EXHIBIT 10.1
AGREEMENT
AND
PLAN OF MERGER
BY AND AMONG
VIANET TECHNOLOGIES, INC.,
COMSERVICES ACQUISITION CORP.
AND
COMSERVICES CORPORATION
DATED December 23, 2001
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CONTENTS
I. DEFINITIONS...........................................................3
II. BASIC TRANSACTION.....................................................8
III. REPRESENTATIONS AND WARRANTIES CONCERNING CSC AND ITS
SUBSIDIARIES.........................................................11
IV. REPRESENTATIONS AND WARRANTIES OF VIANET AND CAC....................27
V. REPRESENTATIONS AND WARRANTIES CONCERNING VIANET.....................28
VI. COVENANTS............................................................29
VII. CONDITIONS TO OBLIGATION TO CLOSE....................................32
VIII. SURVIVAL AND INDEMNIFICATION.........................................34
IX. TERMINATION..........................................................37
X. MISCELLANEOUS........................................................38
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ENTERED INTO ON THIS 23rd DAY OF December, 2001 BY
AND AMONG VIANET TECHNOLOGIES, INC., a DELAWARE CORPORATION ("VIANET"),
COMSERVICES ACQUISITION CORP, A DELAWARE CORPORATION AND A WHOLLY OWNED
SUBSIDIARY OF VIANET ("CAC") AND COMSERVICES CORPORATION, A NEVADA CORPORATION
("CSC") (DOING BUSINESS AS COMM-SERVICES CORPORATION), . VIANET, CAC AND CSC ARE
REFERRED TO COLLECTIVELY HEREIN AS THE "PARTIES".
WHEREAS, CSC is in the business of providing wholesale domestic and
international long distance telecommunications services.
WHEREAS, the Parties desire to effect a tax-free reverse subsidiary merger of
CSC into CAC in a reorganization pursuant to Code Sections 368(a)(1)(A) and
368(a)(2)(E) as a result of which Vianet will own all of the issued and
outstanding shares of CSC and the stockholders of CSC will receive shares of
Vianet in exchange for their CSC shares; and
WHEREAS, the Boards of Directors of Vianet, CAC and CSC have approved the Merger
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
I. DEFINITIONS
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"BASIS" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or reasonably would be expected to
form the basis for any specified consequence.
"CERTIFICATE OF MERGER" has the meaning set forth in Section II (3) below.
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"CLOSING" has the meaning set forth in Section II (2) below.
"CLOSING DATE" has the meaning set forth in Section II (2) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses and
affairs of Vianet and CSC and their Subsidiaries that is not already generally
available to the public.
"CONTINGENT SHARES" has the meaning set forth in Exhibit II (4) (d) (i) below.
"CONTROLLED GROUP" has the meaning set forth in Code Section 1563.
"CONVERSION RATIO" has the meaning set forth in Exhibit II (4) (e) (i) below.
"CONVERTIBLE NOTES" has the meanings set forth in Section VII (1) (i).
"CSC" has the meaning set forth in the preface above.
"CSC SHARE" means any share of the Common Stock, $1.00 par value per share, of
CSC issued and outstanding as of the Effective Time.
"CSC STOCKHOLDER" means any Person who or which holds any CSC Shares at the
Effective Time.
"DELAWARE GENERAL CORPORATION LAW" means the General Corporation Law of the
State of Delaware, as amended.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section III below.
"DISSENTING SHARE" means any CSC Share, which any stockholder who or which has
exercised his or its appraisal rights under the Nevada General Corporation Law
holds of record.
"EFFECTIVE TIME" has the meaning set forth in Section II (4) (a) below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multi employer Plan), or (d) Employee Welfare
Benefit Plan or material fringe benefit or other retirement, bonus, or incentive
plan or program.
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"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Section 3(1).
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all federal, state,
local and foreign statutes, regulations, ordinances and other provisions having
the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA AFFILIATE" means each entity which is treated as a single employer with
Seller for purposes of Code Section 414.
"EXCHANGE AGENT" has the meaning set forth in Section II (6) (a) (i) below.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENTS" has the meaning set forth in Section IV (7) below.
"GAAP" means United States generally accepted accounting principles as in effect
from time to time.
"INFORMATION STATEMENT" has the meaning set forth in Section VI (3) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissues, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all registered and unregistered trademarks, service
marks, trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
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"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means actual knowledge after reasonable investigation and inquiry of
the directors, officers and employees of CSC and its Subsidiaries who would
reasonably be expected to have knowledge of a particular matter.
"LIABILITY" means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the assets,
properties, operations or financial condition of CSC and its Subsidiaries, taken
as a whole.
"MERGER" has the meaning set forth in Section II (1) below.
"MERGER CONSIDERATION" has the meaning set forth in Section II (4) (d) (i).
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the Most
Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section IV (7)
below.
"MULTI EMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37)
"NUMBER OF VIANET SHARES TO BE ISSUED TO CSC SHAREHOLDERS" has the meaning set
forth in Exhibit II (4) (d) (i) below.
"OCTOBER 31 BALANCE SHEET" means the balance sheet contained in the October 31,
2001 Financial Statements.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"PERSON" means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section 406 and Code
Section 4975.
"REGISTRATION" has the meaning set forth in Section II (7) below.
"REQUISITE CSC STOCKHOLDER APPROVAL" means the affirmative vote of the holders
of eighty percent (80%) of CSC Shares in favor of this Agreement and the Merger.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance, charge, claim
or other security interest, other than (a) mechanic's, material men's, and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"SUBSIDIARY" means any corporation with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the common stock or has the power to
vote or direct the voting of sufficient securities to elect a majority of the
directors.
"SURVIVING CORPORATION" has the meaning set forth in Section II (1) below.
"TAX" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
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"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section VIII (4) (a) below.
"VIANET" has the meaning set forth in the preface above.
"VIANET SHARE" means any share of Class A Common Stock, $.001 par value per
Share, of Vianet.
II. BASIC TRANSACTION.
1) THE MERGER. On and subject to the terms and conditions of this Agreement,
CSC will merge with and into CAC (the "Merger") at the effective time, CAC
shall be the corporation surviving the merger (the "Surviving
Corporation").
2) THE CLOSING. The Closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Vianet at 0000
Xxxxxxxxx, Xxxxx 000, Xxxxx, Xxxxx 00000, commencing at 2:00 p.m. local
time on December 28, 2001 or such other date and time as the parties may
mutually determine (the "Closing Date").
3) ACTIONS AT THE CLOSING. At the Closing, (i) CSC will deliver to Vianet and
CAC the various certificates, instruments, and documents referred to in
Section VII below, (ii) Vianet and CAC will deliver to CSC the various
certificates, instruments, and documents referred to in Section VII below,
(iii) CSC and CAC will file with the Secretary of State of the State of
Delaware a Certificate of Merger in the form attached hereto as Exhibit II
(3) (a) (the "Certificate of Merger"), (iv) CSC and CAC will file the
required notice with the Secretary of the State of Nevada and any other
required filings in the form attached hereto as Exhibit II (3) (b), and (v)
Vianet will deliver to the Exchange Agent in the manner provided below in
this Section II the certificates evidencing the Vianet Shares issued in the
Merger.
4) EFFECT OF MERGER:
a) GENERAL. The Merger shall become effective at the time (the "Effective
Time") CSC and CAC file the Certificate of Merger with the Secretary of
State of the State of Delaware. The Merger shall have the effect set
forth in the Delaware General Corporation Law. The Surviving
Corporation may, at any time after the Effective Time, take any action
(including executing and delivering any document) in the name and on
behalf of either CSC or CAC in order to carry out and effectuate the
transactions contemplated by this Agreement.
b) BYLAWS. The name of the Surviving Corporation shall be amended and
changed to Comm-Services Corporation
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c) DIRECTORS AND OFFICERS. The directors and officers of CAC shall become
the directors and officers of the Surviving Corporation at and as of
the Effective Time (retaining their respective positions and terms of
office); provided, however, that Xxxx Xxxxxx shall become the President
of the Surviving Corporation and Xxxxxx Xxxxx shall become the Chief
Financial Officer of the Surviving Corporation.
d) CONVERSION OF CSC SHARES:
i) At and as of the Effective Time, by virtue of the Merger and
without any action on the part of any party hereto or any holder
of CSC Shares, each CSC Share (other than any Dissenting Share)
shall be converted into the right to receive Vianet Shares and a
cash payment in lieu of fractional Vianet Shares (which, for
purposes of this Section II (4) (d) (i) shall be valued at $0.10
per share) (the "Merger Consideration"). (The ratio of Vianet
Shares to One (1) CSC Share is referred to herein as the
"Conversion Ratio". The Conversion Ratio shall be determined on
Closing in accordance with the provisions of Exhibit II (4) (d)
(i) )
ii) all CSC Shares shall no longer be outstanding or issuable and
shall be canceled and retired and shall cease to exist, and each
holder thereof shall thereafter cease to have any rights with
respect to such CSC Shares, and
iii) each Dissenting Share shall be converted into the right to receive
payment from the Surviving Corporation with respect thereto in
accordance with the provisions of the Nevada General Corporation
Law, provided, however, that the Conversion Ratio shall be subject
to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split, of the CSC Shares or the Vianet
Shares after the date hereof but prior to the Effective Time.
iv) No CSC Share shall be deemed to be outstanding or to have any
rights other than those set forth above in this Section II (4) (d)
after the Effective Time.
e) CONVERSION OF CAPITAL STOCK OF CAC. At and as of the Effective Time,
each share of Common Stock of CSC shall be converted into one share of
Common Stock of CAC.
5) OTHER EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the Delaware General Corporation Law and the Nevada General Corporation
Law. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the properties, rights, privileges, powers and
franchises of CSC and CAC shall vest in the Surviving Corporation, and all
debts, liabilities and duties of CSC and CAC shall become the debts,
liabilities and duties of the Surviving Corporation.
6) PROCEDURE FOR PAYMENT:
a) Immediately after the Closing,
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i) Vianet will, on behalf of, and for the benefit of CAC furnish to
Continental Stock Transfer & Trust Company (the "Exchange Agent")
a stock certificate (issued in the name of the Exchange Agent or
its nominee) representing that number of Vianet Shares equal to
the product of (1) the Conversion Ratio times (2) the number of
outstanding CSC Shares (other than any Dissenting Shares); and
ii) Vianet will cause the Exchange Agent to mail a letter of
transmittal (with instructions for its use) in form and substance
reasonably satisfactory to the parties hereto to each record
holder of outstanding CSC Shares for the holder to use in
surrendering the certificates which represented his or its CSC
Shares in exchange for a certificate representing the number of
Vianet Shares to which each of he or it is entitled.
b) Vianet will not pay any dividend or make any distribution on Vianet
Shares (with a record date at or after the Effective Time) to any
record holder of outstanding CSC Shares until the holder surrenders for
exchange his or its certificates which represented CSC Shares. Vianet
instead will pay the dividend or make the distribution to the Exchange
Agent in trust for the benefit of the holder pending surrender and
exchange. Vianet may cause the Exchange Agent to invest any cash the
Exchange Agent receives from Vianet as a dividend or distribution in
one or more investments; provided however, that the terms and
conditions of the investments shall be such as to permit the Exchange
Agent to make prompt payments of cash to the holders of outstanding CSC
Shares as necessary. Vianet may cause the Exchange Agent to pay over to
Vianet any net earnings with respect to the investments. In no event,
however, will any holder of outstanding CSC Shares be entitled to any
interest or earnings on the dividend or distribution pending receipt.
c) Vianet may cause the Exchange Agent to return any Vianet Shares and
dividends and distributions thereon remaining unclaimed 180 days after
the Effective Time, and thereafter each remaining record holder of
outstanding CSC Shares shall be entitled to look to Vianet (subject to
abandoned property, escheat, and other similar laws) as a general
creditor thereof with respect to Vianet Shares and dividends and
distributions thereon to which he or it is entitled upon surrender of
his or its certificates.
d) Vianet shall pay all charges and expenses of the Exchange Agent.
7) REGISTRATION. Within one hundred and eighty days of the Closing, Vianet
will file with the SEC such documentation as is necessary to request the
registration under the Securities Act of the Vianet Shares issued and
issuable in exchange for the CSC Shares (the "Registration").
8) CLOSING OF TRANSFER RECORDS. After the close of business on the Closing
Date, transfers of CSC Shares outstanding prior to the Effective Time shall
not be made on the stock transfer books of the Surviving Corporation.
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9) DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, Dissenting Shares shall not be converted into or be exchangeable
for the right to receive the Merger Consideration, but, instead, the holder
thereof shall be entitled to receive such consideration as shall be
determined pursuant to Section 92A.380 of the Nevada General Corporation
Law; provided, However, that if such holder shall have failed to perfect or
shall have effectively withdrawn or lost its rights to dissent under the
Nevada General Corporation Law, each of such holder's Dissenting Shares
shall thereupon be deemed to have been converted into and to have become
exchangeable for the right to receive, as of the Effective Time, the Merger
Consideration (without any interest thereon) in accordance with Section II
(4) (d) (i) and such holder shall forfeit its appraisal rights provided by
Section 92A.380 of the Nevada General Corporation Law. CSC shall give
Vianet and CAC notice of all such Dissenting Shares and Vianet shall have
the right to participate in all negotiations and proceedings with respect
to any demands for payment by the holder of any Dissenting Shares. CSC
shall not, except with the prior written consent of Vianet, voluntarily
make or agree to make any payment with respect to, or settle or offer to
settle, any such demands for payment. At and as of the Effective Time, the
Surviving Corporation shall assume and be responsible for the satisfaction
and discharge of all appraisal rights to which holders of Dissenting Shares
may be entitled under Section 92A.380 of the Nevada General Corporation
Law.
10) LEGEND. All certificates evidencing Vianet Shares restricted by this
Agreement shall bear a legend indicating the existence of the restrictions
imposed hereby and a stop transfer order may be placed with respect to such
securities. The legend referred to in the preceding sentence shall be
substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO VIANET TECHNOLOGIES, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."
The holder of record of each certificate evidencing Vianet Shares shall have the
right to have such legend removed from any certificate representing Vianet
Shares following the registration of the Vianet Shares in accordance with the
Registration Rights Agreement, provided that the shares are sold pursuant to the
registration statement and in accordance with the provisions of Section 5 of the
Securities Act of 1933.
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III. REPRESENTATIONS AND WARRANTIES CONCERNING CSC AND ITS SUBSIDIARIES.
CSC represents and warrants to Vianet that the statements contained in this
Section III are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section III), except as set forth in the disclosure schedule
which will be delivered to Vianet prior to the Closing and initialed by the
Parties (the "Disclosure Schedule"). Nothing in the Disclosure Schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedule identifies the exception with
particularity and describes the relevant facts in detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section III.
1) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER; AUTHORIZATION. Each of
CSC and its Subsidiaries is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation. Each of CSC and its Subsidiaries is duly authorized to
conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. Each of CSC and its
Subsidiaries has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which
it is engaged and to own and use the properties owned and used by it.
Section III (1) of the Disclosure Schedule lists the directors and officers
of each of CSC and its Subsidiaries. CSC has delivered to Vianet correct
and complete copies of the charter and bylaws of each of CSC and its
Subsidiaries (as amended to date). CSC has delivered to Vianet true and
complete copies of all documents and instruments contained in the minute
books, the stock certificate books, and the stock record books of each of
CSC and its Subsidiaries. None of CSC and its Subsidiaries is in default
under or in violation of any provision of its charter or bylaws. CSC has
full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of CSC enforceable in accordance with its terms
and conditions.
2) CAPITALIZATION. The entire authorized capital stock of CSC consists of
1,000 CSC Shares, $1.00 par value, of which 1,000 CSC Shares are issued and
outstanding and no CSC Shares are held in treasury. All of the issued and
outstanding CSC Shares have been duly authorized, are validly issued, fully
paid, and non-assessable, and are held of record by the stockholders as set
forth in Section III (2) of the Disclosure Schedule. Except as set forth
and described in Section III (2) of the Disclosure Schedule:
a) there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights,
convertible debentures, stock options or other contracts or commitments
that could require CSC to issue, sell, or otherwise cause to become
outstanding any of its capital stock,
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b) there are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to CSC; and
c) there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of CSC.
3) NON-CONTRAVENTION. Except as set forth in Section III (3) to the Disclosure
Schedule neither the execution and the delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
a) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of CSC and its
Subsidiaries is subject or any provision of the charter or bylaws of
any of CSC and its Subsidiaries; or
b) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice,
consent, or approval under any agreement, contract, lease, license,
instrument, or other arrangement to which any of CSC and its
Subsidiaries is a party or by which it is bound or to which any of its
assets is subject (or result in then imposition of any Security
Interest upon any of its assets).
None of CSC and its Subsidiaries needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement.
4) BROKERS' FEES. None of CSC and its Subsidiaries has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement.
5) TITLE TO ASSETS. Except as described in Section III (5) of the Disclosure
Schedule, CSC and its Subsidiaries have good and marketable title to, or a
valid leasehold interest in, the properties and assets used by them,
located on their premises, or shown on the Most Recent Balance Sheet or
acquired after then date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary Course of
Business since the date of the Most Recent Balance Sheet.
6) SUBSIDIARIES. Section III (6) of the Disclosure Schedule sets forth for
each Subsidiary of CSC
a) (i) its name and jurisdiction of incorporation;
b) (ii) the number of shares of authorized capital stock of each class of
its capital stock;
c) (iii) the number of issued and outstanding shares of each class of its
capital stock, the names of the holders thereof, and the number of
shares held by each such holder; and
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d) (iv) the number of shares of its capital stock held in treasury.
Except as described in Section III (6) to the Disclosure Schedule, all of
the issued and outstanding shares of capital stock of each Subsidiary of
CSC have been duly authorized and are validly issued, fully paid, and
non-assessable. Except as described in Section III (6) to the Disclosure
Schedule, CSC holds of record and owns beneficially all of the outstanding
shares of each Subsidiary of CSC free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or
commitments that could require any of CSC and its Subsidiaries to sell,
transfer, or otherwise dispose of any capital stock of any of its
Subsidiaries or that could require any Subsidiary of CSC to issue, sell, or
otherwise cause to become outstanding any of its own capital stock. There
are no outstanding stock appreciation, phantom stock, profit participation,
or similar rights with respect to any Subsidiary of CSC. There are no
voting trusts, proxies, or other agreements or understandings with respect
to the voting of any capital stock of any Subsidiary of CSC. None of CSC
and its Subsidiaries controls directly or indirectly or has any direct or
indirect equity participation in any corporation, partnership, trust, or
other business association which is not a Subsidiary of CSC.
7) FINANCIAL STATEMENTS. Attached hereto as Exhibit III (7) are the following
Financial Statements (collectively the "Financial Statements"):
unaudited Consolidated and Consolidating Balance Sheets and Statements of
Income, as of and for the month ended October 31, 2001 (the "Most Recent
Financial Statements") for CSC and its Subsidiaries.
The Most Recent Financial Statements have been prepared in accordance with
GAAP on a consistent basis, presently fairly in all material respects the
financial condition of CSC and its Subsidiaries for such periods, and are
consistent with the books and records of CSC and its Subsidiaries;
provided, however, that the Most Recent Financial Statements are subject to
normal year-end adjustments (which will not be material individually or in
the aggregate) and lack footnotes and other presentation items.
8) EVENTS SUBSEQUENT TO October 31, 2001. Except as set forth in Section III
(8) of the Disclosure Schedule, since October 31, 2001, there has not been
any material adverse change in the business, financial condition,
operations, results of operations, of any of CSC and its Subsidiaries.
Without limiting the generality of the foregoing, since that date:
a) none of CSC and its Subsidiaries has sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
b) none of CSC and its Subsidiaries has entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than $25,000 or
outside the Ordinary Course of Business;
Page 14 of 43
c) no party (including any of CSC and its Subsidiaries) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $25,000 to which any of CSC and its
Subsidiaries is a party or by which any of them is bound;
d) none of CSC and its Subsidiaries has imposed any Security Interest upon
any of its assets, tangible or intangible;
e) none of CSC and its Subsidiaries has made any capital expenditure (or
series of related capital expenditures) either involving more than
$25,000 or outside the Ordinary Course of Business;
f) none of CSC and its Subsidiaries has made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $25,000 or outside the
Ordinary Course of Business;
g) none of CSC and its Subsidiaries has issued any note, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either
involving more than $10,000;
h) none of CSC and its Subsidiaries has delayed or postponed the payment
of accounts payable and other Liabilities outside the Ordinary Course
of Business;
i) none of CSC and its Subsidiaries has canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $5,000 or outside the Ordinary Course of
Business;
j) none of CSC and its Subsidiaries has granted any license or sublicense
of any rights under or with respect to any Intellectual Property other
than any license disclosed in Section III (8) (j) of the Disclosure
Schedule;
k) there has been no change made or authorized in the charter or bylaws of
any of CSC and its Subsidiaries;
l) none of CSC and its Subsidiaries has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants,
or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock other than grants of
stock options disclosed in Section III (8) (l) of the Disclosure
Schedule;
m) none of CSC and its Subsidiaries has declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
n) none of CSC and its Subsidiaries has experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
property;
o) none of CSC and its Subsidiaries has made any loan to, or entered into
any other transaction with, any of its directors, officers, and
employees outside the Ordinary Course of Business;
Page 15 of 43
p) none of CSC and its Subsidiaries has entered into any employment
contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
q) none of CSC and its Subsidiaries has granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
r) none of CSC and its Subsidiaries has adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
s) none of CSC and its Subsidiaries has made any other change in
employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business;
t) none of CSC and its Subsidiaries has made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
u) there has not been any other material occurrence, event, incident,
action, or transaction outside the Ordinary Course of Business
involving any of CSC and its Subsidiaries; and
v) none of CSC and its Subsidiaries has committed to any of the foregoing.
9) UNDISCLOSED LIABILITIES. None of CSC and its Subsidiaries has any Liability
(and, to the knowledge of CSC, there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand against any of them giving rise to any Liability), except for:
a) Liabilities set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto); and
b) Liabilities which have arisen after the date of the Most Recent Balance
Sheet in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any
breach of contract, breach of warranty, tort, infringement, or
violation of law).
10) LEGAL COMPLIANCE. Each of CSC and its Subsidiaries has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal,
state, local, and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging
any failure so to comply.
11) LICENSES TO DO BUSINESS, Except as provided in Section III (11) of the
Disclosure Schedule, each of CSC and its Subsidiaries holds all licenses,
permits, authorities and other regulatory approvals necessary to do
business and conduct its affairs without interruption and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging any failure
so to comply with any license, permit or other authority.
Page 16 of 43
12) TAX MATTERS.
Except as provided in Section III (12) of the Disclosure Schedule:
a) Each of CSC and its Subsidiaries has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by any of CSC and its Subsidiaries (whether or
not shown on any Tax Return) have been paid. None of CSC and its
Subsidiaries currently is the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where any of CSC and its Subsidiaries does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of
any of CSC and its Subsidiaries that arose in connection with any
failure (or alleged failure) to pay any Tax.
b) Each of CSC and its Subsidiaries has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
c) To the knowledge of CSC, no authority will assess any additional Taxes
for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of any of CSC and its
Subsidiaries either:
i) claimed or raised by any authority in writing; or
ii) as to which CSC has Knowledge based upon personal contact with any
agent of such authority.
Since CSC has not yet completed a fiscal year, it has not been required
to file any federal, state, local or foreign income Tax Returns.
d) None of CSC and its Subsidiaries has waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to
a Tax assessment or deficiency.
e) None of CSC and its Subsidiaries has filed a consent under Code Section
341(f) concerning collapsible corporations. None of CSC and its
Subsidiaries has made any payments, is obligated to make any payments,
or is a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Code
Section 280G. None of CSC and its Subsidiaries has 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). None of CSC and its Subsidiaries is a party to any
Tax allocation or sharing agreement. None of CSC and its Subsidiaries
i) has been a member of an Affiliated Group filing a consolidated
federal income Tax Return (other than a group the common parent of
which was CSC): or
Page 17 of 43
ii) has any Liability for the Taxes of any Person (other than any of
CSC and its Subsidiaries) under Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
f) The unpaid Taxes of CSC and its Subsidiaries did not, as of October 31,
2001, exceed the reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book
and Tax income) set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto). CSC and its Subsidiaries have not
incurred any Liability for Taxes since October 31, 2001 other than
Taxes incurred in the Ordinary Course of Business.
13) REAL PROPERTY.
a) Neither CSC nor any of its Subsidiaries owns any real property.
b) Section III (13) (b) of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to any of CSC and its
Subsidiaries. CSC has delivered to Vianet correct and complete copies
of the leases and subleases listed in Section III (13) (b) of the
Disclosure Schedule (as amended to date). With respect to each lease
and sublease listed in Section III (13) (b) of the Disclosure Schedule:
i) the lease or sublease is legal, valid, binding, enforceable, and
in full force and effect, except as limited by bankruptcy and
insolvency laws and other laws affecting creditors rights
generally, and general principles of equity;
ii) no consent, authorization or other approval is required under the
lease or sublease in connection with the consummation of the
transactions contemplated hereby and such lease or sublease will
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby, except as limited by
bankruptcy and insolvency laws and other laws affecting creditors
rights generally and general principles of equity;
iii) neither CSC, nor any of its Subsidiaries nor, to the Knowledge of
CSC, any other person, is in breach or default thereunder, and, to
the Knowledge of CSC, no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
iv) neither CSC nor any of its Subsidiaries nor, to the Knowledge of
CSC, any other person, has repudiated any provision thereof;
v) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
vi) none of CSC and its Subsidiaries has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold or sub-leasehold;
vii) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and
permits) required of CSC and its Subsidiaries in connection with
the operation thereof by CSC and its Subsidiaries and have been
operated and maintained by CSC and its Subsidiaries in accordance
with applicable laws, rules, and regulations; and
Page 18 of 43
viii) all facilities leased or subleased thereunder are supplied with
utilities and other services reasonably necessary for the
operation of said facilities.
14) INTELLECTUAL PROPERTY.
a) CSC and its Subsidiaries own or have the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of CSC and its
Subsidiaries as presently conducted. Each item of Intellectual Property
owned or used by any of CSC and its Subsidiaries immediately prior to
the Closing hereunder will be owned or available for use by CSC or the
Subsidiary on identical terms and conditions immediately subsequent to
the Closing hereunder. Except as provided in Section III (14) (a) of
the Disclosure Schedule, each of CSC and its Subsidiaries has taken all
action reasonably necessary to maintain and protect each item of
Intellectual Property that it owns or uses.
b) To the knowledge of CSC, none of CSC and its Subsidiaries has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of third parties.
c) Except as disclosed in Section III (14) (c) to the Disclosure Schedule,
neither the directors and officers of CSC and its Subsidiaries or the
employees of CSC and its Subsidiaries with responsibility for
Intellectual Property matters has ever received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that any of CSC and
its Subsidiaries must license or refrain from using any Intellectual
Property rights of any third party).
d) Except as described in Section III (14) (d) to the Disclosure Schedule,
to the Knowledge of CSC, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any of CSC and its Subsidiaries.
e) Section III (14) (e) of the Disclosure Schedule identifies each item of
Intellectual Property, including, without limitation, each patent,
patent application, trademark, trademark application or registration,
copyright or copyright application or registration owned, held (whether
pursuant to license or otherwise) or used by CSC and its Subsidiaries
in conducting their business and identifies each license, agreement, or
other permission which any of CSC and its Subsidiaries has granted to
any third party with respect to any of its Intellectual Property
(together with any exceptions). CSC has delivered to Vianet correct and
complete copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date) and has made
available to Vianet correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of
each such item. Section III (14) (e) of the Disclosure Schedule also
identifies each trade name or unregistered trademark used by any of CSC
and its Subsidiaries in connection with any of its businesses. With
respect to each item of Intellectual Property required to be identified
in Section III (14) (e) of the Disclosure Schedule:
Page 19 of 43
i) CSC and its Subsidiaries possess all right, title, and interest in
and to the item, free and clear of any Security Interest, license,
assignment, shop rights, covenants by CSC nor to xxx third
parties, or other restriction except for the licenses disclosed in
Section III (14) (e) (i) of the Disclosure Schedule;
ii) the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
iii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of of
CSC is, or has been, threatened which challenges the legality,
validity, enforceability, use, or ownership of the item;
iv) neither CSC nor any of its Subsidiaries has assigned any shop
right, license, release, covenant not to xxx or non-assertion
assurance to any Person and, except as disclosed in Section III
(14) (e) (iv) to the Disclosure Schedule, has never agreed to
indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to
the item; and
v) CSC has no Knowledge of any fact or information that would render
any issuing patent based on the pending patent application item
invalid and/or unenforceable and have no Knowledge of any past,
present or threatened claim by any third party that any such
issuing patent would be invalid and/or unenforceable.
f) Section III (14) (f) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that any of CSC and
its Subsidiaries uses pursuant to license, sublicense, agreement, or
permission. CSC has delivered to Vianet correct and complete copies of
all such licenses, sublicenses, agreements, and permissions (as amended
to date). With respect to each item of Intellectual Property required
to be identified in Section III (14) of the Disclosure Schedule, to the
Knowledge of CSC:
i) the license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and
effect, except as limited by bankruptcy and insolvency laws and
other laws affecting creditors rights generally, and general
principles of equity;
ii) no consent, authorization or other approval is required under the
license or sublicense in connection with the consummation of the
transactions contemplated hereby and such license, sublicense,
agreement, or permission will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated
hereby, except as limited by bankruptcy and insolvency laws and
other laws affecting creditors rights generally, and general
principles of equity;
Page 20 of 43
iii) no party to the license, sublicense, agreement, or permission is
in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
iv) no party to the license, sublicense, agreement, or permission has
repudiated any provision thereof;
v) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (iv) above are
true and correct with respect to the underlying license;
vi) the underlying item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
vii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, is threatened which
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
viii) none of CSC and its Subsidiaries has granted any sublicense or
similar right with respect to the license, sublicense, agreement,
or permission.
g) To the Knowledge of CSC, none of CSC and its Subsidiaries will
interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third parties as a
result of the continued operation of its businesses as presently
conducted.
h) CSC has no Knowledge of any new products, inventions, procedures, or
methods of manufacturing or processing that any competitors or other
third parties have developed which reasonably could be expected to
supersede or make obsolete any product or process of any of CSC and its
Subsidiaries.
15) TANGIBLE ASSETS. CSC and its Subsidiaries own or lease all buildings,
machinery, equipment, and other tangible assets reasonably necessary for
the conduct of their businesses as presently conducted. Each such tangible
asset has been maintained in accordance with normal industry practice, is
in operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
16) INVENTORY. CSC and its Subsidiaries have no physical inventory.
17) CONTRACTS. Section III (17) of the Disclosure Schedule lists the following
contracts and other agreements to which any of CSC and its Subsidiaries is
a party:
a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
b) any agreement (or group of related agreements) for the purchase or sale
of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year, result in a
material loss to any of CSC and its Subsidiaries, or involve
consideration in excess of $10,000;
Page 21 of 43
c) any agreement concerning a partnership or joint venture;
d) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $10,000 or
under which it has imposed a Security Interest on any of its assets,
tangible or intangible;
e) any agreement concerning confidentiality or non-competition;
f) any agreement with any of the Stockholders of CSC or their Affiliates;
g) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or arrangement
for the benefit of its current or former directors, officers, and
employees;
h) any collective bargaining agreement;
i) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis or providing severance benefits;
j) any agreement under which it has advanced or loaned any amount to any
of its directors, officers, and employees;
k) any agreement not covered by clauses (i) through (x) under which the
consequences of a default or termination reasonably would be expected
to have a Material Adverse Effect; or
l) any other agreement (or group of related agreements) the performance of
which involves consideration in excess of $10,000. CSC has delivered to
Vianet a correct and complete copy of each written agreement listed in
Section III (17) of the Disclosure Schedule (as amended to date) and a
written summary setting forth the material terms and conditions of each
oral agreement referred to in Section III (17) of the Disclosure
Schedule. Except as set forth on Section III (17) of the Disclosure
Schedule, with respect to each such agreement:
i) the agreement is legal, valid, binding, enforceable, and in full
force and effect except as limited by bankruptcy and insolvency
laws and other laws affecting creditors rights generally and
general principles of equity;
ii) no consent, authorization or other approval is required under the
agreement in connection with the consummation of the transactions
contemplated hereby and such agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions
contemplated hereby except as limited by bankruptcy and insolvency
laws and other laws affecting creditors rights generally and
general principles of equity;
iii) CSC is not in breach or default and, to the Knowledge of CSC, no
other party is in breach or default,
Page 22 of 43
iv) to the Knowledge of CSC, no event has occurred which with notice
or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement;
and
v) CSC has not, and, to the Knowledge of CSC, no other party has,
repudiated any provision of the agreement.
18) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable of CSC and
its Subsidiaries have arisen from bona fide transactions in the Ordinary
Course of Business and are reflected properly on their books and records.
All such notes and accounts receivable reflected on the Most Recent Balance
Sheet are valid receivables subject to no set offs or counterclaims.
19) POWERS OF ATTORNEY. There are no outstanding powers of attorney executed on
behalf of any of CSC and its Subsidiaries.
20) INSURANCE. Section III (20) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements, if any) to which any of CSC and
its Subsidiaries has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past year:
a) the name, address, and telephone number of the agent;
b) the name of the insurer, the name of the policyholder, and the name of
each covered insured;
c) the policy number and the period of coverage;
d) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate)
of coverage; and
e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy:
f) the policy is legal, valid, binding, enforceable, and in full force and
effect, except as limited by bankruptcy and insolvency laws and other
laws affecting creditors rights generally and general principles of
equity;
g) the policy will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation
of the transactions contemplated hereby, except s limited by bankruptcy
and insolvency laws and other laws affecting creditors rights generally
and general principles of equity;
h) neither any of CSC and its Subsidiaries nor, to the Knowledge of CSC,
any other person is in breach or default (including with respect to the
payment of premiums or the giving of notices), and to the Knowledge of
CSC, no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and
Page 23 of 43
i) neither CSC nor any of its subsidiaries, nor, to the Knowledge of the
Principal Stockholders, any other person has repudiated any provision
thereof. Each of CSC and its Subsidiaries has been covered during the
current year by insurance in scope and amount customary and reasonable
for the businesses in which it has engaged during the aforementioned
period. Section III (20) (i) of the Disclosure Schedule describes any
self-insurance arrangements affecting any of CSC and its Subsidiaries.
21) LITIGATION. Section III (21) of the Disclosure Schedule sets forth each
instance in which any of CSC and its Subsidiaries:
a) is, or, with respect to Litigation, during the past ten years was,
subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or
b) is or, with respect to Litigation, during the past ten years was, a
party or, to the Knowledge of any of the Principal Stockholders, is, or
with respect to Intellectual Property during the past ten years was,
threatened in writing to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator.
None of the actions, suits, proceedings, hearings, and investigations
set forth in Section III (21) of the Disclosure Schedule could, if
determined adversely to CSC, have a Material Adverse Effect. None of
the Principal Stockholders has any reason to believe that any such
action, suit, proceeding, hearing, or investigation may be brought or
threatened against any of CSC and its Subsidiaries.
22) PRODUCT WARRANTY. The services provided by any of CSC and its Subsidiaries:
a) have been in conformity in all material respects, with all applicable
contractual commitments; and
b) do not expose CSC and its Subsidiaries to any consequential Liability
for any failure to provide services.
23) PRODUCT LIABILITY. To the knowledge of the Principal Stockholders, none of
CSC and its Subsidiaries has any Liability (and there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any
Liability) arising out of any injury to individuals or property as a result
of the use of any service provided by any of CSC and its Subsidiaries.
24) EMPLOYEES. To the Knowledge of any of the Principal Stockholders, no
executive, key employee, or group of key employees has any plans to
terminate employment with any of CSC and its Subsidiaries. None of CSC and
its Subsidiaries is a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining disputes. None of
CSC and its Subsidiaries has committed any unfair labor practice. CSC has
no Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of
any of CSC and its Subsidiaries.
Page 24 of 43
25) EMPLOYEE BENEFITS.
a) Section III (25) of the Disclosure Schedule lists each Employee Benefit
Plan that any of CSC and its Subsidiaries maintains or to which any of
CSC and its Subsidiaries contributes or has any obligation to
contribute.
b) Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and other
applicable laws.
c) All required reports and descriptions (including Form 5500 Annual
Reports, summary annual reports, PBGC-1's, and summary plan
descriptions) have been timely filed and distributed appropriately with
respect to each such Employee Benefit Plan. When applicable, the
requirements of COBRA have been met with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
d) All premiums and other payments for all periods ending on or before the
Closing Date have been paid with respect to each Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
e) All contributions (including all employer contributions and employee
salary reduction contributions) which are due have been timely paid to
each such Employee Benefit Plan which is an Employee Pension Benefit
Plan and all contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each such Employee
Pension Benefit Plan or accrued in accordance with the past custom and
practice of CSC and its Subsidiaries. Each such Employee Benefit Plan
which is an Employee Pension Benefit Plan meets the requirements of a
"Simplified Employee Pension" under Section 408(k) of the Code,
including Section 408(k)(6) of the Code, and CSC is not aware of any
facts or circumstances that could result in the failure of such
Employee Pension Benefit Plan to satisfy the requirements of Section
408(k) of the Code, including Section 408(k)(6) of the Code. Neither
CSC nor any of its Subsidiaries maintains any Employee Pension Benefit
Plan that is a "qualified plan" under Section 401 (a) of the Code.
f) CSC has delivered to Vianet correct and complete copies of the plan
documents and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the most recent Form
5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such
Employee Benefit Plan.
g) With respect to each Employee Benefit Plan that any of CSC, its
Subsidiaries, and any ERISA Affiliate maintains or ever has maintained
or to which any of them contributes, ever has contributed, or ever has
been required to contribute, there have been no Prohibited Transactions
with respect to any such Employee Benefit Plan. No Fiduciary has any
Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the
assets of any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other than
routine claims for benefits) is pending or, to the Knowledge of any of
the Principal Stockholders, threatened. CSC has no Knowledge of any
Basis for any such action, suit, proceeding, hearing, or investigation.
Page 25 of 43
h) None of CSC, its Subsidiaries, and the other members of the Controlled
Group that includes CSC and its Subsidiaries contributes to, ever has
contributed to, or ever has been required to contribute to any Multi
employer Plan or has any Liability (including withdrawal liability as
defined in ERISA Section 4201) under any Multi employer Plan.
i) None of CSC and its Subsidiaries maintains or ever has maintained or
contributes, ever has contributed, or ever has been required to
contribute to any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their
dependents (other than in accordance with COBRA).
26) GUARANTIES. None of CSC and its Subsidiaries is a guarantor or otherwise is
liable for any Liability or obligation (including indebtedness) of any
other Person other than CSC or any such Subsidiary.
27) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. To the Knowledge of the
Principal Stockholders,
a) Each of CSC and its Subsidiaries, has complied and is in compliance
with all Environmental, Health, and Safety Requirements.
b) Without limiting the generality of the foregoing, each of CSC, its
Subsidiaries and their respective Affiliates has obtained and complied
with, and is in compliance with, all permits, licenses and other
authorizations that are required pursuant to Environmental, Health, and
Safety Requirements for the occupation of its facilities and the
operation of its business.
c) Neither CSC, nor its Subsidiaries, has received any written or oral
notice, report or other demand from a third party regarding any actual
or alleged violation of Environmental, Health, and Safety Requirements,
or any Liabilities, including any investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
d) None of the following exists at any property or facility leased by CSC
or its Subsidiaries:
i) underground storage tanks;
ii) asbestos-containing material in any form or condition;
iii) materials or equipment containing polychlorinated biphenyls; or
iv) landfills, surface impoundments, or disposal areas.
Page 26 of 43
e) Neither this Agreement nor the consummation of the transaction that is
the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
f) Neither CSC, nor its Subsidiaries, has, either expressly or by
operation of law, assumed or undertaken any Liability, including
without limitation any obligation for corrective or remedial action, of
any other Person relating to Environmental, Health, and Safety
Requirements.
28) CERTAIN BUSINESS RELATIONSHIPS WITH CSC AND ITS SUBSIDIARIES. Except as set
forth on Section III (28) of the Disclosure Schedule, none of the
Stockholders of CSC or their Affiliates has been involved in any business
arrangement or relationship with any of CSC and its Subsidiaries within the
past 12 months, and none of the Stockholders of CSC or their Affiliates
owns any asset, tangible or intangible, which is used in the business of
any of CSC and its Subsidiaries.
29) DISCLOSURE. The representations and warranties contained in this Section
III do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and information
contained in this Section III not misleading.
IV. REPRESENTATIONS AND WARRANTIES OF VIANET AND CAC.
Each of Vianet and CAC represents and warrants to CSC that the statements
contained in this Section IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section IV).
1) ORGANIZATION. Each of Vianet and CAC is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction
of its incorporation.
2) AUTHORIZATION OF TRANSACTION. Each of Vianet and CAC has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and, at Closing, the Registration Rights Agreement,
and to perform its obligations hereunder and thereunder. This Agreement and
the Registration Rights Agreement (when executed and delivered) each
constitutes the valid and legally binding obligation of each of Vianet and
CAC, enforceable in accordance with its terms and conditions.
3) NON-CONTRAVENTION. Neither the execution and the delivery of this agreement
or the Registration Rights Agreement, nor the consummation of the
transactions contemplated hereby or thereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either Vianet or CAC is subject or
any provision of the charter or bylaws of either Vianet or CAC, or (ii)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which either
Vianet or CAC is a party or by which it is bound or to which any of its
assets is subject. Other than in connection with the provisions of the
Delaware General Corporation Law, neither Vianet nor CAC needs to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties
to consummate the transactions contemplated by this Agreement.
Page 27 of 43
4) BROKERS' FEES. Except for the fee payable to Alliance Capital pursuant to
the agreement dated May 11th 2001, as amended on September 26th 2001 and
December 10th 2001, by and between Vianet and Alliance Capital, neither
Vianet nor CAC has any liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any of CSC or its
Subsidiaries could become liable or obligated.
V. REPRESENTATIONS AND WARRANTIES CONCERNING VIANET.
Vianet represents and warrants to CSC that the statements contained in this
Section V are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section V).
1) VIANET DISCLOSURES. Vianet currently files reports pursuant to the
requirement of Section 12(g) of the Securities Exchange Act. Except for the
filings disclosed on Schedule V (1) to this Agreement, Vianet has filed all
annual, quarterly, current and other reports that are applicable to it
under the Securities Exchange Act. Vianet has delivered to CSC (a) its
annual report to stockholders and its Annual Report on Form 10-KSB for its
last fiscal year and (b) all of its Quarterly Reports on Form 10-QSB and
each other report, (collectively the "SEC Reports"). The SEC Reports do 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 the light of the circumstances under which they were made, not
misleading. The audited and unaudited financial statements of Vianet
included in the SEC Reports (the "Financial Statements") have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as stated in such Financial Statements or the
notes thereto) and fairly present the financial position of Vianet and its
consolidated subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended.
Except as disclosed by Vianet in the SEC Reports, since the end of the most
recent of such fiscal years, there has been no material adverse change in
the business, properties, financial condition or results of operations of
Vianet and its subsidiaries taken together, and there is no existing
condition, event or series of events which reasonably would be expected to
have a material adverse effect on the business, properties, financial
condition or results of operations of Vianet and its subsidiaries taken
together, or the ability of Vianet to perform its obligations under this
Agreement or the Registration Rights Agreement. The offer, sale and
issuance of the Vianet Shares in connection with the Merger as contemplated
by this Agreement are exempt from the registration requirements of the
Securities Act, and neither Vianet nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption.
Page 28 of 43
2) NO MATERIAL ADVERSE CHANGE. There has not been, since September 30, 2001,
any material adverse change in the assets, properties, business, operations
or financial position of Vianet.
3) VIANET SHARES. The Vianet Shares to be issued to the CSC Stockholders in
connection with the Merger:
a) will have been duly authorized; and
b) upon issuance, delivery and payment therefore in the manner described
herein, will be validly issued, fully paid and non-assessable.
VI. COVENANTS.
The Parties agree as follows with respect to the period from and after the
execution of this Agreement:
1) GENERAL. Each of the Parties will use its best efforts to take all action
and to do all things necessary in order to consummate and make effective
the transactions contemplated by this Agreement (including satisfaction,
but not waiver, of the closing conditions set forth in Section VII below).
2) NOTICES AND CONSENTS. Vianet and CSC will give any notices (and will cause
each of their Subsidiaries to give any notices) to third parties, and will
use commercially reasonable efforts to obtain (and will cause each of their
Subsidiaries to use commercially reasonable efforts to obtain) any consents
or authorizations of any government or government agency or any other
Person required to be obtained by Vianet and CSC or any of their
Subsidiaries to consummate the transaction contemplated hereby.
3) CONSENT OF CSC STOCKHOLDERS. Subject to Vianet's reasonable cooperation in
the preparation thereof, CSC will, within three (3) business days after
execution and delivery this Agreement, disseminate to the CSC Stockholders
a Confidential Solicitation of Consents and Information Statement Regarding
the Merger prepared by the management of CSC (the "Information Statement")
which shall be in form and substance reasonably acceptable to CSC and
Vianet. The Principal Stockholders shall exercise commercially reasonable
efforts to obtain the Requisite CSC Stockholder Approval no later than ten
(10) days after dissemination of the Information Statement. The Information
Statement will contain the affirmative recommendation of the board of
directors of CSC in favor of the adoption of this Agreement and the
approval of the Merger. Each of the Principal Stockholders covenants and
agrees to consent to and approve the Merger.
Page 29 of 43
4) OPERATION OF BUSINESS. Vianet and CSC will continue to conduct their
businesses in the Ordinary Course of Business and will not (and will not
cause or permit any of its Subsidiaries to) without the prior written
consent of the other, engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, without the prior written consent
of the other, each of Vianet and CSC and their Subsidiaries will not:
a) authorize or effect any change in its charter or bylaws;
b) grant any options, warrants, or other rights to purchase or obtain any
of its capital stock or issue, sell, or otherwise dispose of any of its
capital stock (except upon the conversion or exercise of options,
warrants, and other rights currently outstanding);
c) declare, set aside, or pay any dividend or distribution with respect to
its capital stock (whether in cash or in kind), or redeem, repurchase,
or otherwise acquire any of its capital stock;
d) issue any note, bond, or other debt security or create, incur, assume,
or guarantee any indebtedness for borrowed money or capitalized lease
obligation;
e) impose any Security Interest upon any of its assets;
f) make any capital investment in, make any loan to, or acquire the
securities or assets of any other Person;
g) make any change in employment terms for any of its directors, officers,
and employees; and
h) commit to any of the foregoing.
5) FULL ACCESS. Each Party will (and will cause each of its Subsidiaries to)
permit representatives of the other to have full access at all reasonable
times, and in a manner so as not to interfere with normal business
operations, to all premises, properties, personnel, books, records
(including tax records), contracts, and documents of or pertaining to each
of the Parties and their Subsidiaries. Each Party will treat and hold any
Confidential Information it receives from the other and any of its
Subsidiaries in the course of the reviews contemplated by this Section VI
as confidential and will not disclose the Confidential Information to any
other person, will not use any of the Confidential Information except in
connection with this Agreement, and, if this Agreement is terminated for
any reason whatsoever, agrees to return to the other Party all tangible
embodiments (and all copies) thereof which are in its possession.
6) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice to the
other of any material adverse development causing a breach of any of its
own representations and warranties in Section III, IV or V above. No
disclosure by any Party pursuant to this Section VI, however, shall be
deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
Page 30 of 43
7) EXCLUSIVITY. Each of the Parties and their Principal Shareholders will not
(and will not cause or permit any of its Subsidiaries to) solicit,
initiate, or encourage the submission of any proposal or offer from any
Person relating to the acquisition of all or substantially all of the
capital stock or assets of any of Vianet, CSC and their Subsidiaries
(including any acquisition structured as a merger, consolidation, or share
exchange). Each of the Parties shall notify the other immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any
of the foregoing.
8) BOARD REPRESENTATION. Within sixteen days following the Closing, the
directors of Vianet shall appoint a sufficient number of representatives of
the CSC Stockholders to the Vianet Board of Directors so that the
representatives of the CSC Stockholders constitute a majority of the
members of the Vianet Board of Directors.
9) INFORMATION STATEMENT. After execution of this Agreement, Vianet will
assist, as reasonably requested by CSC, in preparing the Information
Statement, including providing to CSC all information reasonably requested
by CSC regarding Vianet that is reasonably necessary to complete the
Information Statement. The information provided by Vianet regarding Vianet
including, without limitation, any information filed by Vianet with the SEC
under the Securities Exchange Act incorporated by reference will not
contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements therein not misleading.
10) PATENT APPLICATIONS. The Principal Stockholders agree to execute and
deliver all applications for patent, including all divisional,
continuation, reissue and other applications for patent on the invention(s)
set forth in the pending applications listed in Section VI (10) of the
Disclosure Schedule and all assignments thereof to Vianet, the Surviving
Corporation or its assigns, to communicate to Vianet or its representatives
all facts known to CSC respecting said invention(s), whenever requested, to
testify in any interferences or other legal proceedings in which any of
said applications or patents resulting there from may become involved, to
sign all lawful papers, make all rightful oaths, and to do generally
everything reasonably necessary to assist Vianet, its successors, assigns
and nominees to obtain patent protection for said invention(s) in the
United States and all other countries, all at the cost and expense of
Vianet.
11) TRANSFERS BY SURVIVING CORPORATION. After the Effective Time, Vianet shall
not cause or permit the Surviving Corporation to transfer any of its
properties or assets outside of the ordinary course of business other than
transfers to subsidiary corporations wholly-owned by the Surviving
Corporation or the merger of the Surviving Corporation into Vianet in a
merger qualifying under Section 368(a) of the Code.
12) TAX INFORMATION. As promptly as reasonably practicable after the Closing,
the Principal Stockholders will provide to Vianet the following information
with respect to each of CSC and its Subsidiaries (or, in the case of clause
(b) below, with respect to each of the Subsidiaries) as of the Closing
Date:
a) the basis of CSC or Subsidiary in its assets;
Page 31 of 43
b) the basis of the stockholder(s) of the Subsidiary in its stock (or the
amount of any Excess Loss Account);
c) the amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign tax, or excess charitable
contribution allocable to CSC or Subsidiary; and
d) the amount of any deferred gain or loss allocable to CSC or Subsidiary
arising out of any deferred inter-company transaction.
VII. CONDITIONS TO OBLIGATION TO CLOSE.
1) CONDITIONS TO OBLIGATION OF VIANET AND CAC. The obligation of each of
Vianet and CAC to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
a) this Agreement and the Merger shall have received the Requisite CSC
Stockholder Approval and CSC shall have delivered to Vianet copies of
the Board of Directors and CSC Stockholders resolutions approving this
Agreement and the Merger, certified by the Secretary of CSC, and good
standing certificates for CSC and the Subsidiaries dated not more than
ten (10) days prior to the Closing;
b) CSC and its Subsidiaries shall each have procured all consents of any
government agency or other Person required to be obtained by them to
consummate the transactions contemplated by this Agreement including,
without limitation, the consents required under Section VI;
c) the representations and warranties of CSC set forth in this Agreement
above shall be true and correct in all material respects at and as of
the Closing Date;
d) CSC shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
e) no action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge
would:
i) prevent consummation of any of the transactions contemplated by
this Agreement;
ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation;
iii) affect adversely the right of Vianet to own the capital stock of
the Surviving Corporation and to control the Surviving Corporation
and its Subsidiaries; or
Page 32 of 43
iv) affect adversely the right of the Surviving Corporation and its
Subsidiaries to own its assets and to operate its businesses (and
no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
f) CSC shall have delivered to Vianet and CAC a certificate to the effect
that each of the conditions specified above in Section IV has been
satisfied in all respects;
g) Vianet and CAC shall have received from counsel to CSC an opinion in
form and substance as set forth in Exhibit VII (1) (g) attached hereto,
addressed to Vianet and CAC, and dated as of the Closing Date;
h) Vianet and CAC shall have received the resignations, effective as of
the Closing, of each director and officer of CSC and its Subsidiaries;
i) not less than 60% of the holders of the 8% Secured Convertible Notes
issued by Vianet between January 11th and October 31st 2001 having an
aggregate face value of $9,176,00 (the "Convertible Notes") shall have
converted their holdings into Vianet Shares; and
j) all actions to be taken by CSC in connection with consummation of the
transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and
substance to CAC and Vianet.
k) The Number of Vianet shares to be issued to CSC shareholders as
indicated in Exhibit II (4) (e) (i) shall have been determined to the
satisfaction of Vianet.
l) CSC shall have provided the Disclosure Schedule as indicated in Section
III and Vianet shall be satisfied that the Disclosure Schedule does not
reveal any Material Adverse Effect.
CAC and Vianet may waive any condition specified in this Section VII if
they execute a writing so stating at or prior to the Closing.
2) CONDITIONS TO OBLIGATION OF CSC. The obligation of CSC to consummate the
transactions to be performed by it in connection with the Closing is
subject to satisfaction of the following conditions:
a) The representations and warranties of Vianet and CAC set forth in this
Agreement above shall be true and correct in all material respects at
and as of the Closing Date;
b) Vianet and CAC shall each have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
c) No action, suit or proceeding shall be pending or threatened before any
court or quasi-judicial or administrative agency of any federal, state,
local or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would
i) prevent consummation of any of the transactions contemplated by
this Agreement or
Page 33 of 43
ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation;
d) Vianet and CAC shall have delivered to CSC a certificate to the effect
that each of the conditions specified above in Section V is satisfied
in all respects;
e) This Agreement and the Merger shall have received the Requisite CSC
Shareholder Approval;
f) This Agreement and the Merger shall have received the Requisite Vianet
Board Approval;
g) CSC shall have received from counsel to Vianet and CAC an opinion in
form and substance as set forth in Exhibit VII (2) (g) attached hereto,
addressed to CSC, and dated as of the Closing Date;
h) All actions to be taken by CAC and Vianet in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to CSC.
i) The Number of Vianet shares to be issued to CSC shareholders as
indicated in Exhibit II (4) (e) (i) shall have been determined to the
satisfaction of CSC.
j) not less than 60% of the holders of the Convertible Notes shall have
converted their holdings into Vianet Shares.
CSC may waive any condition specified in this Section VII if it executes a
writing so stating at or prior to the Closing.
VIII. SURVIVAL AND INDEMNIFICATION.
1) SURVIVAL AND INDEMNIFICATION. The representations and warranties of CSC
contained in this Agreement shall survive the Closing hereunder and
continue in full force and effect thereafter until the second anniversary
of the Closing Date except for the representations set forth in Section IV
(12) and Section IV (27) which shall survive the Closing until the fifth
(5th) anniversary of the Closing Date. Covenants and agreements set forth
in this Agreement to be performed after the Closing shall survive the
Closing in accordance with their respective terms. No claim shall be made
or action brought by any party after the Closing for the breach of any
representation or warranty in this Agreement or in any instrument delivered
pursuant to this Agreement or with respect to any agreement or covenant in
this Agreement or in any instrument delivered pursuant to this Agreement
after the second anniversary of the Closing Date, except with respect to
those representations and warranties set forth in Section IV (12) and
Section IV (27), which may be brought at any time until the fifth (5th)
anniversary of the Closing Date, and except with respect to those covenants
that by their terms contemplate performance after the Closing.
Page 34 of 43
2) INDEMNIFICATION BY CSC. CSC agrees to indemnify and hold harmless Vianet
and its Subsidiaries and Affiliates (including, after the Effective Time,
the Surviving Corporation and its subsidiaries) (collectively, the "Vianet
Group"), and the officers, directors and employees of the Vianet Group and
their successors and assigns (all of the foregoing entities and individuals
to be referred to hereafter as the "Vianet Indemnified Persons") from and
against any and all Adverse Consequences that any Vianet Indemnified Person
may suffer resulting from, arising out of, relating to, in the nature of,
or caused by:
a) any inaccuracy in any of the representations and warranties of CSC set
forth in this Agreement;
b) any failure of CSC (prior to Closing) to comply with any of the
obligations, covenants or agreements contained in this Agreement;
3) INDEMNIFICATION BY VIANET. Vianet agrees to indemnify and hold harmless the
CSC Stockholders from and against any and all Adverse Consequences that the
CSC Stockholders may suffer resulting from, arising out of, relating to, in
the nature of, or caused by:
a) any inaccuracy in any of the representations and warranties of Vianet
or CAC set forth in this Agreement; or
b) any failure of Vianet or CAC to comply with any of their obligations,
covenants or agreements contained in this
Agreement.
4) MATTERS INVOLVING THIRD PARTIES.
a) If any third party shall notify either a Vianet Indemnified Person or
the CSC Stockholders, as the case may be (in either case an
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
party (the "Indemnifying Party") under this Section 9, then the
Indemnified Party shall promptly notify each Indemnifying Party Thereof
in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
b) Any Indemnifying Party will have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as
i) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief,
ii) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the
Indemnified Party, and
iii) the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
Page 35 of 43
c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section VIII (4):
i) the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party
Claim;
ii) 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 (not to be withheld unreasonably); and
iii) 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 written consent of the Indemnified
Party (not to be withheld unreasonably).
d) In the event any of the conditions in Section VII (4) (b) above is or
becomes unsatisfied, however,
i) the Indemnified Party may defend against, and consent to the entry
of any judgment or enter into 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, any Indemnifying Party in connection therewith);
ii) the Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the
Third Party Claim (including reasonable attorneys' fees and
expenses), and
iii) the Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section
VIII.
5) LIMITS ON INDEMNIFICATION. Notwithstanding anything to the contrary
contained in this Section IX , except as provided in the following
sentence: there shall be no amount payable by Vianet or any Principal
Stockholder pursuant to his indemnification obligations under this Section
IX, unless and until the cumulative amount of all Adverse Consequences
incurred by the party to be indemnified under this Section IX exceeds
$200,000, in which event the party to be indemnified shall be entitled to
recover from the indemnifying party pursuant to this Section IX the amount
of such Adverse Consequences in excess of $200,000. The limitations set
forth in the foregoing sentence shall not apply to any Adverse Consequences
arising out of any breach of the representations and warranties in Section
IV (12) or Section IV (27) of this Agreement.
6) INSURANCE PROCEEDS. The amount of any Adverse Consequences otherwise
recoverable under this Section IX by any Indemnified Party shall be reduced
by (i) any amounts recovered by the Indemnified Party under insurance
policies (net of any costs incurred in connection with the collection
thereof) (it being understood that an Indemnified Party shall use its
commercially reasonable efforts to timely pursue all reasonable remedies
against applicable insurers) and (ii) any tax benefits realized by the
Indemnified Party resulting from any amounts recovered under insurance
policies.
Page 36 of 43
7) EXCLUSIVE REMEDY. Each of Vianet and CAC acknowledges and agrees that it
will not assert, except pursuant to and as permitted by this Section IX,
any claim against any Principal Stockholder or any employee, office or
director of CSC or any of its Subsidiaries for any inaccuracies,
misstatements or omissions with respect to information furnished to Vianet
and CAC in connection with the transactions contemplated hereby, it being
agreed and understood that indemnification under this Section IX shall be
the sole and exclusive remedy for any such inaccuracies, misstatements or
omissions except that the limitation of this Section IX (8) shall not apply
in the case of the fraudulent provision of information.
8) EFFECT OF KNOWLEDGE. Notwithstanding anything to the contrary contained in
this Agreement, no claim for indemnification may be asserted by any member
of the Vianet Group against any Principal Stockholder under this Section __
in respect of any fact, event or circumstance giving rise to such claim
that was discovered by or known to Vianet or CAC on or before the Closing,
provided that, the Principal Stockholders shall have the burden of proving
discovery or knowledge by Vianet or CAC.
IX. TERMINATION.
1) TERMINATION OF AGREEMENT. Either of the Parties may terminate this
agreement with the prior authorization of its board of directors (whether
before or after stockholder approval) as provided below:
a) the Parties may terminate this Agreement by mutual written consent at
any time prior to the Effective Time;
b) Vianet and CAC may terminate this Agreement by giving written notice to
CSC and the Principal Stockholders at any time prior to the Effective
Time
i) in the event CSC has breached in any material respect any
representation, warranty, or covenant contained in this Agreement,
Vianet or CAC has notified CSC of the breach, and the breach has
continued without cure for a period of ten (10) days after the
notice of breach and such breach results in the failure to be
satisfied of any condition precedent to the obligation of Vianet
or CAC to consummate the transactions contemplated hereby; or
ii) if the Closing shall not have occurred on or before , February 28,
2002 by reason of the failure of any condition precedent under
Section VII (1) hereof (unless the failure results primarily from
Vianet or CAC breaching any representation, warranty, or covenant
contained in this Agreement);
c) CSC may terminate this Agreement by giving written notice to Vianet and
CAC at any time prior to the Effective Time:
i) in the event Vianet or CAC has breached in any material respect
any representation, warranty, or covenant contained in this
Agreement, CSC has notified Vianet and CAC of the breach, and the
breach has continued without cure for a period of ten (10) days
after the notice of breach and such breach results in the failure
to be satisfied of any condition precedent to the obligation of
CSC and the Principal Stockholders to consummate the transactions
contemplated hereby; or
Page 37 of 43
ii) if the Closing shall not have occurred on or before February 28,
2002 by reason of the failure of any condition precedent under
Section VII (2) hereof (unless the failure results primarily from
CSC breaching any representation, warranty, or covenant contained
in this Agreement); or
d) any Party may terminate this Agreement by giving written notice to the
other Party at any time in the event this Agreement and the Merger fail
to receive the Requisite CSC Stockholder Approval prior to December 27,
2001.
2) EFFECT OF TERMINATION. If any Party terminates this Agreement pursuant to
Section X (1) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however,
that the confidentiality provisions contained in Section VI (5) above and
expense provisions contained in Section XI (12) shall survive any such
termination.
X. MISCELLANEOUS.
1) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any press
release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party;
provided, however, that Vianet may make any public disclosure it believes
in good faith and that it is advised by legal counsel is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities.
2) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that the provisions in
Section II above concerning issuance of the Vianet Shares are intended for
the benefit of the CSC Stockholders are intended for the benefit of the
holders thereof, and the provisions of Section II (8) regarding the
registration of the Vianet shares are intended for the benefit of the CSC
Stockholders
3) ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they relate in any way to the
subject matter hereof.
4) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other Party.
Page 38 of 43
5) COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
6) HEADINGS. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
7) NOTICES. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if delivered personally
(in such case, on the date of delivery), if sent by registered or certified
mail, return receipt requested, postage prepaid (in such case, three days
after mailing) or if by nationally recognized overnight courier (in such
case, on the date of delivery as confirmed by such courier), and addressed
to the intended recipient as set forth below:
If to Vianet or CAC :
Vianet Technologies, Inc.
0000 Xxxxxxxxx, Xxxxx 000,
Xxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxxx
Telecopier No.: (000)-000-0000
With a copy to:
Sichenzia, Ross, Xxxxxxxx & Xxxxxxx LLP
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to CSC:
Comm-Services Corporation
0000 Xxxxxxxxx, Xxxxx 000,
Xxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxx
Telecopier No.: _____________
With a copy to:
_______________
_______________
Attn: _____________
Telecopier No.: _____________
Page 39 of 43
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the
manner herein set forth.
8) GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State
of Delaware. Each of the parties hereto hereby irrevocably submits to the
exclusive jurisdiction of the state or federal courts located in Texas, in
connection with any suit, action or other proceeding arising out of or
relating to this Agreement and the transactions contemplated hereby, and
hereby agree not to assert, by way of motion, as a defense, or otherwise in
any such suit, action or proceeding that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or the subject matter hereof
may not be enforced by such courts.
9) AMENDMENT. To the extent permitted by applicable law, this Agreement may be
amended only in writing signed by all parties hereto, approved by each of
the respective boards of directors of Vianet and CAC and the Board of
Directors of the CSC, at any time before or after adoption of this
agreement by requisite CSC Stockholder approval; provided, however, that,
after any such approval, no amendment shall be made without the approval of
such shareholders except as permitted by the Delaware General Corporation
Law.
10) EXTENSION; WAIVER. At any time prior to the Effective Time, any party
hereto, by action taken by or on behalf of their respective boards of
directors, if applicable, may:
a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto,
b) waive any inaccuracies in the representations and warranties of any
other party contained herein or in any document, certificate or writing
delivered pursuant hereto by any other party, or
c) waive compliance with any of the agreements or conditions contained
herein or any breach thereof. Any agreement on the part of any party to
any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of
any party hereto to assert any of its rights hereunder shall not
constitute a waiver of such rights.
Page 40 of 43
11) SEVERABILITY. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
12) EXPENSES. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
13) CONSTRUCTION. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires.
The word "including" shall mean including without limitation. Any reference
to the masculine shall, if the context otherwise requires, be deemed a
reference to the feminine and vice versa; any reference to the singular
shall, if the context otherwise requires, be deemed a reference to the
plural, and vice versa.
14) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made
a part hereof.
15) DISPUTE RESOLUTION. The parties desire that any controversy or claim
arising out of or related to this Agreement or the transactions
contemplated hereby be resolved in an expeditious and efficient manner
exclusively in accordance with this dispute resolution procedure. A dispute
under this clause shall be initiated by delivering written notice to the
other party briefly stating the nature of the dispute and requesting
resolution. Except as otherwise specified, each party shall bear its own
costs and fees relating to any dispute. The dispute resolution procedure is
as follows:
a) INFORMAL RESOLUTION. The parties agree that before initiation of any
legal or arbitration proceeding with respect to any issue arising out
of the transactions contemplated by this Agreement, they shall use
their respective representatives to attempt to resolve in good faith
all disputes between the parties. The parties agree that they will
cause their respective representatives to meet in person at a mutually
agreeable location, to attempt in good faith to resolve such dispute
within fifteen business days of notification of such dispute. In the
event that the representatives are unable to resolve such a dispute,
the aggrieved party must refer the dispute to mediation under paragraph
(b).
Page 41 of 43
b) MEDIATION. In the event any dispute is not resolved by a meeting of the
parties, the dispute shall be referred to non-binding mediation. The
mediation shall occur within 40 days of the meeting of the parties.
Mediation fees shall be split equally among the parties. The mediator
shall be selected by agreement of the parties or, in the event of no
agreement, shall be designated by Judicial Arbitration and Mediation
Services ("JAMS"). The mediation shall be attended by the parties'
representatives and, if desired, the parties' attorneys.
c) ARBITRATION. In the event a dispute is not resolved by mediation
pursuant to paragraph (b), and the parties thereafter mutually agree,
in writing, to proceed to binding arbitration, the aggrieved party
shall refer the dispute to binding arbitration. The arbitration shall
be governed by the procedures set forth below. The arbitrator shall
give written notice to the parties of the arbitrator's determination,
and judgment upon the same may be entered by any court of competent
jurisdiction.
d) SELECTION OF ARBITRATOR. Within 30 days of referral of a dispute to
arbitration, a single arbitrator will be selected by agreement of the
parties or, in the event of no agreement, shall be designated by JAMS.
Unless agreed otherwise by the parties, the arbitrator shall be a
retired judge with arbitration experience.
e) DISCOVERY. The parties agree to submit discovery plans to the
arbitrator within 15 days following the date that the arbitrator
accepts his appointment to this matter. The discovery plan will
describe all discovery contemplated. The arbitrator will schedule a
meeting of counsel to occur within 15 days of his receipt of the
discovery plans, at which time the arbitrator will issue a written
order scheduling dates for all depositions and completion dates for all
additional discovery. The written discovery plan may only be modified
by a written order from the arbitrator. The parties may request, in
their discovery plans, and the arbitrator shall be empowered to impose,
limitations on the nature and quantity of discovery to be conducted.
f) PROCEDURE. The arbitration hearing shall take place in Dallas, Texas
within 90 days of the arbitrator's acceptance of his appointment. The
hearing is not to exceed two (2) days. Introduction of evidence and
testimony at the hearing will be subject to the Federal Rules of Civil
Procedure. Each party is entitled to be heard, to present material
evidence and testimony, and to cross-examine witnesses appearing at the
hearing.
16) LIMITATION ON DAMAGES. The arbitrator may not award exemplary or punitive
damages except in the case of the fraud.
Page 42 of 43
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date
first above written.
VIANET TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxx
----------------------
Name: Xxxxx Xxxxxx
--------------------
Title: Chief Executive Officer
-----------------------
COMSERVICES ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxx
----------------------
Name: Xxxxx Xxxxxx
--------------------
Title: Chief Executive Officer
-----------------------
COMSERVICES CORPORATION
By: /s/ Xxxxxxx Xxxxxx
----------------------
Name: Xxxxxxx Xxxxxx
--------------------
Title: President
-------------------
Page 43 of 43
EXHIBIT II (4) (d) (i)
Conversion Ratio
For the purposes of Section II (4) (d) (i) the Conversion Ratio will be
determined as follows:
1. The aggregate number of outstanding Vianet common shares issued or
liable to be issued as of the date of the Closing will be determined,
including all warrants, options, convertible instruments or any other
claim for the issuance of common shares other than the Contingent
Shares as identified in Paragraph 5 of this Exhibit II (4) (d) (i) (the
"Aggregate Outstanding Shares of Vianet".)
2. The number of Vianet shares to be issued to CSC shareholders in total
on Closing (the "Number of Vianet shares to be issued to CSC
shareholders") will be that number of shares which provides to the CSC
shareholders in total an interest equal to sixty percent (60%) of the
total common shares or claim for common shares of Vianet immediately
following Closing, which shall be the product of the sum of the
Aggregate Outstanding Shares of Vianet and the Number of Vianet shares
to be issued to CSC shareholders.
3. The Conversion Ratio shall be the product of the Number of Vianet
shares to be issued to CSC shareholders divided by the aggregate number
of outstanding CSC common shares issued or liable to be issued as of
the date of the Closing, including all warrants, options, convertible
instruments or any other claim for the issuance of common shares.
4. At Closing there will be potential claims on Vianet to issue up to a
further 10,469,322 common shares, contingent on certain events which
may or may not occur (the "Contingent Shares"). The Contingent Shares
are listed in the Appendix to this Exhibit. In the event that Vianet is
called on to issue all or any of the Contingent Shares, for every share
so issued an additional 1.5 common shares will be issued to the CSC
shareholders, such shares being distributed among the CSC shareholders
in the same proportion as the Vianet common shares to be issued on
Closing.
APPENDIX TO EXHIBIT II (4) (d) (i)
Contingent Shares
(As of December 12, 2001)
Class A Note conversions 6,549,991 Potential future obligations
RBC 500,000 Issuable if share below $3
Warrant Tender Offer 3,419,331 Tender offer closes on
December 27, 2001
--------------
10,469,322
--------------
