Exhibit 10.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FRONT PORCH DIGITAL INC.,
FRONT PORCH MERGER CORP.
AND
MANAGEDSTORAGE INTERNATIONAL INC.
DATED: AUGUST 16, 2004
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER..........................................................1
SECTION 1.1 The Merger...................................................1
SECTION 1.2 Closing......................................................2
SECTION 1.3 Effective Time...............................................2
SECTION 1.4 Effects of the Merger........................................2
SECTION 1.5 Certificate of Incorporation and By-laws of the
Surviving Corporation........................................2
SECTION 1.6 Directors and Officers.......................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES....................................3
SECTION 2.1 Effect on Capital Stock......................................3
SECTION 2.2 Fractional Shares............................................5
SECTION 2.3 Exchange of Certificates.....................................5
SECTION 2.4 Certain Adjustments..........................................6
SECTION 2.5 Shares of Dissenting Shareholders............................7
SECTION 2.6 Stock Options................................................7
SECTION 2.7 Warrants.....................................................8
SECTION 2.8 Tax-Free Reorganization......................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................9
SECTION 3.1 Organization, Standing and Corporate Power...................9
SECTION 3.2 Subsidiaries................................................10
SECTION 3.3 Capital Structure...........................................10
SECTION 3.4 Authority; Noncontravention.................................11
SECTION 3.5 Financial Statements; Undisclosed Liabilities...............12
SECTION 3.6 Material Contracts..........................................12
SECTION 3.7 Absence of Certain Changes..................................13
SECTION 3.8 Permits; Compliance with Applicable Laws....................13
SECTION 3.9 Absence of Litigation.......................................14
SECTION 3.10 Tax Matters.................................................14
SECTION 3.11 Employee Benefit Plans......................................16
SECTION 3.12 Labor Matters...............................................19
SECTION 3.13 Environmental Matters.......................................20
SECTION 3.14 Intellectual Property.......................................21
SECTION 3.15 Insurance Matters...........................................24
SECTION 3.16 Transactions with Affiliates................................24
SECTION 3.17 Voting Requirements.........................................24
SECTION 3.18 Brokers.....................................................24
SECTION 3.19 Real Property...............................................24
SECTION 3.20 Tangible Personal Property..................................25
SECTION 3.21 Investment Company..........................................25
SECTION 3.22 Board Approval..............................................25
SECTION 3.23 Books and Records...........................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT..........................26
SECTION 4.1 Organization, Standing and Corporate Power..................26
SECTION 4.2 Subsidiaries................................................27
SECTION 4.3 Capital Structure...........................................27
SECTION 4.4 Authority; Noncontravention.................................28
SECTION 4.5 Parent Documents............................................29
SECTION 4.6 Material Contracts..........................................30
SECTION 4.7 Absence of Certain Changes..................................31
SECTION 4.8 Permits; Compliance with Applicable Laws....................31
SECTION 4.9 Absence of Litigation.......................................31
SECTION 4.10 Tax Matters.................................................32
SECTION 4.11 Employee Benefit Plans......................................33
SECTION 4.12 Labor Matters...............................................35
SECTION 4.13 Environmental Matters.......................................36
SECTION 4.14 Intellectual Property.......................................37
SECTION 4.15 Insurance Matters...........................................39
SECTION 4.16 Transactions with Affiliates................................39
SECTION 4.17 Voting Requirements.........................................39
SECTION 4.18 Brokers.....................................................39
SECTION 4.19 Real Property...............................................40
SECTION 4.20 Tangible Personal Property..................................40
SECTION 4.21 Investment Company..........................................41
SECTION 4.22 Board Approval..............................................41
SECTION 4.23 Books and Records...........................................41
SECTION 4.24 Sarbanes Oxley Act Compliance...............................41
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS..........................41
SECTION 5.1 Conduct of Business by the Company..........................41
SECTION 5.2 Advice of Changes...........................................43
SECTION 5.3 No Solicitation by the Company..............................43
SECTION 5.4 Conduct of Business by Parent...............................44
SECTION 5.5 No Solicitation by Parent...................................45
SECTION 5.6 Transition..................................................45
ARTICLE VI ADDITIONAL AGREEMENTS.............................................46
SECTION 6.1 Access to Information; Confidentiality......................46
SECTION 6.2 Commercially Reasonable Efforts.............................46
SECTION 6.3 Indemnification, Exculpation and Insurance..................47
SECTION 6.4 Fees and Expenses...........................................48
SECTION 6.5 Public Announcements........................................48
SECTION 6.6 Employee Benefits...........................................48
SECTION 6.7 Increase of Authorized Common Stock.........................50
SECTION 6.8 Company Shareholder Approval................................50
SECTION 6.9 Regulation D................................................50
ARTICLE VII CONDITIONS PRECEDENT.............................................50
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger..50
SECTION 7.2 Conditions to Obligations of Parent and Merger Sub..........51
SECTION 7.3 Conditions to Obligations of the Company....................52
SECTION 7.4 Frustration of Closing Conditions...........................54
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER...............................54
SECTION 8.1 Termination.................................................54
SECTION 8.2 Effect of Termination.......................................55
SECTION 8.3 Amendment...................................................57
SECTION 8.4 Extension; Waiver...........................................57
ARTICLE IX GENERAL PROVISIONS................................................57
SECTION 9.1 Nonsurvival of Representations, Warranties and Agreements...57
SECTION 9.2 Notices.....................................................57
SECTION 9.3 Definitions.................................................58
SECTION 9.4 Interpretation..............................................60
SECTION 9.5 Counterparts................................................60
SECTION 9.6 Entire Agreement; No Third-Party Beneficiaries..............60
SECTION 9.7 Governing Law...............................................60
SECTION 9.8 Assignment..................................................60
SECTION 9.9 Consent to Jurisdiction.....................................60
SECTION 9.10 Headings....................................................61
SECTION 9.11 Severability................................................61
SECTION 9.12 Enforcement.................................................61
EXHIBITS
Exhibit A - Certificate of Incorporation of Surviving Corporation
Exhibit B - Form of Certificate of Designation, Number, Voting Powers,
Preferences and Rights of Parent's Series A Preferred Stock
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Lock-Up Agreement
Exhibit E - Form of Legal Opinion of Counsel to the Company
Exhibit F - Form of Legal Opinion of Counsel to Parent
Exhibit G - Form of Director Indemnification Agreement
Exhibit H - Form of Xxxxxxx Lock-Up and Voting Agreement
Exhibit I - Form of Xxxxxxx Employment Agreement
INDEX OF DEFINED TERMS
DEFINED TERMS SECTION DEFINED
------------- ---------------
Adjustment Event Section 2.4
affiliate Section 9.3(a)
Agreement Preamble
Certificate of Designation Section 2.1(e)
Certificate of Merger Section 1.3
Closing Section 1.2
Closing Date Section 1.2
Code Section 2.6(a)
Company Preamble
Company Acquisition Proposal Section 5.3(a)
Company Certificate of Incorporation Section 2.1(c)
Company Common Stock Recitals
Company Disclosure Schedule Article III
Company Financial Statements Section 3.5
Company IP Agreements Section 3.14(g)
Company Material Contracts Section 3.6(b)
Company Preferred Stock Section 9.3(f)
Company Series A Preferred Stock Section 2.1(c)
Company Series B Preferred Stock Section 2.1(d)
Company Series C Preferred Stock Section 2.1(e)
Company Stock Certificates Section 2.3(a)
Common Stock Merger Consideration Section 2.1(f)
Company Stock Option Section 2.6(a)
Company Stock Plans Section 3.3(a)
Company Trade Secrets Section 3.14(h)
Company Warrant Section 2.7(a)
Company Undesignated Preferred Stock Section 3.3
Continuing Employees Section 6.3(a)
DGCL Recitals
Dissenting Shares Section 2.5
Director Indemnification Agreement Section 7.3(j)
Effective Time Section 1.3
Employee Plans Section 3.11(a)
Environmental Laws Section 3.13(d)(i)
Environmental Permits Section 3.13(d)(ii)
ERISA Section 3.11(a)
ERISA Affiliate Section 3.11(a)
Exchange Act Section 4.4(c)
Fairness Opinion Section 7.2(f)
Fiduciary Section 3.11(e)
GAAP Section 3.5
Government Entities Section 3.4(c)
Governmental Entity Section 3.4(c)
Hazardous Substances Section 3.13(d)(iii)
Indemnified Parties Section 6.4(a)
Intellectual Property Section 3.14(a)
IRS Section 3.11(g)
ISO Section 2.6(a)
knowledge Section 9.3(e)
Letter of Transmittal Section 2.3(b)
Liens Section 3.4(c)
Lock-Up Agreement Section 2.1(g)
Lock-Up Period Section 2.1(g)
material adverse change Section 9.3(b)
material adverse effect Section 9.3(b)
Merger Recitals
Merger Consideration Section 2.1(f)
Merger Sub Preamble
NVGCL Recitals
Other Company Documents Section 3.8(c)
Other Parent Documents Section 4.8(c)
Parent Preamble
Parent Acquisition Proposal Section 5.5
Parent Authorized Preferred Stock Section 4.3
Parent Common Stock Section 4.3(a)
Parent Disclosure Schedule Article IV
Parent Employee Stock Options Section 4.3(b)
Parent IP Agreements Section 4.14(g)
Parent Material Contracts Section 4.6(b)
Parent SEC Documents Section 4.5
Parent Series A Preferred Stock Section 2.1(e)
Parent Stock Plans Section 4.3(a)
Parent Trade Secrets Section 4.14(h)
Permits Section 3.8(a)
Company Permitted Liens Section 3.9(b)
Person Section 9.3(c)
Preferred Stock Merger Consideration Section 2.1(e)
Release Section 3.13(d)(iv)
Registration Rights Agreement Section 2.1(e)
Requisite Regulatory Approvals Section 7.1(b)
Restraints Section 7.2(c)
Sarbanes Oxley Act Section 4.24
SEC Section 4.5
Secretary Section 1.3
Securities Act Section 2.1(f)
Software Section 3.14(a)
Xxxxxxx Employment Agreement Section 7.3(l)
Xxxxxxx Lock-Up Agreement Section 7.3(k)
Subsidiary Section 9.3(d)
Surviving Corporation Section 1.1
Tangible Personal Property Section 3.20
Tax Section 3.10(i)(i)
Taxes Section 3.10(i)(i)
Tax Return Section 3.10(i)(ii)
Third Party Rights Section 3.14(d)
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") made and entered into on
this 16th day of August 2004, by and among FRONT PORCH DIGITAL INC., a Nevada
corporation ("PARENT"), FRONT PORCH MERGER CORP., a Delaware corporation and
wholly-owned subsidiary of Parent ("MERGER SUB"), and MANAGEDSTORAGE
INTERNATIONAL, INC., a Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, each of Parent, Merger Sub and the Company desire Parent to
consummate a business combination with the Company in a transaction whereby,
upon the terms and subject to the conditions set forth in this Agreement, Merger
Sub will merge with and into the Company (the "MERGER"), each outstanding share
of Class A Common Stock, $.0001 par value per share, of the Company ("COMPANY
COMMON STOCK") (other than shares cancelled and retired pursuant to Section
2.1(b) and Dissenting Shares and Company Preferred Stock (as defined herein),
will be converted into the right to receive the Merger Consideration, and the
Company will be the surviving corporation in the Merger;
WHEREAS, the Board of Directors of the Company unanimously has
determined and resolved that the Merger and all of the transactions contemplated
by this Agreement are in the best interest of the holders of Company Common
Stock and Company Preferred Stock and that the Merger is fair and advisable, and
has approved this Agreement in accordance with the Delaware General Corporation
Law, as amended (the "DGCL"), and has further resolved unanimously to recommend
to all holders of Company Common Stock and Company Preferred Stock that they
authorize, approve and adopt this Agreement and the transactions contemplated
hereby; and
WHEREAS, the Board of Directors of Parent unanimously has determined and
resolved that the Merger and all of the transactions contemplated by this
Agreement are in the best interest of Parent and the holders of Parent Common
Stock and has adopted this Agreement in accordance with the Nevada General
Corporation Law, as amended (the "NVGCL") and Parent, as sole shareholder of
Merger Sub, has adopted this Agreement in accordance with the DGCL.
NOW, THEREFORE, in consideration of the mutual premises recited above
and the representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the DGCL, at the Effective Time,
Merger
Sub shall be merged with and into the Company and the Company shall be the
surviving corporation in the Merger (the "Surviving Corporation") and, as such,
the Company shall continue its corporate existence as a direct, wholly owned
subsidiary of Parent under the laws of the State of Delaware, and the separate
corporate existence of Merger Sub thereupon shall cease.
SECTION 1.2 CLOSING. Subject to the satisfaction or, to the extent
permitted by applicable law, waiver of the conditions to consummation of the
Merger contained in Article VII hereof, the closing of the Merger (the
"Closing") shall take place at 10:00 a.m., New York time, on a date to be
specified by the parties (the "Closing Date"), which date shall not be later
than the third business day next following the satisfaction or, to the extent
permitted by applicable law, waiver of the conditions set forth in Article VII
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or, to the extent permitted by
applicable law, waiver of those conditions), unless another time or date is
agreed to by the parties hereto. The Closing will be held at the offices of
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx, LLP, legal counsel to Parent, located at 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other location as is
agreed to by the parties hereto.
SECTION 1.3 EFFECTIVE TIME. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing the parties shall cause the Merger
to be consummated by filing with the Secretary of State of the State of Delaware
(the "SECRETARY") a certificate of merger (the "CERTIFICATE OF MERGER") duly
executed and so filed in accordance with the DGCL and shall make all other
filings and recordings required under the DGCL to effectuate the Merger and the
transactions contemplated by this Agreement. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Secretary, or
at such subsequent date or time as Parent and the Company mutually shall agree
and specify in the Certificate of Merger (the time the Merger becomes so
effective being hereinafter referred to as the "EFFECTIVE TIME"). SECTION 1.4
EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the DGCL.
SECTION 1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION. The certificate of incorporation of the Surviving Corporation shall
be amended and restated to read as set forth in EXHIBIT A attached hereto and as
so amended shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended or restated as provided therein or by
applicable law. The by-laws of Merger Sub in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter amended or restated as provided therein or by applicable law.
SECTION 1.6 DIRECTORS AND OFFICERS. The directors of Merger Sub at the
Effective Time shall, from and after the Effective Time, be and become the
directors of the Surviving Corporation until their successors shall have been
duly elected and
qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation and by-laws of the Surviving Corporation
and the DGCL; provided that the board of directors of the Merger Sub shall be
comprised of two (2) directors, consisting of Xxxxxx X. Xxxxxxx III and Xxxx
XxXxxxxx. The officers of Merger Sub at the Effective Time shall, from and after
the Effective Time, be and become the officers of the Surviving Corporation
until their successors shall have been duly appointed and qualified or until
their earlier death, resignation or removal in accordance with the certificate
of incorporation and the by-laws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and automatically without any action on the part of any holder of
capital stock of Parent, Merger Sub or the Company, respectively:
(A) CAPITAL STOCK OF MERGER SUB. Each then outstanding share
of common stock, no par value, of Merger Sub shall be converted into and become
one duly authorized, validly issued, fully paid and nonassessable share of
common stock, no par value, of the Surviving Corporation.
(B) CANCELLATION OF TREASURY STOCK AND PARENT OWNED STOCK.
Each share of Company Common Stock and Company Preferred Stock then issued and
held in the Company's treasury and each share of Company Common Stock and
Company Preferred Stock then owned by Parent, Merger Sub or any other wholly
owned subsidiary of Parent, shall be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(C) SERIES A REDEEMABLE PREFERRED STOCK. Each share of the
Series A Redeemable Preferred Stock, $.01 par value per share, of the Company
("COMPANY SERIES A PREFERRED STOCK") issued and outstanding immediately prior to
the Effective Time (other than shares cancelled and retired pursuant to Section
2.1(b)), shall be converted into and become the right to receive, subject to
Section 2.2, two hundred (200) duly authorized, validly issued, fully paid and
nonassessable shares of Parent Common Stock. As a result of the conversion of
the Company Series A Preferred Stock, such preferred stock shall cease to be
outstanding and shall automatically be cancelled and retired.
(D) SERIES B CONVERTIBLE PREFERRED STOCK. Each share of the
Series B Convertible Preferred Stock, $.01 par value per share, of the Company
("COMPANY SERIES B PREFERRED STOCK") issued and outstanding immediately prior to
the Effective Time (other than shares cancelled and retired pursuant to Section
2.1(b)), shall be converted into and become the right to receive, subject to
Section 2.2, twenty-seven and seven hundred eighty nine one thousandths (27.789)
duly authorized, validly issued, fully paid and nonassessable shares of Parent
Common Stock. As a result of the conversion of the Company Series B Preferred
Stock, such preferred stock shall cease to be outstanding and shall
automatically be cancelled and retired.
(E) SERIES C REDEEMABLE PREFERRED STOCK. Each share of the
Series C Redeemable Preferred Stock, $.01 par value per share, of the Company
("COMPANY SERIES C PREFERRED STOCK") issued and outstanding immediately prior to
the Effective Time (other than shares cancelled and retired pursuant to Section
2.1(b)), shall be converted into and become the right to receive, subject to
Section 2.2, one hundred eleven and six thousand forty two ten-thousandths
(111.6042) duly authorized, validly issued, fully paid and nonassessable shares
of Parent Series A Preferred Stock (collectively with the shares of Parent
Common Stock issuable pursuant to the foregoing subparagraphs (c) and (d), the
"PREFERRED STOCK MERGER CONSIDERATION"). As a result of the conversion of the
Company Series C Preferred Stock, such preferred stock shall cease to be
outstanding and shall automatically be cancelled and retired. Prior to the
Effective Time, Parent shall authorize and create a series of preferred stock
consisting of 2,500,000 shares, $.001 par value per share, designated as its
"Series A Convertible Preferred Stock" (the "PARENT SERIES A PREFERRED STOCK").
The terms, limitations and relative rights and preferences of the Parent Series
A Preferred Stock shall be set forth in the Certificate of Designation, Number,
Voting Powers, Preferences and Rights of Series A Preferred Stock of the
Company, in substantially similar form as EXHIBIT B attached hereto (the
"CERTIFICATE OF DESIGNATION"), which Parent shall file with the Secretary of
State of the State of Nevada immediately prior to the Effective Time. At the
Effective Time, Parent and each holder of Parent Series A Preferred Stock shall
enter into (i) the Registration Rights Agreement attached hereto as EXHIBIT C
(the "REGISTRATION RIGHTS AGREEMENT"), and (ii) the Lock-up and Voting Agreement
attached hereto as EXHIBIT D (the "LOCK-UP AGREEMENT").
(F) COMPANY COMMON STOCK. Subject to the provisions of the
last paragraph of this Section 2.1(f), each then outstanding share of Company
Common Stock (but excluding shares cancelled and retired pursuant to Section
2.1(b) and Dissenting Shares), shall be converted into and become the right to
receive, subject to Section 2.2, three thousand eighty nine ten-thousandths
(0.3089) duly authorized, validly issued, fully paid and nonassessable shares of
Parent Common Stock (the "COMMON STOCK MERGER CONSIDERATION"). For the purposes
of this Agreement, the term "MERGER CONSIDERATION" shall mean, collectively, the
Common Stock Merger Consideration and the Preferred Stock Merger Consideration.
(G) LOCK UP. Certain shares of Parent Series A Preferred
Stock and Parent Common Stock issued as Merger Consideration and Shares of
Parent Common Stock issued upon conversion of such Shares of Parent Series A
Preferred Stock shall be subject to the Lock-Up Agreement and each certificate
representing such shares shall bear the appropriate restrictive legend.
SECTION 2.2 FRACTIONAL SHARES. No certificates representing fractional
shares of Parent Common Stock or Parent Preferred Stock shall be issued upon the
surrender for exchange of Company Stock Certificates, no dividend or
distribution by Parent shall relate to such fractional share interests, and such
fractional share interests shall not entitle the owner thereof to vote or to any
rights as a shareholder of Parent. Further, no holder of a Company Stock
Certificate who otherwise would have been entitled to receive in the Merger a
fractional share interest in exchange for such Company Stock Certificate shall
have the right to receive cash payment in lieu thereof. In lieu of any such
fractional shares or cash payment, (x) any such fractional share interest
greater than or equal to one-half of a share (0.5) shall be rounded up to the
next whole share number, and (y) any such fractional share less than one-half of
a share (0.5) shall be rounded down to the preceding whole share number and the
certificates representing shares of Parent Common Stock or Parent Preferred
Stock to be issued in the Merger shall reflect such adjustments.
SECTION 2.3 EXCHANGE OF CERTIFICATES.
(A) As soon as reasonably practicable after the Effective
Time, Parent shall mail to each holder of record of a certificate (or
certificates) which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock or Company Preferred Stock (the
"Company Stock Certificates") (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Company Stock
Certificate(s) shall pass, only upon delivery of the Company Stock
Certificate(s) (or affidavits of loss in lieu of such certificates) (the "Letter
of Transmittal") to the Parent and shall be in such form and have such other
provisions as Parent reasonably may specify, and (ii) instructions for use
thereof in surrendering Company Stock Certificate(s) in exchange for the Merger
Consideration. Upon surrender to the Parent of a Company Stock Certificate in
proper form for cancellation, together with a duly executed letter of
transmittal, the holder of such Company Stock Certificate shall be entitled to
receive in exchange therefor (i) a certificate (or certificates) representing
such whole number of shares of Parent Common Stock and/or Parent Series A
Preferred Stock as such holder is entitled to receive pursuant to Article II in
such denominations and registered in such names as such holder may request. The
shares represented by the Company Stock Certificate so surrendered shall
forthwith be cancelled. Without limiting the generality of the foregoing (and
notwithstanding any other provisions of this Agreement), no interest shall be
paid or accrued in respect of any of the Merger Consideration payable to holders
of Company Common Stock or Company Preferred Stock in accordance with this
Article II. The Letter of Transmittal shall provide (A) procedures for holders
whose Company Stock Certificates are lost, stolen or destroyed to receive the
Merger Consideration, and (B) procedures for the transfer of ownership of shares
of the Company Common Stock or Company Preferred Stock that is not registered on
the stock transfer books and records of the Company. Until surrendered in
accordance with this Section 2.3 and as specified in the Letter of Transmittal,
each Company Stock Certificate shall be deemed at all times from and after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration.
(B) Notwithstanding any other provisions of this Agreement,
no dividends or other distributions declared or made after the Effective Time in
respect of shares of Parent Common Stock or Parent Series A Preferred Stock
having a record date after the Effective Time shall be paid to the holder of any
unsurrendered Company Stock Certificate until the holder shall surrender such
Company Stock Certificate as provided in this Section 2.3. Subject to applicable
law, following surrender of any such Company Stock Certificate, there shall be
paid to the holder of the certificates representing whole shares of Parent
Common Stock or Parent Series A Preferred Stock issued in exchange therefor, in
each case without any interest thereon, (i) at the time of such surrender, the
amount of dividends or other distributions, if any, having a record date after
the Effective Time theretofore payable with respect to such whole shares of
Parent Common Stock or Parent Series A Preferred Stock and not paid, less the
amount of all required withholding Taxes in respect thereof, and (ii) at the
appropriate payment date subsequent to surrender, the amount of dividends or
other distributions having a record date after the Effective Time but prior to
the date of such surrender and having a payment date subsequent to the date of
such surrender and payable with respect to such whole shares of Parent Common
Stock or Parent Series A Preferred Stock, less the amount of all required
withholding Taxes in respect thereof.
(C) All shares of Parent Common Stock or Parent Series A
Preferred Stock issued upon surrender of Company Stock Certificates in
accordance with this Article II and as specified in the Letter of Transmittal
shall be deemed to have been issued and paid in full satisfaction of all rights
pertaining to such shares of Company Common Stock or Company Preferred Stock
represented thereby and, as of the Effective Time, the stock transfer books and
records of the Company shall be closed and there shall be no further
registration of transfers on the stock transfer books and records of the Company
of shares of Company Common Stock or Company Preferred Stock outstanding
immediately prior to the Effective Time. If, after the Effective Time, Company
Stock Certificates are properly presented to the Surviving Corporation for any
reason (but otherwise in accordance with this Article II and as specified in the
Letter of Transmittal), they shall be cancelled and exchanged for the Merger
Consideration as provided in this Section 2.3.
SECTION 2.4 CERTAIN ADJUSTMENTS. If, after the date hereof and prior to
the Effective Time and to the extent permitted by this Agreement, the
outstanding shares of
Parent Common Stock, Company Common Stock or Company Preferred Stock shall be
changed into a different number, class or series of shares by reason of any
reclassification, recapitalization or combination, forward stock split, reverse
stock split, stock dividend or rights issued in respect of such stock, or any
similar event shall occur (any such action, an "ADJUSTMENT EVENT"), the Merger
Consideration shall be adjusted correspondingly to provide to the holders of
Company Common Stock or Company Preferred Stock, as the case may be, the right
to receive shares of Parent Common Stock and/or Parent Series A Preferred stock
having the same economic value as contemplated by this Agreement immediately
prior to such Adjustment Event and Parent's payment obligations likewise shall
be correspondingly adjusted such that it shall be required to pay and deliver
not more than the aggregate Merger Consideration contemplated by this Agreement.
SECTION 2.5 SHARES OF DISSENTING SHAREHOLDERS. Notwithstanding anything
in this Agreement to the contrary, any shares of Company Common Stock or Company
Preferred Stock that are outstanding as of the Effective Time and that are held
by a shareholder who has properly exercised his appraisal rights under Section
262 of the DGCL (the "DISSENTING SHARES") shall not be converted into the right
to receive the Merger Consideration; PROVIDED, HOWEVER, if any such holder shall
have failed to perfect or shall have effectively withdrawn or lost his right to
dissent from the Merger under the DGCL and to receive such consideration as may
be determined to be due with respect to such Dissenting Shares pursuant to and
subject to the requirements of the DGCL, each share of such holder's Company
Common Stock or Company Preferred Stock, as the case may be, thereupon shall be
deemed to have been converted into and to have become, as of the Effective Time,
the right to receive, without any interest thereon, the Merger Consideration in
accordance with Article II. The Company shall give Parent prompt written notice
of (i) all demands for appraisal or payment for shares of Company Common Stock
received by the Company prior to the Effective Time in accordance with the DGCL,
and (ii) any settlement or offer to settle any such demands.
SECTION 2.6 STOCK OPTIONS.
(a) At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (a "COMPANY STOCK OPTION") shall be
automatically amended to constitute an option to acquire such Common Stock
Merger Consideration as the holder of such Company Stock Option would have been
entitled to receive in the Merger had such holder exercised such Company Stock
Option in full immediately prior to the Effective Time; PROVIDED, HOWEVER, that
with respect to any Company Stock Option which is an incentive stock option (an
"ISO") within the meaning of Section 422A of the Internal Revenue Code of 1986,
as amended (the "CODE"), the determination of the exercise price, number of
shares purchasable and terms and conditions of vesting shall in all respects
comply with Section 424(a) of the Code; PROVIDED, FURTHER, that it is intended
in all events for each such Company Stock Option which is an ISO to be treated
in such a manner as to preserve such treatment.
(b) As promptly as practicable after the Effective Time,
Parent shall deliver to each holder of a Company Stock Option a notice that
accurately reflects the changes to such options as contemplated by subsection
(a) of this Section 2.6.
(c) Parent shall take all corporate actions necessary to
reserve for issuance such number of shares of Parent Common Stock as will be
necessary to satisfy exercises in full or after the Effective Time all Company
Stock Options which, as of the Effective Time, became options to acquire Common
Stock Merger Consideration. Parent shall also use its best efforts to ensure
that all ISO's continue to qualify as such at all times after the Effective
Time.
SECTION 2.7 WARRANTS.
(a) At the Effective Time, each outstanding warrant to
purchase shares of Company Common Stock (a "COMPANY COMMON WARRANT") set forth
on Section 2.7 of the Company Disclosure Schedule hereof shall be automatically
amended to constitute a warrant to acquire such Common Stock Merger
Consideration as the holder of such Company Common Warrants would have been
entitled to receive in the Merger had such holder exercised such Company Common
Warrant in full immediately prior to the Effective Time.
(b) At the Effective Time, each outstanding warrant to
purchase shares of Company Series C Preferred Stock (a "COMPANY PREFERRED STOCK
WARRANT") and, together with the Company Common Warrants, the "COMPANY
WARRANTS") set forth on Section 2.7 of the Company Disclosure Schedule hereof
shall be automatically amended to constitute a warrant to acquire ninety six and
five thousand seven hundred seventy four ten-thousandths (96.5774) shares of
Parent Series A Preferred Stock, subject to adjustment pursuant to Section 2.4
hereof for every one share into which such Company Preferred Stock Warrant was
exercisable as of immediately prior to the Effective Time.
(c) As promptly as practicable after the Effective Time,
Parent shall deliver to each holder of a Company Warrant a notice that
accurately reflects the Merger Consideration each such holder is entitled to
receive upon the exercise of such holder's Company Warrant.
(d) Parent shall take all corporate actions necessary to
reserve for issuance such number of shares of Parent Common Stock and Parent
Series A Preferred Stock as will be necessary to satisfy exercises in full after
the Effective Time of all Company Warrants which, as of the Effective Time,
became warrants to acquire Common Stock Merger Consideration or Preferred Stock
Merger Consideration.
SECTION 2.8 TAX-FREE REORGANIZATION. The Merger is intended to qualify
as a reorganization described in Section 368(a)(1)(B) of the Code, and the
parties hereto agree not take any action which could result in the Merger
failing to so qualify. The parties hereto further agree to report the Merger for
all purposes as a reorganization under Section 368 of the Code, and that this
Agreement is intended to be a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule delivered by the Company
to Parent prior to the execution of this Agreement which hereby is incorporated
by reference in and constitutes an integral part of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE"), the Company hereby represents and warrants to Parent and
Merger Sub as follows:
SECTION 3.1 ORGANIZATION, STANDING AND CORPORATE POWER.
(a) Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as presently being conducted. Each of the Company and its
subsidiaries is duly qualified or licensed to conduct business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing individually or in the aggregate
would not reasonably be expected to have a material adverse effect on the
Company.
(b) The Company has delivered or made available to Parent
prior to the execution of this Agreement complete and correct copies of the
certificate of incorporation and by-laws of the Company and its subsidiaries,
each as in effect at the date of this Agreement.
SECTION 3.2 SUBSIDIARIES. Section 3.2 of the Company Disclosure Schedule
lists the names and jurisdiction of incorporation or organization of all the
subsidiaries of the Company, whether consolidated or unconsolidated. The
outstanding securities of the subsidiaries of Company are set forth in Section
3.2 of the Company Disclosure Schedules and all outstanding shares of capital
stock of, or other equity interests in, each such subsidiary: (i) have been duly
authorized, validly issued and are fully paid and nonassessable and (ii) are
owned directly or indirectly by Company, free and clear of all Liens. Except as
set forth above or in Section 3.2 of the Company Disclosure Schedule,
the Company does not own, directly or indirectly, any capital stock of or other
equity or voting interests in any person.
SECTION 3.3 CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock, 50,000 shares of
Company Series A Preferred Stock, 650,000 shares of Company Series B Preferred
Stock, 24,500 shares of Company Series C Preferred Stock, and 5,000,000 shares
of undesignated preferred stock, $.01 par value ("COMPANY UNDESIGNATED PREFERRED
STOCK"). As of the date hereof:
(a) (i) 71,010,323 shares of Company Common Stock are issued
and outstanding; (ii) no shares of Company Common Stock are held by the Company
in its treasury and no shares of Company Common Stock are held by subsidiaries
of the Company; (iii) 10,669,553 shares of Company Common Stock were reserved
for issuance pursuant to any plans, agreements and arrangements providing for
equity-based compensation to any director, employee, consultant or independent
contractor of the Company or any of its subsidiaries (collectively, the "COMPANY
STOCK PLANS"), of which 7,657,829 shares are subject to outstanding Company
Stock Options and/or have been granted in the form of restricted stock or issued
upon exercise of options and (iv) 656,257 warrants to purchase shares of Company
Common Stock are issued and outstanding;
(b) (i) 50,000 shares of Company Series A Preferred
Stock are issued and outstanding, (ii) 650,000 shares of Company Series B
Preferred Stock are issued and outstanding, (iii) 22,109 shares of Company
Series C Preferred Stock are issued and outstanding, and (iv) warrants to
purchase 342 shares of Company Series C Preferred Stock are issued and
outstanding;
(c) The Company has delivered to Parent a true and complete
list, as of the close of business on the date hereof, of all outstanding Company
Stock Options, the number of shares subject to each such Company Stock Option,
the grant date, exercise price, term and vesting schedule of each such Company
Stock Option and the names of the holders thereof.
(d) Except as set forth on Section 3.3 of the Company
Disclosure Schedule, all outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable and
are not subject to preemptive rights created by statute, the Company's
Certificate of Incorporation (the "COMPANY CERTIFICATE OF INCORPORATION") or any
agreement to which the Company is a party or by which the Company may be bound.
Except as set forth in this Section and except for changes since the date of
this Agreement resulting from the exercise of Company Stock Options outstanding
on such date, there are outstanding (i) no shares of capital stock or other
voting securities of the Company, (ii) no securities of the Company convertible
into or exchangeable for shares of capital stock or voting securities of the
Company, and (iii) no options or other rights to acquire from the Company, and
no obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock of the Company.
SECTION 3.4 AUTHORITY; NONCONTRAVENTION.
(a) The Company has the corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. Except for any required approval by the Company's
shareholders in connection with the consummation of the Merger, all corporate
acts and proceedings required to be taken by or on the part of the Company to
authorize the Company to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby have been duly and validly
taken. This Agreement constitutes a valid and binding agreement of the Company.
(b) The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, conflict
with or result in a violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation under (i) any provision of the Company
Certificate of Incorporation, (ii) any material loan or credit agreement, note,
mortgage, indenture, lease or other material agreement or (iii) material
instrument, permit, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or its properties or assets.
(c) The execution, delivery and performance by the Company
of this Agreement and the consummation of the Merger by the Company require no
consent, approval, order or authorization of, action by or in respect of, or
registration or filing with, any governmental body, court, agency, official or
authority (each, a "GOVERNMENTAL ENTITY", collectively "GOVERNMENT ENTITIES")
other than the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware.
(d) The execution and delivery of this Agreement and the
consummation of the Merger will not result in the creation of any pledges,
claims, liens, charges, encumbrances, adverse claims, mortgages and security
interests of any kind or nature whatsoever (collectively, "LIENS") upon any
asset of the Company.
(e) Except as set forth in Section 3.4(e) of the Company
Disclosure Schedule, no consent, approval, waiver or other action by any person
(other than the Governmental Entities referred to in (c) above) under any
Company Material Contract is required or necessary for, or made necessary by
reason of, the execution, delivery and performance of this Agreement by the
Company or the consummation of the Merger.
SECTION 3.5 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) The Company has furnished to the Parent true, correct
and complete copies of: (i) audited balance sheet of the Company as of December
31, 2002 and unaudited balance sheets of the Company as of December 31, 2003 and
June 30, 2004 reviewed by the Company's independent accountants; (ii) an audited
income statement of the Company for the fiscal year ended December 31, 2002 and
unaudited income statements of the Company for the fiscal year ended December
31, 2003 and for the three (3) and six (6) month periods ended June 30, 2004
reviewed by the Company's independent accountants and (iii) an audited statement
of cash flows of the Company for the fiscal year ended December 31, 2002 and
unaudited statements of cash flows of the Company for the fiscal year ended
December 31, 2003 and for the three (3) and six (6) month periods ended June 30,
2004 reviewed by the Company's independent accountants (collectively, the
"Company Financial Statements"). The Company Financial Statements have been
prepared by the Company on the basis of the books and records maintained by the
Company in the ordinary course of business in a manner consistently used and
applied throughout the periods involved. The Company Financial Statements have
been prepared in accordance with generally accepted accounting principles
("GAAP") and fairly present in all material respects the financial condition of
the Company and its subsidiaries as at the respective dates thereof, except that
the Company's reviewed balance sheet as of June 30, 2004 and its income
statements and statements of cash flows for the three (3) and six (6) month
periods then ended do not contain footnotes and are subject to normal year end
adjustments in the ordinary course of business.
(b) Except for liabilities (i) set forth in Section 3.5 of
the Company Disclosure Schedule, (ii) reflected in the Company Financial
Statements or described in any notes thereto (or for which neither accrual nor
footnote disclosure is required pursuant to GAAP), or (ii) incurred in the
ordinary course of business, consistent with past practice or in connection with
this Agreement or the transactions contemplated hereby, neither the Company nor
any of its subsidiaries has any material liabilities or obligations of any
nature.
SECTION 3.6 MATERIAL CONTRACTS.
(a) Each Company Material Contract is valid and binding on
and enforceable against the Company (or, to the extent a subsidiary is a party,
such subsidiary) and, to the knowledge of the Company, each other party thereto
and is in full force and effect. Neither the Company nor any of its subsidiaries
is in breach or default under any Company Material Contract. Neither the Company
nor any of its subsidiaries knows of, and has not received notice of, any
violation or default under (nor, to the knowledge of the Company, does there
exist any condition which with the passage of time or the giving of notice or
both would result in such a violation or default under) any Company Material
Contract by any other party thereto. Prior to the date hereof, the Company has
made available to Parent true and complete copies of all Company Material
Contracts.
(b) As used in this Agreement, "COMPANY MATERIAL CONTRACTS"
shall mean any contract, license agreement, commitment, lease, or restriction of
any kind to which the Company is a party or by which the Company or any of its
subsidiaries is bound or to which any of the Company's or any of its
subsidiaries' assets are subject which involve payments to or from the Company
of at least $100,000.
SECTION 3.7 ABSENCE OF CERTAIN CHANGES. Except for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby, and
except as set forth in Section 3.7 of the Company Disclosure Schedule, (i) since
December 31, 2003, there has not been any material adverse change in the Company
or any of its subsidiaries or any event which either individually or when
aggregated with other event(s) has or reasonably would be expected to have a
material adverse effect on the Company or any of its subsidiaries taken as a
whole, and (ii) there are not, to the Company's knowledge, any facts,
circumstances or events that make it reasonably likely that the Company will not
be able to fulfill its obligations under this Agreement in all material
respects.
SECTION 3.8 PERMITS; COMPLIANCE WITH APPLICABLE LAWS.
(a) The Company and its subsidiaries own and/or possess all
material permits, licenses, variances, authorizations, exemptions, orders,
registrations and approvals of all Governmental Entities which are required for
the operation of the business of the Company and its subsidiaries (the
"PERMITS") as presently conducted. The Company and its subsidiaries is in
compliance in all material respects with the terms of the Permits and all the
Permits are in full force and effect and no suspension, modification or
revocation of any of them is pending or, to the knowledge of the Company,
threatened nor, to the knowledge of the Company, do grounds exist for any such
action.
(b) Each of the Company and its subsidiaries is in
compliance in all material respects with all applicable statutes, laws,
regulations, ordinances, Permits, rules, writs, judgments, orders, decrees and
arbitration awards of each Governmental Entity applicable to the Company or any
of its subsidiaries.
(c) Except for filings with respect to Taxes, which are the
subject of Section 3.10 and not covered by this Section 3.8(c), the Company and
each of its subsidiaries has timely filed all regulatory reports, schedules,
forms, registrations and other documents, together with any amendments required
to be made with respect thereto, that they were required to file with each
Governmental Entity (the "OTHER COMPANY DOCUMENTS"), and have timely paid all
fees and assessments, if any, due and payable in connection therewith, except
where the failure to make such payments and filings individually or in the
aggregate would not have a material adverse effect on the Company.
SECTION 3.9 ABSENCE OF LITIGATION. Section 3.9 of the Company Disclosure
Schedule contains a true and current summary description of each pending and, to
the Company's knowledge, threatened litigation, action, suit, case, proceeding,
investigation or arbitration. Except as set forth in Section 3.9 of the Company
Disclosure Schedule, no action, inquiry, demand, charge, requirement or
investigation by any Governmental Entity and no litigation, action, suit, case,
proceeding, investigation or arbitration by any person or Governmental Entity,
in each case with respect to the Company or any of its subsidiaries or any of
their respective properties or Permits, is pending or, to the knowledge of the
Company, threatened.
SECTION 3.10 TAX MATTERS.
(a) Each of the Company and its subsidiaries has (i) filed
with the appropriate Governmental Entities all United States federal income and
other material Tax Returns required to be filed by it (giving effect to all
extensions) and such Tax Returns are true, correct and complete in all material
respects; (ii) paid in full all United States federal income and other material
Taxes required to have been paid by it; and (iii) made adequate provision for
all accrued Taxes not yet due. The accruals and provisions for Taxes reflected
in the Company Financial Statements are adequate in accordance with GAAP for all
Taxes accrued or accruable through the date of such statements.
(b) As of the date of this Agreement, no Federal, state,
local or foreign audits or other administrative proceedings or court proceedings
are presently pending with regard to any Taxes or Tax Returns of the Company or
any of its subsidiaries, and neither the Company nor any of its subsidiaries has
received a written notice of any material pending or proposed claims, audits or
proceedings with respect to Taxes.
(c) No deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been proposed, asserted,
or assessed in writing by any Governmental Entity against, or with respect to,
the Company or any of its subsidiaries. There is no action, suit or audit now in
progress, pending or, to the knowledge of the Company, threatened against or
with respect to the Company or any of its subsidiaries with respect to any
material Tax.
(d) Neither the Company nor any of its subsidiaries has been
included in any "consolidated," "unitary" or "combined" Tax Return (other than
Tax Returns which include only the Company) provided for under the laws of the
United States, any foreign jurisdiction or any state or locality with respect to
Taxes for any taxable year.
(e) No election under Section 341(f) of the Code has been
made by the Company or any of its subsidiaries.
(f) No claim has been made in writing by any Governmental
Entities in a jurisdiction where the Company or any of its subsidiaries does not
file Tax Returns that the Company is, or may be, subject to taxation by that
jurisdiction.
(g) Each of the Company and its subsidiaries has made
available to Parent correct and complete copies of (i) all of its material Tax
Returns filed within the past three (3) years, (ii) all audit reports, letter
rulings, technical advice memoranda and similar documents issued by a
Governmental Entity within the past three (3) years relating to the Federal,
state, local or foreign Taxes due from or with respect to the Company or any of
its subsidiaries, and (iii) any closing letters or agreements entered into by
the Company with any Governmental Entities within the past three (3) years with
respect to Taxes.
(h) Neither the Company nor any of its subsidiaries has
received any notice of deficiency or assessment from any Governmental Entity for
any amount of Tax that has not been fully settled or satisfied, and to the
knowledge of the Company, no such deficiency or assessment is proposed.
(i) For purposes of this Agreement:
(i) "TAX" or "TAXES" shall mean shall mean all
federal, state, county, local, foreign and other taxes of any kind
whatsoever (including, without limitation, income, profits, premium,
excise, sales, use, occupancy, gross receipts, franchise, ad valorem,
severance, capital levy, production, transfer, license, stamp,
environmental, withholding, employment, unemployment compensation,
payroll related and property taxes, import duties and other governmental
charges and assessments), whether or not measured in whole or in part by
net income, and including deficiencies, interest, additions to tax or
interest, and penalties with respect thereto, and including expenses
associated with contesting any proposed adjustment related to any of the
foregoing.
(ii) "TAX RETURN" shall mean any return, information
report or filing with respect to Taxes, including any schedules attached
thereto and including any amendments thereof.
SECTION 3.11 EMPLOYEE BENEFIT PLANS.
(a) Section 3.11 of the Company Disclosure Schedule contains
a true and complete list of all pension, stock option, stock purchase, benefit,
welfare, profit-sharing, retirement, disability, vacation, severance,
hospitalization, insurance, incentive, deferred compensation and other similar
fringe or employee benefit plans, funds, programs
or arrangements, whether written or oral, in each of the foregoing cases which
(i) covers, is maintained for the benefit of, or relates to any or all current
or former employees of the Company or any of its subsidiaries and any other
entity ("ERISA AFFILIATE") related to the Company under Section 414(b), (c), (m)
and (o) of the Code and (ii) is not a "multiemployer plan" as defined in Section
3(37) or Section 4001(a)(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Section 414 of the Code (the "EMPLOYEE PLANS").
Section 3.11 of the Company Disclosure Schedule identifies and includes but is
not limited to, each of the Employee Plans that is subject to Section 302 or
Title IV of ERISA or Section 412 of the Code. Neither the Company, any of its
subsidiaries nor any ERISA Affiliate of the Company or any of its subsidiaries
has any commitment or formal plan, whether or not legally binding, to create any
additional employee benefit plan or modify or change any existing Employee Plan
other than as may be required by the express terms of such Employee Plan or
applicable law.
(b) With respect to each Employee Plan that has been
qualified or is intended to be qualified under the Code or that is an "Employee
Benefit Plan" within the meaning of Section 3.3 of ERISA, such Employee Plan has
been duly approved and adopted by all necessary and appropriate action of the
Board of Directors of the Company (or a duly constituted committee thereof).
(c) With respect to the Employee Plans, all required
contributions for all periods ending before the Closing Date have been or will
be paid in full by the Closing Date. Subject only to normal retrospective
adjustments in the ordinary course, all required insurance premiums have been or
will be paid in full with regard to such Employee Plans for policy years or
other applicable policy periods ending on or before the Closing Date by the
Closing Date. As of the date hereof, none of the Employee Plans has unfunded
benefit liabilities, as defined in Section 4001(a)(16) of ERISA.
(d) The Company has no "multi-employer plans," as defined in
Section 3(37) or Section 4001(a)(3) of ERISA or Section 414 ("MULTI-EMPLOYER
PLANS"), and never has had any such plans.
(e) With respect to each Employee Plan (i) no prohibited
transactions as defined in Section 406 of ERISA or Section 4975 of the Code have
occurred or are expected to occur as a result of the Merger or the transactions
contemplated by this Agreement, (ii) no action, suit, grievance, arbitration or
other type of litigation, or claim with respect to the assets of any Employee
Plan (other than routine claims for benefits made in the ordinary course of plan
administration for which plan administrative review procedures have not been
exhausted) is pending or, to the knowledge of the Company, threatened or
imminent against the Company, any ERISA Affiliate or any fiduciary, as such term
is defined in Section 3(21) of ERISA ("FIDUCIARY"), including, but not limited
to, any action, suit, grievance, arbitration or other type of litigation, or
claim regarding conduct that allegedly interferes with the attainment of rights
under any Employee Plan. To the knowledge of the Company, neither the Company,
nor its directors, officers,
employees or any Fiduciary has any liability for failure to comply with ERISA or
the Code for any action or failure to act in connection with the administration
or investment of such plan. None of the Employee Plans is subject to any pending
investigations or to the knowledge of the Company threatened investigations from
any Governmental Agencies who enforce applicable laws under ERISA and the Code.
(f) Each of the Employee Plans is, and has been, operated in
accordance with its terms and each of the Employee Plans, and administration
thereof, is, and has been, in all material respects in compliance with the
requirements of any and all applicable statutes, orders or governmental rules or
regulations currently in effect, including, but not limited to, ERISA and the
Code. All required reports and descriptions of the Employee Plans (including but
not limited to Form 5500 Annual Reports, Form 1024 Application for Recognition
of Exemption Under Section 501(a), Summary Annual Reports and Summary Plan
Descriptions) have been timely filed and distributed as required by ERISA and
the Code. Any notices required by ERISA or the Code or any other state or
federal law or any ruling or regulation of any state or federal administrative
agency with respect to the Employee Plans, including but not limited to any
notices required by Section 4980B of the Code, have been appropriately given.
(g) The Internal Revenue Service (the "IRS") has issued a
favorable determination letter or opinion letter with respect to each Employee
Plan intended to be "qualified" within the meaning of Section 401(a) of the Code
that has not been revoked and, to the knowledge of the Company, no circumstances
exist that could adversely affect the qualified status of any such plan and the
exemption under Section 501(a) of the Code of the trust maintained thereunder.
Each Employee Plan intended to satisfy the requirements of Section 125,
501(c)(9) or 501(c)(17) of the Code has satisfied such requirements in all
material respects.
(h) With respect to each Employee Plan to which the Company
or any ERISA Affiliate made, or was required to make, contributions on behalf of
any employee during the five-year period ending on the last day of the most
recent plan year end prior to the Closing Date, (i) no liability under Title IV
or Section 302 of ERISA has been incurred by the Company or any ERISA Affiliate
that has not been satisfied in full, and (ii) to the knowledge of the Company,
no condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability and (iii) the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan did not exceed, as of its latest valuation date, the
then current value of the assets of such plan allocable to such accrued
benefits. No Employee Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recently
ended fiscal year.
(i) Except as set forth in Section 3.11 of the Company
Disclosure Schedule, no Employee Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees for periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by Section 4980B of the Code, Section
601 of ERISA or other applicable law, (ii) death benefits under any "pension
plan," (iii) benefits the full cost of which is borne by the employee (or his
beneficiary) or (iv) Employee Plans that can be amended or terminated by the
Company without consent. The Company does not have any current or projected
liability with respect to post-employment or post-retirement welfare benefits
for retired, former, or current employees of the Company.
(j) No material amounts payable under the Employee Plans
will fail to be deductible for Federal income tax purposes by virtue of Section
162(m) of the Code.
(k) To the extent that the Company is deemed to be a
fiduciary with respect to any Plan that is subject to ERISA, the Company (i)
during the past five years has complied with the requirements of ERISA and the
Code in the performance of its duties and responsibilities with respect to such
employee benefit plan and (ii) has not knowingly caused any of the trusts for
which it serves as an investment manager, as defined in Section 3(38) of ERISA,
to enter into any transaction that would constitute a "prohibited transaction"
under Section 406 of ERISA or Section 4975 of the Code, with respect to any such
trusts, except for transactions that are the subject of a statutory or
administrative exemption.
(l) No person will be entitled to a "gross up" or other
similar payment in respect of excise taxes under Section 4999 of the Code with
respect to the transactions contemplated by this Agreement.
(m) None of the Employee Plans have been completely or
partially terminated and none has been the subject of a "reportable event" as
that term is defined in Section 4043 of ERISA. No amendment has been adopted
which would require the Company or any ERISA Affiliate to provide security
pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code.
SECTION 3.12 LABOR MATTERS.
(a) With respect to employees of the Company or its
subsidiaries: (i) to the knowledge of the Company, no senior executive or key
employee has any plans to terminate employment with the Company or any of its
subsidiaries; (ii) there is no unfair labor practice charge or complaint against
the Company pending or, to the knowledge of the Company, threatened before the
National Labor Relations Board or any other comparable Governmental Entity;
(iii) there is no demand for recognition made by any
labor organization or petition for election filed with the National Labor
Relations Board or any other comparable Governmental Entity; (iv) no grievance
or any arbitration proceeding arising out of or under collective bargaining
agreements is pending and, to the knowledge of Company, no claims therefor have
been threatened other than grievances or arbitrations incurred in the ordinary
course of business; (v) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby will not give
rise to termination of any existing collective bargaining agreement or permit
any labor organization to commence or initiate any negotiations in respect of
wages, hours, benefits, severance or working conditions under any such existing
collective bargaining agreements; and (vi) there is no litigation, arbitration
proceeding, governmental investigation, administrative charge, citation or
action of any kind pending or, to the knowledge of the Company, proposed or
threatened against the Company relating to employment, employment practices,
terms and conditions of employment or wages, benefits, severance and hours.
(b) Section 3.12(b) of the Company Disclosure Schedule lists
the name, title, date of employment and current annual salary of each current
salaried employee whose annual salary exceeds $100,000. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby will not (i) result in any payment (including severance,
unemployment compensation, tax gross-up, bonus or otherwise) becoming due to any
current or former director, employee or independent contractor of the Company or
any of its subsidiaries, from the Company or any of its subsidiaries under any
Employee Plan or other agreement, (ii) materially increase any benefits
otherwise payable under any Employee Plan or other agreement, or (iii) result in
the acceleration of the time of payment, exercise or vesting of any such
benefits.
(c) Section 3.12(c) of the Company Disclosure Schedule sets
forth all contracts, agreements, plans or arrangements covering any employee of
the Company or its subsidiaries containing "change of control," "stay-put,"
transition, retention, severance or similar provisions, and sets forth the names
and titles of all such employees, the amounts payable under such provisions,
whether such provisions would become payable as a result of the Merger and the
transactions contemplated by this Agreement, and when such amounts would be
payable to such employees, all of which are in writing, have heretofore been
duly approved by the Company's Board of Directors, and true and complete copies
of all of which have heretofore been delivered to Parent. There is no contract,
agreement, plan or arrangement (oral or written) covering any employee of the
Company that individually or collectively could give rise to the payment of any
amount that would not be deductible pursuant to the terms of Section 280G of the
Code.
SECTION 3.13 ENVIRONMENTAL MATTERS. Except for such matters which would
not, individually or in the aggregate, reasonably be expected to result in a
material adverse effect on the Company or are listed in Section 3.13 of the
Company Disclosure Schedule:
(a) COMPLIANCE. (i) The Company and its subsidiaries are in
compliance in all material respects with all applicable Environmental Laws; (ii)
neither the Company nor any of its subsidiaries has received any written
communication from any person or governmental entity that alleges that the
Company or any of its subsidiaries is not in compliance with applicable
Environmental Laws; and (iii) there have not been any Releases of Hazardous
Substances by the Company or any of its subsidiaries, or, by any other party, at
any property currently or formerly owned or operated by the Company or any of
its subsidiaries that occurred during the period of the Company's or any of its
subsidiaries' ownership or operation of such property.
(b) ENVIRONMENTAL PERMITS. The Company and its subsidiaries
have all Environmental Permits necessary for the conduct and operation of its
business, and all such permits are in good standing or, where applicable, a
renewal application has been timely filed and is pending agency approval, and
the Company or its subsidiaries are in compliance with all terms and conditions
of all such Environmental Permits and is not required to make any expenditure in
order to obtain or renew any Environmental Permits.
(c) ENVIRONMENTAL CLAIMS. There are no Environmental Claims
pending or, to the Company's knowledge, threatened, against the Company, or
against any real or personal property or operation that the Company owns, leases
or manages.
(d) As used in this Agreement:
(i) "ENVIRONMENTAL LAWS" shall mean any and all
binding and applicable local, municipal, state, federal or international
law, statute, treaty, directive, decision, judgment, award, regulation,
decree, rule, code of practice, guidance, order, direction, consent,
authorization, permit or similar requirement, approval or standard
concerning (A) occupational, consumer and/or public health and safety,
and/or (B) environmental matters (including clean-up standards and
practices), with respect to buildings, equipment, soil, sub-surface
strata, air, surface water, or ground water, whether set forth in
applicable law or applied in practice, whether to facilities such as
those of the Company Properties in the jurisdictions in which the
Company Properties are located or to facilities such as those used for
the transportation, storage or disposal of Hazardous Substances
generated by the Company or otherwise.
(ii) "ENVIRONMENTAL PERMITS" shall mean Permits
required by Environmental Laws.
(iii) "HAZARDOUS SUBSTANCES" shall mean any and all
dangerous substances, hazardous substances, toxic substances,
radioactive substances, hazardous wastes, special wastes, controlled
wastes, oils, petroleum and petroleum products, hazardous chemicals and
any other materials which are regulated by the Environmental Laws or
otherwise found or determined to be potentially harmful to human health
or the environment.
(iv) "RELEASE" shall mean any spilling, leaking,
pumping, emitting, emptying, discharging, injecting, escaping, leaching,
migrating, dumping or disposing of Hazardous Substances (including the
abandonment or discarding of barrels, containers or other closed
receptacles containing Hazardous Substances) into the environment.
SECTION 3.14 INTELLECTUAL PROPERTY.
(a) Section 3.14(a) of the Company Disclosure Schedule sets
forth, for the Intellectual Property (as defined below) owned or purported to be
owned by the Company or any of its subsidiaries, a complete and accurate list of
all U.S. and foreign (i) patents and patent applications, (ii) trademarks and
service marks which are registered or the subject of an application for
registration and material unregistered trademarks or service marks , (iii)
copyrights which are registered or the subject of an application for
registration, and (iv) Internet domain names. The Company or one of its
subsidiaries owns or has the valid right to use all patents and patent
applications, patent rights, trademarks, service marks, trademark or service
xxxx registrations and applications, trade names, logos, designs, Internet
domain names, slogans and general intangibles of like nature, together with all
goodwill related to the foregoing, copyrights, copyright registrations, renewals
and applications, Software (as defined below), technology, inventions,
discoveries, trade secrets and other confidential information, know-how,
proprietary processes, designs, processes, techniques, formulae, algorithms,
models and methodologies, licenses, and all other proprietary rights
(collectively, the "INTELLECTUAL PROPERTY") that it owns or purports to own or
is licensed to Company in a manner sufficient for the conduct of the business of
the Company as it currently is conducted. "SOFTWARE" means any and all (i)
computer programs, including any and all software implementations of algorithms,
models and methodologies, whether in source code or object code, (ii) databases
and compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing, (iv)
the technology supporting and content contained on any owned or operated
Internet site(s), and (v) all documentation, including user manuals and training
materials, relating to any of the foregoing.
(b) All of the Intellectual Property owned or purported to
be owned by the Company or any of its subsidiaries is free and clear of all
Liens. The Company or one of its subsidiaries is listed in the records of the
appropriate United States, state or foreign agency as, the sole owner of record
for each patent and patent application and trademark, service xxxx and copyright
which is registered or the subject of an application for registration that is
listed in Section 3.14(a) of the Company Disclosure Schedule.
(c) All of the patents, patent applications, trademarks,
service marks and copyrights owned or purported to be owned by Company which
have been issued by, or registered or the subject of an application filed with,
as applicable, the U.S. Patent and Trademark Office, the U.S. Copyright Office
or in any similar office or agency anywhere in the world, including, but not
limited to the items listed in Section 3.14(a) of the Company Disclosure
Schedule are subsisting, enforceable, in full force and effect, and have not
been cancelled, expired, abandoned or otherwise terminated and all renewal fees
in respect thereof have been duly paid and are currently in compliance with all
formal legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications) and are, to the
Company's knowledge, valid. There is no pending or, to the Company's knowledge,
threatened opposition, interference, invalidation or cancellation proceeding
before any court or registration authority in any jurisdiction against any of
the items listed in Section 3.14(a) of the Company Disclosure Schedule or, to
the Company's knowledge, against any other Intellectual Property used by the
Company or its subsidiaries.
(d) The conduct of the Company's or each of its
subsidiaries' business as currently conducted does not infringe upon (either
directly or indirectly such as through contributory infringement or inducement
to infringe), dilute, misappropriate or otherwise violate (i) any Intellectual
Property owned or controlled by any third party ("THIRD PARTY RIGHTS"), other
than the rights of any third party under any patent, or (ii) to the Company's
knowledge, the rights of any third party under any patent. There are no pending,
or, to the knowledge of the Company, threatened claims against the Company or
any of its subsidiaries alleging that the operation of the business as currently
conducted, infringes on or conflicts with any Third Party Rights.
(e) To the Company's knowledge, no third party is
misappropriating, infringing, diluting, or violating any Intellectual Property
owned or purported to be owned by or licensed to or by the Company or its
subsidiaries and no such claims have been made against a third party by the
Company or any of its subsidiaries.
(f) Each material item of Software, which is used by the
Company or any of its subsidiaries in connection with the operation of its
business as currently conducted, is either (i) owned by the Company or any of
its subsidiaries, (ii) currently in the public domain or otherwise available to
the Company without the need of a license, lease or consent of any third party,
or (iii) used under rights granted to the Company or any of its subsidiaries
pursuant to a written agreement, license or lease from a third party.
(g) Section 3.14(g) of Company Disclosure Schedule sets
forth a complete list of all agreements under which the Company or any of its
subsidiaries is granted rights to acquire or use the Intellectual Property of a
third party (other than shrink-wrap general purpose software) (the "COMPANY IP
AGREEMENTS"). Except as set forth in Section 3.14(g) of Company Disclosure
Schedule, the Company is not under any obligation to pay royalties or other
payments in connection with any Company IP Agreement, nor restricted from
assigning its rights respecting Intellectual Property nor will the Company
otherwise be, as a result of the execution and delivery of this Agreement or the
performance of its obligations under this Agreement, in breach of any Company IP
Agreement. Each Company IP Agreement is in full force and effect and has not
been amended. Neither the Company nor, to the knowledge of the Company, any
other party thereto, is in default or breach under any such Company IP
Agreement. No event has occurred which, with the passage of time or the giving
of notice or both, would cause a breach of or default by the Company under any
of the Company IP Agreements and, to the knowledge of the Company, there is no
breach or anticipated breach by any other party to any Company IP Agreement.
(h) To the Company's knowledge, the Products do not
intentionally contain any "viruses", "time-bombs", "key-locks", or any other
devices intentionally created that could disrupt or interfere with the operation
of the Products or the integrity of the data, information or signals they
produce in a manner adverse to the Company, any of its subsidiaries or any
licensee or recipient.
(i) To the Company's knowledge, neither the Company nor any
of its subsidiaries has embedded any open source, copyleft or community source
code in any of its Products which are generally available or in development,
including but not limited to any libraries or code licensed under the GNU
General Public License, GNU Lesser General Public License or similar license
arrangement.
SECTION 3.15 INSURANCE MATTERS. The Company and its subsidiaries have
all material primary insurance providing insurance coverage that is customary in
amount and scope for other companies in the industry in which the Company and
its subsidiaries operate. All such policies are in full force and effect, all
premiums due and payable thereon have been paid and no written or oral notice of
cancellation or termination has been received and is outstanding.
SECTION 3.16 TRANSACTIONS WITH AFFILIATES. Except as set forth on
Section 3.16 of the Company Disclosure Schedule, there are no outstanding
amounts payable to or receivable from, or advances by the Company or any of its
subsidiaries to, and neither the Company nor any of its subsidiaries is
otherwise a creditor of or debtor to, or a party to any transaction or agreement
with, any stockholder, director, employee or affiliate of the Company or any of
its subsidiaries, other than (i) transactions or agreements with Parent or its
subsidiaries or their respective affiliates, stockholders, directors or
executive
officers, or (ii) as part of the normal and customary terms of such persons'
employment or service as a director with the Company or any of its subsidiaries.
SECTION 3.17 VOTING REQUIREMENTS. The affirmative vote (in person or by
duly authorized and valid proxy at a Company shareholders' meeting or by written
consent) of the holders of a majority of the outstanding shares of each of the
Company Common Stock, Company Series A Preferred Stock, Company Series B
Preferred Stock and Company Series C Preferred Stock in favor of the adoption of
this Agreement is the only vote of the holders of any class or series of the
Company's capital stock required by applicable law and the Company's
organizational instruments to duly effect such adoption.
SECTION 3.18 BROKERS. No broker, investment banker, financial advisor,
finder, consultant or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee, compensation or commission, however
and whenever payable, in connection with the Merger and the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
SECTION 3.19 REAL PROPERTY.
(a) Each of the Company and its subsidiaries has good and
marketable title in fee simple to all real properties owned by it and all
buildings, structures and other improvements located thereon and valid
leaseholds in all real estate leased by it, other than Company Permitted Liens.
Section 3.19(a) of the Company Disclosure Schedule sets forth a complete list of
all (i) real property owned by the Company or its subsidiaries as of the date
hereof and (ii) real property leased, subleased, or otherwise occupied or used
by the Company or any of its subsidiaries as lessee. With respect to each parcel
of real property leased, subleased, or otherwise occupied or used by the Company
or any of its subsidiaries as lessee: (i) the Company or the applicable
subsidiary has a valid leasehold interest or other right of use and occupancy,
free and clear of any Liens on such leasehold interest or other rights of use
and occupancy, or any covenants, easements or title defects known to or created
by the Company or the applicable subsidiary, except as do not materially affect
the occupancy or uses of such property. Each of the Company's and its
subsidiaries' agreement with respect to real property leased, subleased, or
otherwise occupied or used by the Company as lessee is in full force and effect
and has not been amended. Neither the Company or the applicable subsidiary nor,
to the knowledge of the Company or the applicable subsidiary, any other party
thereto, is in material default or material breach under any such agreement. No
event has occurred which, with the passage of time or the giving of notice or
both, would cause a breach of or default by the Company or the applicable
subsidiary under any of such agreement and, to the knowledge of the Company or
the applicable subsidiary, there is no breach or anticipated breach by any other
party to such agreements.
(b) As used in this Agreement, Company Permitted Liens shall
mean: (i) Any Lien reflected in Section 3.19(b)(i) of the Company Disclosure
Schedule, (ii) Liens for Taxes not yet due or delinquent or as to which there is
a good faith dispute and for which there are adequate provisions on the books
and records of the Company in accordance with GAAP, (iii) with respect to real
property, any Lien, encumbrance or other title defect which is not in a
liquidated amount (whether material or immaterial) and which does not,
individually or in the aggregate, interfere materially with the current use or
materially detract from the value or marketability of such property (assuming
its continued use in the manner in which it is currently used) and (iv) inchoate
materialmen's, mechanics', carriers', workmen's and repairmen's liens arising in
the ordinary course and not past due and payable or the payment of which is
being contested in good faith by appropriate proceedings.
SECTION 3.20 TANGIBLE PERSONAL PROPERTY. Except as would not materially
impair the Company and its operations, the machinery, equipment, furniture,
fixtures and other tangible personal property (the "Tangible Personal Property")
owned, leased or used by the Company or any of its subsidiaries is in the
aggregate sufficient and adequate to carry on business in all material respects
as presently conducted and is, in the aggregate and in all material respects, in
good operating condition and repair, normal wear and tear excepted. The Company
is in possession of and has good title to, or valid leasehold interests in or
valid rights under contract to use, the Tangible Personal Property material to
the Company, taken as a whole, free and clear of all Liens, other than Company
Permitted Liens.
SECTION 3.21 INVESTMENT COMPANY. Neither the Company nor or any of its
subsidiaries is an investment company required to be registered as an investment
company pursuant to the Investment Company Act.
SECTION 3.22 BOARD APPROVAL. Pursuant to meetings duly noticed and
convened in accordance with all applicable laws and at each of which a quorum
was present, the Board of Directors of the Company, after full and deliberate
consideration, unanimously (other than for directors who abstain) has (i) duly
approved this Agreement and resolved that the Merger and the transactions
contemplated hereby are fair to, advisable and in the best interests of the
Company's shareholders, (ii) resolved to unanimously recommend that the
Company's shareholders approve the Merger and the transactions contemplated
hereby and (iii) directed that the Merger be submitted for consideration by the
holders of Company Common Stock and Company Preferred Stock.
SECTION 3.23 BOOKS AND RECORDS. Each of the Company and its subsidiaries
maintains and has maintained accurate books and records reflecting its assets
and liabilities and accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth on the Disclosure Schedule delivered by Parent to
the Company prior to the execution of this Agreement which is incorporated by
reference in and constitutes an integral part of this Agreement (the "PARENT
DISCLOSURE SCHEDULE"), Parent hereby represents and warrants to the Company as
follows:
SECTION 4.1 ORGANIZATION, STANDING AND CORPORATE POWER.
(a) Each of Parent, its subsidiaries and Merger Sub is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has the
requisite corporate power and requisite authority to carry on its business as
presently being conducted. Each of Parent and its subsidiaries is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be in good
standing individually or in the aggregate would not reasonably be expected to
have a material adverse effect on Parent.
(b) Parent has delivered or made available to the Company
prior to the execution of this Agreement complete and correct copies of the
certificate of incorporation and by-laws or other organizational documents of
Parent, its subsidiaries and Merger Sub, each as in effect at the date of this
Agreement.
SECTION 4.2 SUBSIDIARIES.
(a) Section 4.2 of the Parent Disclosure Schedule lists the
names and jurisdiction of incorporation or organization of all the subsidiaries
of the Company, whether consolidated or unconsolidated. The outstanding
securities of the subsidiaries of Parent are set forth in Section 4.2 of the
Parent Disclosure Schedules and all outstanding shares of capital stock of, or
other equity interests in, each such subsidiary: (i) have been duly authorized,
validly issued and are fully paid and nonassessable and (ii) are owned directly
or indirectly by Parent, free and clear of all Liens. Except as set forth above
or in Section 4.2 of Parent Disclosure Schedule, the Parent does not own,
directly or indirectly, any capital stock of or other equity or voting interests
in any person.
(b) Merger Sub is a newly formed corporation with no
material assets or liabilities, except for liabilities arising under this
Agreement. Merger Sub will not conduct any business or activities other than the
issuance of its capital stock to Parent prior to the Merger.
SECTION 4.3 CAPITAL STRUCTURE.
(a) A) The authorized capital stock of Parent consists of
150,000,000 shares of common stock, $.001 par value (the "Parent Common Stock"),
and 5,000,000 shares of undesignated preferred stock, par value $.001 per share,
of Parent ("PARENT AUTHORIZED PREFERRED STOCK"). As of the date hereof: (i)
70,753,840 shares of Parent
Common Stock were issued and outstanding; (ii) 1,433,639 shares of Parent Common
Stock were held by Parent in its treasury; (iii) no shares of Parent Common
Stock were held by subsidiaries of Parent; (iv) approximately 6,167,645 shares
of Parent Common Stock were reserved for issuance pursuant to the stock-based
plans identified in Section 4.2 of the Parent Disclosure Schedule (such plans,
collectively, the "PARENT STOCK PLANS"), all of which are subject to outstanding
employee stock options or other rights to purchase or receive Parent Common
Stock granted under the Parent Stock Plans (collectively, "PARENT EMPLOYEE STOCK
OPTIONS"); (v) 9,107,143 shares of Parent Common Stock are reserved for issuance
pursuant to convertible notes and (vi) 17,237,696 shares of Parent Common Stock
were reserved for issuance pursuant to outstanding warrants.
(b) All outstanding shares of capital stock of Parent have
been, and all shares thereof which may be issued pursuant to this Agreement or
otherwise (including upon the conversion of the Parent Series A Preferred Stock)
will be, when issued, duly authorized and validly issued and are fully paid and
nonassessable and are not subject to preemptive rights created by statute, the
Parent's articles of incorporation or any agreement to which Parent is a party
or by which Parent may be bound. Except as set forth in this Section and except
for changes since the date of this Agreement resulting from the exercise of
Parent's employee stock options outstanding on such date, there are outstanding
(i) no shares of capital stock or other voting securities of Parent, (ii) no
securities of Parent convertible into or exchangeable for shares of capital
stock or voting securities of Parent, and (iii) no options or other rights to
acquire from Parent, and no obligation of Parent to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock of Parent.
(c) Parent has a sufficient number of duly authorized but
unissued shares of Parent Common Stock to issue the maximum number of such
shares contemplated by Article II of this Agreement as the Merger Consideration.
(d) Except as set forth on Section 4.3(d) of the Parent
Disclosure Schedule, no Person holds any registration rights in respect of
Parent's capital stock or other securities which have not been satisfied in full
as of the Closing.
(e) Section 4.3(e) of the Parent Disclosure Schedule sets
forth all of Parent's indebtedness for borrowed money that is, or may become,
convertible into Parent's capital stock and that is outstanding as of the
Closing.
SECTION 4.4 AUTHORITY; NONCONTRAVENTION.
(a) Parent and Merger Sub have the corporate power and
authority to execute, deliver and perform this Agreement and the other
agreements to be executed and delivered by Parent and/or Merger Sub in
connection herewith and to consummate the
transactions contemplated hereby and thereby. All corporate acts and proceedings
required to be taken by or on the part of Parent and Merger Sub to authorize
Parent and Merger Sub, as the case may be, to execute, deliver and perform this
Agreement and the other agreements to be executed and delivered by Parent and/or
Merger Sub in connection herewith and to consummate the transactions
contemplated hereby and thereby have been duly and validly taken. This Agreement
constitutes a valid and binding agreement, and the other agreements to be
executed and delivered by Parent and/or Merger Sub in connection herewith when
so executed and delivered will constitute valid and binding agreements, of
Parent and Merger Sub.
(b) The execution and delivery of this Agreement does not,
the execution and delivery of the other agreements to be executed and delivered
by Parent and/or Merger Sub in connection herewith, and the consummation of the
transactions contemplated hereby or thereby will not conflict with or result in
a violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation under (i) any provision of Parent's or Merger Sub's
articles/certificate of incorporation, (ii) any material loan or credit
agreement, note, mortgage, indenture, lease or other material agreement or (iii)
material instrument, permit, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or Merger Sub or their
properties or assets.
(c) The execution, delivery and performance by Parent and
Merger Sub of this Agreement and the other agreements to be executed and
delivered by Parent and/or Merger Sub in connection herewith and the
consummation of the Merger by Parent and Merger Sub requires no consent,
approval, order or authorization of, action by or in respect of, or registration
or filing with, any Governmental Entity other than (i) the filing of the
Certificate of Designation and the Certificate of Merger and with the Secretary
of State of the State of Delaware, and, with respect to Parent, (ii) compliance
with any applicable requirement of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"); (iii) compliance with the Securities Act; and (iv)
compliance with any state securities or blue sky laws.
(d) The execution and delivery of this Agreement and the
other agreements to be executed and delivered by Parent and/or Merger Sub in
connection herewith and the consummation of the Merger will not result in the
creation of any Lien upon any asset of Parent.
(e) Except as set forth in Section 4.4(e) of the Parent
Disclosure Schedule, no consent, approval, waiver or other action by any person
(other than the Government Entities referred to in (c) above) under any Parent
Material Contract is required or necessary for, or made necessary by reason of,
the execution, delivery and performance of this Agreement by Parent or the
consummation of the Merger.
SECTION 4.5 PARENT DOCUMENTS.
(a) As of their respective filing dates, (i) all reports
filed by Parent with the Securities and Exchange Commission (the "SEC") pursuant
to the Exchange Act (the "PARENT SEC DOCUMENTS") complied in all material
respects with the requirements of the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such Parent SEC
Documents, and (ii) no Parent SEC Documents, as of their respective dates
contained any untrue statement of a material fact or omitted, and no Parent SEC
Document filed subsequent to the date hereof will omit as of their respective
dates, to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of registration statements of the
Parent under the Securities Act, in light of the circumstances under which they
were made) not misleading.
(b) The financial statements of Parent included in the
Parent SEC Documents (including the related notes) complied as to form, as of
their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Quarterly Report
Form 10-Q of the SEC) applied on a consistent basis during the periods and at
the dates involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial condition of Parent and its subsidiaries at
the dates thereof and the consolidated results of operations and cash flows of
Parent and its subsidiaries for the periods then ended (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that were
not material in amount or effect). Except for liabilities (i) reflected in
Parent's unaudited balance sheet as of June 30, 2004 or described in any notes
thereto (or for which neither accrual nor footnote disclosure is required
pursuant to GAAP), (ii) incurred in the ordinary course of business since June
30, 2004 consistent with past practice or in connection with this Agreement or
the transactions contemplated hereby, or (iii) set forth on Schedule 4.5(b) of
the Parent Disclosure Schedule, neither Parent nor any of its subsidiaries has
any material liabilities or obligations of any nature.
SECTION 4.6 MATERIAL CONTRACTS.
(a) Each Parent Material Contract is valid and binding on
and enforceable against Parent (or, to the extent a subsidiary of Parent is a
party, such subsidiary) and, to the knowledge of Parent, each other party
thereto and is in full force and effect. Neither Parent nor any of its
subsidiaries is in breach or default under any Parent Material Contract. Neither
the Parent nor any subsidiary of the Parent knows of, or has received notice of,
any violation or default under (nor, to the knowledge of Parent, does there
exist any condition which with the passage of time or the giving of notice or
both would result in such a violation or default under) any Parent Material
Contract by any other party thereto. Prior to the date hereof, Parent has made
available to the Company true and complete copies of all Parent Material
Contracts.
(b) As used in this Agreement, "PARENT MATERIAL CONTRACTS"
shall mean any contract, license agreement, commitment, lease, or restriction of
any kind to which the Parent or any of its subsidiaries is a party or by which
the Parent or any of its subsidiaries is bound or to which any of the Parent's
or any of its subsidiaries' assets are subject which involve payments to or from
Parent of at least $100,000.
SECTION 4.7 ABSENCE OF CERTAIN CHANGES. Except for liabilities incurred
in connection with this Agreement or the transactions contemplated hereby, and
except as disclosed in the Parent SEC Documents filed and publicly available
prior to the date hereof, (i) since June 30, 2004, there has not been any
material adverse change in Parent or any event which either individually or when
aggregated with other event(s) has or reasonably would be expected to have a
material adverse effect on Parent and its subsidiaries taken as a whole, and
(ii) there are not, to Parent's knowledge, any facts, circumstances or events
that make it reasonably likely that Parent will not be able to fulfill its
obligations under this Agreement in all material respects.
SECTION 4.8 PERMITS; COMPLIANCE WITH APPLICABLE LAWS.
(a) Parent and its subsidiaries own and/or possess all
Permits which are required for the operation of the respective businesses of
Parent and its subsidiaries as presently conducted. Each of Parent and its
subsidiaries is in compliance in all material respects with the terms of the
Permits and all the Permits are in full force and effect and no suspension,
modification or revocation of any of them is pending or, to the knowledge of
Parent, threatened nor, to the knowledge of Parent, do grounds exist for any
such action.
(b) Each of Parent and its subsidiaries is in compliance in
all material respects with all applicable statutes, laws, regulations,
ordinances, permits, rules, writs, judgments, orders, decrees or arbitration
awards of any Governmental Entity applicable to Parent or its subsidiaries.
(c) Except for filings with the SEC and filings with respect
to Taxes, which are the subjects of Sections 4.5 and 4.10, respectively, and not
covered by this Section 4.8(c), the Parent and each of its subsidiaries have
timely filed all regulatory reports, schedules, forms, registrations and other
documents, together with any amendments required to be made with respect
thereto, that they were required to file with each Governmental Entity (the
"OTHER PARENT DOCUMENTS"), and have timely paid all fees and assessments due and
payable in connection therewith, except where the failure to make such payments
and filings individually or in the aggregate would not have a material adverse
effect on the Parent.
SECTION 4.9 ABSENCE OF LITIGATION. Section 4.9 of Parent Disclosure
Schedule contains a true and current summary description of each pending and, to
Parent's knowledge, threatened litigation, action, suit, case, proceeding,
investigation or arbitration, the forum, the parties thereto, the subject matter
thereof and the amount of damages claimed or other remedies requested. Except as
set forth on Section 4.9 of the Parent Disclosure Schedule, no action, inquiry,
demand, charge, requirement or investigation by any Governmental Entity and no
litigation, action, suit, case, proceeding, investigation or arbitration by any
person or Governmental Entity, in each case with respect to Parent or any of its
subsidiaries or any of their respective properties or Permits, is pending or, to
the knowledge of Parent, threatened.
SECTION 4.10 TAX MATTERS.
(a) Each of the Parent and each of its subsidiaries has (i)
filed (or there have been filed on its behalf) with the appropriate Governmental
Entities all United States federal income and other material Tax Returns
required to be filed by it (giving effect to all extensions) and such Tax
Returns are true, correct and complete in all material respects; (ii) paid in
full (or there has been paid in full on its behalf) all income and other
material Taxes required to have been paid by it; and (iii) made adequate
provision (or adequate provision has been made on its behalf) for all accrued
Taxes not yet due. The accruals and provisions for Taxes reflected in the
Parent's audited consolidated balance sheet as of December 31, 2003 (and the
notes thereto) and the most recent quarterly financial statements (and the notes
thereto) are adequate in accordance with GAAP for all Taxes accrued or accruable
through the date of such statements.
(b) As of the date of this Agreement, no Federal, state,
local or foreign audits or other administrative proceedings or court proceedings
are presently pending with regard to any Taxes or Tax Returns of the Parent or
any of its subsidiaries, and neither the Parent nor any subsidiary of the Parent
has received a written notice of any material pending or proposed claims, audits
or proceedings with respect to Taxes.
(c) No deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been proposed, asserted,
or assessed by any Governmental Entity against, or with respect to, the Parent
or any of its subsidiaries. There is no action, suit or audit now in progress,
pending or, to the knowledge of Parent, threatened against or with respect to
the Parent or any of its subsidiaries with respect to any Tax.
(d) Neither the Parent nor any of its subsidiaries has been
included in any "consolidated," "unitary" or "combined" Tax Return (other than
Tax Returns which include only the Parent and any of its subsidiaries) provided
for under the laws of the United States, any foreign jurisdiction or any state
or locality with respect to Taxes for any taxable year.
(e) No election under Section 341(f) of the Code has been
made by Parent or any of its subsidiaries.
(f) No claim has been made in writing by any Governmental
Entities in a jurisdiction where Parent or any of its subsidiaries does not file
Tax Returns that any such entity is, or may be, subject to taxation by that
jurisdiction.
(g) Each of the Parent and each of its subsidiaries has made
available to the Company correct and complete copies of (i) all of their
material Tax Returns filed within the past six years, (ii) all audit reports,
letter rulings, technical advice memoranda and similar documents issued by a
Governmental Entity within the past five years relating to the Federal, state,
local or foreign Taxes due from or with respect to the Parent or any of its
subsidiaries, and (iii) any closing letters or agreements entered into by the
Parent or any of its subsidiaries with any Governmental Entities within the past
five years with respect to Taxes.
(h) Neither the Parent nor any of its subsidiaries has
received any notice of deficiency or assessment from any Governmental Entity for
any amount of Tax that has not been fully settled or satisfied, and to the
knowledge of the Parent and its subsidiaries no such deficiency or assessment is
proposed.
SECTION 4.11 EMPLOYEE BENEFIT PLANS.
(a) Section 4.11 of the Parent Disclosure Schedule contains
a true and complete list of all of Parent's and its subsidiaries' Employee
Plans. Neither Parent nor any ERISA Affiliate of Parent has any commitment or
formal plan, whether or not legally binding, to create any additional employee
benefit plan or modify or change any existing Employee Plan other than as may be
required by the express terms of such Employee Plan or applicable law.
(b) With respect to each Employee Plan that has been
qualified or is intended to be qualified under the Code or that is an "Employee
Benefit Plan" within the meaning of Section 3.3 of ERISA, such Employee Plan has
been duly approved and adopted by all necessary and appropriate action of the
Board of Directors of Parent (or a duly constituted committee thereof).
(c) With respect to the Employee Plans, all required
contributions for all periods ending before the Closing Date have been or will
be paid in full by the Closing Date. Subject only to normal retrospective
adjustments in the ordinary course, all required insurance premiums have been or
will be paid in full with regard to such Employee Plans
for policy years or other applicable policy periods ending on or before the
Closing Date by the Closing Date.
(d) The Parent does not have any Multi-Employer Plans or any
Employee Plans that are subject to Section 302 or Title IV of ERISA or Section
412 of the Code, nor has it ever had such plans.
(e) With respect to each Employee Plan (i) no prohibited
transactions as defined in Section 406 of ERISA or Section 4975 of the Code have
occurred or are expected to occur as a result of the Merger or the transactions
contemplated by this Agreement, (ii) except as set forth on Section 4.11(b) of
the Parent Disclosure Schedule, no action, suit, grievance, arbitration or other
type of litigation, or claim with respect to the assets of any Employee Plan
(other than routine claims for benefits made in the ordinary course of plan
administration for which plan administrative review procedures have not been
exhausted) is pending or, to the knowledge of Parent, threatened or imminent
against Parent, any ERISA Affiliate or any Fiduciary, including, but not limited
to, any action, suit, grievance, arbitration or other type of litigation, or
claim regarding conduct that allegedly interferes with the attainment of rights
under any Employee Plan. Except as set forth on Section 4.11(b) of the Parent
Disclosure Schedule, to the knowledge of Parent, neither Parent, nor its
directors, officers, employees or any Fiduciary has any liability for failure to
comply with ERISA or the Code for any action or failure to act in connection
with the administration or investment of such plan. Except as set forth on
Section 4.11(b) of the Parent Disclosure Schedule, none of the Employee Plans is
subject to any pending investigations or to the knowledge of Parent threatened
investigations from any Governmental Agencies who enforce applicable laws under
ERISA and the Code.
(f) Except as set forth on Section 4.11(f) of the Parent
Disclosure Schedule, each of the Employee Plans is, and has been, operated in
accordance with its terms and each of the Employee Plans, and administration
thereof, is, and has been, in all material respects in compliance with the
requirements of any and all applicable statutes, orders or governmental rules or
regulations currently in effect, including, but not limited to, ERISA and the
Code. All required reports and descriptions of the Employee Plans (including but
not limited to Form 5500 Annual Reports, Form 1024 Application for Recognition
of Exemption Under Section 501(a), Summary Annual Reports and Summary Plan
Descriptions) have been filed and distributed as required by ERISA and the Code.
Any notices required by ERISA or the Code or any other state or federal law or
any ruling or regulation of any state or federal administrative agency with
respect to the Employee Plans, including but not limited to any notices required
by Section 4980B of the Code, have been appropriately given.
(g) The IRS has issued a favorable determination letter or
opinion letter with respect to each Employee Plan intended to be "qualified"
within the meaning of Section 401(a) of the Code that has not been revoked and,
to the knowledge of the Company, no circumstances exist that could adversely
affect the qualified status of any
such plan and the exemption under Section 501(a) of the Code of the trust
maintained thereunder. Each Employee Plan intended to satisfy the requirements
of Section 125, 501(c)(9) or 501(c)(17) of the Code has satisfied such
requirements in all material respects.
(h) No Employee Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees for periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by Section 4980B of the Code, Section
601 of ERISA or other applicable law, (ii) death benefits under any "pension
plan," (iii) benefits the full cost of which is borne by the employee (or his
beneficiary) or (iv) Employee Plans that can be amended or terminated by Parent
without consent. Parent does not have any current or projected liability with
respect to post-employment or post-retirement welfare benefits for retired,
former, or current employees of Parent.
(i) No material amounts payable under the Employee Plans
will fail to be deductible for Federal income tax purposes by virtue of Section
162(m) of the Code.
(j) To the extent that Parent or any of its subsidiaries is
deemed to be a fiduciary with respect to any Plan that is subject to ERISA,
Parent or such subsidiary (i) during the past five years has complied with the
requirements of ERISA and the Code in the performance of its duties and
responsibilities with respect to such employee benefit plan and (ii) has not
knowingly caused any of the trusts for which it serves as an investment manager,
as defined in Section 3(38) of ERISA, to enter into any transaction that would
constitute a "prohibited transaction" under Section 406 of ERISA or Section 4975
of the Code, with respect to any such trusts, except for transactions that are
the subject of a statutory or administrative exemption.
(k) No person will be entitled to a "gross up" or other
similar payment in respect of excise taxes under Section 4999 of the Code with
respect to the transactions contemplated by this Agreement.
SECTION 4.12 LABOR MATTERS.
(a) With respect to employees of Parent and its
subsidiaries: (i) to the knowledge of Parent, no senior executive or key
employee has any plans to terminate employment with Parent or any of its
subsidiaries; (ii) there is no unfair labor practice charge or complaint against
Parent or any of its subsidiaries pending or, to the knowledge of Parent,
threatened before the National Labor Relations Board or any other comparable
Governmental Entity; (iii) there is no demand for recognition made by any labor
organization or petition for election filed with the National Labor Relations
Board or any other comparable Governmental Entity; (iv) no grievance or any
arbitration proceeding
arising out of or under collective bargaining agreements is pending and, to the
knowledge of Parent, no claims therefor have been threatened other than
grievances or arbitrations incurred in the ordinary course of business; (v) the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby will not give rise to termination
of any existing collective bargaining agreement or permit any labor organization
to commence or initiate any negotiations in respect of wages, hours, benefits,
severance or working conditions under any such existing collective bargaining
agreements; and (vi) there is no litigation, arbitration proceeding,
governmental investigation, administrative charge, citation or action of any
kind pending or, to the knowledge of Parent, proposed or threatened against
Parent relating to employment, employment practices, terms and conditions of
employment or wages, benefits, severance and hours.
(b) Section 4.12(b) of the Parent Disclosure Schedule lists
the name, title, date of employment and current annual salary of each current
salaried employee whose total annual salary exceeds $100,000. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby will not (i) result in any payment (including severance,
unemployment compensation, tax gross-up, bonus or otherwise) becoming due to any
current or former director, employee or independent contractor of Parent or any
of its subsidiaries, from Parent or any of its subsidiaries under any Employee
Plan or other agreement, (ii) materially increase any benefits otherwise payable
under any Employee Plan or other agreement, or (iii) result in the acceleration
of the time of payment, exercise or vesting of any such benefits.
(c) Section 4.12(c) of the Parent Disclosure Schedule sets
forth all contracts, agreements, plans or arrangements covering any employee of
Parent or its subsidiaries containing "change of control," "stay-put,"
transition, retention, severance or similar provisions, and sets forth the names
and titles of all such employees, the amounts payable under such provisions,
whether such provisions would become payable as a result of the Merger and the
transactions contemplated by this Agreement, and when such amounts would be
payable to such employees, all of which are in writing, have heretofore been
duly approved by the Parent's Board of Directors, and true and complete copies
of all of which have heretofore been delivered to the Company. There is no
contract, agreement, plan or arrangement (oral or written) covering any employee
of Parent that individually or collectively could give rise to the payment of
any amount that would not be deductible pursuant to the terms of Section 280G of
the Code.
SECTION 4.13 ENVIRONMENTAL MATTERS. Except for such matters which would
not, individually or in the aggregate, reasonably be expected to result in a
material adverse effect on the Parent or are set forth in Section 4.13 of the
Parent Disclosure Schedule:
(a) COMPLIANCE. (i) The Parent and its subsidiaries are in
compliance in all material respects with all applicable Environmental Laws; (ii)
neither the Parent nor
any of its subsidiaries has received any written communication from any person
or governmental entity that alleges that Parent or any of its subsidiaries are
not in compliance with applicable Environmental Laws; and (iii) there have not
been any Releases of Hazardous Substances by Parent or any of its subsidiaries,
or, by any other party, at any property currently or formerly owned or operated
by Parent or any of its subsidiaries that occurred during the period of Parent's
or any of its subsidiaries' ownership or operation of such property.
(b) ENVIRONMENTAL PERMITS. Parent and its subsidiaries have
all Environmental Permits necessary for the conduct and operation of its
business, and all such permits are in good standing or, where applicable, a
renewal application has been timely filed and is pending agency approval, and
Parent and its subsidiaries are in compliance with all terms and conditions of
all such Environmental Permits and are not required to make any expenditure in
order to obtain or renew any Environmental Perm
(c) ENVIRONMENTAL CLAIMS. There are no Environmental Claims
pending or, to Parent's knowledge, threatened, against Parent or any of its
subsidiaries, or against any real or personal property or operation that Parent
or any of its subsidiaries owns, leases or manages.
SECTION 4.14 INTELLECTUAL PROPERTY.
(a) Section 4.14(a) of Parent Disclosure Schedule sets
forth, for the Intellectual Property owned or purported to be owned by Parent or
any of its subsidiaries, a complete and accurate list of all U.S. and foreign
(i) patents and patent applications, (ii) trademarks and service marks which are
registered or the subject of an application for registration and material
unregistered trademarks or service marks , (iii) copyrights which are registered
or the subject of an application for registration, and (iv) Internet domain
names. Parent or one of its subsidiaries owns or has the valid right to use the
Intellectual Property, used in the business of Parent as it currently is
conducted.
(b) All of the Intellectual Property owned or purported to
be owned by Parent or any of its subsidiaries is free and clear of all Liens.
Parent or any of its subsidiaries (as applicable) is listed in the records of
the appropriate United States, state or foreign agency as, the sole owner of
record for each patent and patent application and trademark, service xxxx and
copyright which is registered or the subject of an application for registration
that is listed in Section 4.14(a) of Parent Disclosure Schedule.
(c) All of the patents, patent applications, trademarks,
service marks and copyrights owned or purported to be owned by Parent which have
been issued by, or registered or the subject of an application filed with, as
applicable, the U.S. Patent and Trademark Office, the U.S. Copyright Office or
in any similar office or agency anywhere
in the world, including, but not limited to the items listed in Section 4.14(a)
of Parent Disclosure Schedule are subsisting, enforceable, in full force and
effect, and have not been cancelled, expired, abandoned or otherwise terminated
and all renewal fees in respect thereof have been duly paid and are currently in
compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications) and are, to Parent's knowledge, valid. There is no pending or, to
Parent's knowledge, threatened opposition, interference, invalidation or
cancellation proceeding before any court or registration authority in any
jurisdiction against any of the items listed in Section 4.14(a) of Parent
Disclosure Schedule or, to Parent's knowledge, against any other Intellectual
Property used by Parent or its subsidiaries.
(d) The conduct of Parent's and its subsidiaries' business
as currently conducted does not infringe upon (either directly or indirectly
such as through contributory infringement or inducement to infringe), dilute,
misappropriate or otherwise violate (i) any Third Party Rights, other than the
rights of any third party under any patent, or (ii) to Parent's knowledge, the
rights of any third party under any patent. There are no pending, or, to the
knowledge of Parent, threatened claims against Parent or any of its subsidiaries
alleging that the operation of the business as currently conducted, infringes on
or conflicts with any Third Party Rights.
(e) To Parent's knowledge, no third party is
misappropriating, infringing, diluting, or violating any Intellectual Property
owned or purported to be owned by or licensed to or by Parent or any of its
subsidiaries and no such claims have been made against a third party by Parent
or any of its subsidiaries.
(f) Each material item of Software, which is used by Parent
or any of its subsidiaries in connection with the operation of their businesses
as currently conducted, is either (i) owned by Parent or any of its
subsidiaries, (ii) currently in the public domain or otherwise available to
Parent without the need of a license, lease or consent of any third party, or
(iii) used under rights granted to Parent or any of its subsidiaries pursuant to
a written agreement, license or lease from a third party.
(g) Section 4.14(g) of Parent Disclosure Schedule sets forth
a complete list of all agreements under which Parent is granted rights to
acquire or use the Intellectual Property of a third party (other than
shrink-wrap general purpose software) (the "PARENT IP AGREEMENTS"). Except as
set forth in Section 4.14(g) of Parent Disclosure Schedule, Parent is not under
any obligation to pay royalties or other payments in connection with any Parent
IP Agreement, nor restricted from assigning its rights respecting Intellectual
Property nor will Parent otherwise be, as a result of the execution and delivery
of this Agreement or the performance of its obligations under this Agreement, in
breach of any Parent IP Agreement. Each Parent IP Agreement is in full force and
effect and has not been amended. Neither Parent nor, to the knowledge of Parent,
any other party thereto, is in default or breach under any such Parent IP
Agreement. No event has
occurred which, with the passage of time or the giving of notice or both, would
cause a breach of or default by Parent under any of Parent IP Agreements and, to
the knowledge of Parent, there is no breach or anticipated breach by any other
party to any Parent IP Agreement.
(h) To Parent's knowledge, the Products do not intentionally
contain any "viruses", "time bombs", "key-locks", or any other devices
intentionally created that could disrupt or interfere with the operation of the
Products or the integrity of the data, information or signals they produce in a
manner adverse to Parent, any of its subsidiaries or any licensee or recipient.
(i) To Parent's knowledge, neither Parent nor any of its
subsidiaries has embedded any open source, copyleft or community source code in
any of its Products which are generally available or in development, including
but not limited to any libraries or code licensed under the GNU General Public
License, GNU Lesser General Public License or similar license arrangement.
SECTION 4.15 INSURANCE MATTERS. Parent and its subsidiaries have all
material primary insurance providing insurance coverage that is customary in
amount and scope for other companies in the industry in which Parent and its
subsidiaries operate including, without limitation, directors and officers
liability insurance. All such policies are in full force and effect, all
premiums due and payable thereon have been paid and no written or oral notice of
cancellation or termination has been received and is outstanding.
SECTION 4.16 TRANSACTIONS WITH AFFILIATES. Except as set forth on
Section 4.16 of the Parent Disclosure Schedule, there are no outstanding amounts
payable to or receivable from, or advances by the Parent or any of its
subsidiaries to, and neither the Parent nor any of its subsidiaries is otherwise
a creditor of or debtor to, or a party to any transaction or agreement with, any
stockholder, director, employee or affiliate of the Parent or any of its
subsidiaries, other than (i) Parent's outstanding indebtedness to the Company,
any of its stockholders, directors or executive officers, (ii) transactions or
agreements with the Company or any of its stockholders, directors or executive
officers, or (iii) as part of the normal and customary terms of such persons'
employment or service as a director with the Parent or any of its subsidiaries.
SECTION 4.17 VOTING REQUIREMENTS. No consent or approval of the holders
of the outstanding shares of Parent Common Stock or any other class of Parent
capital stock is required to approve the Merger and the transactions
contemplated by this Agreement under applicable law or the Parent's
organizational instruments.
SECTION 4.18 BROKERS. No broker, investment banker, financial advisor,
finder, consultant or other person is entitled to any broker's, finder's,
financial advisor's
or other similar fee, compensation or commission, however and whenever payable,
in connection with the Merger and the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.
SECTION 4.19 REAL PROPERTY.
(a) Each of Parent and its subsidiaries has good and
marketable title in fee simple to all real properties owned by it and all
buildings, structures and other improvements located thereon and valid
leaseholds in all real estate leased by it, other than Parent Permitted Liens.
Section 4.19 of the Parent Disclosure Schedule sets forth a complete list of all
(i) real property owned by Parent or its subsidiaries as of the date hereof; and
(ii) real property leased, subleased, or otherwise occupied or used by Parent
and its Subsidiaries as lessee. With respect to each parcel of real property
leased, subleased, or otherwise occupied or used by the Parent or any of its
Subsidiaries as lessee: (i) the Parent or the applicable subsidiary has a valid
leasehold interest or other right of use and occupancy, free and clear of any
Liens on such leasehold interest or other rights of use and occupancy, or any
covenants, easements or title defects known to or created by the Parent or the
applicable subsidiary, except as do not materially affect the occupancy or uses
of such property. Each of the Parent's and its subsidiaries' agreements with
respect to real property leased, subleased, or otherwise occupied or used by the
Parent as lessee is in full force and effect and has not been amended. Neither
the Parent or the applicable subsidiary nor, to the knowledge of the Parent or
the applicable subsidiary, any other party thereto, is in material default or
material breach under any such agreement. No event has occurred which, with the
passage of time or the giving of notice or both, would cause a breach of or
default by the Parent or the applicable subsidiary under any of such agreement
and, to the knowledge of the Parent or the applicable subsidiary, there is no
breach or anticipated breach by any other party to such agreements.
(b) As used in this Agreement, Parent Permitted Liens shall
mean: (i) any Lien reflected in Section 4.19(b)(i) of the Parent Disclosure
Schedule, (ii) Liens for Taxes not yet due or delinquent or as to which there is
a good faith dispute and for which there are adequate provisions on the books
and records of Parent in accordance with GAAP, (iii) with respect to real
property, any Lien, encumbrance or other title defect which is not in a
liquidated amount (whether material or immaterial) and which does not,
individually or in the aggregate, interfere materially with the current use or
materially detract from the value or marketability of such property (assuming
its continued use in the manner in which it is currently used) and (iv) inchoate
materialmen's, mechanics', carriers', workmen's and repairmen's liens arising in
the ordinary course and not past due and payable or the payment of which is
being contested in good faith by appropriate proceedings.
SECTION 4.20 TANGIBLE PERSONAL PROPERTY. Except as would not materially
impair Parent and its operations or the operations of its subsidiaries, the
Tangible Personal Property owned, leased or used by Parent or any of its
subsidiaries is in the
aggregate sufficient and adequate to carry on their respective businesses in all
material respects as presently conducted and is, in the aggregate and in all
material respects, in good operating condition and repair, normal wear and tear
excepted. Parent and its subsidiaries are in possession of and have good title
to, or valid leasehold interests in or valid rights under contract to use, the
Tangible Personal Property material to Parent and its subsidiaries, taken as a
whole, free and clear of all Liens, other than Parent Permitted Liens.
SECTION 4.21 INVESTMENT COMPANY. Neither Parent nor any of its
subsidiaries is an investment company required to be registered as an investment
company pursuant to the Investment Company Act.
SECTION 4.22 BOARD APPROVAL. Pursuant to meetings duly noticed and
convened in accordance with all applicable laws and at each of which a quorum
was present, the Board of Directors of Parent, after full and deliberate
consideration, unanimously (other than for directors who abstain) has duly
adopted this Agreement and resolved that the Merger and the transactions
contemplated hereby are fair to, advisable and in the best interests of Parent's
shareholders. The Board of Directors of Merger Sub unanimously has duly approved
this Agreement and has determined that the Merger is advisable.
SECTION 4.23 BOOKS AND RECORDS. Each of Parent and its subsidiaries
maintains and has maintained accurate books and records reflecting its assets
and liabilities and accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
SECTION 4.24 SARBANES OXLEY ACT COMPLIANCE. Parent is in compliance with
all presently effective and applicable provisions of the Sarbanes Oxley Act of
2002 (the "SARBANES OXLEY ACT") and is actively taking steps to ensure that it
will be in compliance with other provisions of the Sarbanes Oxley Act upon the
effectiveness or applicability to Parent of such provisions.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1 CONDUCT OF BUSINESS BY THE COMPANY. Except as required by
applicable law or regulation and except as otherwise contemplated by this
Agreement, until the earlier of the termination of this Agreement or the
Effective Time, the Company shall, and cause each of its subsidiaries to,
conduct its and their respective businesses in the ordinary course and
consistent with past practices. Except as set forth in Section 5.1
of the Company Disclosure Schedule, as required by applicable law or regulation
and except as otherwise contemplated by this Agreement or except as previously
consented to by Parent, in writing, after the date hereof and until the earlier
of the termination of this Agreement or the Effective Time, the Company shall
not and shall not permit any of its subsidiaries to:
(a) amend or otherwise change its Certificate of
Incorporation or by-laws;
(b) issue, sell, pledge, dispose of, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of its capital stock of any class, or options, warrants, convertible securities
or other rights of any kind to acquire shares of such capital stock, or any
other ownership interest, thereof, other than exercises of Company warrants or
Company Stock Options by the holders thereof in accordance with their terms or
(ii) any of its assets, tangible or intangible;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to its
capital stock;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, for cash or
shares of stock, by merger, consolidation, or acquisition of stock or assets)
any interest in any corporation, partnership or other business organization or
division thereof or any assets, or make any investment either by purchase of
stock or securities, contributions of capital or property transfer, or, except
in the ordinary course of business, consistent with past practice, purchase any
property or assets of any other person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or otherwise
as an accommodation become responsible for, the obligations of any person, or
make any loans or advances, or (iii) enter into any Company Material Contract;
(f) make any capital expenditure in excess of $50,000 or
enter into any contract or commitment therefore;
(g) amend, terminate or extend any Company Material
Contract;
(h) delay or accelerate payment of any account payable or
other liability of the Company beyond or in advance of its due date or the date
when such liability would have been paid in the ordinary course of business
consistent with past practice; or
(i) agree, in writing or otherwise, to take or authorize any
of the foregoing actions or any action which would make any representation or
warranty contained in Article III untrue or incorrect.
SECTION 5.2 ADVICE OF CHANGES. Each of the Company, as one party, and
Parent and Merger Sub, together as the second party, shall promptly advise the
other party orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or any
such representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; (iii) any suspension, termination, limitation,
modification, change or other alteration of any agreement, arrangement, business
or other relationship with any of its customers, suppliers or sales or design
personnel; or (iv) any change or event having, or which, insofar as reasonably
can be foreseen, could have a material adverse effect on such party or on the
accuracy and completeness of its representations and warranties or the ability
of such party to satisfy the conditions set forth in Article VII; PROVIDED,
HOWEVER, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement; and PROVIDED
FURTHER that a failure to comply with this Section 5.2 shall not constitute a
failure to be satisfied of any condition set forth in Article VII unless the
underlying untruth, inaccuracy, failure to comply or satisfy, or change or event
would independently result in a failure of a condition set forth in Article VII
to be satisfied.
SECTION 5.3 NO SOLICITATION BY THE COMPANY.
(a) The Company will promptly notify Parent after receipt of
any offer or indication that any person is considering making an offer with
respect to a Company Acquisition Proposal or any request for nonpublic
information relating to the Company or for access to the properties, books or
records of the Company by any person that may be considering making, or has
made, an offer with respect to a Company Acquisition Proposal and will keep
Parent fully informed of the status and details of any such offer, indication or
request. "Company Acquisition Proposal" means any proposal for a merger or other
business combination involving the Company or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company, other than
the transactions contemplated by this Agreement.
(b) From the date hereof until the termination hereof
pursuant to Section 8.1, the Company and the officers of the Company will not
and the Company will use its best efforts to cause its directors, employees and
agents not to, directly or indirectly, (i) take any action to solicit, initiate
or encourage any offer or indication of interest from any person or entity with
respect to any Company Acquisition Proposal, (ii) engage in negotiations with,
or disclose any nonpublic information relating to the Company or (iii)
afford access to the properties, books or records of the Company to, any person
or entity that may be considering making, or has made, an offer with respect to
a Company Acquisition Proposal.
SECTION 5.4 CONDUCT OF BUSINESS BY PARENT. Except as required by
applicable law or regulation and except as otherwise contemplated by this
Agreement, until the earlier of the termination of this Agreement or the
Effective Time, Parent shall, and cause each of its subsidiaries to, conduct its
and their respective businesses in the ordinary course and consistent with past
practices. Except as set forth in Section 5.4 of the Parent Disclosure Schedule,
as required by applicable law or regulation and except as otherwise contemplated
by this Agreement or except as previously consented to by the Company, in
writing, after the date hereof until the earlier of the termination of this
Agreement or the Effective Time, Parent shall not, and shall not permit any of
its subsidiaries to:
(a) amend or otherwise change its certificate of
incorporation or by-laws;
(b) issue, sell, pledge, dispose of, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of its capital stock of any class, or options, warrants, convertible securities
or other rights of any kind to acquire shares of such capital stock, or any
other ownership interest, thereof, or (ii) any of its assets, tangible or
intangible;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to its
capital stock, other than from any subsidiary of Parent to Parent or to any
other subsidiary of Parent;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, for cash or
shares of stock, by merger, consolidation, or acquisition of stock or assets)
any interest in any corporation, partnership or other business organization or
division thereof or any assets, or make any investment either by purchase of
stock or securities, contributions of capital or property transfer, or, except
in the ordinary course of business, consistent with past practice, purchase any
property or assets of any other person, (ii) [other than in the ordinary course
of business consistent with past practices,] incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or otherwise
as an accommodation become responsible for, the obligations of any person, or
make any loans or advances, or (iii) enter into any Parent Material Contract;
(f) make any capital expenditure or enter into any contract
or commitment therefore, other than in the ordinary course of business
consistent with past practices;
(g) amend, terminate or extend any Parent Material Contract;
(h) delay or accelerate payment of any account payable or
other liability of the Company beyond or in advance of its due date or the date
when such liability would have been paid in the ordinary course of business
consistent with past practice; or
(i) agree, in writing or otherwise, to take or authorize any
of the foregoing actions or any action which would make any representation or
warranty contained in Article IV untrue or incorrect.
SECTION 5.5 NO SOLICITATION BY PARENT.
(a) Parent will promptly notify the Company after receipt of
any offer or indication that any person is considering making an offer with
respect to a Parent Acquisition Proposal or any request for nonpublic
information relating to Parent or for access to the properties, books or records
of Parent by any person that may be considering making, or has made, an offer
with respect to a Parent Acquisition Proposal and will keep the Company fully
informed of the status and details of any such offer, indication or request.
"PARENT ACQUISITION PROPOSAL" means any proposal for a merger or other business
combination involving Parent or the acquisition of any equity interest in, or a
substantial portion of the assets of, Parent, other than the transactions
contemplated by this Agreement.
(b) From the date hereof until the termination hereof
pursuant to Section 8.1, Parent and the officers of Parent will not and Parent
will use its best efforts to cause its directors, employees and agents not to,
directly or indirectly, subject to the directors' fiduciary obligations under
applicable law, (i) take any action to solicit, initiate or encourage any offer
or indication of interest from any person or entity with respect to any Parent
Acquisition Proposal, (ii) engage in negotiations with, or disclose any
nonpublic information relating to Parent or (iii) afford access to the
properties, books or records of Parent to, any person or entity that may be
considering making, or has made, an offer with respect to a Parent Acquisition
Proposal.
SECTION 5.6 TRANSITION. To the extent permitted by applicable law,
Parent and the Company shall, and shall cause their respective subsidiaries,
affiliates, officers and employees to, use their commercially reasonable efforts
to facilitate the integration of
the Company and its subsidiaries with the businesses of Parent and its
subsidiaries to be effective as of the Closing Date.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Each party shall, and shall cause its subsidiaries to,
afford to the other party and to the officers, current employees, accountants,
counsel, financial advisors, agents, lenders and other representatives of such
party and its subsidiaries, reasonable access during normal business hours
during the period prior to the Effective Time to all its respective properties,
books, contracts, commitments, personnel and records and, during such period,
each party shall, and shall cause each of its subsidiaries to, furnish promptly
to the other party (i) a copy of each material report, schedule, registration
statement and other document filed by it with any Governmental Entity, and (ii)
all other information concerning its business, properties and personnel as such
other party may reasonably request.
(b) The parties will hold, and will use their best efforts
to cause their officers, directors, employees, consultants, advisors and agents
to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning the other party and its subsidiaries
furnished to it in connection with the transactions contemplated hereby, except
to the extent that such information can be shown to have been (i) previously
known on a nonconfidential basis by the disclosing party, (ii) in the public
domain through no fault of the disclosing party, or (iii) later lawfully
acquired by the disclosing party from other sources; PROVIDED that each party
may disclose such information to its officers, directors, employees,
consultants, advisors and agents in connection with the Merger so long as such
persons are informed of the confidential nature of such information and are
directed to treat such information confidentially. Each parties' obligation to
hold such information in confidence shall be satisfied if it exercises the same
care with respect to such information as it would exercise to preserve the
confidentiality of its own similar information. Notwithstanding any other
provision of this Agreement, if this Agreement is terminated, such confidence
shall be maintained and all confidential materials shall be destroyed or
delivered to their owner, upon request.
SECTION 6.2 COMMERCIALLY REASONABLE EFFORTS. Except where otherwise
provided in this Agreement, each party will use its commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Merger as
soon as practicable after the satisfaction of the conditions set forth in
Article VII hereof, PROVIDED that the foregoing shall not require the Company,
Parent or Merger Sub to take any action or agree to any condition that might, in
the reasonable judgment of the Company or Parent, as the case may be, have a
material adverse effect on the Company or Parent, respectively.
SECTION 6.3 INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) All rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
now existing in favor of the current or former directors or officers of the
Company as provided in its certificate of incorporation or by-laws and any
existing indemnification agreements or arrangements of the Company shall survive
the Merger and shall continue in full force and effect in accordance with their
terms, and shall not be amended, repealed or otherwise modified for a period of
five years after the Effective Time in any manner that would adversely affect
the rights thereunder of such individuals for acts or omissions occurring at or
prior to the Effective Time.
(b) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any individual who is now or has been at any time prior
to the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer of the Company (the "INDEMNIFIED PARTIES" and each an
"INDEMNIFIED PARTY"), is, or is threatened to be, made a party, or arising out
of or pertaining to (i) the fact that he is or was a director, officer or
current employee of the Company or its predecessors or (ii) this Agreement or
any of the transactions contemplated hereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree to
cooperate and use their reasonable best efforts to defend against and respond
thereto.
(c) For a period of five (5) years after the Effective Time,
the Surviving Corporation shall maintain in effect the Company's current
directors' and officers' liability insurance covering acts or omissions
occurring prior to the Effective Time with respect to those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy on terms with respect to such scope of coverage and amount no less
favorable to the Company's directors and officers currently covered by such
insurance than those of such policy in effect on the date hereof; PROVIDED,
HOWEVER, that the Surviving Corporation may substitute therefor policies of
Parent or its subsidiaries (including self-insurance) containing terms with
respect to scope of coverage and amount no less favorable to such directors or
officers.
(d) From and after the Effective Time, the Surviving
Corporation shall maintain in effect a directors' and officer's liability
insurance policy covering acts or omissions occurring after the Effective Time.
(e) Parent shall cause the Surviving Corporation or any
successor thereto, whether by consolidation, merger or transfer of substantially
all of its properties or assets, to comply with its obligations under this
Section 6.3. The provisions of this Section 6.3 shall survive the Effective Time
and are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and other person named herein and his or her heirs and
representatives.
SECTION 6.4 FEES AND EXPENSES. All costs, fees and expenses incurred in
connection with the Merger, this Agreement (including all instruments and
agreements prepared and delivered in connection herewith), and the transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses.
SECTION 6.5 PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing, and shall provide each other the opportunity to
review, comment upon and concur with, and shall use reasonable efforts to agree
on, any press release or other public statements or announcements (including
pursuant to Rule 165 under the Securities Act and Rule 14a-12 under the Exchange
Act) and any broadly distributed internal communications with respect to the
Merger, this Agreement and the transactions contemplated by this Agreement, and
shall not issue any such press release or make any such public statement or
announcement prior to such consultation, except as either party may determine is
required by applicable law or court process (provided prior notice is given to
the other party with a copy of any such disclosure). The parties agree that the
initial press releases (or joint press release if the parties so determine) to
be issued with respect to the Merger, this Agreement and the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 6.6 EMPLOYEE BENEFITS.
(a) Parent shall, or shall cause the Surviving Corporation
and its subsidiaries to, (i) give those employees who are, as of the Effective
Time, employed by the Company (the "CONTINUING EMPLOYEES") full credit for
purposes of eligibility, vesting and benefit accruals (other than for purposes
of benefit calculations and accruals under any defined benefit pension plan)
under any employee benefit plans or arrangements maintained by Parent, the
Surviving Corporation or any subsidiary of Parent or the Surviving Corporation
for such Continuing Employees' service with the Company (or any predecessor
entity) to the same extent recognized by the Company, and (ii) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Continuing
Employees under any welfare plan that such employees may be eligible to
participate in after the Effective
Time, other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Effective
Time under any welfare plan maintained for the Continuing Employees by the
Company immediately prior to the Effective Time, and provide credit under any
such welfare plan for any copayments, deductibles and out-of-pocket expenditures
for the remainder of the coverage period during which any transfer of coverage
occurs.
(b) From and after the Effective Time, Parent shall provide,
or shall cause to be provided, to the Continuing Employees compensation and
employee benefit plans, programs and arrangements that are, in the aggregate,
substantially comparable to those generally provided to such employees as of the
date hereof.
(c) Subject to Section 6.6(a) and (b) above, from and after
the Effective Time, Parent shall, or shall cause the Surviving Corporation to,
assume and honor all Employee Plans, as in effect on the date hereof; PROVIDED,
HOWEVER, nothing herein shall restrict Parent's or the Surviving Corporation's
ability to amend or terminate such Employee Plans in accordance with their
terms.
SECTION 6.7 INCREASE OF AUTHORIZED COMMON STOCK. Not later than 90 days
following the Effective Time, Parent shall take such action as may be necessary
to ensure that the number of authorized but unissued shares of Parent Common
Stock is sufficient to issue the maximum number of such shares issuable upon the
conversion of the Parent Series A Preferred Stock into Parent Common Stock
pursuant to the terms of the Certificate of Designation.
SECTION 6.8 COMPANY SHAREHOLDER APPROVAL. The Company and the officers
of the Company will, and the Company will use its commercially reasonable
efforts to cause the directors of the Company to, obtain all requisite
shareholder approval for the Merger and the other transactions contemplated in
this Agreement, including, if necessary and to the extent applicable, through
the exercise of "drag-along" rights held by the Company or its officers or
directors pursuant to any shareholder agreements.
SECTION 6.9 REGULATION D. Each party hereto shall use all reasonable
efforts to cause the shares of Parent Common Stock and Parent Series A Preferred
Stock to be issued hereunder in connection with the Merger to be issued in
accordance with Regulation D promulgated under the Securities Act. Each party
hereto shall cooperate with the other parties hereto with respect to all filings
required pursuant to Regulation D promulgated under the Securities Act and shall
not knowingly take any action or fail to act to the extent such action or
failure to act would jeopardize the issuance of the shares of Parent Common
Stock and Parent Series A Preferred Stock hereunder in accordance with such
Regulation D.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or, to the extent permitted by applicable law, waiver by each of
Parent and the Company on or prior to the Closing Date of the following
conditions:
(a) SHAREHOLDER APPROVALS. The Company shall have obtained
the consent of its shareholders to the Merger, this Agreement and the
transactions contemplated hereby.
(b) GOVERNMENTAL AND REGULATORY APPROVALS. Other than the
filing of the Certificate of Merger provided for under Section 1.3, all
consents, approvals and actions of, filings with and notices to any Governmental
Entity required by the Company, Parent or any of their subsidiaries under
applicable law or regulation to consummate the Merger and the transactions
contemplated by this Agreement, the failure of which to be
obtained or made would result in a material adverse effect on Parent's ability
to conduct the business of the Company in substantially the same manner as
presently conducted, shall have been obtained or made (all such approvals and
the expiration of all such waiting periods, the "REQUISITE REGULATORY
APPROVALS")
(c) NO INJUNCTIONS OR RESTRAINTS. No judgment, order,
restraining order and/or injunction (temporary or otherwise), decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity or other legal restraint or
prohibition (collectively, "RESTRAINTS") shall be in effect preventing or
materially delaying the consummation of the Merger; PROVIDED, HOWEVER, that each
of the parties shall have used its commercially reasonable efforts to have such
Restraint lifted, vacated or rescinded.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligation of Parent and Merger Sub to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
representations and warranties of the Company set forth herein and in the
Company Disclosure Schedule shall be true and correct in all material respects
at and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case such representations
and warranties shall be true and correct as of such date). Parent shall have
received a certificate of the Company's Chief Executive Officer and Chief
Financial Officer to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all obligations required to be
performed by it at or prior to the Closing Date under this Agreement. Parent
shall have received a certificate of the Company's Chief Executive Officer and
Chief Financial Officer to the foregoing effect.
(c) REGULATORY CONDITION. No condition or requirement shall
have been imposed by one or more Governmental Entities in connection with any
required approval by them of the Merger that requires the Company or any of its
subsidiaries to be operated in a manner that would have a material adverse
effect on the Company.
(d) NO COMPANY MATERIAL ADVERSE EFFECT. There shall not be
or exist any change, effect, event, circumstance, occurrence or state of facts
that has had, has or which reasonably could be expected to have, a material
adverse effect on the Company.
(d) LEGAL OPINION. Parent shall have received an opinion of
Xxxxxxx Procter LLP, counsel to the Company, substantially in the form of
attached hereto as EXHIBIT E.
(e) FAIRNESS OPINION. Parent shall have received and
delivered to its Board of Directors and shareholders a fairness opinion (the
"FAIRNESS OPINION") rendered by Xxxxx Fargo Securities indicating that the
transactions contemplated by this Agreement are fair to the current holders of
Parent Common Stock, which opinion shall be in form and substance reasonably
satisfactory to the Parent and customary in scope and substance for fairness
opinions delivered by investment banking firms in connection with transactions
similar to the Merger.
(f) CERTIFICATE OF DESIGNATION. The Certificate of
Designation shall have been filed with and accepted by the Secretary of State of
the State of Nevada.
(g) REGISTRATION RIGHTS AGREEMENT. Parent and each holder of
Parent Series A Preferred Stock shall have entered into the Registration Rights
Agreement.
(h) LOCK-UP AGREEMENT. Each holder of Parent Series A
Preferred Stock issued as Merger Consideration shall have executed the Lock-Up
Agreement.
(i) XXXXXXX LOCK-UP AGREEMENT. Each holder of Parent Series
A Preferred Stock and Xxxxxx X. Xxxxxxx III shall have executed the Lock-Up and
Voting Agreement in the form attached hereto as EXHIBIT H (the "Xxxxxxx Lock-Up
Agreement").
(j) XXXXXXX EMPLOYMENT AGREEMENT. Xxxxxx X. Xxxxxxx III
shall have executed the Employment Agreement in the form attached hereto as
EXHIBIT I (the "Xxxxxxx Employment Agreement").
SECTION 7.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent set forth herein and in the Parent Disclosure Schedule
shall be true and correct in all material respects at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case such representations and warranties shall be
true and correct as of such date). The Company shall have received a certificate
of Parent's Chief Executive Officer and Chief Financial Officer to the foregoing
effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall have
performed in all material respects all obligations required to be performed by
it at or prior to the Closing Date under this Agreement. The Company shall have
received a certificate of Parent's Chief Executive Officer and Chief Financial
Officer to the foregoing effect.
(c) REGULATORY CONDITION. No condition or requirement shall
have been imposed by one or more Governmental Entities in connection with any
required approval by them of the Merger that requires Parent or any of its
subsidiaries to be operated in a manner that would have a material adverse
effect on Parent.
(d) NO PARENT MATERIAL ADVERSE EFFECT. There shall not be or
exist any change, effect, event, circumstance, occurrence or state of facts that
has had, has or which reasonably could be expected to have, a material adverse
effect on Parent.
(e) LEGAL OPINION. The Company shall have received an
opinion of Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP, counsel to Parent, substantially
in the form attached hereto as EXHIBIT F.
(f) CERTIFICATE OF DESIGNATION. The Company shall have
received evidence of filing and effectiveness of the Certificate of Designation
with the Secretary of State of Nevada and the Company shall have received a
certificate of Parent's Chief Executive Officer to the foregoing effect.
(g) REGISTRATION RIGHTS AGREEMENT. Parent and each holder of
Parent Series A Preferred Stock shall have entered into the Registration Rights
Agreement and the Company shall have received a fully executed copy thereof.
(h) LOCK-UP AGREEMENT. Parent and each holder of Parent
Series A Preferred Stock issued as Merger Consideration shall have entered into
the Lock-Up Agreement and the Company shall have received a fully executed copy
thereof.
(i) DIRECTOR RESIGNATION. Xx. Xxx Xxxxxxxxx shall have
resigned from Parent's Board of Directors effective as of the Effective Time.
(j) ADDITIONAL DIRECTORS. Parent's Board of Directors shall
have resolved that, effective two (2) days following the Closing, the size of
such Board of Directors be increased by two (2) for an aggregate total of seven
(7) directors, and that two of the vacancies created by such increase and by the
resignation of Xx. Xxx Xxxxxxxxx be filled at such time by Xxxxxxxxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxx and that such resolutions shall not have been
rescinded, amended or otherwise modified.
(k) DIRECTOR INDEMNIFICATION AGREEMENTS. Parent shall have
entered into a Director Indemnification Agreement substantially in the form
attached hereto as EXHIBIT G (each, a "DIRECTOR INDEMNIFICATION AGREEMENT") with
each of Xxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxxxxx, Xxxxxx X. Xxxxxxx III, Xx. Xxx
Xxxxxxxxx, Xxxxxxxxxxx X Xxxxxxx and Xxxx XxXxxxxx, and effective upon the date
of their appointment to the Board, Xxxxxxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx.
(l) XXXXXXX LOCK-UP AGREEMENT. Parent, each holder of Parent
Series A Preferred Stock and Xxxxxx X. Xxxxxxx III shall have entered into a
Lock-Up and Voting Agreement in the form attached hereto as EXHIBIT H (the
"Xxxxxxx Lock-Up Agreement").
(m) XXXXXXX EMPLOYMENT AGREEMENT. Parent and Xxxxxx X.
Xxxxxxx III shall have entered into an Employment Agreement in the form attached
hereto as EXHIBIT I (the "Xxxxxxx Employment Agreement").
SECTION 7.4 FRUSTRATION OF CLOSING CONDITIONS. Neither Parent nor the
Company may rely on the failure of any condition set forth in Section 7.1, 7.2
or 7.3, as the case may be, to be satisfied if such failure was caused by such
party's failure to use its own commercially reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement, as required by
and subject to Section 6.2.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether or not the Company's shareholders have
approved the Agreement:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company;
(i) if the Merger shall not have been consummated at
or prior to 5:00 p.m., New York time, on August 31, 2004, PROVIDED,
HOWEVER, that the right to terminate this Agreement pursuant to this
Section 8.1(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the
failure of the Merger to be consummated by such time and date.
(ii) if any Restraint having any of the effects set
forth in Section 7.1(c) shall be in effect and shall have become final
and nonappealable; PROVIDED, HOWEVER, that the party seeking to
terminate this Agreement pursuant to this Section 8.1(b) (iii) shall
have used its commercially reasonable efforts to prevent the entry of
such Restraint and to have such Restraint vacated or removed;
(iii) if any Governmental Entity that must grant a
Requisite Regulatory Approval shall have denied the applicable Requisite
Regulatory Approval and such denial shall have become final and
nonappealable; or
(c) by Parent or the Company if the Company's shareholders
have not consented to Merger;
(d) by Parent, if the Company shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in Section 7.2(a) or (b), and (ii) is either incapable of being cured by
the Company or, if curable, is not cured within 15 days of receipt from Parent
of written notice thereof; or
(e) by the Company, if Parent shall have breached any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach (i) would give rise to the failure of a condition set
forth in Section 7.3(a) or (b), and (ii) is either incapable of being cured by
Parent or, if curable, is not cured within 15 days of receipt from the Company
written notice thereof.
The party desiring to terminate this Agreement pursuant to clause (b) or
(c) of this Section 8.1 shall provide written notice of such termination to the
other party in accordance with Section 8.2, specifying in reasonable detail the
provision hereof pursuant to which such termination is effected.
SECTION 8.2 EFFECT OF TERMINATION.
(a) If this Agreement is terminated by either the Company or
Parent as provided in Section 8.1, this Agreement forthwith shall become void
and have no effect, without any liability or obligation on the part of Parent or
the Company; PROVIDED, HOWEVER, that nothing herein shall relieve any party from
any liability (in contract, tort or otherwise, and whether pursuant to an action
at law or in equity) for any knowing or willful breach by such party of any of
its representations, warranties, covenants or agreements set forth in this
Agreement or in respect of fraud by any party. Notwithstanding the foregoing,
the provisions of this Article VIII, Section 6.1(b),
Section 6.4, Section 6.5, Section 9.7, Section 9.9 and Section 9.12 shall
survive any termination of this Agreement.
(b) Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Article VIII hereof for
its benefit have not been satisfied, Parent, Merger Sub and/or the Company (as
applicable) shall have the right to waive the satisfaction thereof and to
proceed with the transactions contemplated hereby.
SECTION 8.3 AMENDMENT. This Agreement may be amended by the parties at
any time; PROVIDED, HOWEVER, that after receipt of approval by the Company's
shareholders, there shall not be made any amendment that by law requires any
further approval by the shareholders of the Company without the further approval
of such shareholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of all of the parties to be bound thereby.
SECTION 8.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
a party may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
8.3, waive compliance by the other party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a 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 to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
SECTION 9.2 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to Parent or Merger Sub, to:
Front Porch Digital Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
with a copy (which shall not constitute
notice pursuant to this Section 9.2 to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
(b) if to the Company, to:
ManagedStorage International, Inc.
00000 Xxxxxxx Xxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxx XxXxxxxx
with a copy (which shall not constitute
notice pursuant to this Section 9.2) to:
Xxxxxxx Procter LLP
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
and
Xxxx Guest, Esq.
00 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Fax No.: (000) 000-0000
SECTION 9.3 DEFINITIONS. For purposes of this Agreement:
(a) an "AFFILIATE" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of a
person, whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise.
(b) "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT"
means, when used in reference to the Company or Parent, any change, effect,
event, circumstance, occurrence or state of facts that is, or which reasonably
could be expected to be, materially adverse to the business, assets,
liabilities, condition (financial or otherwise), cash flows or results of
operations of such party and its subsidiaries, considered as an entirety.
(c) "PERSON" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(d) a "SUBSIDIARY" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect not less than a majority of its Board
of Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first person.
(e) "KNOWLEDGE" means, (i) with respect to the Company, the
knowledge after reasonable due inquiry, of the Company's executive officers and
(ii) with respect to Parent, the knowledge after reasonable due inquiry, of
Parent's executive officers.
(f) "COMPANY PREFERRED STOCK" means, collectively, the
Company Series A Preferred Stock, the Company Series B Preferred Stock and the
Company Series C Preferred Stock.
SECTION 9.4 INTERPRETATION. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. 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.
SECTION 9.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties
and delivered to the other parties. A facsimile copy of a signature page shall
be deemed to be an original signature page.
SECTION 9.6 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the documents and instruments referred to herein) (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Section
6.4 which shall inure to the benefit of and be enforceable by the persons
referred to therein, are not intended to confer upon any person other than the
parties any rights or remedies.
SECTION 9.7 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal substantive and procedural laws of
the State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law of such state.
SECTION 9.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION 9.9 CONSENT TO JURISDICTION. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or Colorado in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (c) agrees that it
will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the State of New York or Colorado. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or any of the transactions
contemplated by this Agreement in any Federal court located in the State of New
York or Colorado, and hereby further irrevocably and unconditionally waive and
agree not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
SECTION 9.10 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.11 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.12 ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
FRONT PORCH DIGITAL INC.
By /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
FRONT PORCH MERGER CORP.
By /s/ Xxxxxx X. Xxxxxxx III
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Name: Xxxxxx X. Xxxxxxx III
Title: Chief Executive Officer
MANAGEDSTORAGE INTERNATIONAL, INC.
By /s/ Xxxxxx X. Xxxxxxx III
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Name: Xxxxxx X. Xxxxxxx III
Title: Chief Executive Officer
[SIGNATURE PAGE TO MERGER AGREEMENT]
