited Claims pursuant to this Section 16 of any Principal Company
Stockholder who is an Indemnifying Party shall be satisfied (x) first, through
the terms and provisions of the Escrow Agreement and (y) second, to the extent
not satisfied through the terms and provisions of the Escrow Agreement, at the
option of such Principal Company Stockholder: (i) in cash, or (ii) by delivery
of a combination of cash and Buyer Common Stock (each share of which shall be
valued for such purpose at the Closing Price Per Share on the date of delivery),
PROVIDED, that in the event that any Principal Stockholder elects to deliver a
combination of cash and shares of Buyer Common Stock, the portion of such
delivery made up of Buyer Common Stock shall not be more than, on a percentage
basis, the portion of the merger consideration received by such Principal
Company Stockholder that was not subject to the escrow in the form of Buyer
Common Stock with any Buyer Common Stock delivered in the Merger or pursuant to
this Section 16.4 being valued solely for purposes of this proviso at the
Closing Date Price Per Share (but not for any other purpose). Notwithstanding
clause (y) of the previous sentence, a Principal Company Stockholder may not use
Buyer Common Stock to satisfy an indemnification obligation for an Unlimited
Claim if it could reasonably be expected that satisfaction of such
indemnification obligation with Buyer Common Stock could disqualify
the transactions contemplated hereby as a reorganization within the meaning
of Section 368(a) of the Code. The parties agree that to the greatest extent
possible the payment of any indemnity hereunder shall be treated as an
adjustment to the merger consideration paid by Buyer hereunder for tax
purposes.
16.5. LIMITATIONS OF LIABILITY.
(a) BASKET. No Indemnifying Party will be required to
indemnify an Indemnified Party hereunder until such time as the aggregate amount
of Damages for which (i) Buyer, the Surviving Corporation, and their respective
directors, officers, employees, representatives, and other Affiliates, on the
one hand, or (ii) the Principal Company Stockholders and their respective
directors, officers, employees, representatives, and other Affiliates, as the
case may be, on the other, are otherwise entitled to indemnification pursuant to
this Agreement exceeds $1,000,000, but only to the extent of such excess,
PROVIDED, that in the event that a single claim is made for Damages in excess of
$200,000 by an Indemnified Party pursuant to this Section 16, such claim may be
pursued to the extent of the excess of such claim over $200,000, regardless of
this Section 16.5. Notwithstanding anything to the contrary in this Section
16.5, the limits imposed by Section 16.5(a) shall not apply to the Schedule 16.2
Costs or any Damages arising out of or in connection with any breach of Buyer,
Merger Sub, the Company or the Principal Company Stockholders of any of their
respective warranties, representations, covenants, agreement or obligations
under Sections 6.4, 6.13, 6.27, 7, 8.6, or 8.11 of this Agreement (collectively,
the "UNLIMITED CLAIMS").
(b) MAXIMUM LIABILITY. If the Merger is consummated, the
maximum aggregate liability of each Principal Company Stockholder (other than
with respect to Unlimited Claims) will not exceed such Principal Company
Stockholder's portion of (i) the Escrowed Merger Consideration (which escrow
shall be reduced on the first anniversary of the Closing, as further provided in
the Escrow Agreement) plus (ii) if Buyer releases shares of Buyer Common Stock
from the Escrowed Merger Consideration pursuant to Section 3.3(b) (the "RELEASED
SHARES"), as of any date that Escrowed Merger Consideration is delivered (or
would be required to be delivered) to Buyer in accordance with the terms of the
Escrow Agreement, the amount of cash equal to such Principal Company
Stockholder's portion of the Released Shares then held by such Principal Company
Stockholder multiplied by the Closing Price Per Share on such date; PROVIDED,
that in the event that such Principal Company Stockholder elects to sell such
Principal Company Stockholder's portion of the Released Shares as of such date,
the Principal Company Stockholder shall not be required to pay cash in respect
of such indemnity claim in excess of the amount of cash proceeds actually
received by the Principal Company Stockholder, net of reasonable and customary
brokerage commissions actually incurred, as a result of such sale or sales of
the Released Shares. In addition to the limitations set forth in the previous
sentence, no Principal Company Stockholder will be liable in the aggregate for
any indemnity claim or claims (other than claims in respect of Unlimited Claims
and Section 16.2 Costs) in
excess of such Principal Company Stockholder's portion of the Other Escrowed
Merger Consideration. Notwithstanding anything to the contrary contained
herein, as of a given date that an indemnity claim is paid to Buyer, no
Principal Company Stockholder will be liable in the aggregate for any
indemnity claim or claims made under this Merger Agreement (including without
limitation any indemnity claims made in respect of the Unlimited Claims and
the Schedule 16.2 Costs) in excess of (x) the aggregate cash proceeds
received by such Principal Company Stockholder pursuant to the Merger plus
(y) the aggregate cash proceeds received from the sale of any shares of Buyer
Common Stock received by such Principal Company Stockholder as a result of
the Merger, net of reasonable and customary brokerage commissions actually
incurred by such Principal Company Stockholder in connection with such sale
or sales, and (z) the amount of shares of Buyer Common Stock, if any, held by
such Principal Company as of such date, multiplied by the Closing Price Per
Share.
If the Merger is consummated, the maximum aggregate liability of the
Surviving Corporation, Merger Sub and the Buyer for indemnification hereunder
(other than with respect to any Unlimited Claims) will not exceed the Maximum
Indemnification Value (as defined in Section 19.1).
(c) TIME LIMIT. All representations and warranties in this
Agreement shall survive the Closing and any investigation at any time made by or
on behalf of an Indemnified Party and shall expire on the first anniversary of
the Effective Time, and no Indemnifying Party will be liable for any Damages
hereunder after the first anniversary of the Effective Time unless a written
claim for indemnification is given by the Indemnified Party to the Indemnifying
Party with respect thereto prior to the first anniversary of the Effective Time
(the "CUT-OFF DATE"). Notwithstanding the foregoing, liability for (i) Damages
resulting from a breach of the representations and warranties contained in
Section 6.13 shall continue until the expiration of all applicable statute of
limitations relating to any Taxes owed as a result of such breach, and (ii)
Damages resulting from a breach of the representations and warranties contained
in Sections 6.4, 6.27, 8.6 and 8.11 shall not expire. In addition, a written
claim by an Indemnified Party with respect to Schedule 16.2 Costs may be
delivered at any time prior to the 18 month anniversary of the Closing Date).
(d) EFFECT OF KNOWLEDGE. Notwithstanding any other provisions
contained in this Agreement, in the event that the Merger is consummated, no
party shall be entitled to any indemnification under this Agreement with respect
to any fact or circumstances which was disclosed after the signing of this
Agreement pursuant to Section 10.16 to the extent that such disclosure would
have resulted in either of the conditions set forth in Sections 13.1 or 14.1 not
being satisfied, the satisfaction of which condition is waived by such party
prior to the Effective Time, and any claims for indemnification any party may
have hereunder with respect to any breach of any representation, warranty,
agreement or covenant arising from such facts or circumstances shall be deemed
to be waived.
(e) INITIAL RECOURSE OF BUYER AND SURVIVING CORPORATION.
Without adversely affecting the limits on indemnification set forth in the other
paragraphs of this Section 16.5, any claims for indemnification by the Buyer or
the Surviving Corporation must first be pursued in accordance with the terms of
the Escrow Agreement against the Escrowed Merger Consideration, before being
pursued against the Principal Stockholders directly. Notwithstanding anything to
the contrary in this Agreement, including but not limited to the several and not
joint nature of the obligations of the Principal Company Stockholders under
Section 6 and Section 16.2, the Buyer shall be entitled to make a claim for the
full amount of any Damages for which the Buyer is entitled to be indemnified
pursuant to Section 16.1 in
accordance with the terms of the Escrow Agreement, without having to join any
or all of the Principal Company Stockholders to such action to seek such
Damages from the Escrowed Merger Consideration.
16.6. EXCLUSIVITY; NO WAIVER.
(a) Other than in the case of fraud, in the event that the
Merger is consummated, the rights and remedies provided in this Section 16 and
the Escrow Agreement shall be the exclusive rights and remedies of the parties
hereto after the Closing in connection with the transactions contemplated by
this Agreement, and each of the parties hereto agrees to indemnify and hold
harmless each of the other parties hereto against any claims made by or on
behalf of such party other than pursuant to this Section 16 in connection with
or related to such transactions, regardless of the source of such claim or cause
of action.
(b) No party under this contract shall have any claims under
this Agreement in the event that this Agreement is terminated prior to the
Effective Time, except for claims arising out of fraud or an intentional breach
by the Company, on the one hand, or the Buyer, on the other hand, of this
Agreement, and except for any claim to enforce against the Company, and not the
Principal Company Stockholders, the provisions of the Bridge Note and Section 5
hereof.
17. RELEASES. If the Merger is consummated, then effective as of
the Effective Time, each of the Principal Company Stockholders, for himself
or itself and his or its heirs, legatees, successors, and assigns, hereby
fully and irrevocably releases, remises, and discharges the Surviving
Corporation and its officers, directors, employees, agents, representatives,
successors, and assigns from any and all Damages, regardless of whether
known, unknown, or unknowable, and regardless of whether absolute,
contingent, or otherwise, and regardless of whether at law, in equity, or
otherwise, without limitation, whether now existing or arising in the future,
in each case to the extent based on actions, omissions, and/or events
occurring at or before the Effective Time, including without limitation all
rights to indemnification and/or contribution, but excluding Damages arising
expressly under this Agreement; provided, however, that notwithstanding any
statement to the contrary in this Section 17, each Principal Company
Stockholder who, as of the date of this Agreement, is entitled to
indemnification from the Company for any actions taken by such Principal
Company Stockholder in his capacity as an officer and/or director of the
Company shall continue from and after the Effective Time to be entitled to
indemnification by the Surviving Corporation to the same extent to which such
Principal Company Stockholder would be entitled to indemnification therefor
as of the date of this Agreement. Furthermore, each of such releasing persons
hereby irrevocably agrees not to xxx, or to commence, maintain, or aid in the
prosecution of any litigation, arbitration, or other action or proceeding
against or adverse to any of such released persons, or otherwise to seek any
recourse against any of such released persons, in respect of any matter
hereby released or purported or attempted to be released; except with respect
to such person's rights under this Agreement or any other transaction
document contemplated hereby.
18. TERMINATION.
(a) This Agreement may be terminated at any time before the
Effective Time:
(i) by agreement of Buyer and the Company;
(ii) by Buyer, in the event of a willful breach by the Company
of any representation, warranty or agreement contained herein which has not been
cured or is not curable within fifteen (15) days after notice thereof to the
breaching party; or
(iii) by the Company, in the event of a material breach by
Buyer of any representation, warranty or agreement contained herein which has
not been cured or is not curable within fifteen (15) days after notice thereof
to the breaching party.
(b) If (i) any temporary restraining order, preliminary or
permanent injunction, or other order issued by any court of competent
jurisdiction, or other binding legal restraint or prohibition preventing the
consummation of the Merger or the other transactions contemplated hereby is
at any time in effect for a period of more than 20 consecutive days, or (ii)
the Closing does not occur on or before January 31, 2001 (the "TERMINATION
DATE") then either Buyer or the Company may terminate this Agreement by
delivering written notice to the other at any time after the close of
business on the date such termination right arises hereunder, PROVIDED that
such failure to close is not the result of a breach of this Agreement by the
terminating party (including, in the case of any such termination by Buyer,
any breach by Merger Sub, or in the case of any such termination by the
Company, any breach by any of the Principal Company Stockholders) and,
PROVIDED, FURTHER, that the Buyer may extend the Termination Date beyond
January 31, 2001 upon notice to the Company, in the event that the Merger has
not been consummated because (i) all necessary regulatory approvals,
including but not limited to those required under the HSR Act, have not been
obtained; (ii) the Registration Statement has not been declared effective by
the SEC; or (iii) the Buyer has not received approval of this Agreement and
the Merger from its stockholders, PROVIDED, in any such case that the Buyer
is continuing to use diligent efforts to obtain such approvals during any
such extension of the Termination Date. In addition, the Termination Date may
not be extended past February 28, 2001 unless the Buyer has complied with its
obligations to make the Second Bridge Loan under Section 5.2 in accordance
with the terms thereof. Notwithstanding anything else to the contrary
contained herein, this Agreement shall terminate on March 31, 2001, unless
otherwise extended by mutual agreement of the Buyer and the Company.
19. DEFINITIONS.
19.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the following respective meanings:
"AFFILIATE" means, with respect to any person or entity, any person or
entity that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such person or
entity.
"AGGREGATE CASH CONSIDERATION means the sum of (i) Fifty Million
Dollars PLUS (ii) the product of (A) the quotient of (X) Fifty Million Dollars
DIVIDED by (Y) the Company Fully
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Diluted Shares Number MINUS the number of Company Restricted Shares issued
and outstanding at the Effective Time and (B) 100,000.
"AGGREGATE COMPANY COMMON STOCK CONSIDERATION NUMBER" means the product
of (i) the Company Fully Diluted Shares Number and (ii) the Calculation Ratio.
"AGGREGATE REDEMPTION VALUE" means the amount of cash payable to
Company Stockholders with respect to the Company Redeemable Preferred Stock
pursuant to Section 2.5.
"BRIDGE LOANS" means the Initial Bridge Loan and, in the event made by
Buyer, each of the Second Bridge Loan.
"BRIDGE NOTE CONVERSION SHARES" means the shares of Company Common
Stock issuable upon the conversion of the Bridge Note.
"BUYER FULLY DILUTED SHARE NUMBER" means, as of a particular time, the
fully-diluted number of shares of Buyer Common Stock outstanding, calculated as
the sum of (i) the number of shares of Buyer Common Stock issued and outstanding
at such time, PLUS (ii) the number of shares of Buyer Common Stock issuable upon
the exercise of all outstanding options, warrants and other rights to purchase,
subscribe for or otherwise acquire shares of Buyer Common Stock, whether or not
such options, warrants or other rights are exercisable for shares of Buyer
Common Stock at such time or become exercisable for Buyer Common Stock
immediately after such time or the Effective Time by virtue of the Merger, and
the conversion into Buyer Common Stock of any securities outstanding at the
Effective Time and convertible into Buyer Common Stock, whether or not such
securities are then convertible into shares of Buyer Common Stock. The foregoing
method of calculation shall be made on an actual basis without reference to any
other method, including but not limited the treasury stock method, for
calculating the fully diluted and outstanding shares of Buyer Common Stock.
"CALCULATION RATIO" means the fraction derived by dividing (i) the
Closing Buyer Common Stock Consideration Number, by (ii) the Closing Company
Common Stock Consideration Number.
"CASH CONSIDERATION" means the Aggregate Cash Consideration MINUS the
Aggregate Redemption Value.
"CASH PAYMENT PER SHARE" means the Cash Consideration, DIVIDED by the
amount equal to (i) the Company Fully Diluted Shares Number MINUS (ii) the
number of Company Restricted Shares issued and outstanding at the Effective
Time.
"CLOSING BUYER COMMON STOCK CONSIDERATION NUMBER" means the number of
shares of Buyer Common Stock equal to (x) 10,125,642 MULTIPLIED by (y) a
fraction, the numerator of which is the Buyer Fully Diluted Share Number as of
the Effective Time over the Buyer Fully Diluted Share Number as of the date
hereof, PROVIDED that such number shall not be less than 10,125,642.
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"CLOSING COMPANY COMMON STOCK CONSIDERATION NUMBER" means the amount
equal to (i) the Company Fully Diluted Shares Number MINUS (ii) up to 2,433,250
shares of Company Common Stock issuable upon the exercise of any Company Options
outstanding as of October 31, 2000 that will be converted into Unvested
Replacement Options in accordance with Section 4, including any such options
that, but for the modifications to such options contemplated by Section 14.12
would, by their terms, vest on or before the Effective Time, and MINUS (iii) up
to 384,500 shares of Company Common Stock issuable upon the exercise of any
Company Options granted after October 31, 2000 but before the Effective Time
that will be converted into Unvested Replacement Options in accordance with
Section 4, PROVIDED, that the Closing Company Common Stock Consideration Number
shall not include any Bridge Note Conversion Shares.
"CLOSING DATE PRICE PER SHARE" means the Closing Price Per Share on the
Closing Date.
"CLOSING PRICE PER SHARE" means the weighted average closing sale price
(in thousandths) of Buyer Common Stock on the Nasdaq National Market for the 20
trading days up to and including the day that is two trading days prior to the
date for which such Closing Price Per Share is determined.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK EXCHANGE RATIO" means (x) the Aggregate Company Common
Stock Consideration Number MINUS (i) the aggregate number of shares of Buyer
Common Stock issuable in respect of shares of Company Redeemable Preferred Stock
and (ii) the CPS Dividend Equivalent Share Number, DIVIDED by (y) the Company
Fully Diluted Shares Number.
"COMPANY COMMON STOCK" means, the Company's Common Shares, $0.01 par
value per share.
"COMPANY FULLY DILUTED SHARES NUMBER" means the sum of (i) the number
of shares of Company Common Stock issued and outstanding at the Effective Time,
PLUS (ii) the number of shares of Company Common Stock issuable upon the
exercise of all Company Options, Company Warrants and other rights to purchase,
subscribe for or otherwise acquire shares of Company Common Stock, whether or
not such Company Options, Company Warrants or other rights are exercisable for
shares of Company Common Stock at the Effective Time or become exercisable for
Company Common Stock or Buyer Common Stock immediately after the Effective Time
by virtue of the Merger, and the conversion into Company Common Stock of any
securities outstanding at the Effective Time and convertible into Company Common
Stock (including but not limited to the Company Convertible Preferred Stock, but
NOT including the Bridge Note Conversion Shares), whether or not such securities
are then convertible into shares of Company Common Stock. The foregoing method
of calculation shall be made on an actual basis without reference to any other
method, including but not limited the treasury stock method, for calculating the
fully diluted and outstanding shares of Company Common Stock.
"COMPANY STOCKHOLDER" means any stockholder of the Company other than
the Principal Company Stockholders.
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"COMPANY STOCK PLAN" means the PriceInteractive, Inc. Stock Incentive
Plan as established effective January 1, 1997, as amended as of the date hereof.
"DAMAGES" means all damages, losses, claims, demands, actions, causes
of action, suits, litigations, arbitrations, liabilities, costs, and expenses,
including court costs and the reasonable fees and expenses of legal counsel.
"ESCROW AGENT" means the escrow agent named in the Escrow Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC thereunder, as in effect as of the
relevant time of reference.
"GAAP" means United States generally accepted accounting principles,
applied on a consistent basis.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"INDEBTEDNESS," as applied to any person, means (a) all indebtedness of
such person for borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness of such person for the deferred purchase price
of property or services represented by a note or other security, (c) all
indebtedness of such person created or arising under any conditional sale or
other title retention agreement (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of specific property), (d) all indebtedness of such person
secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of property subject to such mortgage or other Lien, (e) all
obligations of such person under leases that have been or must be, in accordance
with generally accepted accounting principles, recorded as capital leases in
respect of which such person is liable as lessee, (f) any liability of such
person in respect of banker's acceptances or letters of credit, and (g) all
indebtedness referred to in clauses (a), (b), (c), (d), (e), or (f) above that
is directly or indirectly guaranteed by such person or which such person has
agreed (contingently or otherwise) to purchase or otherwise acquire or in
respect of which such person has otherwise assured a creditor against loss.
"INDEMNIFICATION STOCK NUMBER" shall mean that number of shares of
Buyer Common Stock equal to the 12.5% of (x) the sum of (A) the Cash Payment Per
Share multiplied by the difference of the Closing Company Common Stock
Consideration Number minus the number of Company Restricted Shares, PLUS (B) the
Aggregate Redemption Value, PLUS (C) the CPS Dividend Equivalent Share Number
multiplied by the Closing Date Price Per Share, and PLUS (D) the Closing Company
Common Stock Consideration Number multiplied by the Common Stock Exchange Ratio
and the Closing Date Price Per Share, PLUS (E) the Redeemable Preferred Exchange
Ratio multiplied by the number of shares of Company Redeemable Preferred Stock
issued and outstanding as of the Effective Time and further multiplied by the
Closing Date Price Per Share, DIVIDED by (y) the Closing Date Price Per Share.
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"KNOWLEDGE," when used to qualify a representation or warranty in this
Agreement, has the following meaning: Where a representation or warranty is made
to the Company's knowledge, or with a similar qualification, the Company will be
deemed to have knowledge of any matter with respect to which any executive
officer or director of the Company has actual knowledge or would have knowledge
after conducting a reasonable investigation. Where a representation is made to
Buyer's or Merger Sub's knowledge or with a similar qualification, Buyer and the
Merger Sub will be deemed to have knowledge of any matter with respect to which
any director or executive officer of Buyer or Merger Sub has actual knowledge or
would have knowledge after conducting a reasonable investigation.
"LIENS" means any and all liens, claims, mortgages, security interests,
charges, encumbrances, and restrictions on transfer of any kind, except, in the
case of references to securities, those arising under applicable securities laws
solely by reason of the fact that such securities were issued pursuant to
exemptions from registration under such securities laws.
"MATERIAL ADVERSE EFFECT" with respect to a person means any change or
effect that is or is reasonable likely to be materially adverse to (i) the
business, results of operations, assets, prospects, or financial condition of
the person and any Subsidiaries, taken as a whole, or (ii) the ability of the
person to perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement.
"MAXIMUM INDEMNIFICATION VALUE" shall mean with respect to the Buyer
and the Merger Sub as of any day the amount equal to (x) the Closing Price Per
Share as of such date multiplied by the Indemnification Stock Number, MINUS (y)
the aggregate value previously paid by such Indemnifying Party, or group of
Indemnifying Parties, in satisfaction of claims against such Indemnifying Party
or group of Indemnifying Parties under Section 16 (with any shares of Buyer
Common Stock delivered in satisfaction of indemnification obligations hereunder
being valued at the Closing Price Per Share on the date of delivery, regardless
of whether those shares are Escrowed Merger Consideration).
"MERGER CONSIDERATION PER SHARE" means that number of shares of Buyer
Common Stock equal to one (1) MULTIPLIED by the Common Stock Exchange Ratio PLUS
an amount in cash equal to the Cash Payment Per Share.
"PERMITTED LIENS" means (a) such imperfections of title, easements,
encumbrances or restrictions which do not materially impair the current use by
the Company of the assets subject thereto or the Company's ability to sell or
transfer such assets without discharging any obligation, (b) materialmen's,
mechanics', carriers', workmen's, warehousemen's, repairmen's, landlord's and
other like liens arising in the ordinary course of business, or deposits to
obtain the release of such Liens, (c) the Liens listed on Section 6.11 of the
Company Disclosure Schedule, (d) Liens under Company's Senior Credit Agreement,
(e) Liens related to leased furniture and equipment, and (f) purchase money
security interests incurred in the ordinary course of business.
"PERSON" (regardless of whether capitalized) means any natural person,
entity, or association, including without limitation any corporation,
partnership, limited liability company, government (or agency or subdivision
thereof), trust, joint venture, or proprietorship.
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"RPS CASH AMOUNT PER SHARE" means (i) $4,094,245.80 (or such amount as
the Chief Executive Officer of the Company may determine in writing delivered to
Buyer and the Summit Parties on or before the business day prior to Closing, but
in no event more than the aggregate Redeemable Liquidation Value (as defined in
the Company's Certificate of Incorporation as amended from time to time) of all
shares of the Company Redeemable Preferred Stock issued and outstanding at the
Effective Time and subject to conversion pursuant to Section 2.5(a) hereof (the
"CONVERTED RPS SHARES")) DIVIDED BY (ii) the number of Converted RPS Shares.
"REDEEMABLE PREFERRED EXCHANGE RATIO" means the fraction derived by
dividing (i) the amount equal to the Redeemable Liquidation Value (as defined in
the Company's Amended and Restated Certificate of Incorporation, as amended to
date) of one share of Company Redeemable Preferred Stock MINUS the RPS Cash
Amount Per Share, by (ii) the Closing Date Price Per Share.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, as in effect as of the relevant
time of reference.
"SECURITIES LAWS" shall mean the Securities Act, the Exchange Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any regulatory authority promulgated thereunder.
"SEVERALLY BUT NOT JOINTLY" or "SEVERALLY AND NOT JOINTLY" shall, as
among the Principal Company Stockholders, be deemed to be made for purposes of
the representations, warranties, agreements, covenants and indemnification
obligations made or assumed hereunder by the Principal Company Stockholders in
proportion to the number of shares of Company Common Stock held by each
Principal Company Stockholder (treating the holders of Company Convertible
Preferred Stock and Company Options as holding the aggregate number of shares of
Company Common Stock for which such shares of Company Convertible Preferred
Stock are convertible into or such Company Options are exercisable for).
"SUBSIDIARY" or "SUBSIDIARIES" means, with respect to any person, any
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of which will at the time be owned by such person or by a
Subsidiary of such person, if the holders of the shares of such class or classes
(a) are ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof,
whether or not the right so to vote exists by reason of the happening of a
contingency.
"TAX" or "TAXES" (and with correlative meaning, "TAXABLE") means any
federal, state, local, or foreign income, gross receipts, franchise, estimated,
alternative minimum, add-on minimum, sales, use, transfer, registration, value
added, excise, natural resources, severance,
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stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"TAX RETURN" means any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
"THE SUMMIT PARTIES" means Summit Ventures V, L.P., Summit Ventures IV,
L.P., Summit V Advisors Fund, L.P, Summit V Advisors Funds (QP), L.P., Summit V
Companion Fund, L.P. and Summit Investors III, L.P., collectively.
"TREASURY REGULATION" means the Treasury Regulations promulgated under
the Code, including temporary and proposed Treasury Regulations, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).
"UNVESTED REPLACEMENT OPTIONS" shall mean those options to purchase
Buyer Common Stock issuable upon the conversion into options to purchase Buyer
Common Stock of all Company Options that are not exercisable as of the Effective
Time or immediately after the Effective Time, including any Company Options, the
exercisability of which would have been accelerated at or around the Effective
Time had the holder of such Company Option not waived the acceleration of such
Company Option in connection with the Merger.
19.2. TERMS DEFINED ELSEWHERE. The following terms are defined
herein in the sections identified below:
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TERM SECTION TERM SECTION
---- ------- ---- -------
Additional Escrow Parties 3.3 Former Shares 4(a)
Agreement Preamble Hazardous Substances 6.15(c)
Bridge Note 5.1 iBasis Plan 11.8(a)(i)
Buyer Preamble Indemnified Parties 11.7(b)
Buyer Common Stock Preamble Indemnified Party 16.3(a)
Buyer Disclosure Schedule 8 Indemnifying Party 16.3(a)
Buyer's SEC Reports 8.5 Initial Bridge Loan 5.1
Buyer Stock Plan 8.6 Major Intellectual Properties 6.10(b)
Buyer Stockholder Merger 1
Voting Agreement Preamble Merger Certificate 1
Buyer Supplemental Disclosures 11.5 Merger Sub Preamble
CERCLA 6.15(b) MicroStrategy Assurance Letter 13.9
Certificate 3.1 Most Recent Audited
Closing 1 Balance Sheet 6.7
Closing Date 1 Most Recent Unaudited
Company Preamble Balance Sheet 6.7
Company Common New Option Number 10.4(b)
Stock 2.5(b) Other Escrowed Merger
Company Convertible Preferred Consideration 3.3
Stock 2.5(d)(i) PBGC 6.14(d)(ii)
Company Disclosure Permitted Uses 5.1
Schedule 6 Pre-Merger Period 6.13(y)
Company Intellectual Properties 6.10(b) Principal Buyer Stockholders Preamble
Company Option 4(a) Principal Company Stockholders Preamble
Company Option Plan 4(a) RCRA 6.15(b)
Company Plan 11.8(i)(A) Registration Rights Agreement Preamble
Company Property 6.15(d) Registration Statement Preamble
Company Redeemable Preferred Released Shares 16.5(b)
Stock 2.5(a) Replacement Cash Right 4(a)
Company Restricted Shares 10.4(b) Replacement Exercise Price
Company Restricted Stock Plan 10.20 Per Share 4(a)
Company Stockholder Replacement Option 4(a)
Representative 20.3(a) Restricted Stock Award Agreement 10.4(b)
Company Supplemental XXXX 6.15(b)
Disclosures 10.16 Second Bridge Loan 5.2(a)
Confidential Information 6.10(k) Second Loan Date 5.2(a)
contract 6.20 September 2000 10-Q 8.5
Cut-off Date 16.5(c) Section 16.2 Costs 16.2
DGCL 1 Stockholder Representatives 20.3
Dissenting Shares 2.7 Summit Stockholder
Effective Time 1 Representative 20.3(a)
Employee Benefit Plan 6.14(a) Surviving Corporation 2.1
Environmental Laws 6.15(b) Termination Date 18(b)
EPA 6.15(c) Third-Party Claim 16.3(a)
ERISA 6.14(c) Third Party License
Escrow Agreement 3.3 Escrowed Shares 3.3
Escrowed Merger Consideration 3.3 Unlimited Claims 16.5(a)
20. GENERAL.
20.1. COOPERATION. Each of the parties will cooperate with the
others and use its reasonable best efforts to prepare all necessary
documentation, to effect all necessary filings,
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and to obtain all necessary permits, consents, approvals, and authorizations of
all governmental bodies and other third parties necessary to consummate the
transactions contemplated by this Agreement.
20.2. SURVIVAL OF PROVISIONS. The provisions of this
Agreement, including without limitation the representations and warranties of
the parties, and the provisions of the other documents executed and delivered in
connection with this Agreement, the Merger, and the other transactions
contemplated hereby will, notwithstanding any investigation by or on behalf of
any other party, be deemed to have been relied on by each other party, and
subject to the provisions of Section 16.5 hereof, will survive the Closing and
the consummation of the Merger and the other transactions contemplated hereby.
20.3. STOCKHOLDER REPRESENTATIVES.
(a) APPOINTMENT OF STOCKHOLDER REPRESENTATIVE. Upon approval
of the Merger by the Company Stockholders, each of the Company Stockholders
(other than Summit and any holder of Dissenting Shares) shall be deemed to have
constituted and appointed, and each of the Principal Company Stockholders (other
than Summit and any holder of Dissenting Shares), hereby constitutes and
appoints effective from and after the date of such approval of this Agreement,
Xxxxxx X. Xxxxx, as the agent and attorney-in-fact of each of the Company
Stockholders other than the Summit Parties and any holder of Dissenting Shares
(the "COMPANY STOCKHOLDER REPRESENTATIVE" and, together with the Summit
Stockholder Representative, the "STOCKHOLDER REPRESENTATIVES"), and each of the
Summit Parties hereby constitutes and appoints, effective from and after the
date of this Agreement hereof, (the "SUMMIT STOCKHOLDER REPRESENTATIVE") as the
agent and attorney-in-fact of the Summit Parties, in each case to act as
Stockholder Representative under this Agreement and the Escrow Agreement in
accordance with the terms of this Section 20.3 and the Escrow Agreement. In the
event of the resignation, death or incapacity of the Company Stockholder
Representative, a successor Company Stockholder Representative shall thereafter
be appointed by an instrument in writing signed by such successor Company
Stockholder Representative and by those Principal Company Stockholders who
immediately prior to the Effective Time held a majority of the shares of
outstanding Company Common Stock on a fully-converted basis (other than
Dissenting Shares and the Summit Parties) held by all Company Stockholders other
than the Summit Parties and such appointment shall become effective as to any
such successor Company Stockholders' Representative when a copy of such
instrument shall have been delivered to Buyer. In the event of the resignation,
death or incapacity of the Summit Stockholder Representative, a successor Summit
Stockholder Representative shall thereafter be appointed by an instrument in
writing signed by such successor Summit Stockholder Representative and by the
Summit Parties and such appointment shall become effective as to any such
successor Summit Stockholders' Representative when a copy of such instrument
shall have been delivered to Buyer.
(b) AUTHORITY. The Stockholder Representatives are hereby
fully authorized by the Company Stockholders and the Summit Parties to, in each
case, on behalf of the parties for whom they are representative:
(i) execute and deliver the Escrow Agreement;
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(ii) receive all notices or other documents given or to be
given to the Company Stockholders or the Summit Parties, as the case may be, by
Buyer under Sections 16 of this Agreement or to the Stockholder Representatives
by Buyer pursuant to the Escrow Agreement;
(iii) receive and accept service of legal process in
connection with any claim or other proceeding against the Company Stockholders
arising under Section 16 of this Agreement or the Escrow Agreement in respect of
the Escrowed Merger Consideration;
(iv) undertake, compromise, defend and settle any such suit or
proceeding;
(v) execute and deliver all agreements, certificates and
documents required or deemed appropriate by the Stockholder Representatives in
connection with any of the transactions contemplated by Section 16 of this
Agreement or the Escrow Agreement (including, without limitation, one or more
blank stock powers relating to the transfer of any Escrowed Shares);
(vi) engage special counsel, accountants and other advisors
and incur such other expenses on behalf of the Company Stockholders in
connection with any matter arising under Section 16 of this Agreement or the
Escrow Agreement as the Stockholder Representatives deems appropriate on behalf
of such Company Stockholders;
(vii) retain and liquidate any Escrowed Shares to which the
Company Stockholders are entitled and apply the proceeds thereof to the payment
of (or reimbursement of the Stockholder Representatives for) expenses and
liabilities for which the Stockholders' Representative may incur pursuant to
this Section 20.3; and
(viii) take such other action of the Company Stockholders as
such Stockholder Representatives may deem appropriate, including, without
limitation:
(A) agreeing to any modification or amendment of this
Agreement or the Escrow Agreement and executing and delivering an agreement of
such modification or amendment;
(B) taking any actions required or permitted under
Section 16 of this Agreement or the Escrow Agreement to protect or enforce the
rights of the Company Stockholders hereunder and thereunder to the Escrowed
Merger Consideration; and
(C) all such other matters as the Stockholder
Representatives may deem necessary or appropriate to carry out the intents and
purposes of Section 16 of this Agreement and the Escrow Agreement.
(c) EXTENT AND SURVIVAL OF AUTHORITY. The appointment of each
of the Stockholder Representatives is an agency coupled with an interest and is
irrevocable and any action taken by a Stockholder Representative pursuant to the
authority granted in this Section
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20.3 or under the Escrow Agreement shall be effective and absolutely binding on
each Company Stockholder notwithstanding any contrary action of or direction
from such Company Stockholder for whom they serve as representative, except for
actions or omissions of the Stockholder Representatives constituting willful
misconduct or gross negligence. The death or incapacity, or dissolution or other
termination of existence, of any Company Stockholder shall not terminate the
authority and agency of the Stockholder Representatives.
(d) RELEASE FROM LIABILITY; INDEMNIFICATION. Each Company
Stockholder hereby releases the Stockholder Representatives from, and each
Company Stockholder agrees to indemnify the Stockholder Representatives against,
liability for any action taken or not taken by him in his capacity as such Agent
(including the expenses referred to in Sections 20.3(b) and (e) hereof), except
for the liability of any such Stockholder Representative to a Company
Stockholder for loss which such Company Stockholder may suffer from the willful
misconduct or gross negligence of such Stockholder Representative in carrying
out his duties hereunder under the Escrow Agreement.
(e) REIMBURSEMENT OF EXPENSES. The Stockholder Representatives
shall receive no compensation for services as such, but shall receive
reimbursement from, and be indemnified by, the Company Stockholders for whom
they serve as representative, pro rata, for any and all expenses, charges and
liabilities, including, but not limited to, reasonable attorneys' fees, incurred
by such Stockholder Representative in the performance or discharge of his duties
pursuant to this Section 20.3 and the Escrow Agreement. Unless the Company
Stockholders pay all such expenses, charges and liabilities upon demand by the
Stockholder Representative who represents such Company Stockholders, such
Stockholder Representative shall have no obligation to incur such expenses,
charges or liabilities, or to continue to perform any duties hereunder.
20.4. EXPENSES. Each of the parties will be responsible for
and will pay his or its own expenses in connection with the negotiation and
preparation of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby.
20.5. BENEFITS OF AGREEMENT; NO ASSIGNMENTS; NO THIRD-PARTY
BENEFICIARIES.
(a) This Agreement will bind and inure to the benefit of the
parties hereto and their respective heirs, successors, and permitted assigns.
(b) No party will assign any rights or delegate any
obligations hereunder without the consent of the other parties, and any attempt
to do so will be void.
(c) Nothing in this Agreement is intended to or will confer
any rights or remedies on any person other than the parties hereto and their
respective heirs, successors, and permitted assigns.
20.6. NOTICES. All notices, requests, payments, instructions,
or other documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to
have been duly given if (i) delivered personally (effective upon delivery),
(ii) mailed by registered or certified mail, return receipt requested,
postage prepaid (effective five business days after dispatch), (iii) sent by
a reputable, established courier service that guarantees next business day
delivery (effective the next business day), or (iv) sent by telecopier
followed within 24 hours by confirmation by one of the foregoing methods
(effective upon receipt of the telecopy in complete, readable form),
addressed as follows (or to such other address as the recipient party may
have furnished to the sending party for the purpose pursuant to this section):
(a) If to Buyer, Merger Sub, and/or (after the Effective
Time), the Company to:
iBasis, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx
Telecopier: (000) 000-0000
with a copy sent at the same time and by the same means to:
Xxxxx X. Xxxxx, Esq. and
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
(b) If to any of the Principal Company Stockholders (other
than the Summit Parties) and/or (before the Effective Time) the Company, to the
Company Stockholder Representative at:
Xxxxxx X. Xxxxx
c/o PriceInteractive, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
with a copy sent at the same time and by the same means to:
Xxxxx X. Xxxxxxx, Esq.
c/o Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
X.X. Xxx 000
Xxxxxxxxxx, X.X. 00000-0000
Telecopier No. (000) 000-0000
and Xxxxxxx X. X. Xxxxx, Esq.
Xxxxxx, Hall & Xxxxxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telecopier No. (000) 000-0000
(c) If to any of the Summit Parties, to the Summit Stockholder
Representative at:
c/o Summit Partners
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Telecopier No. (000) 000-0000
with a copy sent at the same time and by the same means to:
Xxxxxxx X. X. Xxxxx, Esq.
Xxxxxx, Hall & Xxxxxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telecopier No. (000) 000-0000
20.7. COUNTERPARTS. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
will be an original, but all of which together will constitute one and the same
agreement. In pleading or proving this Agreement, it will not be necessary to
produce or account for more than one such counterpart.
20.8. CAPTIONS. The captions of sections or subsections of
this Agreement are for reference only and will not affect the interpretation or
construction of this Agreement.
20.9. EQUITABLE RELIEF. Each of the parties hereby
acknowledges that any breach by him or it of his or its obligations under this
Agreement would cause substantial and irreparable damage to the parties, and
that money damages would be an inadequate remedy therefor, and accordingly,
acknowledges and agrees that each other party will be entitled to an injunction,
specific performance, and/or other equitable relief to prevent the breach of
such obligations.
20.10. CONSTRUCTION. The language used in this Agreement is
the language chosen by the parties to express their mutual intent, and no rule
of strict construction will be applied against any party.
20.11. WAIVERS. No waiver of any breach or default hereunder
will be valid unless in a writing signed by the waiving party. No failure or
other delay by any party exercising any right, power, or privilege hereunder
will be or 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.
20.12. ENTIRE AGREEMENT. This Agreement, together with the
exhibits and schedules hereto and the other agreements, instruments,
certificates, and other documents referred to herein as having been or to be
executed and delivered in connection with the transactions contemplated hereby,
contains the entire understanding and agreement among the parties, and
supersedes any prior understandings or agreements among them, or between or
among any of them, with respect to the subject matter hereof. Notwithstanding
the foregoing, the provisions of the Confidentiality Agreements dated as of
November 9, 2000, by and between the Company and Buyer, will survive the
execution and delivery of this Agreement and the consummation of the Merger.
20.13. GOVERNING LAW. Except to the extent that the DGCL shall
apply to the Merger, this Agreement will be governed by and interpreted and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts, as applied to contracts under seal made, and entirely to be
performed, within the Commonwealth of Massachusetts, and without reference to
principles of conflicts or choice of laws.
20.14. PUBLIC ANNOUNCEMENTS. Buyer, the Principal Company
Stockholders and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or the Merger and related transactions and shall not issue any such
press release or make any such public statement prior to such consultation,
except that the Buyer may make such public statements or announcements that may
be required by applicable law or the rules of the Nasdaq National Market or the
National Association of Securities Dealers, Inc. The parties have agreed on the
text of a joint press release by which Buyer and the Company will announce the
execution of this Agreement. Notwithstanding the foregoing, at any time after
issuance of the press release referred to in the preceding sentence the Summit
Parties may disclose (using publicly available information) to their respective
partners, representatives and other interested parties the transactions
contemplated by this Agreement.
20.15. AMENDMENT. This Agreement may not be amended or
modified except by an instrument in writing signed by each of the parties
hereto.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
Executed and delivered under seal as of the date first above written.
BUYER: IBASIS, INC.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: President and Chief Executive Officer
MERGER SUB: PENGUIN ACQUISITION CORP.
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: President
COMPANY: PRICEINTERACTIVE, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman, President and Chief Executive
Officer
STOCKHOLDER
REPRESENTATIVES
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx,
not individually but solely as
Company Stockholder Representative
----------------------------------------
----------------------------------------,
not individually but solely as
Summit Stockholder Representative
The undersigned Company Stockholder hereby executes and delivers under
seal this Agreement and Plan of Merger and Reorganization by and among iBasis,
Inc., Penguin Acquisition Corp. and PriceInteractive, Inc. and the other parties
hereto as of the date first above written.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Stockholder
The undersigned Company Stockholder hereby executes and delivers under
seal this Agreement and Plan of Merger and Reorganization by and among iBasis,
Inc., Penguin Acquisition Corp. and PriceInteractive, Inc. and the other parties
hereto as of the date first above written.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Stockholder
The undersigned Company Stockholders hereby execute and deliver under
seal this Agreement and Plan of Merger and Reorganization by and among iBasis,
Inc., Penguin Acquisition Corp. and PriceInteractive, Inc. and the other parties
hereto as of the date first above written.
SUMMIT VENTURES V, L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Member
SUMMIT VENTURES IV, L.P.,
By: Summit Partners IV, L.P.,
Its General Partner
By: Stamps, Xxxxxxx & Co. IV, L.P.,
Its General Partner, Individually and as
Summit Stockholder Representative
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: General Partner
SUMMIT INVESTORS III, L.P.
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: General Partner
SUMMIT V COMPANION FUND, L.P.
By: Summit Partners V, L.P.
Its General Partner
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Member
SUMMIT V ADVISORS FUND, L.P.
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Member
SUMMIT V ADVISORS FUND (QP), L.P.
By: Summit Partners, LLC
Its General Partner
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Member
EXHIBIT A-1
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Summit Ventures V, L.P.
Summit Ventures IV, L.P.
Summit V Advisors Fund, L.P.
Summit V Advisors Funds (QP), L.P.
Summit V Companion Fund, L.P.
Summit Investors III, L.P.
