AGREEMENT AND PLAN OF MERGER
BETWEEN
IPARTY CORP.
AND
WSI ACQUISITIONS CORP.
TABLE OF CONTENTS
I. THE MERGER.................................................................................... -2-
Section 1.02 Effective Time................................................................ -2-
Section 1.03 Closing....................................................................... -2-
Section 1.04 Certificate of Incorporation and By-laws of the Surviving Corporation......... -3-
Section 1.05 Directors and Officers of the Surviving Corporation........................... -3-
Section 1.06 Effects of the Merger......................................................... -4-
II. STATUS AND CONVERSION OF SECURITIES........................................................... -4-
Section 2.01 Stock of IPC.................................................................. -4-
(a) IPC Common Stock............................................................ -4-
(b) Exchange of IPC Common Stock................................................ -4-
Section 2.02 Capital Stock of Acquisition.................................................. -5-
III. COVENANTS..................................................................................... -5-
Section 3.01 [INTENTIONALLY OMITTED]....................................................... -5-
Section 3.02 [INTENTIONALLY OMITTED]....................................................... -5-
Section 3.03 Blue Sky Filings.............................................................. -5-
Section 3.04 [INTENTIONALLY OMITTED]....................................................... -5-
Section 3.05 NASD Listing.................................................................. -5-
Section 3.06 Directors' and Officers' Indemnification and Insurance........................ -6-
Section 3.07 [INTENTIONALLY OMITTED]....................................................... -8-
IV. REPRESENTATIONS AND WARRANTIES................................................................ -8-
Section 4.01 Certain Representations and Warranties of IPC................................. -8-
(a) Organization and Qualification.............................................. -8-
(b) Organizational Documents; Capital Stock..................................... -9-
(c) Authority Relative to this Agreement....................................... -10-
(d) Non-Contravention; Approvals and Consents.................................. -10-
(e) Financial Statements....................................................... -12-
(f) Absence of Certain Changes or Events....................................... -13-
(g) Absence of Undisclosed Liabilities......................................... -13-
(h) Legal Proceedings.......................................................... -13-
(i) Compliance with Laws and Orders............................................ -14-
(j) Compliance with Agreements; Certain Agreements............................. -14-
(k) Tax Matters................................................................ -15-
(l) Environmental Matters...................................................... -17-
(m) Employee Benefit Plans..................................................... -18-
(n) Patents, Trademarks, Et Cetera............................................. -19-
(o) Insurance.................................................................. -19-
(p) Labor Matters.............................................................. -19-
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(q) Tangible Property and Assets............................................... -19-
(r) Shareholder Approval. ..................................................... -20-
(s) Broker..................................................................... -20-
(t) Consents Without Any Condition............................................. -20-
(u) Transfer Taxes............................................................. -20-
Section 4.02 Certain Representations and Warranties of Acquisition........................ -21-
(a) Organization and Qualification............................................. -21-
(b) Organizational Documents; Capital Stock.................................... -21-
(c) Authority Relative to this Agreement....................................... -23-
(d) Non-Contravention; Approvals and Consents.................................. -24-
(e) Financial Statements....................................................... -25-
(f) Absence of Certain Changes or Events....................................... -26-
(g) Absence of Undisclosed Liabilities......................................... -26-
(h) Legal Proceedings.......................................................... -27-
(i) Information Supplied....................................................... -27-
(j) Compliance with Laws and Orders............................................ -27-
(k) Compliance with Agreements; Certain Agreements............................. -28-
(l) Tax Matters................................................................ -28-
(m) Environmental Matters...................................................... -30-
(n) Employee Benefit Plans..................................................... -31-
(o) Patents, Trademarks, Et Cetera............................................. -32-
(p) Insurance.................................................................. -32-
(q) Labor Matters.............................................................. -32-
(r) Tangible Property and Assets............................................... -32-
(s) Shareholder Approval....................................................... -33-
(t) Brokers.................................................................... -33-
(u) Consents Without Any Condition............................................. -33-
V. CONDITIONS................................................................................... -33-
Section 5.01 Conditions to Each Party's Obligation to Effect the Merger................... -33-
(a) State Securities Laws...................................................... -34-
(c) No Injunctions or Restraints............................................... -34-
(d) Consents and Approvals..................................................... -34-
Section 5.02 Conditions to Obligation of Acquisition to Effect the Merger................. -35-
(a) Representations and Warranties............................................. -35-
(c) Other Closing Documents.................................................... -35-
(d) Review of Proceedings...................................................... -36-
(e) Legal Action............................................................... -36-
(f) No Governmental Action..................................................... -36-
(g) Material Adverse Change.................................................... -37-
Section 5.03 Conditions to Obligation of IPC to Effect the Merger......................... -37-
(a) Representations and Warranties............................................. -37-
-ii-
(b) Performance of Obligations................................................. -37-
(c) Other Closing Documents.................................................... -37-
(d) Review of Proceedings...................................................... -38-
(e) Legal Action............................................................... -38-
(f) No Governmental Action..................................................... -38-
(g) Material Adverse Change.................................................... -38-
(h) Registration Rights........................................................ -39-
VI. INDEMNIFICATION.............................................................................. -39-
Section 6.01 Indemnification by Acquisition............................................... -39-
VII. TERMINATION.................................................................................. -40-
VIII. MISCELLANEOUS................................................................................ -40-
Section 8.01 Further Actions.............................................................. -40-
Section 8.02 Availability of Equitable Remedies........................................... -40-
Section 8.03 Survival..................................................................... -41-
Section 8.04 Modification................................................................. -41-
Section 8.05 Notices...................................................................... -41-
Section 8.06 Waiver....................................................................... -42-
Section 8.07 Binding Effect............................................................... -42-
Section 8.08 No Third-Party Beneficiaries................................................. -43-
Section 8.09 Severability................................................................. -43-
Section 8.10 Headings..................................................................... -43-
Section 8.11 Counterparts; Governing Law.................................................. -43-
-iii-
TABLE OF SCHEDULES
Schedule 4.01(d) Consents for IPC
Schedule 4.01(j) Selected Agreements
Schedule 4.02(a) Equity interests owned by Acquisition
Schedule 4.02(b) Options
Schedule 4.02(d) Consents for Acquisition
Schedule 4.02(f) Changes with respect to Acquisition
Schedule 4.02(l) Tax Matters
TABLE OF EXHIBITS
Exhibit 4.01(b) Certificate of Incorporation and By-laws of IPC
Exhibit 4.02(b) Certificate of Incorporation and By-laws of Acquisition
Exhibit 5.03(i) Registration Rights Agreement
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AGREEMENT AND PLAN OF MERGER
BETWEEN
IPARTY CORP.
AND
WSI ACQUISITIONS CORP.
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
July 2nd, 1998, between iParty Corp., a Delaware corporation whose address is
1350 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx 00000 ("IPC"), and WSI
Acquisitions Corp., a Delaware corporation formerly incorporated in Texas
whose address is 0000 Xxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000 ("Acquisition").
Acquisition in its capacity as the surviving corporation is herein sometimes
called the "Surviving Corporation," and Acquisition and IPC are herein
sometimes called the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, the Board of Directors of each of IPC and
Acquisition has determined that it is advisable and in the best interests of
its respective shareholders to consummate, and the Board of Directors of each
of IPC and Acquisition has approved, the business combination transaction
provided for herein in which IPC would merge with and into Acquisition (the
"Merger");
WHEREAS, the shareholders of each of IPC and Acquisition have
approved the Merger; and
WHEREAS, IPC and Acquisition desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
I. THE MERGER.
Section 1.01 The Merger
At the Effective Time (as defined in Section 1.02), upon
the terms and subject to the conditions of this Agreement, IPC shall be merged
with and into Acquisition in accordance with the Delaware General Corporation
Law (the "DGCL"). Acquisition shall be the surviving corporation in the
Merger. As a result of the Merger, the outstanding shares of capital stock of
IPC shall be converted and cancelled in the manner provided in Article II.
Section 1.02 Effective Time.
At the Closing (as defined in Section 1.03), a certificate
of merger (the "Certificate of Merger") shall be duly prepared by the
Surviving Corporation and thereafter delivered to the Secretary of State of
Delaware for filing as provided in Section 251 of the DGCL, on, or as soon as
practicable after, the Closing Date (as defined in Section 1.03). The Merger
shall become effective as soon as the Certificate of Merger has been filed
with the Secretary of State of Delaware (the date and time when such condition
has been satisfied being referred to herein as the "Effective Time").
Section 1.03 Closing.
The closing of the Merger (the "Closing") will take place
at the offices of Camhy Karlinsky & Xxxxx LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000, or at such other place as the parties hereto mutually agree,
on a date and at a time to be specified by the parties, which shall
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in no event be later than 10:00 a.m., local time, on the next business day
following satisfaction of the condition set forth in Section 5.01(a), provided
that the other closing conditions set forth in Article V have been satisfied
or, if permissible, waived in accordance with this Agreement, or on such other
date as the parties hereto mutually agree (the "Closing Date"). At the Closing
there shall be delivered to IPC and Acquisition the certificates and other
documents and instruments required to be delivered under Article V.
Section 1.04 Certificate of Incorporation and By-laws of the
Surviving Corporation.
At the Effective Time, (i) the certificate of incorporation
of Acquisition as in effect immediately prior to the Effective Time shall be
amended to change the name of Acquisition to "iParty Corp.," and, as so amended,
such certificate of incorporation shall be the certificate of incorporation of
the Surviving Corporation until thereafter amended as provided by law and such
certificate of incorporation, and (ii) the By-laws of Acquisition as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the certificate of
incorporation of the Surviving Corporation, and such By-laws.
Section 1.05 Directors and Officers of the Surviving Corporation.
The directors of Acquisition immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors of
the Surviving Corporation and such directors shall appoint the officers of
Acquisition immediately prior to the Effective Time to be the officers of the
Surviving Corporation. The directors and officers of the Surviving Corporation
shall serve until their successors shall have been duly elected or appointed
and qualified or until their earlier death,
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resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and By-laws.
Section 1.06 Effects of the Merger.
Subject to the foregoing, the effects of the Merger shall
be as provided in the applicable provisions of the DGCL.
II. STATUS AND CONVERSION OF SECURITIES.
Section 2.01 Stock of IPC.
(a) IPC Common Stock. Each share of common stock, par
value $.01 per share, of IPC ("IPC Common Stock") issued and outstanding at
the Effective Time shall, by virtue of the Merger and without any action on
the part of the holders thereof, be converted into 60,000 shares (the "Merger
Consideration") of common stock, par value $0.001 per share, of Acquisition
("Acquisition Common Stock").
(b) Exchange of IPC Common Stock.
(i) At the Effective Time, upon surrender to
Acquisition of all the outstanding shares of IPC Common
Stock, Acquisition shall deliver to the sole shareholder
of IPC, iParty LLC, a Delaware limited liability company
("iParty"), such number of certificates as may be directed
by iParty representing in the aggregate the Merger
Consideration.
(ii) After the Effective Time, iParty shall cease
to have any rights as a shareholder of IPC, except such
rights, if any, as it may have pursuant to Delaware law.
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Section 2.02 Capital Stock of Acquisition.
At the Effective Time, each share of common stock, $.001 par
value, of Acquisition issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into one share of common stock, $.001 par value, of
the Surviving Corporation.
III. COVENANTS.
Section 3.01 [INTENTIONALLY OMITTED].
Section 3.02 [INTENTIONALLY OMITTED].
Section 3.03 Blue Sky Filings.
Acquisition shall have taken all actions (other than
qualifying as a foreign corporation or taking any action which would subject
it to service of process in any jurisdiction where Acquisition is not now so
qualified or subject) required to be taken under applicable state blue sky or
securities laws in connection with the issuance of Acquisition Common Stock
pursuant to the Merger.
Section 3.04 [INTENTIONALLY OMITTED].
Section 3.05 NASD Listing.
Acquisition shall have used its best efforts to cause the
shares of Acquisition Common Stock to be issued in the Merger in accordance
with this Agreement to be admitted for trading or authorized for quotation on
the National Association of Securities Dealers, Inc. Bulletin Board (the "NASD
Bulletin Board") and on each national securities exchange on which shares of
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Acquisition Common Stock may at such time be admitted for trading or listed,
subject to official notice of issuance, prior to the Effective Time.
Section 3.06 Directors' and Officers' Indemnification and
Insurance.
(a) IPC, and from and after the Effective Time, the
Surviving Corporation (each, an "Indemnifying Party"), shall until the sixth
(6th) anniversary of the Effective Time, indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof or
who becomes prior to the Effective Time, a director or officer of IPC (the
"Indemnified Parties") against (i) all losses, claims, damages, costs and
expenses (including reasonable attorneys' fees), liabilities, judgments, and
settlement amounts that are paid or incurred in connection with any claim,
action, suit, proceeding or investigation (whether civil, criminal,
administrative or investigative and whether asserted or claimed prior to, at
or after the Effective Time) that are based in whole or in part on, or arise
in whole or in part out of, the fact that such Indemnified Party is or was a
director or officer of IPC and relates to or arises out of an action or
omission occurring at or prior to the Effective Time ("Indemnified
Liabilities"), and (ii) all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of or pertaining to, this Agreement or
the transactions contemplated hereby, in each case to the full extent a
corporation is permitted under applicable law to indemnify its own directors,
officers, employees or agents, as the case may be; provided, however, that no
Indemnifying Party shall be liable for any settlement of any claim effected
without its written consent, which consent shall not be unreasonably withheld.
Without limiting the foregoing, in the event that any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Party
(whether arising prior to or after the Effective Time), (w) the Indemnifying
Parties
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will pay expenses in advance of the final disposition of any such claim,
action, suit, proceeding or investigation to each Indemnified Party to the
full extent permitted by applicable law provided that the person to whom
expenses are advanced provides an undertaking to repay such advance if it is
ultimately determined that such person is not entitled to indemnification; (x)
the Indemnified Parties shall retain counsel reasonably satisfactory to the
Indemnifying Parties; (y) the Indemnifying Parties shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties (subject to the
final sentence of this paragraph) promptly as statements therefor are
received; and (z) the Indemnifying Parties shall use all commercially
reasonable efforts to assist in the vigorous defense of any such matter. Any
Indemnified Party wishing to claim indemnification under this Section 3.06,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify the Indemnifying Parties, but the failure to so notify an
Indemnifying Party shall not relieve it from any liability which it may have
under this paragraph except to the extent such failure irreparably prejudices
such party. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties.
(b) The provisions of this Section 3.06 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs and legal representatives, and shall be in addition to any
other rights an Indemnified Party may have under the certificate of
incorporation or By-laws of Acquisition, under the DGCL or otherwise.
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(c) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall assume the obligations set forth in this Section 3.06.
Section 3.07 [INTENTIONALLY OMITTED]
IV. REPRESENTATIONS AND WARRANTIES.
Section 4.01 Certain Representations and Warranties of IPC. IPC
represents and warrants to Acquisition as follows:
(a) Organization and Qualification. IPC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its
assets and properties, except for such failures to have such corporate power
and authority which, individually or in the aggregate, do not and are not
reasonably expected to have a Material Adverse Effect (as defined in this
Section 4.01(a)) on IPC. IPC is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its assets and properties, or the conduct or nature of its
business makes such qualification, licensing or admission necessary, except
for such failures to be so qualified, licensed or admitted and in good
standing which, individually or in the aggregate, do not and are not
reasonably expected to have a Material Adverse Effect on IPC. As used in this
Agreement, a "Material Adverse Effect" shall mean
-8-
a material adverse effect on the businesses, properties, assets, liabilities,
condition (financial or otherwise) or results of operations of an entity (or
group of entities taken as a whole). Notwithstanding the foregoing, a Material
Adverse Effect shall not include any change in political or economic matters
of general applicability. IPC does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
(b) Organizational Documents; Capital Stock.
(i) Attached hereto as Exhibit 4.01(b) is a true
and complete copy of the certificate of incorporation and
By-laws of IPC as in effect on the date hereof.
(ii) The authorized capital stock of IPC consists
solely of 1,000 shares of IPC Common Stock. As of the date
of this Agreement, 100 shares of IPC Common Stock are
issued and outstanding. All the issued and outstanding
shares of IPC Common Stock are duly authorized, validly
issued, fully paid and nonassessable. Except pursuant to
this Agreement, there are no outstanding subscriptions,
options, warrants, rights (including "phantom" stock
rights), preemptive rights or other contracts,
commitments, understandings or arrangements, including any
right of conversion or exchange under any outstanding
security, instrument or agreement (collectively,
"Options"), obligating IPC to issue or sell any shares of
capital stock of IPC or to grant, extend or enter into any
Option with respect thereto.
(iii) There are no outstanding contractual
obligations of IPC to repurchase, redeem or otherwise
acquire any shares of IPC Common Stock or any capital
stock
-9-
of IPC or to provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in,
any person.
(iv) Since the date of its formation, IPC has not
authorized, declared, paid or effected any cash or
non-cash dividend or liquidating or other distribution or
stock split.
(c) Authority Relative to this Agreement. IPC has full
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by IPC and the
consummation by IPC of the Merger and the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of IPC and by iParty,
and no other corporate proceedings on the part of IPC or iParty are necessary to
authorize the execution, delivery and performance of this Agreement by IPC and
the consummation by IPC of the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by IPC and constitutes a legal,
valid and binding obligation of IPC enforceable against IPC in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(d) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of this Agreement by
IPC do not, and the performance by IPC of its obligations
hereunder and the consummation of the
-10-
transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition
of any lien, claim, mortgage, encumbrance, pledge,
security interest, equity or charge of any kind (any of
the foregoing, a "Lien") upon any of the assets or
properties of IPC under any of the terms, conditions or
provisions of (x) the certificate of incorporation or
By-laws of IPC or (y) subject to the taking of the actions
described in paragraph (ii) of this Section 4.01(d), (A)
any statute, law, rule, regulation or ordinance
(collectively, "Laws"), or any judgment, decree, order,
writ, permit or license (collectively, "Orders"), of any
court, tribunal, arbitrator, authority, agency,
commission, official or other instrumentality of the
United States, any foreign country, or any domestic or
foreign state, county, city or other political subdivision
(a "Governmental or Regulatory Authority"), applicable to
IPC or any of its assets or properties, or (B) any note,
bond, mortgage, security agreement, indenture, license,
franchise, permit, concession, contract, lease (capital or
operating) or other instrument, obligation or agreement of
any kind (collectively, "Contracts") to which IPC is a
party or by which IPC or any of its assets or properties
is bound, excluding from the foregoing clauses (A) and (B)
conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions
of Liens which, individually or in the aggregate, could
not
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be reasonably expected to have a Material Adverse Effect
on IPC or on its ability to consummate the transactions
contemplated by this Agreement.
(ii) Except (x) for the filing of the Certificate
of Merger and other appropriate merger documents required
by the DGCL with the Secretary of State of Delaware and
appropriate documents with the relevant authorities of
other states in which the Constituent Corporations are
qualified to do business and (y) as disclosed in Schedule
4.01(d) hereto, no consent, approval, or action of, filing
with, or notice to any Governmental or Regulatory
Authority or other public or private third party is
necessary or required under any of the terms, conditions
or provisions of any Law or Order of any Governmental or
Regulatory Authority or any Contract to which IPC is a
party or by which IPC or any of its assets or properties
is bound for the execution and delivery of this Agreement
by IPC, the performance by IPC of its obligations
hereunder or the consummation of the transactions
contemplated hereby, except for such consents, approvals,
or actions of, filings with or notices to any Governmental
or Regulatory Authority or other public or private third
party the failure of which to make or obtain could not
reasonably be expected to have a Material Adverse Effect
on IPC or on its ability to consummate the transactions
contemplated by this Agreement.
(e) Financial Statements. IPC has previously provided to
Acquisition an unaudited balance sheet dated as of June 30, 1998.
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(f) Absence of Certain Changes or Events. Since the date
of the formation of IPC, (i) no change, event or development or combination of
changes or developments (including any worsening of any condition currently
existing) has occurred or is reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect on IPC (a "Material Adverse Change in
IPC") and (ii) IPC has conducted its business only in the ordinary course
consistent with past practice.
(g) Absence of Undisclosed Liabilities. Since the date of
its formation, IPC has not incurred any liabilities or obligations (whether
absolute, accrued, contingent, fixed or otherwise, or whether due or to become
due), of any nature that would be required by generally accepted accounting
principles ("GAAP") to be reflected on a balance sheet of IPC, except
liabilities or obligations incurred in the ordinary course of business
consistent with past practice and which have not had, and are not reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect
on IPC.
(h) Legal Proceedings. There are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of IPC, threatened
against, relating to or affecting, nor to the knowledge of IPC are there any
Governmental or Regulatory Authority investigations or audits pending or
threatened against, relating to or affecting, IPC or any of its assets and
properties which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on IPC or on the ability of IPC to
consummate the transactions contemplated by this Agreement. IPC is not subject
to any judgment, decree, court order or writ of any Governmental or Regulatory
Authority.
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(i) Compliance with Laws and Orders. IPC holds all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
its business (the "IPC Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which, individually or
in the aggregate, do not and are not reasonably expected to have a Material
Adverse Effect on IPC. IPC is in compliance with the terms of the IPC Permits,
except failures so to comply which, individually or in the aggregate, do not
and are not reasonably expected to have a Material Adverse Effect on IPC. IPC
is not in violation of or default under any Law or Order of any Governmental
or Regulatory Authority, except for violations which, individually or in the
aggregate, do not and are not reasonably expected to have a Material Adverse
Effect on IPC.
(j) Compliance with Agreements; Certain Agreements.
(i) Neither IPC, nor to the knowledge of IPC, any
other party thereto, is in breach or violation of, or in
default in the performance or observance of any term or
provision of, and no event has occurred which, with notice
or lapse of time or both, is reasonably expected to result
in a default under, (x) the certificate of incorporation
or By-laws of IPC or (y) any Contract to which IPC is a
party or by which IPC or any of its assets or properties
is bound, except in the case of clause (y) for breaches,
violations and defaults which, individually or in the
aggregate, do not and are not reasonably expected to have
a Material Adverse Effect on IPC.
(ii) Except as disclosed in Schedule 4.01(j) hereto
or as provided for in this Agreement, as of the date
hereof, IPC is not a party to any oral or written (u)
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capital or operating leases providing for the payment of
more than $50,000 per annum, (v) consulting agreement not
terminable on thirty (30) days' or less notice involving
the payment of more than $25,000 per annum, (w) union or
collective bargaining agreement which covers more than 15
employees, (x) agreement with any executive officer or
other key employee of IPC the benefits of which are
contingent or vest, or the terms of which are materially
altered, upon the occurrence of a transaction involving
IPC of the nature contemplated by this Agreement, (y)
agreement with respect to any executive officer or other
key employee of IPC providing any term of employment or
compensation guarantee extending for a period longer than
one year and for the payment of more than $100,000 per
annum or (z) agreement or plan, including any stock
option, stock appreciation right, restricted stock or
stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
(k) Tax Matters. For purposes of this Section 4.01(k) and
Section 4.02(1) the terms "Tax" and "Taxes" include without limitation all
liabilities for federal, state, local, foreign or other taxes, whether based on,
or related to income, profits, capital, premiums, sales, use, gross receipts,
property, ad valorem, franchise, employment, excise, payroll import and other
taxes, duties,
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leases and assessments, and include all related penalties, interest, additions
to tax and liabilities for taxes related to contractual obligations with
customers and suppliers.
(i) IPC has filed all material Tax returns required
to be filed by applicable law prior to the Closing Date.
All material Tax returns were true, complete and correct
and filed on a timely basis. IPC (i) has paid all material
Taxes due, or claimed or asserted by any taxing authority
to be due, for the periods covered by such Tax returns or
(ii) has duly and fully provided reserves (in accordance
with GAAP) adequate to pay all such Taxes.
(ii) IPC has established (and until the Closing
Date will maintain) on its books and records reserves
adequate to reflect all material Taxes not yet due and
payable.
(iii) There are no Tax Liens upon the assets of IPC
which are reasonably expected to have a Material Adverse
Effect on IPC except Liens for Taxes not yet due.
(iv) IPC has not requested (and no request has been
made on its behalf) any extension of time within which to
file any material Tax return.
(v) No audits or other administrative proceedings
or court proceedings are presently pending with regard to
any Taxes or Tax returns of IPC.
(vi) IPC has not received a written ruling of a
taxing authority relating to Taxes or entered into a
written and legally binding agreement with any taxing
authority relating to Taxes.
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(vii) No agreements relating to allocating or
sharing of any material Tax liability have been entered
into by IPC.
(viii) Except for the execution, delivery and
performance of this Agreement, no event has occurred which
would cause the limitations under Section 382 of the
Internal Revenue Code of 1986, as amended (the "Code"), to
apply to IPC.
(l) Environmental Matters.
(i) As of the date hereof, to the knowledge of IPC,
no underground storage tanks are present under any
property that IPC has at any time owned, operated,
occupied or leased. To the knowledge of IPC, as of the
date hereof, no material amount of any substance that has
been designated by any government entity or by applicable
federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs,
asbestos, petroleum, urea-formaldehyde and all substances
listed as hazardous substances pursuant to the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource
Conservation and Recovery Xxx 0000, as amended, and the
regulations promulgated pursuant to said laws (any of the
foregoing, a "Hazardous Material"), but excluding office
and janitorial supplies, are present, as a result of the
actions of IPC in, on or under any property, including the
land and the improvements, ground water and surface water,
that IPC has at any time owned, operated, occupied or
leased.
-17-
(ii) At no time has IPC transported, stored, used,
manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of
any Law in effect on or before the Effective Time, which
has had or is reasonably likely to have a Material Adverse
Effect on IPC, nor has IPC engaged in Hazardous Materials
Activities (as defined in Section 4.02(m)(ii) hereof) in
violation of any law or order promulgated by any
Governmental or Regulatory Authority which has or is
reasonably likely to have a Material Adverse Effect on
IPC.
(iii) IPC has all material environmental approvals,
permits, licenses, clearances and consents (the
"Environmental Permits") necessary for the conduct of its
current business.
(iv) No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending
or, to the knowledge of IPC, as of the date hereof,
threatened concerning any Environmental Permit or any
Hazardous Materials Activity of IPC which could reasonably
be expected to have a Material Adverse Effect on IPC. IPC
is not aware of any fact or circumstance which could
involve IPC in any environmental litigation or impose upon
IPC any environmental liability which in either case would
be reasonably likely to have a Material Adverse Effect on
IPC.
(m) Employee Benefit Plans. IPC does not have or contribute
to any pension, profit-sharing, option, other incentive plan or any other type
of Employee Benefit Plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")),
-18-
or have any obligation to or customary arrangement with employees for bonuses,
incentive compensation, vacations, severance pay, sick pay, sick leave,
insurance, service award, relocation, disability, tuition refund or other
benefits, whether oral or written.
(n) Patents, Trademarks, Et Cetera. IPC has all right,
title and interest in, or a valid and binding license to use all patents,
patent applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, franchises, trade secrets, computer
programs (in object or source code form), or other intangible property or
asset (collectively, "Intangibles") which are individually or in the aggregate
material to the conduct of its business. IPC is not in default (or with the
giving of notice or lapse of time or both, would be in default) in any
material respect under any license to use such Intangibles. To IPC's
knowledge, no such Intangibles are being infringed by any third party, and IPC
is not infringing any Intangible of any third party, except for such defaults
and infringements which, individually or in the aggregate, do not and are not
reasonably expected to have a Material Adverse Effect on Acquisition.
(o) Insurance. IPC does not currently maintain and since
its formation, has never maintained liability, property, workers'
compensation, directors' and officers', liability or any other insurance
policies that insure the business, operations, properties, assets or employees
of IPC.
(p) Labor Matters. Since the date of its formation, IPC has
had no employees.
(q) Tangible Property and Assets. IPC has marketable title
to, or has valid leasehold interests in or valid rights under contract to use,
all tangible property and assets used in and, individually or in the aggregate,
material to the conduct of the business of IPC free and clear of all Liens other
than (i) any statutory Lien arising in the ordinary course of business by
operation
-19-
of law with respect to a liability that is not yet due or delinquent and (ii)
any minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property or asset subject to such Lien or the use of such property or asset in
the conduct of the business of IPC. All such property and assets are, in all
respects material to IPC, in good working order and condition, ordinary wear
and tear excepted, and adequate and suitable for the purposes for which they
are presently being used.
(r) Shareholder Approval. IPC has obtained the approval of
its sole shareholder with respect to the Merger, this Agreement and the other
transactions contemplated hereby.
(s) Broker. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by IPC directly
with Acquisition and its affiliates without the intervention of any person on
behalf of IPC in such manner as to give rise to any valid claim by any person
against Acquisition and its affiliates for a finder's fee, brokerage
commission or similar payment.
(t) Consents Without Any Condition. IPC has not made any
agreement or reached any understanding not approved by Acquisition as a
condition for obtaining any consent, authorization, approval, order, license,
certificate or permit required for the consummation of the transactions
contemplated by this Agreement.
(u) Transfer Taxes. IPC has prepared and filed all
declarations and filings necessary to comply with any transfer tax statutes
that require any such filings before the Effective Time.
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Section 4.02 Certain Representations and Warranties of Acquisition.
Acquisition represents and warrants to IPC as follows:
(a) Organization and Qualification. Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has full corporate power and authority
to conduct its business as and to the extent now conducted and to own, use and
lease its assets and properties, except for such failures to have such corporate
power and authority which, individually or in the aggregate, do not and are not
reasonably expected to have a Material Adverse Effect on Acquisition.
Acquisition is duly qualified, licensed or admitted to do business and is in
good standing in each jurisdiction in which the ownership, use or leasing of its
assets and properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for such failures to be
so qualified, licensed or admitted and in good standing which, individually or
in the aggregate, do not and are not reasonably expected to have a Material
Adverse Effect on Acquisition. Delaware is the only jurisdiction in which
Acquisition is qualified, licensed or admitted to do business. Except as
disclosed in Schedule 4.02(a) hereto, Acquisition does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
(b) Organizational Documents; Capital Stock.
(i) Attached hereto as Exhibit 4.02(b) is a true and
complete copy of the certificate of incorporation and
By-laws of Acquisition as in effect on the date
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hereof. Such documents provide for a board of directors
consisting of six members and authorize the issuance by
Acquisition of 10,000,000 shares of preferred stock.
(ii) The authorized capital stock of Acquisition
consists solely of 50,000,000 shares of Acquisition Common
Stock and 10,000,000 shares of preferred stock, par value
$.001 per share ("Acquisition Preferred Stock"). As of the
date hereof, 5,000,000 shares of Acquisition Common Stock
are issued and outstanding, no shares of Acquisition
Preferred Stock are outstanding, no shares of Acquisition
Common Stock or Acquisition Preferred Stock are held in
the treasury of Acquisition and 1,000,000 shares of
Acquisition Common Stock and 1,000,000 shares of
Acquisition Preferred Stock are reserved for issuance
pursuant to the instruments described in Schedule 4.02(b)
hereto. All of the issued and outstanding shares of
Acquisition Common Stock are, and all shares of
Acquisition Common Stock and Acquisition Preferred Stock
reserved for issuance will be, upon issuance in accordance
with the terms specified in the instruments or agreements
pursuant to which they are issuable, duly authorized,
validly issued, fully paid and nonassessable. Except
pursuant to this Agreement and the warrants described in
Schedule 4.02(b), there are no outstanding Options
obligating Acquisition to issue or sell any shares of
capital stock of Acquisition or to grant, extend or enter
into any Option with respect thereto. The shares of
Acquisition Common Stock issuable to the holder of IPC
Common Stock pursuant to Article II hereof will be, when
issued in accordance with this Agreement, duly authorized,
validly issued, fully paid and
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nonassessable. The outstanding shares of Acquisition Common
Stock are eligible for quotation on the NASD Bulletin Board.
(iii) There are no outstanding contractual
obligations of Acquisition to repurchase, redeem or
otherwise acquire any shares of Acquisition Common Stock.
(iv) Since the date of its formation, Acquisition
has not authorized, declared, paid or effected any cash or
non-cash dividend or liquidating or other distribution or
stock split other than the 40 to 1 reverse stock split
with respect to the Acquisition Common Stock effective as
of June 18, 1998.
(c) Authority Relative to this Agreement. Acquisition has
full corporate power and authority to enter into this Agreement and to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Acquisition
and the consummation by Acquisition of the Merger and the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of Acquisition and by its shareholders and no other corporate
proceedings on the part of Acquisition or its shareholders are necessary to
authorize the execution, delivery and performance of this Agreement by
Acquisition and the consummation by Acquisition of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Acquisition and constitutes a legal, valid and binding obligation of Acquisition
enforceable against Acquisition in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by
-23-
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(d) Non-Contravention; Approvals and Consents.
(i) The execution and delivery of this Agreement by
Acquisition do not, and the performance by Acquisition of
its obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition
of any Lien on any of the assets or properties of
Acquisition under, any of the terms, conditions or
provisions of (x) the certificate of incorporation or
By-laws of Acquisition or (y) subject to the taking of the
actions described in paragraph (ii) of this Section
4.02(d), (A) any Laws or Orders of any Governmental or
Regulatory Authority applicable to Acquisition or any of
its assets or properties, or (B) any Contracts to which
Acquisition is a party or by which Acquisition or any of
its assets or properties is bound, excluding from the
foregoing clauses (A) and (B) conflicts, violations,
breaches, defaults, terminations, modifications,
accelerations and creations and impositions of Liens,
which individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect on
Acquisition or on the ability of Acquisition to consummate
the transactions contemplated by this Agreement.
-24-
(ii) Except (x) for filings with various state
securities authorities that are required in connection
with the transactions contemplated by this Agreement, (y)
for the filing of the Certificate of Merger and other
appropriate merger documents required by the DGCL with the
Secretary of State of Delaware and appropriate documents
with the relevant authorities of other states in which the
Constituent Corporations are qualified to do business and
(z) as disclosed in Schedule 4.02(d) hereto, no consent,
approval, or action of, filing with or notice to any
Governmental or Regulatory Authority or other public or
private third party is necessary or required under any of
the terms, conditions or provisions of any Law or Order of
any Governmental or Regulatory Authority or any Contract
to which Acquisition is a party or by which Acquisition or
any of its assets or properties is bound for the execution
and delivery of this Agreement by Acquisition, the
performance by Acquisition of its obligations hereunder or
the consummation of the transactions contemplated hereby,
except for such consents, approvals or actions of, filing
with or notices to any Governmental or Regulatory
Authority or other public or private third party the
failure of which to make or obtain could not reasonably be
expected to have a Material Adverse Effect on Acquisition
or on its ability to consummate the transactions
contemplated by this Agreement.
(e) Financial Statements. Acquisition delivered to IPC prior
to the execution of this Agreement a true, correct and complete copy of each
audited and unaudited financial statement (the "Acquisition Financial
Statements") of Acquisition since January 1, 1992. The
-25-
Acquisition Financial Statements were prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited
statements) and fairly present (subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end audit adjustments which
are not expected to be, individually or in the aggregate, materially adverse
to Acquisition), the financial position of Acquisition as at the respective
dates thereof and the results of operations and cash flows for the respective
periods then ended.
(f) Absence of Certain Changes or Events. Except as set
forth in Schedule 4.02(f) hereto, (i) since February 28, 1998 no change, event
or development or combination of changes or developments (including any
worsening of any condition currently existing) has occurred or is reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect
on Acquisition (a "Material Adverse Change in Acquisition"), and (ii) between
such date and the date hereof Acquisition has conducted its business only in
the ordinary course consistent with past practice.
(g) Absence of Undisclosed Liabilities. Except for matters
reflected or reserved against in the balance sheet for the period ended
December 31, 1997 included in the Acquisition Financial Statements,
Acquisition did not have at such date and has not incurred since that date,
any liabilities or obligations (whether absolute, accrued, contingent, fixed
or otherwise, or whether due or to become due) of any nature, except
liabilities or obligations which were incurred in the ordinary course of
business consistent with past practice which have not had, and are not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Acquisition.
-26-
(h) Legal Proceedings. (i) There are no actions, suits,
arbitrations or proceedings pending or to the knowledge of Acquisition,
threatened against, relating to or affecting, nor to the knowledge of
Acquisition, are there any Governmental or Regulatory Authority investigations
or audits pending or threatened against, relating to or affecting, Acquisition
or any of its assets and properties which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on Acquisition
or on the ability of Acquisition to consummate the transactions contemplated
by this Agreement, and (ii) Acquisition is not subject to any judgment,
decree, court order or writ of any Governmental or Regulatory Authority.
(i) Information Supplied. Any documents to be filed by
Acquisition with any Governmental or Regulatory Authority in connection with
the Merger and the other transactions contemplated hereby will comply as to
form in all material respects with the requirements of all applicable Laws and
will not, on the date of its filing and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Acquisition with respect
to information supplied by or on behalf of IPC expressly for inclusion
therein.
(j) Compliance with Laws and Orders. Acquisition holds all
permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
its business (the "Acquisition Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which,
individually or in the aggregate, do not and are not reasonably expected to
have a Material Adverse Effect on
-27-
Acquisition. Acquisition is in compliance with the terms of the Acquisition
Permits, except failures so to comply which, individually or in the aggregate,
do not have and are not reasonably expected to have a Material Adverse Effect
on Acquisition. Acquisition is not in violation of or default under any Law or
Order of any Governmental or Regulatory Authority except for violations which,
individually or in the aggregate, do not and are not reasonably expected to
have a Material Adverse Effect on Acquisition.
(k) Compliance with Agreements; Certain Agreements.
Neither Acquisition, nor to the knowledge of Acquisition, any other party
thereto, is in breach or violation of, or in default in the performance or
observance of any term or provision of and no event has occurred which, with
notice or lapse of time or both, is reasonably expected to result in a default
under, (x) the certificate of incorporation or By-laws of Acquisition or (y)
any Contract to which Acquisition is a party or by which Acquisition or any of
its assets or properties is bound, except in the case of clause (y) for
breaches, violations and defaults which, individually or in the aggregate, do
not and are not reasonably expected to have a Material Adverse Effect on
Acquisition.
(l) Tax Matters.
(i) Except as set forth in Schedule 4.02(l) hereto,
Acquisition has filed all material Tax returns to be filed
by applicable law prior to the Closing Date. All material
Tax returns were (and, as to Tax returns not filed as of
the date hereof, will be) true, complete and correct and
filed on a timely basis. Acquisition (i) has paid all
material Taxes due, or claimed or asserted by any taxing
authority to be due, for
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the periods covered by such Tax returns or (ii) has duly
and fully provided reserves (in accordance with GAAP)
adequate to reflect all such Taxes.
(ii) Acquisition has established (and until the
Closing Date will maintain) on its books and records
reserves adequate to reflect all material Taxes not yet
due and payable. Acquisition has made available to IPC the
complete and accurate copies of all work papers associated
with the calculation of Acquisition's Tax reserves.
(iii) There are no Tax Liens upon the assets of
Acquisition which could reasonably be expected to have a
Material Adverse Effect on Acquisition except Liens for
Taxes not yet due.
(iv) Acquisition has not requested (and no request
has been made on its behalf) any extension of time within
which to file any material Tax return.
(v) (A) No income Tax returns have been examined by
any taxing authorities for any periods; and (B) no
deficiency for any material Taxes has been suggested,
proposed, asserted or assessed against Acquisition that
has not been resolved and paid in full.
(vi) No audits or other administrative proceedings
or court proceedings are presently pending with regard to
any Taxes or Tax returns of Acquisition.
(vii) Acquisition has not received a written ruling
of a taxing authority relating to Taxes or entered into a
written and legally binding agreement with any taxing
authority relating to Taxes.
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(viii) To the extent requested by IPC, Acquisition
has made available to IPC (or, in the case of Tax returns
to be filed on or before the Closing Date, will make
available) complete and accurate copies of all Tax returns
and associated work papers filed by or on behalf of
Acquisition for all taxable years ending on or prior to
the Closing Date.
(ix) No agreements relating to allocating or
sharing of any material Taxes have been entered into by
Acquisition.
(x) Acquisition has not entered into any
transactions that could give rise to an understatement of
federal income Tax within the meaning of Section 6661 of
the Code for Tax returns filed on or before December 31,
1989 and within the meaning of Section 6662 of the Code
for Tax returns filed after December 31, 1989.
(m) Environmental Matters.
(i) As of the date hereof, to the knowledge of
Acquisition, no underground storage tanks are present
under any property that Acquisition has at any time owned,
operated, occupied or leased. To the knowledge of
Acquisition, as of the date hereof, no material amount of
any Hazardous Materials, but excluding office and
janitorial supplies, are present, as a result of the
actions of Acquisition in, on or under any property,
including the land and the improvements, ground water and
surface water, that Acquisition has at any time owned,
operated, occupied or leased.
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(ii) At no time has Acquisition transported,
stored, used, manufactured, disposed of, released or
exposed its employees or others to Hazardous Materials
(collectively, "Hazardous Materials Activities") in
violation of any Law in effect on or before the Effective
Time, which has had or is reasonably likely to have a
Material Adverse Effect on Acquisition, nor has
Acquisition engaged in Hazardous Materials Activities in
violation or any Law or Order promulgated by any
Governmental or Regulatory Authority which has or is
reasonably likely to have a Material Adverse Effect on
Acquisition.
(iii) Acquisition currently holds all Environmental
Permits necessary for the conduct of its business.
(iv) No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending
or, to the knowledge of Acquisition, as of the date
hereof, threatened concerning any Environmental Permit or
any Hazardous Materials Activity of Acquisition which
could reasonably be expected to have a Material Adverse
Effect on Acquisition. Acquisition is not aware of any
fact or circumstance which could involve Acquisition in
any environmental litigation or impose upon Acquisition
any environmental liability which in either case would be
reasonably likely to have a Material Adverse Effect on
Acquisition.
(n) Employee Benefit Plans. Acquisition does not have or
contribute to any pension, profit-sharing, option, other incentive plan, or any
other type of Employee Benefit Plan, or have any obligation to or customary
arrangement with employees for bonuses, incentive
-31-
compensation, vacations, severance pay, sick pay, sick leave, insurance,
service award, relocation, disability, tuition refund or other benefits,
whether oral or written.
(o) Patents, Trademarks, Et Cetera. Acquisition has all
right, title and interest in, or a valid and binding license to use,
Intangibles which are individually or in the aggregate material to the conduct
of the business of Acquisition. Acquisition is not in default (or with the
giving of notice or lapse of time or both, would be in default) in any
material respect under any license to use any such Intangible. To
Acquisition's knowledge, no, such Intangible is not being infringed by any
third party, and Acquisition is not infringing any Intangible of any third
party, except for such defaults and infringements which, individually or in
the aggregate, do not and are not reasonably expected to have a Material
Adverse Effect on Acquisition.
(p) Insurance. Acquisition does not currently maintain and
since its formation, has never maintained liability, property, workers'
compensation, directors' and officers', liability or any other insurance
policies that insure the business, operations, properties, assets or employees
of Acquisition.
(q) Labor Matters. Since the date of its formation
Acquisition has not had any employees.
(r) Tangible Property and Assets. Acquisition has good and
marketable title to, or has valid leasehold interests in or valid rights under
contract to use, all tangible property and assets used in and, individually or
in the aggregate, material to the conduct of the business of Acquisition, free
and clear of all Liens other than (i) any statutory Lien arising in the
ordinary course of business by operation of law with respect to a liability
that is not yet due or delinquent and (ii) any
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minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property or asset subject to such Lien or the use of such property or asset in
the conduct of the business of Acquisition. All such property and assets are,
in all respects material to Acquisition, in good working order and condition,
ordinary wear and tear excepted, and adequate and suitable for the purposes
for which they are presently being used.
(s) Shareholder Approval. Acquisition has obtained the
approval of the necessary percentage of its shareholders as required by the
DGCL and any other applicable law with respect to the Merger, this Agreement
and the other transactions contemplated hereby.
(t) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by Acquisition
and its affiliates directly with IPC without the intervention of any person on
behalf of Acquisition and its affiliates in such manner as to give rise to any
valid claim by any person against IPC for a finder's fee, brokerage commission
or similar payment.
(u) Consents Without Any Condition. Acquisition has not made
any agreement or reached any understanding not approved by IPC as a condition
for obtaining any consent, authorization, approval, order, license, certificate
or permit required for the consummation of the transactions contemplated by this
Agreement.
V. CONDITIONS.
Section 5.01 Conditions to Each Party's Obligation to Effect the
Merger.
The respective obligation of each party to effect the Merger
is subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
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(a) State Securities Laws. Acquisition shall have received
all state securities or "Blue Sky" permits and other authorizations necessary
to issue the Acquisition Common Stock pursuant to this Agreement after the
Merger.
(b) NASD Bulletin Board Listing. The shares of Acquisition
Common Stock issuable to IPC's shareholder in the Merger in accordance with
this Agreement shall be eligible for quotation on the NASD Bulletin Board.
(c) No Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall
have enacted, issued, promulgated, enforced or entered any Law or Order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making illegal or otherwise restricting, preventing or
prohibiting consummation of the Merger or the other transactions contemplated
by this Agreement.
(d) Consents and Approvals. Other than the filings
provided for by Section 1.02, all consents, approvals and actions of, filings
with and notices to any Governmental or Regulatory Authority or any other
public or private third parties required of Acquisition or IPC to consummate
the Merger and the other matters contemplated hereby (including, without
limitation, those listed on Schedules 4.01(d) and 4.02(d)), the failure of
which to be obtained or taken could be reasonably expected to have a material
adverse effect on Acquisition, IPC or the Surviving Corporation or on the
ability of Acquisition and IPC to consummate the transactions contemplated
hereby shall have been obtained, all in form and substance reasonably
satisfactory to Acquisition and IPC, and no such consent, approval or action
shall contain any term or condition which could be reasonably expected
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to result in a material diminution of the benefits of the Merger to the
shareholders of Acquisition and IPC.
Section 5.02 Conditions to Obligation of Acquisition to Effect the
Merger.
The obligation of Acquisition to effect the Merger is
further subject to the fulfillment, at or prior to the Closing, of each of the
following additional conditions (all or any of which may be waived in whole or
in part by Acquisition and in its sole discretion):
(a) Representations and Warranties. The representations
and warranties made by IPC in this Agreement shall be true and correct in all
material respects as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
and IPC shall have delivered to Acquisition a certificate, dated the Closing
Date and executed on behalf of IPC by its Chairman of the Board, President or
any Senior Vice President, to such effect.
(b) Performance of Obligations. IPC shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by
IPC at or prior to the Closing, and IPC shall have delivered to Acquisition a
certificate dated the Closing Date and executed on behalf of the Company by
its Chairman of the Board, President or any Senior Vice President, to such
effect.
(c) Other Closing Documents. IPC shall have delivered to
Acquisition at or prior to the Effective Time such other documents as
Acquisition may reasonably request in order to enable Acquisition to determine
whether the conditions to its obligations under this Agreement have been met
and otherwise to carry out the provisions of this Agreement.
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(d) Review of Proceedings. All actions, proceedings,
instruments and documents required by IPC to carry out this Agreement or
incidental thereto and all other related legal matters shall be subject to the
reasonable approval of Xxxxxxx Xxxxxxx, Esq., counsel to Acquisition, and IPC
shall have furnished such counsel such documents as such counsel may have
reasonably requested for the purpose of enabling them to pass upon such
matters.
(e) Legal Action. There shall not have been instituted or
threatened any legal proceeding relating to, or seeking to prohibit or
otherwise challenge the consummation of, the transactions contemplated by this
Agreement, or to obtain substantial damages with respect thereto.
(f) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, judgment or decree
proposed, promulgated, enacted, entered, enforced or deemed applicable to the
transactions contemplated by this Agreement by any federal, state, local or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of Acquisition, (i) makes this Agreement, the Merger or any of the
other transactions contemplated by this Agreement illegal, (ii) results in a
material delay in the ability of IPC or Acquisition to consummate the Merger
or any of the other transactions contemplated by this Agreement, (iii)
requires the divestiture by Acquisition of a material portion of the business
of either Acquisition or IPC, or (iv) otherwise materially prohibits,
restricts or delays consummation of the Merger or any of the other
transactions contemplated by this Agreement or materially impairs the
contemplated benefits to Acquisition of this Agreement, the Merger or any of
the other transactions contemplated by this Agreement.
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(g) Material Adverse Change. There shall not have been a
Material Adverse Change in IPC.
Section 5.03 Conditions to Obligation of IPC to Effect the Merger.
The obligation of IPC to effect the Merger is further
subject to the fulfillment, at or prior to the Closing, of each of the
following additional conditions (all or any of which may be waived in whole or
in part by IPC in its sole discretion):
(a) Representations and Warranties. The representations
and warranties made by Acquisition in this Agreement shall be true and correct
in all material respects as of the Closing Date as though made on and as of
the Closing Date or, in the case of representations and warranties made as of
a specified date earlier than the Closing Date, on and as of such earlier
date, and Acquisition shall have delivered to IPC a certificate, dated the
Closing Date and executed on behalf of Acquisition by its Chairman of the
Board, President or any Vice President, to such effect.
(b) Performance of Obligations. Acquisition shall have
performed and complied with in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with
by Acquisition at or prior to the Closing, and Acquisition shall have
delivered to IPC a certificate, dated the Closing Date and executed on behalf
of Acquisition by its Chairman of the Board, President or any Vice President,
to such effect.
(c) Other Closing Documents. Acquisition shall have
delivered to IPC at or prior to the Effective Time such other documents as IPC
may reasonably request in order to enable IPC to determine whether the
conditions to its obligations under this Agreement have been met and otherwise
to carry out the provisions of this Agreement.
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(d) Review of Proceedings. All actions, proceedings,
instruments and documents required by Acquisition to carry out this Agreement
or incidental thereto and all other related legal matters shall be subject to
the reasonable approval of Camhy Xxxxxxxxx & Xxxxx LLP, counsel to IPC, and
Acquisition shall have furnished such counsel such documents as such counsel
may have reasonably requested for the purpose of enabling it to pass upon such
matters.
(e) Legal Action. There shall not have been instituted or
threatened any legal proceeding relating to, or seeking to prohibit or
otherwise challenge the consummation of, the trans actions contemplated by
this Agreement, or to obtain substantial damages with respect thereto.
(f) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, judgment or decree
proposed, promulgated, enacted, entered, enforced or deemed applicable to the
transactions contemplated by this Agreement by any federal, state, local or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of IPC, (i) makes this Agreement, the Merger or any of the other
transactions contemplated by this Agreement illegal, (ii) results in a
material delay in the ability of Acquisition or IPC to consummate the Merger
or any of the other transactions contemplated by this Agreement, or (iii)
otherwise materially prohibits, restricts or delays consummation of the Merger
or any of the other transactions contemplated by this Agreement or materially
impairs the contemplated benefits to IPC and iParty of this Agreement, the
Merger or any of the other transactions contemplated by this Agreement.
(g) Material Adverse Change. There shall not have been a
Material Adverse change in Acquisition.
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(h) Registration Rights. As of the Effective Time,
Acquisition shall have entered into with iParty a registration rights
agreement substantially in the form attached hereto as Exhibit 5.03(i).
(i) Capital. As of the Effective Time, Acquisition shall
have at least $999,024.43 of readily available cash in its capital account.
VI. INDEMNIFICATION.
Section 6.01 Indemnification by Acquisition.
(a) Acquisition agrees to indemnify and hold harmless IPC
and its officers, directors, employees, counsel and agents against and in
respect of any and all Claims as and when incurred, arising out of or based
upon any breach or inaccuracy of any representation, warranty, covenant or
agreement of Acquisition contained in this Agreement (including the Exhibits
and Schedules attached hereto) or any certificates delivered pursuant to this
Agreement.
(b) Each indemnified party (an "Indemnitee") shall give
Acquisition prompt notice (including reasonable detail) of any claim asserted
or threatened against such Indemnitee on the basis of which such Indemnitee
intends to seek indemnification (but the obligations of Acquisition shall not
be conditioned upon receipt of such notice, except to the extent that
Acquisition is actually prejudiced by such failure to give notice). If the
claim is a third party claim, demand, action or proceeding, Acquisition
promptly shall assume the defense of any Indemnitee, with counsel reasonably
satisfactory to such Indemnitee, and the fees and expenses of such counsel
shall be the sole cost and expense of Acquisition. Notwithstanding the
foregoing, any Indemnitee shall be entitled, at his or its expense, to employ
counsel separate from counsel for Acquisition and
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from any other party in such action, proceeding or investigation. No Indemnitee
may agree to a settlement of claim without the prior written approval of
Acquisition which approval shall not be unreasonably withheld. Acquisition may
not agree to a settlement of a claim involving anything other than the payment
of money without the prior written approval of the Indemnitee which shall not be
unreasonably withheld.
VII. TERMINATION.
[INTENTIONALLY OMITTED].
VIII. MISCELLANEOUS.
Section 8.01 Further Actions.
Each party hereto will execute such further documents and
instruments and take such further actions as may reasonably be requested by
the other party to consummate the Merger, to vest the Surviving Corporation
with full title to all assets, properties, rights, approvals, immunities and
franchises of either of the Constituent Corporations or to effect the other
purposes of this Agreement.
Section 8.02 Availability of Equitable Remedies.
Since a breach of the provisions of this Agreement could
not adequately be compen sated by money damages, any party shall be entitled,
either before or after the Effective Time, in addition to any other right or
remedy available to it, to an injunction restraining such breach or threatened
breach and to specific performance of any such provision of this Agreement,
and, in either case, no bond or other security shall be required in connection
therewith, and the parties hereby consent to the issuance of such an
injunction and to the ordering of specific performance.
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Section 8.03 Survival.
The representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Merger for a period of one year after the
Effective Time.
Section 8.04 Modification.
This Agreement may be amended, supplemented or modified by
action taken by or on behalf of the respective Board of Directors of the
parties hereto at any time prior to the Effective Time, but after such
adoption and approval only to the extent permitted by applicable law. No such
amendment, supplement or modification shall be effective unless set forth in a
written instrument duly executed by or on behalf of each party hereto.
Section 8.05 Notices.
Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested or by Federal Express, express mail or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex or similar telecommunications equipment) against receipt to the party to
which it is to be given at the address of such party set forth in the preamble
to this Agreement (or to such other address as the party shall have furnished
in writing in accordance with the provisions of this Section 8.05) with copies
as follows:
If to Acquisition:
Law Offices of Xxxxxxx Xxxxxxx
00000 Xxxxxxx Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
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If to IPC:
Camhy Karlinsky & Xxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. XxXxxx
Any notice shall be addressed to the attention of the Chairman. Any notice or
other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party's address which
will be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 8.05 shall be deemed given at the time of
receipt hereof.
Section 8.06 Waiver.
Any waiver by any party of a breach of any term of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this
Agreement on one or more occasions will not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that
term or any other term of this Agreement. Any waiver must be in writing and be
authorized by a resolution of the Board of Directors or by an officer of the
waiving party.
Section 8.07 Binding Effect.
The provisions of this Agreement shall be binding upon and
inure to the benefit of Acquisition and IPC and their respective successors
and assigns.
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Section 8.08 No Third-Party Beneficiaries.
This Agreement does not create, and shall not be construed
as creating, any rights enforceable by any person not a party to this
Agreement, except for the sole shareholder of IPC with respect to Section
2.01, the respective officers, directors, representatives, affiliates of IPC
and Acquisition with respect to Section 6.01(a) and the Indemnitees with
respect to Section 6.01.
Section 8.09 Severability.
If any provision of this Agreement is hereafter held to be
invalid, illegal or unenforceable for any reason, such provision shall be
reformed to the maximum extent permitted so as to preserve the parties'
original intent, failing which, it shall be severed from this Agreement, with
the balance of this Agreement continuing in full force and effect. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable. If any provision
is inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.
Section 8.10 Headings.
The headings in this Agreement are solely for convenience
of reference and shall be given no effect in the construction or
interpretation of this Agreement.
Section 8.11 Counterparts; Governing Law.
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall be governed
by, and construed in accordance with, the laws of the State of New York,
without giving effect to the rules governing conflict of laws, any action,
suit or proceeding arising out of, based on,
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or in connection with this Agreement, any document relating hereto or
delivered in connection with the transactions contemplated hereby, any
statement, certificate, or other instrument delivered by or on behalf of, or
delivered to, any party hereto or thereto in connection with the transactions
contemplated hereby or thereby, any breach of this Agreement or such other
document, the Merger, or the other transactions contemplated hereby or thereby
may be brought only in the United States District Court for the Southern
District of New York and each party covenants and agrees not to assert, by way
of motion, as a defense or otherwise, in any such action, suit or proceeding,
any claim that it is not subject personally to the jurisdiction of such court
if it has been duly served with process, that its property is exempt or immune
from attachment or execution, that the action, suit or proceeding is brought
in an inconvenient forum, that the venue of the action, suit or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.
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IN WITNESS WHEREOF, this Agreement has been executed by
duly authorized officers of each of the parties hereto as of the date first
above written.
IPARTY CORP.
By /s/ Xxxxxx X. XxXxxx
---------------------------------
Name: Xxxxxx X. XxXxxx
Title: Secretary
WSI ACQUISITIONS CORP.
By /s/ Xxxx Xxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxx
Title: President
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SCHEDULE 4.01(d)
None
SCHEDULE 4.01(j)
Selected Agreements
SCHEDULE 4.02(a)
None
SCHEDULE 4.02(b)
Warrants to purchase an aggregate of 1,000,000 shares of Series A Preferred
Stock at an exercise price of $1.00 per share issued to Henslowe Trading
Limited and Xxxxxxx Developments Limited.
SCHEDULE 4.02(d)
None
SCHEDULE 4.02(f)
None
SCHEDULE 4.02(l)
Acquisitions has not filed any Federal Tax returns prior to the Closing Date
other than the tax return for 1997.
