SHARE EXCHANGE AGREEMENT
Agreement entered into on August 21, 2002 by and between NEBO PRODUCTS,
INC., a Utah corporation (the "NEBO" or "Purchaser") and NAVISET HOLDINGS CORP.,
a Utah corporation (the "Naviset"). NEBO and Naviset are referred to
collectively herein as the "Parties."
RECITALS:
Whereas, NEBO owns all of the issued and outstanding capital stock of
NEBO; and
Whereas, NEBO desires to acquire all of the issued and outstanding
shares of Naviset from the current holders of such shares (the "Naviset
Shareholders"); and
Whereas, the Naviset Shareholders desire to sell all of the Naviset
shares to NEBO in exchange for shares of NEBO common stock on the terms and
conditions set forth in this Agreement; and
Whereas, the respective boards of directors of NEBO and Naviset each
deem it advisable and in the best interests of their respective shareholders to
combine their respective businesses by NEBO acquiring all of the shares of
capital stock of Naviset pursuant to this Agreement; and
Whereas, the respective boards of directors of the Parties have
approved and adopted this Agreement as a plan of reorganization under section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Parties agree that NEBO may effect the acquisition and exchange through a wholly
owned subsidiary.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions. The following terms shall have the meanings
contained in this Section 1 for purposes of this Agreement.
"Acquired Company" means Naviset and each Subsidiary of Naviset.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"Best Efforts" means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such Person of this Agreement and the Exchange.
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"Breach" a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Closing" has the meaning set forth in Section 2.2 below.
"Closing Date" has the meaning set forth in Section 2.2 below.
"Confidential Information" means any information concerning the
businesses and affairs of the Acquired Companies that is not already generally
available to the public.
"Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Definitive Naviset Proxy Materials" means the definitive proxy
materials relating to the Special Naviset Meeting.
"Definitive NEBO Proxy Materials" means the definitive proxy materials
relating to the Special NEBO Meeting.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Dissenting Share" means any Naviset Share that any shareholder who or
which has exercised his or its appraisal rights under the Utah Business
Corporations Act holds of record.
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" means any cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:
(a) Any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) Fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
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(c) Financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) Any other compliance, corrective, investigative, or
remedial measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action," include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as
amended ("CERCLA").
"Environmental Law" is any Legal Requirement that requires or relates
to:
(a) Advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) Preventing or reducing to acceptable levels the
release of pollutants or hazardous substances or materials into the Environment;
(c) Reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) Assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of;
(e) Protecting resources, species, or ecological
amenities;
(f) Reducing to acceptable levels the risks inherent
in the transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) Cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention; or
(h) Making responsible parties pay private parties, or groups
of them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
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"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Exchange" has the meaning set forth in Section 2.1 below.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" has the meaning set forth in Section 2.5.1 below.
"Exchange Ratio" has the meaning set forth in Section 2.4.3 below.
"Facilities" means any real property, leaseholds, or other interests
currently or formerly owned or operated by Naviset or any of its Subsidiaries
and any buildings, plants, structures, or equipment (including motor vehicles,
tank cars, and rolling stock) currently or formerly owned or operated by Naviset
or any of its Subsidiaries.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Body" means any:
(a) Nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) Federal, state, local, municipal, foreign, or other
government;
(c) Governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) Multi-national organization or body; or
(e) Body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"Hazardous Activity" includes the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or Acquired
Companies.
"Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
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pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefore and asbestos or asbestos-containing materials.
"IRS" means the Internal Revenue Service.
"Joint Proxy Statement" means the disclosure document combining the
Definitive NEBO Proxy Materials and the Definitive Naviset Proxy Materials.
"Knowledge" means actual knowledge after reasonable investigation.
"Most Recent Fiscal Quarter End" has the meaning set forth in Section
3.5 below.
"NEBO" has the meaning set forth in the preface above.
"NEBO-owned Share" means any Naviset Share that NEBO owns beneficially.
"NEBO Share" means any share of the common stock, no par value per
share, of NEBO.
"Occupational Safety and Health Law" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Release" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"Requisite NEBO Shareholder Approval" means the affirmative vote of the
holders of a majority of the NEBO Shares in favor of this Agreement and the
Exchange.
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"Requisite Naviset Shareholder Approval" means the affirmative vote of
the holders of the Naviset Shares in favor of this Agreement and the Exchange.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Special Naviset Meeting" has the meaning set forth in Section 5.3.2
below.
"Special NEBO Meeting" has the meaning set forth in Section 5.3.2
below.
"Subsidiary" with respect to any Person (the "Owner"), means any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, "Subsidiary" means a
Subsidiary of Naviset.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" means a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"Threatened" means a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
"Utah Business Corporations Act" means the Revised Business
Corporations Act of the State of Utah, as amended.
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2. Basic Transaction.
2.1 The Exchange. On and subject to the terms and conditions
of this Agreement, NEBO will acquire all of the issued and outstanding shares of
common stock of Naviset (the "Naviset Shares") from the Naviset Shareholders and
the Naviset Shareholders will exchange their Naviset Shares for shares of NEBO
common stock (the "NEBO Shares") on the terms and conditions contained in this
Agreement (the "Exchange"). As a consequence of the Exchange, Naviset will
become a wholly owned subsidiary of NEBO.
2.2 The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Durham
Xxxxx & Xxxxxxx in Salt Lake City, Utah, commencing at 9:00 a.m. local time on
the second business day following the satisfaction or waiver of all conditions
to the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Parties may mutually
determine (the "Closing Date"); provided, however, that the Closing Date shall
be no earlier than September 30, 2002 and no later than December 31, 2002.
Subject to the provisions of Section 9, failure to consummate the purchase and
sale provided for in this Agreement on the date and time and at the place
determined pursuant to this Section 2.2 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.
2.3 Actions at the Closing. At the Closing, (i) Naviset will
deliver to NEBO the various certificates, instruments, and documents referred to
in Section 6.1 below, (ii) NEBO will deliver to Naviset the various
certificates, instruments, and documents referred to in Section 6.2 below, and
(iii) NEBO will deliver to the Exchange Agent in the manner provided below in
this Section 2 the certificate evidencing the NEBO Shares issued in the
Exchange.
2.4 Effect of Exchange.
2.4.1 General. The Exchange shall become
effective at Closing. The Parties agree that NEBO may, at any time after the
Closing, take any action (including executing and delivering any document) in
the name and on behalf of either NEBO or Naviset in order to carry out and
effectuate the transactions contemplated by this Agreement.
2.4.2 Directors and Officers. At the Closing, the
board of directors of NEBO will be Xxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxx Xxxxx.
Within six months of the Closing Date, these directors will unanimously approve
and appoint four additional directors to a seven-member board. Each person so
appointed shall meet the standards established for independent directors by the
NASDAQ Stock Market. At the Closing, the newly constituted three-director board
of directors of NEBO shall ratify the employment agreement of Xxxxx Xxxxxx and
appoint the following executive officers of NEBO:
o Xxxxx Xxxxxx, CEO and Chairman
o Xxxx Xxxxx, President
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o Xxx Xxxxx, Chief Strategy and Operating Officer
o Xxxxx Xxxxx, Chief Financial Officer
o Xxxxx Xxxxxx, Sr. Vice President
2.4.3 Exchange of Naviset Shares. At and as of the
Closing, (A) each Naviset Share (other than any Dissenting Share or NEBO-owned
Share) shall be exchanged for one NEBO Share (the ratio of one NEBO Share to one
Naviset Share is referred to herein as the "Exchange Ratio"), (B) each
Dissenting Share shall be converted into the right to receive payment from
Naviset with respect thereto in accordance with the provisions of the Utah
Business Corporations Act, and (C) each NEBO-owned Share shall be canceled;
provided, however, that the Exchange Ratio shall be subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split,
or other change in the number of Naviset Shares outstanding. No Naviset Share
shall be deemed to be outstanding or to have any rights other than those set
forth above in this Section 2.4.3 after the Closing.
2.4.4 NEBO Shares. Each NEBO Share issued and
outstanding at and as of the Closing will remain issued and outstanding.
2.4.5 Naviset Stock Options. Each employee stock
option that has been granted for the purchase of Naviset Shares in existence at
the date of this Agreement (hereinafter a "Naviset Option") will be converted at
the Effective Date into an option for the purchase of the same number of NEBO
Shares (hereinafter a "NEBO Replacement Option") at the same exercise price and
on the same terms as to vesting, forfeiture, expiration and exercise as in
effect at the Closing Date. To the extent necessary to accommodate the
conversion of the Naviset Options to NEBO Replacement Options NEBO will adopt a
new stock option plan. The total number of shares reserved for the exercixe of
Naviset options that will be converted to NEBO options shall not exceed
13,500,000. Approval of the new plan, if any, will be obtained as part of the
Joint Proxy Statement at the Special NEBO Meeting.
2.4.6 Employment Agreements. At the Closing,
NEBO shall sign and deliver employment agreements with Xxxx Xxxxx, Xxxxx
Xxxxxx, Xxx Xxxxx, and Xxxxx Xxxxx."
2.4.7 Change of Corporate Name. As a part of the
action taken by the shareholders of NEBO at the NEBO Special Meeting, the board
of directors of NEBO shall recommend to the shareholders that they approve an
amendment to NEBO's articles of incorporation changing the name of NEBO to
"Naviset Holdings Corp." If approved and if the Exchange is closed, the
amendment to change the corporate name of NEBO will be filed promptly with the
Division of Corporations of the State of Utah.
2.4.8 Adjustments to Exchange Ratio. The Exchange
Ratio shall be adjusted to reflect fully the effect of any stock split, reverse
split, stock dividend (including any dividend or distribution of securities
convertible into NEBO Shares or Naviset Shares), reorganization,
recapitalization or other like change with respect to NEBO Shares or Naviset
Shares occurring after the date hereof and prior to the Closing.
2.4.9 Dissenters' Rights. Dissenting Naviset Shares
("Dissenting Shares"), if any, shall not be exchanged for NEBO Shares but shall
instead be converted into the right to receive such consideration as may be
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determined to be due with respect to such Dissenting Shares pursuant to the Utah
Business Corporations Law. Naviset shall give NEBO prompt notice of any demand
received by Naviset to require Naviset to purchase outstanding Naviset Shares,
and NEBO shall have the right to direct and participate in all negotiations and
proceedings with respect to such demand. Naviset agrees that, except with the
prior written consent of NEBO, or as required under the Utah Business
Corporations Law, it will not voluntarily make any payment with respect to, or
settle or offer to settle, any such purchase demand. Each holder of Dissenting
Shares ("Dissenting Shareholder") who, pursuant to the provisions of the Utah
Business Corporations Law, becomes entitled to payment of the fair value for
Dissenting Shares shall receive payment therefor (but only after the value
therefor shall have been agreed upon or finally determined pursuant to such
provisions). If, after the Closing, any Dissenting Shares shall lose their
status as Dissenting Shares, NEBO shall issue and deliver, upon surrender by
such Dissenting Shareholder of a certificate or certificates representing
Naviset Shares, the NEBO Shares to which such Naviset Shareholder would
otherwise be entitled under this Section 2.4.
2.5 Procedure for Payment.
2.5.1 Immediately after the Closing, (A) NEBO
will furnish to Colonial Stock Transfer Company (the "Exchange Agent") a stock
certificate (issued in the name of the Exchange Agent or its nominee)
representing that number of NEBO Shares equal to the product of (I) the Exchange
Ratio times (II) the number of outstanding Naviset Shares (other than any
Dissenting Shares and NEBO-owned Shares) and (B) NEBO will cause the Exchange
Agent to mail a letter of transmittal (with instructions for its use) in the
form attached hereto as Exhibit "A" to each record holder of outstanding Naviset
Shares for the holder to use in surrendering the certificates which represented
his or its Naviset Shares in exchange for a certificate representing the number
of NEBO Shares to which he or it is entitled.
2.5.2 NEBO will not pay any dividend or make any
distribution on NEBO Shares (with a record date at or after the Closing) to any
record holder of outstanding Naviset Shares until the holder surrenders for
exchange his or its certificates that represented Naviset Shares. NEBO instead
will pay the dividend or make the distribution to the Exchange Agent in trust
for the benefit of the holder pending surrender and exchange. NEBO may cause the
Exchange Agent to invest any cash the Exchange Agent receives from NEBO as a
dividend or distribution in one or more of the permitted investments approved in
writing by NEBO; provided, however, that the terms and conditions of the
investments shall be such as to permit the Exchange Agent to make prompt
payments of cash to the holders of outstanding Naviset Shares as necessary. NEBO
may cause the Exchange Agent to pay over to NEBO any net earnings with respect
to the investments, and NEBO will replace promptly any cash, which the Exchange
Agent loses through investments. In no event, however, will any holder of
outstanding Naviset Shares be entitled to any interest or earnings on the
dividend or distribution pending receipt.
2.5.3 NEBO may cause the Exchange Agent to return
any NEBO Shares and dividends and distributions thereon remaining unclaimed 180
days after the Closing, and thereafter each remaining record holder of
outstanding Naviset Shares shall be entitled to look to NEBO (subject to
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abandoned property, escheat, and other similar laws) as a general creditor
thereof with respect to the NEBO Shares and dividends and distributions thereon
to which he or it is entitled upon surrender of his or its certificates.
2.5.4 NEBO shall pay all charges and expenses of
the Exchange Agent.
2.6 Closing of Transfer Records. After the close of business
on the date of this Agreement, transfers of Naviset Shares outstanding prior to
the date hereof shall not be made on the stock transfer books of Naviset. No
transfers of Naviset Shares will be made on the stock transfer books of NEBO.
2.7 Option Plan. At the Closing, NEBO will adopt a new stock
option plan for the issuance of options and other awards. The plan will be
submitted to the shareholders of NEBO for approval. NEBO Replacement Options
will be granted under the new plan at Closing to convert existing Naviset
options to NEBO options as provided in Section 2.4.5.
2.8 Lost, Stolen or Destroyed Certificates. In the event any
Naviset Share certificates shall have been lost, stolen or destroyed, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
certificates, upon the making of an affidavit of that fact by the holder thereof
such NEBO Shares as may be required pursuant to this Section 2; provided,
however, that NEBO may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against NEBO, NEBO or the Exchange
Agent with respect to the certificates alleged to have been lost, stolen or
destroyed.
2.9 Taking of Necessary Action; Further Action. Each of NEBO
and Naviset will take all such reasonable and lawful action as may be necessary
or desirable in order to effectuate the Exchange in accordance with this
Agreement as promptly as possible. If, at any time after the Closing, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest NEBO with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of Naviset, the officers and
directors of Naviset are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.
3. Representations and Warranties of Naviset. Naviset represents and
warrants to NEBO that the statements contained in this Section 3 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3), except as
set forth in the disclosure schedule accompanying this Agreement and initialed
by the Parties (the "Disclosure Schedule"). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3 and all information in the Disclosure Schedule will
be brought current at the Closing.
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3.1 Organization, Qualification, and Corporate Power. Each of
the Acquired Companies is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation. Each of
the Acquired Companies is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a material
adverse effect on the financial condition of the Acquired Companies taken as a
whole or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. Each of the Acquired Companies has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it.
3.2 Capitalization. The entire authorized capital stock of
Naviset consists of 350,000,000 shares divided into common (300,000,000) and
preferred (50,000,000) shares, of which 9,432,192 shares of common stock are
issued and outstanding and no shares of common stock are held in treasury.
Naviset has no preferred shares designated, issued or outstanding. All of the
issued and outstanding Naviset Shares have been duly authorized and are validly
issued, fully paid, and nonassessable. Except as detailed in the Disclosure
Schedule, Section 3.2, there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Naviset to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Naviset.
3.3 Authorization of Transaction. Naviset has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
Naviset cannot consummate the Exchange unless and until it receives the
Requisite Naviset Shareholder Approval. This Agreement constitutes the valid and
legally binding obligation of Naviset, enforceable in accordance with its terms
and conditions.
3.4 Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Acquired Companies is subject
or any provision of the charter or bylaws of any of the Acquired Companies or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which any of the Acquired Companies
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets). Other
than in connection with the provisions of the Xxxx-Xxxxx-Xxxxxx Act, the Utah
Business Corporations Act, the Exchange Act, the Securities Act, and the state
securities laws, none of the Acquired Companies needs to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
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3.5 Financial Statements. Naviset has delivered to NEBO
financial statements for the fiscal quarters ended June 30, 2002 (the "Most
Recent Fiscal Quarter End"), and March 31, 2002 and for the fiscal years ended
September 30, 2000 and 2001. These financial statements (including the related
notes and schedules) are auditable and have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby, and
present fairly the financial condition of the Acquired Companies as of the
indicated dates and the results of operations of the Acquired Companies for the
indicated periods, are correct and complete in all respects, and are consistent
with the books and records of the Acquired Companies; provided, however, that
the interim statements are subject to normal year-end adjustments.
3.6 Books and Records. The books of account, minute books,
stock record books, and other records of the Acquired Companies, all of which
have been made available to NEBO, are complete and correct and have been
maintained in accordance with sound business practices and comply with the
requirements of Section 13(b)(2) of the Exchange Act, as amended (regardless of
whether or not the Acquired Companies are subject to that Section), including
the maintenance of an adequate system of internal controls. The minute books of
the Acquired Companies contain accurate and complete records of all meetings
held of, and corporate action taken by, the shareholders, the boards of
directors, and committees of the boards of directors, and no meeting of any such
shareholders, board of directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books. At the
Closing, all of those books and records will be in the possession of the
Acquired Companies and delivered to NEBO.
3.7 Events Subsequent to Most Recent Fiscal Quarter End. Since
the Most Recent Fiscal Quarter End, there has not been any material adverse
change in the business, financial condition, operations, results of operations,
or future prospects of the Acquired Companies taken as a whole.
3.8 Undisclosed Liabilities. None of the Acquired Companies
has any liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due), including any liability for
taxes, except for (i) liabilities set forth on the face of the balance sheet
dated as of the Most Recent Fiscal Quarter End (rather than in any notes
thereto) and (ii) liabilities which have arisen after the Most Recent Fiscal
Quarter End in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law).
3.9 Title To Properties; Encumbrances. Section 3.9 of the
Disclosure Schedule contains a complete and accurate list of all real property,
leaseholds, or other interests therein owned by any of the Acquired Companies.
Naviset has delivered or made available to NEBO copies of the deeds and other
instruments (as recorded) by which the Acquired Companies acquired such real
property and interests, and copies of all title insurance policies, opinions,
abstracts, and surveys in the possession of Naviset or the Subsidiaries and
relating to such property or interests. Naviset (or its Subsidiaries, as the
case may be) own (with good and marketable title in the case of real property,
12
subject only to the matters permitted by the following sentence) all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) that they purport to own located in the Facilities owned or operated
by them or reflected as owned in their respective books and records, including
all of the properties and assets reflected in Naviset's Financial Statements
(except for assets held under capitalized leases disclosed or not required to be
disclosed in Section 3.9 of the Disclosure Schedule and personal property sold
since the date of the Most Recent Fiscal Quarter, as the case may be, in the
Ordinary Course of Business), and all of the properties and assets purchased or
otherwise acquired by the Acquired Companies since the date of the Financial
Statements (except for personal property acquired and sold since the date
thereof in the Ordinary Course of Business and consistent with past practice),
which subsequently purchased or acquired properties and assets (other than
inventory and short-term investments) are listed in Section 3.9 of the
Disclosure Schedule. All material properties and assets reflected in the
Financial Statements are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the Financial Statements as securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Most Recent Fiscal Quarter (such mortgages and
security interests being limited to the property or assets so acquired), with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (c) liens for current taxes not yet
due, and (d) with respect to real property, (i) minor imperfections of title, if
any, none of which is substantial in amount, materially detracts from the value
or impairs the use of the property subject thereto, or impairs the operations of
any of the Acquired Companies, and (ii) zoning laws and other land use
restrictions that do not impair the present or anticipated use of the property
subject thereto. All buildings, plants, and structures owned by the Acquired
Companies lie wholly within the boundaries of the real property owned by the
Acquired Companies and do not encroach upon the property of, or otherwise
conflict with the property rights of, any other Person.
3.10 Condition and Sufficiency of Assets. The buildings,
plants, structures, and equipment of the Acquired Companies are structurally
sound, are in good operating condition and repair, and are adequate for the uses
to which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures, and equipment of the Acquired Companies are sufficient for
the continued conduct of their businesses after the Closing in substantially the
same manner as conducted prior to the Closing.
3.11 Accounts Receivable. All accounts receivable of the
Acquired Companies that are reflected on the Financial Statements or on the
accounting records of the Acquired Companies as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Financial Statements or
on the accounting records of the Acquired Companies as of the Closing Date
13
(which reserves are adequate and calculated consistent with past practice and,
in the case of the reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than the reserve
reflected in the Financial Statements represented of the Accounts Receivable
reflected therein and will not represent a material adverse change in the
composition of such Accounts Receivable in terms of aging). Subject to such
reserves, each of the Accounts Receivable either has been or will be collected
in full, without any set-off, within ninety days after the day on which it first
becomes due and payable. There is no contest, claim, or right of set-off, other
than returns in the Ordinary Course of Business, under any Contract with any
obligor of an Accounts Receivable relating to the amount or validity of such
Accounts Receivable. Section 3.11 of the Disclosure Schedule contains a complete
and accurate list of all Accounts Receivable as of the Most Recent Fiscal
Quarter, which list sets forth the aging of such Accounts Receivable.
3.12 Inventory. All inventory of the Acquired Companies,
whether or not reflected in the Financial Statements, consists of a quality and
quantity usable and salable in the Ordinary Course of Business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Financial Statements
or on the accounting records of the Acquired Companies as of the Closing Date,
as the case may be. All inventories not written off have been priced at the
lower of cost or market value on a last in, first out basis. The quantities of
each item of inventory (whether raw materials, work-in-process, or finished
goods) are not excessive, but are reasonable in the present circumstances of the
Acquired Companies.
3.13 Taxes.
3.13.1 The Acquired Companies have filed or
caused to be filed (on a timely basis since 1999) all Tax Returns that are or
were required to be filed by or with respect to any of them, either separately
or as a member of a group of corporations, pursuant to applicable Legal
Requirements. Naviset has delivered or made available to NEBO copies of, and
Section 3.13 of the Disclosure Schedule contains a complete and accurate list
of, all such Tax Returns relating to income or franchise taxes filed since
January 1999. The Acquired Companies have paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by Naviset or any
of the Acquired Companies, except such Taxes, if any, as are listed in Section
3.13 of the Disclosure Schedule and are being contested in good faith and as to
which adequate reserves (determined in accordance with GAAP) have been provided
in the Financial Statements.
3.13.2 The United States federal and state income
Tax Returns of each of the Acquired Companies subject to such Taxes have been
audited by the IRS or relevant state tax authorities or are closed by the
applicable statute of limitations for all taxable years through 2001. Section
3.13 of the Disclosure Schedule contains a complete and accurate list of all
audits of all such Tax Returns, including a reasonably detailed description of
the nature and outcome of each audit. All deficiencies proposed as a result of
such audits have been paid, reserved against, settled, or, as described in
Section 3.13 of the Disclosure Schedule, are being contested in good faith by
appropriate proceedings. Section 3.13 of the Disclosure Schedule describes all
14
adjustments to the United States federal income Tax Returns filed by any of the
Acquired Companies or any group of corporations including any of them for all
taxable years since 1999, and the resulting deficiencies proposed by the IRS.
Except as described in Section 3.13 of the Disclosure Schedule, neither Naviset
nor any Subsidiary has given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by any other Person) of
any statute of limitations relating to the payment of Taxes of any of Naviset or
any Subsidiary or for which any of them may be liable.
3.13.3 The charges, accruals, and reserves with
respect to Taxes on the respective books of each of the Acquired Companies are
adequate (determined in accordance with GAAP) and are at least equal to that
entity's liability for Taxes. There exists no proposed tax assessment against
any of the Acquired Companies except as disclosed in the Financial Statements or
in Section 3.13 of the Disclosure Schedule. No consent to the application of
Section 341(f)(2) of the IRC has been filed with respect to any property or
assets held, acquired, or to be acquired by any of Naviset or the Subsidiaries
of Naviset. All Taxes that any of them is or was required by Legal Requirements
to withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body or other Person.
3.13.4 All Tax Returns filed by (or that include on
a consolidated basis) any of the Acquired Companies are true, correct, and
complete. There is no tax sharing agreement that will require any payment by any
of the Acquired Companies after the date of this Agreement. Neither Naviset nor
any Subsidiary is, or within the five-year period preceding the Closing Date has
been, an "S" corporation.
3.14 Employee Benefits.
3.14.1 As used in this Section 3.14, the following
terms have the meanings set forth below.
"ERISA Affiliate" means, with respect to the
Acquired Companies, any other person that, together with the Company, would be
treated as a single employer under IRC ss.414.
"Multi-Employer Plan" has the meaning given in ERISA
ss.3(37)(A).
"Naviset Other Benefit Obligation" means an Other
Benefit Obligation owed, adopted, or followed by the Acquired Companies or an
ERISA Affiliate of the Acquired Companies.
"Naviset Plan" means all Plans of which the Acquired
Companies or an ERISA Affiliate of the Acquired Companies is or was a Plan
Sponsor, or to which the Acquired Companies or an ERISA Affiliate of the
Acquired Companies otherwise contributes or has contributed, or in which the
15
Acquired Companies or an ERISA Affiliate of the Acquired Companies otherwise
participates or has participated. All references to Plans are to Naviset Plans
unless the context requires otherwise.
"Naviset VEBA" means a VEBA whose members include
employees of any of the Acquired Companies or any ERISA Affiliate of the
Acquired Companies.
"Other Benefit Obligations" means all obligations,
arrangements, or customary practices, whether or not legally enforceable, to
provide benefits, other than salary, as compensation for services rendered, to
present or former directors, employees, or agents, other than obligations,
arrangements, and practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of IRC ss.132.
"PBGC" means the Pension Benefit Guaranty
Corporation, or any successor thereto.
"Pension Plan" has the meaning given in ERISA
ss.3(2)(A).
"Plan" has the meaning given in ERISA ss.3(3).
"Plan Sponsor" has the meaning given in ERISA
ss.3(16)(B).
"Qualified Plan" means any Plan that meets or
purports to meet the requirements of IRC ss.401(a).
"Title IV Plans" means all Pension Plans that are
subject to Title IV of ERISA, 29 U.S.C.ss.1301 et seq., other than
Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary
association under IRC ss.501(c)(9).
"Welfare Plan" has the meaning given in ERISA
ss.3(1).
3.14.2 Section 3.14 of the Disclosure Schedule
contains a complete and accurate list of all Naviset Plans, Naviset Other
Benefit Obligations, and Naviset VEBAs, and identifies as such all Naviset Plans
that are (A) defined benefit Pension Plans, (B) Qualified Plans, (C) Title IV
Plans, or (D) Multi-Employer Plans.
3.14.3 Section 3.14 of the Disclosure Schedule
contains a complete and accurate list of (A) all ERISA Affiliates of each of the
Acquired Companies, and (B) all Plans of which any such ERISA Affiliate is or
was a Plan Sponsor, in which any such ERISA Affiliate participates or has
participated, or to which any such ERISA Affiliate contributes or has
contributed.
16
3.14.4 Section 3.14 of the Disclosure Schedule
sets forth, for each Multi-Employer Plan, as of its last valuation date, the
amount of potential withdrawal liability of the Acquired Companies and their
other ERISA Affiliates, calculated according to information made available
pursuant to ERISA ss.4221(e).
3.14.5 Section 3.14 of the Disclosure Schedule
sets forth a calculation of the liability of the Acquired Companies for
post-retirement benefits other than pensions, made in accordance with Financial
Accounting Statement 106 of the Financial Accounting Standards Board, regardless
of whether any of the Acquired Companies is required by this Statement to
disclose such information.
3.14.6 Section 3.14 of the Disclosure Schedule
sets forth the financial cost of all obligations owed under any Naviset Plan or
Naviset Other Benefit Obligation that is not subject to the disclosure and
reporting requirements of ERISA.
3.14.7 Naviset has delivered to NEBO, or will
deliver to NEBO prior to the Closing:
(a) All documents that set forth the
terms of each Plan, Other Benefit Obligation, or VEBA and of any related trust,
including (A) all plan descriptions and summary plan descriptions of Naviset
Plans for which Naviset or the Acquired Companies are required to prepare, file,
and distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding
Naviset Plans, Naviset Other Benefit Obligations, and Naviset VEBAs for which a
plan description or summary plan description is not required;
(b) All personnel, payroll, and
employment manuals and policies;
(c) All collective bargaining agreements
pursuant to which contributions have been made or obligations incurred
(including both pension and welfare benefits) by the Acquired Companies and the
ERISA Affiliates of the Acquired Companies, and all collective bargaining
agreements pursuant to which contributions are being made or obligations are
owed by such entities;
(d) A written description of any Plan or
Other Benefit Obligation that is not otherwise in writing;
(e) All registration statements filed
with respect to any Naviset Plan;
(f) All insurance policies purchased
by or to provide benefits under any Naviset Plan;
17
(g) All contracts with third party
administrators, actuaries, investment managers, consultants, and other
independent contractors that relate to any Naviset Plan, Naviset Other Benefit
Obligation, or Naviset VEBA;
(h) All reports submitted within the
four years preceding the date of this Agreement by third party administrators,
actuaries, investment managers, consultants, or other independent contractors
with respect to any Naviset Plan, Naviset Other Benefit Obligation, or Naviset
VEBA;
(i) All notifications to employees of
their rights under ERISAss.601 et seq. and IRCss.4980B;
(j) The Form 5500 filed in each of the
most recent three plan years with respect to each Naviset Plan, including all
schedules thereto and the opinions of independent accountants;
(k) All notices that were given by any
of the Acquired Companies or any ERISA Affiliate of the Acquired Companies or
any Naviset Plan to the IRS, the PBGC, or any participant or beneficiary,
pursuant to statute, within the four years preceding the date of this Agreement,
including notices that are expressly mentioned elsewhere in this Section 3.14;
(l) All notices that were given by the
IRS, the PBGC, or the Department of Labor to any of the Acquired Companies, any
ERISA Affiliate of the Acquired Companies, or any Naviset Plan within the four
years preceding the date of this Agreement;
(m) With respect to Qualified Plans and
VEBAs, the most recent determination letter for each Plan of the Acquired
Companies that is a Qualified Plan; and
(n) With respect to Title IV Plans, the
Form PBGC-1 filed for each of the three most recent plan years.
3.14.8 Except as set forth in Section 3.14 of the
Disclosure Schedule:
(a) The Acquired Companies have
performed all of their respective obligations under all Naviset Plans, Naviset
Other Benefit Obligations, and Naviset VEBAs. The Acquired Companies have made
appropriate entries in their financial records and statements for all
obligations and liabilities under such Plans, VEBAs, and Obligations that have
accrued but are not due.
(b) No statement, either written or
oral, has been made by any of the Naviset or any Subsidiary to any Person with
regard to any Plan or Other Benefit Obligation that was not in accordance with
the Plan or Other Benefit Obligation and that could have an adverse economic
consequence to any of the Acquired Companies or to NEBO.
18
(c) The Acquired Companies, with
respect to all Naviset Plans, Naviset Other Benefits Obligations, and Naviset
VEBAs, are, and each Naviset Plan, Naviset Other Benefit Obligation, and Naviset
VEBA is, in full compliance with ERISA, the IRC, and other applicable Laws
including the provisions of such Laws expressly mentioned in this Section 3.14,
and with any applicable collective bargaining agreement.
(d) No transaction prohibited by
ERISA ss.406 and no "prohibited transaction" under IRC ss.4975(c) have occurred
with respect to any Naviset Plan.
(e) Neither Naviset nor any Subsidiary
has any liability to the IRS with respect to any Plan, including any liability
imposed by Chapter 43 of the IRC.
(f) Neither Naviset nor any Subsidiary
has any liability to the PBGC with respect to any Plan or has any liability
under ERISAss.502 orss.4071.
(g) All filings required by ERISA and
the IRC as to each Plan have been timely filed, and all notices and disclosures
to participants required by either ERISA or the IRC have been timely provided.
(h) All contributions and payments made
or accrued with respect to all Naviset Plans, Naviset Other Benefit Obligations,
and Naviset VEBAs are deductible under IRC ss.162 or ss.404. No amount, or any
asset of any Naviset Plan or Naviset VEBA, is subject to tax as unrelated
business taxable income.
(i) Each Naviset Plan can be terminated
within thirty days, without payment of any additional contribution or amount and
without the vesting or acceleration of any benefits promised by such Plan.
(j) Since May 2001, there has been no
establishment or amendment of any Naviset Plan, Naviset VEBA, or Naviset Other
Benefit Obligation.
(k) No event has occurred or
circumstance exists that could result in a material increase in premium costs of
Naviset Plans and Naviset Other Benefit Obligations that are insured, or a
material increase in benefit costs of such Plans and Obligations that are
self-insured.
(l) Other than claims for benefits
submitted by participants or beneficiaries, no claim against, or legal
proceeding involving, any Naviset Plan, Naviset Other Benefit Obligation, or
Naviset VEBA is pending or, to Naviset's Knowledge, is Threatened.
(m) No Naviset Plan is a stock bonus,
pension, or profit-sharing plan within the meaning of IRCss.401(a).
(n) Each Qualified Plan of each of the
Acquired Companies is qualified in form and operation under IRC ss.401(a); each
trust for each such Plan is exempt from federal income tax under IRC ss.501(a).
19
Each Naviset VEBA is exempt from federal income tax. No event has occurred or
circumstance exists that will or could give rise to disqualification or loss of
tax-exempt status of any such Plan or trust.
(o) Each of the Acquired Companies
and each ERISA Affiliate of the Acquired Companies has met the minimum funding
standard, and has made all contributions required, under ERISA ss.302 and IRC
ss.402.
(p) No Naviset Plan is subject to Title
IV of ERISA.
(q) The Acquired Companies have paid all
amounts due to the PBGC pursuant to ERISAss.4007.
(r) Neither Naviset nor any Subsidiary
or any ERISA Affiliate of the Acquired Companies has ceased operations at any
facility or has withdrawn from any Title IV Plan in a manner that would subject
to any entity or Naviset to liability under ERISA ss.4062(e), ss.4063, or
ss.4064.
(s) Neither Naviset nor any Subsidiary
or any ERISA Affiliate of the Acquired Companies has filed a notice of intent to
terminate any Plan or has adopted any amendment to treat a Plan as terminated.
The PBGC has not instituted proceedings to treat any Naviset Plan as terminated.
No event has occurred or circumstance exists that may constitute grounds under
ERISA ss.4042 for the termination of, or the appointment of a trustee to
administer, any Naviset Plan.
(t) No amendment has been made, or is
reasonably expected to be made, to any Plan that has required or could require
the provision of security under ERISA ss.307 or IRC ss.401(a)(29).
(u) No accumulated funding deficiency,
whether or not waived, exists with respect to any Naviset Plan; no event has
occurred or circumstance exists that may result in an accumulated funding
deficiency as of the last day of the current plan year of any such Plan.
(v) The actuarial report for each
Pension Plan of each of the Acquired Companies and each ERISA Affiliate of each
of the Acquired Companies fairly presents the financial condition and the
results of operations of each such Plan in accordance with GAAP.
(w) Since the last valuation date for
each Pension Plan of each of the Acquired Companies and each ERISA Affiliate of
the Acquired Companies, no event has occurred or circumstance exists that would
increase the amount of benefits under any such Plan or that would cause the
excess of Plan assets over benefit liabilities (as defined in ERISA ss.4001) to
decrease, or the amount by which benefit liabilities exceed assets to increase.
20
(x) No reportable event (as defined
in ERISAss.4043 and in regulations issued thereunder) has occurred.
(y) Neither Naviset nor any Subsidiary
has Knowledge of any facts or circumstances that may give rise to any liability
of any Seller, any of the Acquired Companies, or NEBO to the PBGC under Title IV
of ERISA.
(z) Neither Naviset nor any Subsidiary
or any ERISA Affiliate of the Acquired Companies has ever established,
maintained, or contributed to or otherwise participated in, or had an obligation
to maintain, contribute to, or otherwise participate in, any Multi-Employer
Plan.
(aa) Neither Naviset nor any Subsidiary
or any ERISA Affiliate of the Acquired Companies has withdrawn from any
Multi-Employer Plan with respect to which there is any outstanding liability as
of the date of this Agreement. No event has occurred or circumstance exists that
presents a risk of the occurrence of any withdrawal from, or the participation,
termination, reorganization, or insolvency of, any Multi-Employer Plan that
could result in any liability of either any of the Acquired Companies or NEBO to
a Multi-Employer Plan.
(bb) Neither Naviset nor any Subsidiary
or any ERISA Affiliate of the Acquired Companies has received notice from any
Multi-Employer Plan that it is in reorganization or is insolvent, that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of any excise tax, or that such Plan intends to terminate or has
terminated.
(cc) No Multi-Employer Plan to which any
of the Acquired Companies or any ERISA Affiliate of the Acquired Companies
contributes or has contributed is a party to any pending merger or asset or
liability transfer or is subject to any proceeding brought by the PBGC.
(dd) Except to the extent required
under ERISAss.601 et seq. and IRC ss.4980B, neither Naviset nor any Subsidiary
provides health or welfare benefits for any retired or former employee or is
obligated to provide health or welfare benefits to any active employee following
such employee's retirement or other termination of service.
(ee) Each of the Acquired Companies has
the right to modify and terminate benefits to retirees (other than pensions)
with respect to both retired and active employees.
(ff) Naviset and all Acquired Companies
have complied with the provisions of ERISAss.601 et seq. and IRCss.4980B.
(gg) No payment that is owed or may
become due to any director, officer, employee, or agent of any of the Acquired
Companies will be non-deductible to the Acquired Companies or subject to tax
21
under IRC ss.280G or ss.4999; nor will any of the Acquired Companies be required
to "gross up" or otherwise compensate any such person because of the imposition
of any excise tax on a payment to such person.
(hh) The consummation of the Exchange
will not result in the payment, vesting, or acceleration of any benefit.
3.15 Compliance With Legal Requirements; Governmental
Authorizations.
3.15.1 Except as set forth in Section 3.15 of the
Disclosure Schedule:
(a) Each of the Acquired Companies is,
and at all times since May 2001 has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct or operation of
its business or the ownership or use of any of its assets;
(b) No event has occurred or
circumstance exists that (with or without notice or lapse of time) (A) may
constitute or result in a violation by any of the Acquired Companies of, or a
failure on the part of any of the Acquired Companies to comply with, any Legal
Requirement, or (B) may give rise to any obligation on the part of any of the
Acquired Companies to undertake, or to bear all or any portion of the cost of,
any remedial action of any nature; and
(c) Neither Naviset nor any Subsidiary
has received, at any time since May 2001, any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any actual, alleged,
possible, or potential obligation on the part of any of the Acquired Companies
to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature.
3.15.2 Section 3.15 of the Disclosure Schedule
contains a complete and accurate list of each Governmental Authorization that is
held by any of the Acquired Companies or that otherwise relates to the business
of, or to any of the assets owned or used by, any of the Acquired Companies.
Each Governmental Authorization listed or required to be listed in Section 3.15
of the Disclosure Schedule is valid and in full force and effect. Except as set
forth in Section 3.15 of the Disclosure Schedule:
(a) Each of the Acquired Companies is,
and at all times since May 2001 has been, in full compliance with all of the
terms and requirements of each Governmental Authorization identified or required
to be identified in Section 3.15 of the Disclosure Schedule;
(b) No event has occurred or
circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental Authorization listed or
required to be listed in Section 3.15 of the Disclosure Schedule, or (B) result
22
directly or indirectly in the revocation, withdrawal, suspension, cancellation,
or termination of, or any modification to, any Governmental Authorization listed
or required to be listed in Section 3.15 of the Disclosure Schedule;
(c) Neither Naviset nor any Subsidiary
has received, at any time since May 2001, any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
(d) All applications required to have
been filed for the renewal of the Governmental Authorizations listed or required
to be listed in Section 3.15 of the Disclosure Schedule have been duly filed on
a timely basis with the appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Section 3.15 of the Disclosure
Schedule collectively constitute all of the Governmental Authorizations
necessary to permit the Acquired Companies to lawfully conduct and operate their
businesses in the manner they currently conduct and operate such businesses and
to permit the Acquired Companies to own and use their assets in the manner in
which they currently own and use such assets.
3.16 Legal Proceedings; Orders.
3.16.1 Except as set forth in Section 3.16 of the
Disclosure Schedule, there is no pending Proceeding:
(a) That has been commenced by or
against any of the Acquired Companies or that otherwise relates to or may affect
the business of, or any of the assets owned or used by, any of the Acquired
Companies; or
(b) That challenges, or that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with, any of the Exchange.
To the Knowledge of Naviset and the Acquired Companies, (1) no such Proceeding
has been Threatened, and (2) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding. Naviset has delivered to NEBO copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
Section 3.16 of the Disclosure Schedule. The Proceedings listed in Section 3.16
of the Disclosure Schedule will not have a material adverse effect on the
business, operations, assets, condition, or prospects of any of the Acquired
Companies.
23
3.16.2 Except as set forth in Section 3.16 of the
Disclosure Schedule:
(a) There is no Order to which any of
the Acquired Companies, or any of the assets owned or used by any of the
Acquired Companies, is subject;
(b) Neither Seller is subject to any
Order that relates to the business of, or any of the assets owned or used by,
any of the Acquired Companies; and
(c) To the Knowledge of Naviset and
the Acquired Companies, no officer, director, agent, or employee of any of the
Acquired Companies is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of any of the Acquired Companies.
3.16.3 Except as set forth in Section 3.16 of the
Disclosure Schedule:
(a) Each of the Acquired Companies is,
and at all times since May 2001 has been, in full compliance with all of the
terms and requirements of each Order to which it, or any of the assets owned or
used by it, is or has been subject;
(b) No event has occurred or
circumstance exists that may constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any term or requirement
of any Order to which any of the Acquired Companies, or any of the assets owned
or used by any of the Acquired Companies, is subject; and
(c) Neither Naviset nor any Subsidiary
has received, at any time since May 2001, any notice or other communication
(whether oral or written) from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential violation of, or failure
to comply with, any term or requirement of any Order to which any of the
Acquired Companies, or any of the assets owned or used by any of the Acquired
Companies, is or has been subject.
3.17 Brokers' Fees. None of the Acquired Companies has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
3.18 Continuity of Business Enterprise. Naviset operates
at least one significant historic business line, or owns at least a significant
portion of its historic business assets, in each case within the meaning of
Reg.ss.1.368-1(d).
3.19 Disclosure. The Definitive Naviset Proxy Materials
will comply with the Exchange Act in all material respects. The Definitive
Naviset Proxy Materials will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they will be made, not
misleading; provided, however, that Naviset makes no representation or warranty
with respect to any information that NEBO will supply specifically for use in
the Definitive Naviset Proxy Materials. None of the information that Naviset
24
will supply specifically for use in the Registration Statement, the Prospectus,
or the Definitive NEBO Proxy Materials will contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they will
be made, not misleading.
3.20 Absence of Certain Changes and Events. Except as set
forth in Section 3.20 of the Disclosure Schedule, since the date of the Most
Recent Fiscal Quarter, the Acquired Companies have conducted their businesses
only in the Ordinary Course of Business and there has not been any:
3.20.1 change in any of the Acquired Companies'
authorized or issued capital stock; grant of any stock option or right to
purchase shares of capital stock of any of the Acquired Companies; issuance of
any security convertible into such capital stock; grant of any registration
rights; purchase, redemption, retirement, or other acquisition by any of the
Acquired Companies of any shares of any such capital stock; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock;
3.20.2 amendment to the Organizational Documents of
any of the Acquired Companies;
3.20.3 payment or increase by any of the Acquired
Companies of any bonuses, salaries, or other compensation to any stockholder,
director, officer, or (except in the Ordinary Course of Business) employee or
entry into any employment, severance, or similar Contract with any director,
officer, or employee;
3.20.4 adoption of, or increase in the payments
to or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of any of the Acquired Companies;
3.20.5 damage to or destruction or loss of any
asset or property of any of the Acquired Companies, whether or not covered by
insurance, materially and adversely affecting the properties, assets, business,
financial condition, or prospects of the Acquired Companies, taken as a whole;
3.20.6 entry into, termination of, or receipt of
notice of termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to any of
the Acquired Companies of at least $150,000;
3.20.7 sale (other than sales of inventory in
the Ordinary Course of Business), lease, or other disposition of any asset or
property of any of the Acquired Companies or mortgage, pledge, or imposition of
any lien or other encumbrance on any material asset or property of any of the
Acquired Companies, including the sale, lease, or other disposition of any of
the Intellectual Property Assets;
25
3.20.8 cancellation or waiver of any claims or
rights with a value to any of the Acquired Companies in excess of $150,000;
3.20.9 material change in the accounting methods
used by any of the Acquired Companies; or
3.20.10 agreement, whether oral or written, by any
of the Acquired Companies to do any of the foregoing.
3.21 Employees.
3.21.1 Section 3.21 of the Disclosure Schedule
contains a complete and accurate list of the following information for (A) each
employee, director and officer of Naviset, (B) each senior employee, officer and
director of each of the other Acquired Companies, including each employee on
leave of absence or layoff status, and (C) each Naviset employee, officer and
director terminated by Naviset since May 1, 2001: employer; name; job title;
current compensation paid or payable and any change in compensation since
December 31, 2001; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under any of the Acquired Companies'
pension, retirement, profit-sharing, thrift-savings, deferred compensation,
stock bonus, stock option, cash bonus, employee stock ownership (including
investment credit or payroll stock ownership), severance pay, insurance,
medical, welfare, or vacation plan, other Employee Pension Benefit Plan or
Employee Welfare Benefit Plan, or any other employee benefit plan or any
Director Plan.
3.21.2 No employee or director of any of the
Acquired Companies is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as an employee or director of the
Acquired Companies, or (ii) the ability of any of the Acquired Companies to
conduct its business, including any Proprietary Rights Agreement with the
Acquired Companies by any such employee or director. To Naviset's Knowledge, no
director, officer, or other key employee of any of the Acquired Companies
intends to terminate his employment with Acquired Companies.
3.21.3 Section 3.21 of the Disclosure Schedule
also contains a complete and accurate list of the following information for each
retired employee or director of the Acquired Companies, or their dependents,
receiving benefits or scheduled to receive benefits in the future: name, pension
benefit, pension option election, retiree medical insurance coverage, retiree
life insurance coverage, and other benefits.
3.22 Labor Relations; Compliance. During the past five
years, neither Naviset nor its Subsidiaries has been or is a party to any
collective bargaining or other labor Contract. During the past five years, there
has not been, there is not presently pending or existing, and there is not
Threatened, (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any Proceeding against or affecting any of the Acquired
26
Companies relating to the alleged violation of any Legal Requirement pertaining
to labor relations or employment matters, including any charge or complaint
filed by an employee or union with the National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting any of the Acquired Companies or their premises, or (c) any
application for certification +of a collective bargaining agent. No event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by any of
the Acquired Companies, and no such action is contemplated by any of the
Acquired Companies. Each of the Acquired Companies has complied in all respects
with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. Neither Naviset nor its Subsidiaries is
liable for the payment of any compensation, damages, taxes, fines, penalties, or
other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements.
3.23 Intellectual Property.
3.23.1 Intellectual Property Assets. The term "Intellectual Property Assets"
includes:
(a) The name Naviset, all fictional
business names, trading names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
(b) All patents, patent applications,
and inventions and discoveries that may be patentable (collectively, "Patents");
(c) All copyrights in both published
works and unpublished works (collectively, "Copyrights");
(d) All rights in mask works
(collectively, "Rights in Mask Works"); and
(e) All know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"); owned, used, or licensed by any of the Acquired Companies as licensee
or licensor.
3.23.2 Agreements. Section 3.22(b) of the
Disclosure Schedule contains a complete and accurate list and summary
description, including any royalties paid or received by the Acquired Companies,
of all Contracts relating to the Intellectual Property Assets to which any of
the Acquired Companies is a party or by which any of the Acquired Companies is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $1,000 under which any of the Acquired Companies is the licensee. There are
27
no outstanding and, to Naviset's Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
3.23.3 Know-How Necessary for the Business.
(a) The Intellectual Property Assets
are all those necessary for the operation of the Acquired Companies' businesses
as they are currently conducted or as reflected in the business plan given to
NEBO. One or more of the Acquired Companies is the owner of all right, title,
and interest in and to each of the Intellectual Property Assets, free and clear
of all liens, security interests, charges, encumbrances, equities, and other
adverse claims, and has the right to use without payment to a third party all of
the Intellectual Property Assets.
(b) Except as set forth in Section
3.22(c) of the Disclosure Schedule, all former and current employees of each of
the Acquired Companies have executed written Contracts with one or more of the
Acquired Companies that assign to one or more of the Acquired Companies all
rights to any inventions, improvements, discoveries, or information relating to
the business of any of the Acquired Companies. No employee of any of the
Acquired Companies has entered into any Contract that restricts or limits in any
way the scope or type of work in which the employee may be engaged or requires
the employee to transfer, assign, or disclose information concerning his work to
anyone other than one or more of the Acquired Companies.
3.23.4 Patents.
(a) Section 3.23.4 of the Disclosure
Schedule contains a complete and accurate list and summary description of all
Patents. One or more of the Acquired Companies is the owner of all right, title,
and interest in and to each of the Patents, free and clear of all liens,
security interests, charges, encumbrances, entities, and other adverse claims.
(b) All of the issued Patents are
currently in compliance with formal legal requirements (including payment of
filing, examination, and maintenance fees and proofs of working or use), are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.
(c) No Patent has been or is now
involved in any interference, reissue, reexamination, or opposition proceeding.
To Naviset's Knowledge, there is no potentially interfering patent or patent
application of any third party.
(d) No Patent is infringed or, to
Naviset's Knowledge, has been challenged or threatened in any way. None of the
products manufactured and sold, nor any process or know-how used, by any of the
Acquired Companies infringes or is alleged to infringe any patent or other
proprietary right of any other Person.
(e) All products made, used, or sold
under the Patents have been marked with the proper patent notice.
28
3.23.5 Trademarks.
(a) Section 3.23.5 of Disclosure
Schedule contains a complete and accurate list and summary description of all
Marks. One or more of the Acquired Companies is the owner of all right, title,
and interest in and to each of the Marks, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims.
(b) All Marks that have been registered
with the United States Patent and Trademark Office are currently in compliance
with all formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal applications), are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.
(c) No Xxxx has been or is now involved
in any opposition, invalidation, or cancellation and, to Naviset's Knowledge, no
such action is Threatened with the respect to any of the Marks.
(d) To Naviset's Knowledge, there is no
potentially interfering trademark or trademark application of any third party.
(e) No Xxxx is infringed or, to
Naviset's Knowledge, has been challenged or threatened in any way. None of the
Marks used by any of the Acquired Companies infringes or is alleged to infringe
any trade name, trademark, or service xxxx of any third party.
(f) All products and materials
containing a Xxxx xxxx the proper federal registration notice where permitted by
law.
3.23.6 Copyrights.
(a) Section 3.23.6 of the Disclosure
Schedule contains a complete and accurate list and summary description of all
Copyrights. One or more of the Acquired Companies is the owner of all right,
title, and interest in and to each of the Copyrights, free and clear of all
liens, security interests, charges, encumbrances, equities, and other adverse
claims.
(b) All the Copyrights have been
registered and are currently in compliance with formal legal requirements, are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the date of Closing.
(c) No Copyright is infringed or, to
Naviset's Knowledge, has been challenged or threatened in any way. None of the
subject matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party.
(d) All works encompassed by the
Copyrights have been marked with the proper copyright notice.
3.23.7 Trade Secrets.
(a) With respect to each Trade Secret,
the documentation relating to such Trade Secret is current, accurate, and
sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of any
individual.
(b) The Acquired Companies have taken
all reasonable precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(c) One or more of the Acquired
Companies has good title and an absolute (but not necessarily exclusive) right
to use the Trade Secrets. The Trade Secrets are not part of the public knowledge
or literature, and, to Naviset's Knowledge, have not been used, divulged, or
appropriated either for the benefit of any Person (other than one or more of the
Acquired Companies) or to the detriment of the Acquired Companies. No Trade
Secret is subject to any adverse claim or has been challenged or threatened in
any way.
3.24 Certain Payments. During the past five years, neither
Naviset nor its Subsidiaries or director, officer, agent, or employee of any of
the Acquired Companies, or any other Person associated with or acting for or on
behalf of any of the Acquired Companies, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of any of the Acquired Companies or any Affiliate of the Acquired
Companies, or (iv) in violation of any Legal Requirement, (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Acquired Companies.
3.25 Disclosure.
3.25.1 No representation or warranty of Naviset in
this Agreement and no statement in the Disclosure Schedule omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
3.25.2 No notice given pursuant to Section 5.5
will contain any untrue statement or omit to state a material fact necessary to
make the statements therein or in this Agreement, in light of the circumstances
in which they were made, not misleading.
3.25.3 There is no fact known to Naviset that has
specific application to any of the Acquired Companies (other than general
economic or industry conditions) and that materially adversely affects the
assets, business, prospects, financial condition, or results of operations of
30
the Acquired Companies (on a consolidated basis) that has not been set forth in
this Agreement or the Disclosure Schedule.
3.26 Relationships With Related Persons. Neither Naviset
nor any Related Person of Naviset or of any of the Acquired Companies has, or
since the first day of the next to last completed fiscal year of the Acquired
Companies has had, any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to the Acquired
Companies' businesses. No Acquired Company or any Related Person of Naviset or
of any of the Acquired Companies is, or since the first day of the next to last
completed fiscal year of the Acquired Companies has owned (of record or as a
beneficial owner) an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial interest
in any transaction with any of the Acquired Companies other than business
dealings or transactions conducted in the Ordinary Course of Business with the
Acquired Companies at substantially prevailing market prices and on
substantially prevailing market terms, or (ii) engaged in competition with any
of the Acquired Companies with respect to any line of the products or services
of Naviset or any of its Subsidiaries (a "Competing Business") in any market
presently served by Acquired Companies except for less than one percent of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or in the over-the-counter market. Except as set forth
in Section 3.26 of the Disclosure Schedule, neither Naviset nor any Related
Person of Naviset or of its Subsidiaries is a party to any Contract with, or has
any claim or right against, any of the Acquired Companies.
3.27 Brokers or Finders. Acquired Companies and their
agents have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
4. Representations and Warranties of NEBO. NEBO represents and warrants
to Naviset that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except as
set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged
in paragraphs corresponding to the numbered and lettered paragraphs contained in
this Section 4.
4.1 Organization. NEBO is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
4.2 Capitalization. The entire authorized capital stock
of NEBO consists of 200,000,000 shares divided into common (100,000,000) and
preferred (100,000,000) shares, of which 18,797,445 shares of common stock are
issued and outstanding and no shares are held in treasury. NEBO has no preferred
shares designated, issued or outstanding. NEBO has certain stock options and
warrants outstanding, as disclosed in Section 4.2 of the Disclosure Schedule.
All of the NEBO Shares to be issued in the Exchange have been duly authorized
and, upon consummation of the Exchange, will be validly issued, fully paid, and
nonassessable.
31
4.3 Authorization of Transaction. NEBO has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder; provided, however, that
NEBO cannot consummate the Exchange unless and until it receives the Requisite
NEBO Shareholder Approval. This Agreement constitutes the valid and legally
binding obligation of NEBO, enforceable in accordance with its terms and
conditions.
4.4 Noncontravention. To the Knowledge of any director or
officer of NEBO, neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which NEBO is subject or any provision of the charter or bylaws of NEBO
or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument or other arrangement to which NEBO is a party or by which it
is bound or to which any of its assets is subject, except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, or failure to give notice would not have a material adverse effect
on the ability of the Parties to consummate the transactions contemplated by
this Agreement. To the Knowledge of any director or officer of NEBO, and other
than in connection with the provisions of the Xxxx-Xxxxx-Xxxxxx Act, the Utah
Business Corporations Act, the Exchange Act, the Securities Act, and the state
securities laws, NEBO does not need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
4.5 Brokers' Fees. NEBO does not have any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which any of the
Acquired Companies could become liable or obligated. NEBO will be solely
responsible for the payment of fees and expenses to its investment banker and
financial adviser, Xxxxxx Capital. Legal and investment banking fees of the
Parties shall be paid in full at Closing.
4.6 Continuity of Business Enterprise. It is the present
intention of NEBO to continue at least one significant historic business line of
Naviset, or to use at least a significant portion of Naviset's historic business
assets in a business, in each case within the meaning of Reg.ss.1.368-1(d).
4.7 Disclosure. The Registration Statement, the
Prospectus, and the Definitive NEBO Proxy Materials will comply with the
Securities Act and the Exchange Act in all material respects. The Registration
Statement, the Prospectus, and the Definitive NEBO Proxy Materials will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they will be made, not misleading; provided, however,
that NEBO makes no representation or warranty with respect to any information
32
that Naviset will supply specifically for use in the Registration Statement, the
Prospectus, and the Definitive NEBO Proxy Materials. None of the information
that NEBO will supply specifically for use in the Definitive Naviset Proxy
Materials will contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they will be made, not misleading.
5. Covenants. The Parties agree as follows with respect to the
period from and after the execution of this Agreement.
5.1 General. Each of the Parties will use its reasonable
best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
Closing conditions set forth in Section 6 below).
5.2 Notices and Consents. Naviset will give any notices
(and will cause each of its Subsidiaries to give any notices) to third parties,
and will use its reasonable best efforts to obtain (and will cause each of its
Subsidiaries to use its reasonable best efforts to obtain) any third party
consents, that NEBO reasonably may request in connection with the matters
referred to in Section 3.4 above.
5.3 Regulatory Matters and Approvals. Each of the Parties
will (and Naviset will cause each of its Subsidiaries to) give any notices to,
make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 3.4 and Section 4(d)
above. Without limiting the generality of the foregoing:
5.3.1 Securities Act, Exchange Act, and State
Securities Laws. Naviset will assist NEBO to prepare and file with the SEC
preliminary proxy materials under the Exchange Act relating to the Special
Naviset Meeting and the Special NEBO Meeting. The filing Party in each instance
will use its reasonable best efforts to respond to the comments of the SEC
thereon and will make any further filings (including amendments and supplements)
in connection therewith that may be necessary, proper, or advisable. NEBO will
provide Naviset, and Naviset will provide NEBO, with whatever information and
assistance in connection with the foregoing filings that the filing Party
reasonably may request. NEBO will take all actions that may be necessary,
proper, or advisable under state securities laws in connection with the offering
and issuance of the NEBO Shares.
5.3.2 Utah Business Corporations Act. Naviset
will call a special meeting of its shareholders (the "Special Naviset Meeting")
as soon as reasonably practicable in order that the shareholders may consider
and vote upon the adoption of this Agreement and the approval of the Exchange in
accordance with the Utah Business Corporations Act. NEBO will call a special
meeting of its shareholders (the "Special NEBO Meeting") as soon as reasonably
practicable in order that the shareholders may consider and vote upon the
adoption of this Agreement and the approval of the Exchange in accordance with
the Utah Business Corporations Act. The Parties will mail the Joint Proxy
33
Statement to their respective shareholders simultaneously and as soon as
reasonably practicable. The Joint Proxy Statement will contain the affirmative
recommendations of the respective boards of directors of the Parties in favor of
the adoption of this Agreement and the approval of the Exchange; provided,
however, that no director or officer of either Party shall be required to
violate any fiduciary duty or other requirement imposed by law in connection
therewith.
5.3.3 Xxxx-Xxxxx-Xxxxxx Act. If and to the extent
the Xxxx-Xxxxx-Xxxxxx Act applies to this transaction, each of the Parties will
file (and Naviset will cause each of its Subsidiaries to file) any Notification
and Report Forms and related material that it may be required to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will use its reasonable
best efforts to obtain (and Naviset will cause each of its Subsidiaries to use
its reasonable best efforts to obtain) an early termination of the applicable
waiting period, and will make (and Naviset will cause each of its Subsidiaries
to make) any further filings pursuant thereto that may be necessary, proper, or
advisable.
5.4 Operation of Business. Naviset will not (and will not
cause or permit any of its Subsidiaries to) engage in any practice, take any
action, or enter into any transaction outside the Ordinary Course of Business.
Without limiting the generality of the foregoing, from and after the date of
this Agreement:
5.4.1 None of the Acquired Companies will
authorize or effect any change in its articles, charter or bylaws;
5.4.2 None of the Acquired Companies will grant
any options, warrants, or other rights to purchase or obtain any of its capital
stock or issue, sell, or otherwise dispose of any of its capital stock (except
upon the conversion or exercise of options, warrants, and other rights currently
outstanding);
5.4.3 None of the Acquired Companies will declare,
set aside, or pay any dividend or distribution with respect to its capital stock
(whether in cash or in kind), or redeem, repurchase, or otherwise acquire any of
its capital stock, in either case outside the Ordinary Course of Business;
5.4.4 None of the Acquired Companies will issue
any note, bond, or other debt security or create, incur, assume, or guarantee
any indebtedness for borrowed money or capitalized lease obligation outside the
Ordinary Course of Business;
5.4.5 None of the Acquired Companies will impose
any Security Interest upon any of its assets outside the Ordinary Course of
Business;
5.4.6 None of the Acquired Companies will make
any capital investment in, make any loan to, or acquire the securities or assets
of any other Person outside the Ordinary Course of Business;
34
5.4.7 None of the Acquired Companies will make
any change in employment terms for any of its directors, officers, and employees
outside the Ordinary Course of Business; and
5.4.8 None of the Acquired Companies will commit
to any of the foregoing.
5.5 Full Access. Each Party will (and will cause each of
its Subsidiaries to) permit representatives of the other Party to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Party and its Subsidiaries, to all premises,
properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to each of the other Party and its Subsidiaries. The
Parties will treat and hold as such any Confidential Information it receives
from any of the other Party and its Subsidiaries in the course of the reviews
contemplated by this Section 5.5, will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, agrees to return to the other Party all
tangible embodiments (and all copies) thereof which are in its possession.
5.6 Notice of Developments. Each Party will give prompt
written notice to the other of any material adverse development causing a breach
of any of its own representations and warranties in Section 3 and Section 4
above. No disclosure by any Party pursuant to this Section 5.6, however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
5.7 Exclusivity. Naviset will not (and will not cause or
permit any of its Subsidiaries to) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of all or substantially all of the capital stock or assets of any of the
Acquired Companies (including any acquisition structured as a merger,
consolidation, or share exchange); provided, however, that Naviset, its
Subsidiaries, and their directors and officers will remain free to participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing to the extent
their fiduciary duties may require. Naviset shall notify NEBO immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
5.8 Insurance and Indemnification.
5.8.1 NEBO will provide each individual who
served as a director or officer of Naviset at any time prior to the Closing with
liability insurance for a period of 24 months after the Closing no less
favorable in coverage and amount than any applicable insurance in effect
immediately prior to the Closing; provided, however, that NEBO may reduce the
coverage and amount of liability insurance to the extent the cost of liability
insurance having the full coverage and amount would exceed $50,000 per annum.
35
5.8.2 NEBO will observe any indemnification
provisions now existing in the articles of incorporation or bylaws of Naviset
for the benefit of any individual who served as a director or officer of Naviset
at any time prior to the Closing.
6. Conditions to Obligation to Close.
6.1 Conditions to Obligation of NEBO. The obligation of
NEBO to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions; provided,
however, that NEBO may waive any condition specified in this Section 6.1 if it
executes a writing so stating at or prior to the Closing:
6.1.1 This Agreement and the Exchange shall have
received the Requisite Naviset Shareholder Approval and the number of Dissenting
Shares shall not exceed 3% of the number of outstanding Naviset Shares;
6.1.2 The Acquired Companies shall have procured
all of the third party consents specified in Section 5.2 above;
6.1.3 The representations and warranties set
forth in Section 3 above shall be true and correct in all material respects at
and as of the Closing Date;
6.1.4 Naviset shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
6.1.5 No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions contemplated
by this Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (C) affect adversely the right
of NEBO to own the former assets, to operate the former businesses, and to
control the former Subsidiaries of Naviset, or (D) affect adversely the right of
any of the former Subsidiaries of Naviset to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
6.1.6 Naviset shall have delivered to NEBO a
certificate to the effect that each of the conditions specified above in Section
6.1.1-6.1.5 is satisfied in all respects;
6.1.7 This Agreement and the Exchange shall have
received the Requisite NEBO Shareholder Approval;
6.1.8 All applicable waiting periods (and any
extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Section 3.4 and Section 4.4 above;
36
6.1.9 NEBO shall have received from counsel
to Naviset an opinion in form and substance as set forth in Exhibit "C" attached
hereto, addressed to NEBO, and Dated as of the Closing Date;
6.1.10 NEBO shall have received the resignations,
effective as of the Closing, of each director and officer of the Acquired
Companies other than those whom NEBO shall have specified in writing at least
five business days prior to the Closing; and
6.1.11 All actions to be taken by Naviset in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to NEBO.
6.2 Conditions to Obligation of Naviset. The obligation
of Naviset to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions;
provided, however, that Naviset may waive any condition specified in this
Section 6.2 if it executes a writing so stating at or prior to the Closing:
6.2.1 This Agreement and the Exchange shall
have received the Requisite NEBO Shareholder Approval;
6.2.2 The representations and warranties set
forth in Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
6.2.3 NEBO shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing;
6.2.4 No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions contemplated
by this Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (C) affect adversely the right
of NEBO to own the former assets, to operate the former businesses, and to
control the former Subsidiaries of Naviset, or (D) affect adversely the right of
any of the former Subsidiaries of Naviset to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
6.2.5 NEBO shall have delivered to Naviset a
certificate to the effect that each of the conditions specified above in Section
6.2.1-6.2.4 is satisfied in all respects;
6.2.6 This Agreement and the Exchange shall have
received the Requisite Naviset Shareholder Approval;
6.2.7 All applicable waiting periods (and any
extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or
otherwise been terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Section 3.4 and Section 4.4 above;
6.2.8 All actions to be taken by NEBO in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to Naviset.
7. Additional Agreements.
7.1 Preparation of Solicitation Statement. As soon as
practicable after the execution of this Agreement, Naviset and NEBO shall
jointly prepare a solicitation statement for the solicitation of approval of the
shareholders of Naviset describing this Agreement and the transactions
contemplated hereby and thereby. The information supplied by Naviset for
inclusion in the solicitation statement to be sent to the shareholders of
Naviset shall not, on the date the solicitation statement is first mailed to
Naviset's shareholders or at the Closing, contain any statement which, at such
time, is false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not false or misleading,
or omit to state any material fact necessary to correct any statement in any
earlier communication which has become false or misleading. Notwithstanding the
foregoing, Naviset makes no representation, warranty or covenant with respect to
any information supplied by NEBO contained in any of the foregoing documents.
The information supplied by NEBO for inclusion in the solicitation statement
shall not, on the date the solicitation statement is first mailed to Naviset's
shareholders, nor at the Closing, contain any statement which, at such time, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which it is made, not false or misleading; or omit to state
any material fact necessary to correct any statement in any earlier
communication which has become false or misleading. Notwithstanding the
foregoing, NEBO makes no representation, warranty or covenant with respect to
any information supplied by Naviset that is contained in any of the foregoing
documents. The solicitation statement shall constitute a disclosure document for
the offer and issuance of shares of NEBO Shares to be received by the holders of
Naviset Shares in the Exchange. NEBO and Naviset shall each use reasonable
commercial efforts to cause the solicitation statement to comply with applicable
federal and state securities laws requirements. Each of NEBO and Naviset agrees
to provide promptly to the other such information concerning its business and
financial statements and affairs as, in the reasonable judgment of the providing
party or its counsel, may be required or appropriate for inclusion in the
solicitation statement or in any amendments or supplements thereto, and to cause
its counsel and auditors to cooperate with the other's counsel and auditors in
the preparation of the solicitation statement. Naviset will promptly advise
NEBO, and NEBO will promptly advise Naviset, in writing if at any time prior to
the Closing either Naviset or NEBO shall obtain knowledge of any facts that
might make it necessary or appropriate to amend or supplement the solicitation
statement in order to make the statements contained or incorporated by reference
therein not misleading or to comply with applicable law. The solicitation
statement shall contain the recommendation of the board of directors of Naviset
that the Naviset Shareholders approve the Exchange and this Agreement and the
38
conclusion of the board of directors that the terms and conditions of the
Exchange are fair and reasonable to the shareholders of Naviset. Anything to the
contrary contained herein notwithstanding, Naviset shall not include in the
solicitation statement any information with respect to NEBO or its affiliates or
associates, the form and content of which information shall not have been
approved by NEBO prior to such inclusion.
7.2 Approval of Shareholders. Naviset shall promptly
after the date hereof take all action necessary in accordance with Utah Law and
its articles of incorporation and bylaws to obtain the written consent or
approval of the Naviset Shareholders approving the Exchange as soon as
practicable. Subject to Section 7.1, Naviset shall use its best efforts to
solicit from shareholders of Naviset written consents in favor of the Exchange
and shall take all other action necessary or advisable to secure the vote or
consent of shareholders required to effect the Exchange.
7.3 Sale of Shares Pursuant to Section 4(2) of the
Securities Act. The Parties acknowledge and agree that the NEBO Shares issuable
to the Naviset Shareholders pursuant to Section 2 hereof shall be issued and
sold pursuant to the exemption available by Section 4(2) of the Securities Act
and the rules and regulations promulgated thereunder including, without
limitation, Regulations S and D, and as such, the NEBO Shares shall constitute
"restricted securities" within meaning of the Securities Act. The certificates
of NEBO Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
THESE SHARES HAVE NOT BEEN ACQUIRED WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SHARES UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 OR
UNDER APPLICABLE STATE SECURITIES LAWS.
7.4 Public Disclosure. Unless otherwise permitted by this
Agreement, NEBO and Naviset shall consult with each other before issuing any
press release or otherwise making any public statement or making any other
public (or non-confidential) disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement and the transactions contemplated
hereby, and neither shall issue any such press release or make any such
statement or disclosure without the prior approval of the other (which approval
shall not be unreasonably withheld), except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange or with the Nasdaq Stock Market.
7.5 Affiliate Agreement. Naviset shall use its best
efforts, on behalf of NEBO and pursuant to the request of NEBO, to cause Xxxx
Xxxxx, Xxxxx Xxxxxx, Xxx Xxxxx and Xxxxx Xxxxx, to execute on the date hereof
and deliver to NEBO an Affiliate Agreement substantially in the form attached
hereto as Exhibit "D", concurrently with the execution of this Agreement and in
any event prior to the time that the solicitation statement is mailed to the
shareholders of Naviset.
39
7.6 Legal Requirements. Each of NEBO and Naviset will,
and will cause their respective subsidiaries to, take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
them with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval, order or authorization of or any registration, declaration or filing
with, any Governmental Entity or other person, required to be obtained or made
in connection with the taking of any action contemplated by this Agreement.
7.7 Blue Sky Laws. NEBO shall take such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the NEBO Shares in connection with the
Exchange. Naviset shall use its best efforts to assist NEBO as may be necessary
to comply with the securities and blue sky laws of all jurisdictions which are
applicable in connection with the issuance of NEBO Shares in connection with the
Exchange.
7.8 Registration of Shares Issued in the Exchange. For
purposes of this Agreement, "Registrable Shares" shall mean the NEBO Shares
issued in the Exchange, but excluding NEBO Shares issued in the Exchange that
have been sold or otherwise transferred by the holders of Naviset Shares who
initially received such shares in the Exchange (collectively, the "Holders");
provided, however, that a distribution of shares of NEBO Shares issued in the
Exchange without additional consideration to underlying beneficial owners (such
as the general and limited partners, shareholders or trust beneficiaries of a
Holder) shall not be deemed such a sale or transfer for purposes of this Section
7.8 and such underlying beneficial owners shall be entitled to the same rights
under this Section 7.8 as the initial Holder from which the Registrable Shares
were received and shall be deemed a Holder for the purposes of this Section 7.8.
In case NEBO shall receive from a majority of the Holders a written request that
NEBO effect any registration, qualification or compliance with respect to shares
of Registrable Securities, NEBO will:
(a) Promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(b) As soon as practicable, use its best efforts
to effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by NEBO within 20 days after receipt of such written
notice from NEBO.
40
7.8.1 Notwithstanding the foregoing, NEBO shall
not be obligated to take any action pursuant to Section 7.8(b):
(a) In any particular jurisdiction in which
NEBO would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless NEBO is already
subject to service in such jurisdiction and except as may be required by the
Securities Act;
(b) Prior to twelve months after the Closing;
(c) During the period starting with the date
sixty (60) days prior to NEBO's estimated date of filing of, and ending on the
date ninety (90) days (or such longer period of time as required by any
underwriter participating in such offer of NEBO's securities) immediately
following the effective date of, any registration statement pertaining to
securities of NEBO (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), provided that NEBO is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(d) If NEBO has previously effected one (1) such
registration.
Subject to the foregoing clauses (a) through (d), NEBO shall file a registration
statement covering the Registrable Securities so requested to be registered as
soon as practicable after receipt of the request or requests of a majority of
the Holders.
7.8.2 Costs and Expenses. The costs and expenses
to be borne by NEBO for purposes of this Section 7.8 shall include, without
limitation, printing expenses, legal fees and disbursements of counsel for NEBO,
"blue sky" expenses, accounting fees and filing fees, but shall not include
underwriting commissions or similar charges, legal fees and disbursements of
counsel for the selling Holders. All expenses of any registered offering not
otherwise borne by NEBO shall be borne pro rata among the Selling Holders (and
NEBO and other Holders selling securities in the offering) on the basis of the
number of shares registered.
7.8.3 Indemnification by NEBO. To the fullest
extend permitted by law, NEBO will indemnify and hold harmless each selling
Holder, each underwriter of NEBO Shares being sold by such Holders pursuant to
this Section 7.8 and each person, if any, who controls any such Holder or
underwriter within the meaning of the Securities Act or the Exchange Act against
all actions, claims, losses, damages, liabilities and expenses to which they or
any of them become subject under the Securities Act, the Exchange Act or under
any other statute or at common law or otherwise and, except as hereinafter
provided, will promptly reimburse each such Holder, each such underwriter and
each such controlling person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of material fact in any
registration statement and any prospectus filed pursuant to Section 7.8 or any
post-effective amendment thereto or arise out of or are based upon any omission
or alleged omission to state a material fact required to be stated therein or
41
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading or any violation by NEBO of any rule or
regulation promulgated under the Securities Act or the Exchange Act applicable
to NEBO and relating to action or inaction required by NEBO in connection with
such registration; provided, however, that NEBO shall not be liable to any such
Holder, underwriter or controlling person in respect of any claims, losses,
damages, liabilities and expenses resulting from any untrue statement or alleged
untrue statement, or omission or alleged omission made in reliance upon and in
conformity with information furnished in writing to NEBO by such Holder or
underwriter specifically for use in connection with such registration statement
and prospectus or post-effective amendment.
7.8.4 Indemnification by Holders. To the fullest
extent permitted by law, each selling Holder of Registrable Shares registered in
accordance with Section 7.8 will indemnify NEBO, each person, if any, who
controls NEBO within the meaning of the Securities Act or the Exchange Act, each
director of NEBO and each officer of NEBO who signs the registration statement
and each underwriter of NEBO Shares against any actions, claims, losses,
damages, liabilities and expenses to which they or any of them may become
subject under the Securities Act, the Exchange Act or under any other statute or
at common law or otherwise, and will promptly reimburse NEBO and each such
director, officer, underwriter or controlling person for any legal or other
expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact in any registration statement and any prospectus
filed pursuant to Section 7.8 or any post-effective amendment thereto, or any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, which untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with information furnished in writing to NEBO by such
Holder or underwriter specifically for use in connection with such registration
statement, or any violation by such Holder of any rule or regulation promulgated
under the Securities Act or the Exchange Act applicable to such Holder and
relating to action or inaction required by such Holder in connection with sales
of securities covered by such registration, prospectus or post-effective
amendment; provided, however, that the obligations of each such selling Holder
hereunder shall be limited to an amount equal to the gross proceeds to such
Holder from the sale of such Holder's Registrable Shares as contemplated herein.
7.8.5 Indemnification Procedure. Each person
entitled to indemnification under Section 7.8.3 or 7.8.4 (an "Indemnified
Person") shall give notice to the party required to provide indemnification (the
"Indemnifying Person") promptly after such Indemnified Person has actual
knowledge of any claim as to which indemnity may be sought and shall permit the
Indemnifying Person to assume the defense of any such claim and any litigation
resulting therefrom, provided that counsel for the Indemnifying Person who
conducts the defense of such claim or any litigation resulting therefrom shall
be approved by the Indemnified Person (whose approval shall not unreasonably be
withheld), and the Indemnified Person may participate in such defense at such
party's expense (unless the Indemnified Person has reasonably concluded that
there may be a conflict of interest between the Indemnifying Person and the
Indemnified Person in such action, in which case the fees and expenses of
42
counsel for the Indemnified Person shall be at the expense of the Indemnifying
Person), and provided further that the failure of any Indemnified Person to give
notice as provided herein shall not relieve the Indemnifying Person of its
obligations under this Section 7.8 except to the extent the Indemnifying Person
is materially prejudiced thereby. No Indemnifying Person, in the defense of any
such claim or litigation, shall (except with the consent of each Indemnified
Person) consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Person of a release from all liability in respect
to such claim or litigation. Each Indemnified Person shall furnish such
information regarding itself or the claim in question as an Indemnifying Person
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
7.8.6 Contribution. In order to provide for just
and equitable contribution to joint liability under the Securities Act in any
case in which NEBO or any Holder makes a claim for indemnification pursuant to
this Section 7.8 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding that this
Section 7.8 provides for indemnification, in such case, then NEBO and such
Holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such proportion
as is appropriate to reflect the relative fault of NEBO on the one hand and of
the Holder on the other in connection with the statements or omission which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations or, if the allocation provided herein is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by NEBO and any Holder of Registrable
Shares from the offering of the securities covered by such Registration
Statement. The relative fault of NEBO on the one hand and of the Holder on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by NEBO on the
one hand or by the Holder on the other, and each party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, however, that, in any such case no person or
entity guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Securities Act will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
7.9 "Market Stand-Off" Agreement. In connection with a
public offering of securities by NEBO pursuant to Section 7.8, each holder who
participates in the registration statement filed under the Securities Act for
such offering will not, to the extent requested in good faith by an underwriter
of securities of NEBO, sell or otherwise transfer or dispose of any Registrable
Securities included in such registration statement (other than to donees or
partners of the Holder who agree to be similarly bound) for up to that period of
time, not to exceed one hundred eighty (180) days (the "Market Stand-Off
Period"), following the effective date of such registration statement of NEBO
filed under the Securities Act as is requested by the managing underwriter(s) of
such offering; provided that the officers and directors of NEBO who own stock of
43
NEBO also agree to such restrictions. In order to enforce the foregoing
covenant, NEBO may impose stop transfer instructions with respect to the
Registrable Securities of each such holder (and the shares or securities of
every other person subject to the foregoing restriction) until the end of such
period.
7.10 Termination of NEBO's Obligations. NEBO will have no
obligations pursuant to Section 7.8 hereof with respect to Registrable
Securities held by a Holder if in the opinion of counsel to NEBO at the time of
filing a registration statement such Holder may sell all of such Holder's
Registrable Securities in any single three (3)-month period without registration
under the Securities Act pursuant to Rule 144.
7.11 Reasonable Commercial Efforts and Further Assurances.
Each of the parties to this Agreement shall use reasonable commercial efforts to
effectuate the transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to Closing under this Agreement. Each party hereto, at
the reasonable request of another party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
7.12 Shareholders' Agent. Xxxxx Xxxxxx shall be
constituted and appointed as agent ("Shareholders' Agent") for and on behalf of
the Naviset Shareholders to give and receive notices and communications and to
take all actions necessary or appropriate in the judgment of the Shareholders'
Agent for the accomplishment of the foregoing. Such agency may be changed by the
holders of a majority in interest of the Naviset Shares from time to time upon
not less than 10 days' prior written notice to NEBO. No bond shall be required
of the Shareholders' Agent, and the Shareholders' Agent shall receive no
compensation for his services. Notices or communications to or from the
Shareholders' Agent shall constitute notice to or from each of the Naviset
Shareholders.
7.13 Limitation of Liability. The Shareholders' Agent
shall not be liable for any act done or omitted hereunder as Shareholders' Agent
while acting in good faith and in the exercise of reasonable judgment and any
act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith. The Naviset Shareholders shall severally indemnify
the Shareholders' Agent and hold him harmless against any loss, liability or
expense incurred without gross negligence or bad faith on the part of the
Shareholders' Agent and arising out of or in connection with the acceptance or
administration of his duties hereunder.
7.14 Access to Information. The Shareholders' Agent shall
have reasonable access to information about Naviset and the reasonable
assistance of Naviset's officers and employees for purposes of performing his
duties and exercising his rights hereunder, provided that the Shareholders'
Agent shall treat confidentially and not disclose any nonpublic information from
or about Naviset to anyone (except on a need to know basis to individuals who
agree to treat such information confidentially).
44
7.15 Conflict of Interest. NEBO acknowledges that Xxxxx
Xxxxxx may have a conflict of interest with respect to his duties as
Shareholders' Agent, and in such regard Xxxxx Xxxxxx has informed NEBO that he
will act in the best interests of Naviset Shareholders.
7.16 Actions of the Shareholders' Agent. A decision, act,
consent or instruction of the Shareholders' Agent shall constitute a decision of
all Naviset Shareholders and shall be final, binding and conclusive upon each
such Naviset Shareholder, and NEBO may rely upon any decision, act, consent or
instruction of the Shareholders' Agent as being the decision, act, consent or
instruction of each and every such Naviset Shareholder. NEBO is hereby relieved
from any liability to any person for any acts done by it in accordance with such
decision, act, consent or instruction of the Shareholders' Agent.
8. Termination.
8.1 Termination of Agreement. Either of the Parties may
terminate this Agreement with the prior authorization of its board of directors
(whether before or after shareholder approval) as provided below:
8.1.1 The Parties may terminate this Agreement by
mutual written consent at any time prior to the Closing;
8.1.2 NEBO may terminate this Agreement by
giving written notice to Naviset at any time prior to the Closing (A) in the
event Naviset has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, NEBO has notified Naviset
of the breach, and the breach has continued without cure for a period of 30 days
after the notice of breach or (B) if the Closing shall not have occurred on or
before December 31, 2002, by reason of the failure of any condition precedent
under Section 6(a) hereof (unless the failure results primarily from NEBO
breaching any representation, warranty, or covenant contained in this
Agreement);
8.1.3 Naviset may terminate this Agreement by
giving written notice to NEBO at any time prior to the Closing (A) in the event
NEBO has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, Naviset has notified NEBO of the
breach, and the breach has continued without cure for a period of 30 days after
the notice of breach or (B) if the Closing shall not have occurred on or before
December 31, 2002, by reason of the failure of any condition precedent under
Section 6(b) hereof (unless the failure results primarily from Naviset breaching
any representation, warranty, or covenant contained in this Agreement);
8.1.4 Any Party may terminate this Agreement by
giving written notice to the other Party at any time after the Special NEBO
Meeting or the Special Naviset Meeting in the event this Agreement and the
Exchange fail to receive the Requisite NEBO Shareholder Approval or the
Requisite Naviset Shareholder Approval respectively.
45
8.2 Effect of Termination. If any Party terminates this
Agreement pursuant to Section 8.1 above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in Section 5.7 above
shall survive any such termination.
9. Miscellaneous.
9.1 Survival. None of the representations, warranties,
and covenants of the Parties (other than the provisions in Section 2 above
concerning issuance of the NEBO Shares, the provisions in Section 5.8 above
concerning insurance and indemnification, and will survive the Closing.
9.2 Press Releases and Public Announcements. No Party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the other
Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other Party
prior to making the disclosure).
9.3 No Third Party Beneficiaries. This Agreement shall
not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns; provided, however, that (i)
the provisions in Section 2 above concerning issuance of the NEBO Shares and are
intended for the benefit of the Naviset Shareholders and (ii) the provisions in
Section 5.8 above concerning insurance and indemnification are intended for the
benefit of the individuals specified therein and their respective legal
representatives.
9.4 Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements, or representations
by or between the Parties, written or oral, to the extent they related in any
way to the subject matter hereof.
9.5 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party.
9.6 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
9.7 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
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9.8 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to NEBO: NEBO Products, Inc.
00000 Xxxxxxx Xxxxxxxxx, #000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx Xxxxxx
If to Naviset: Naviset Holdings Corp.
0000 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx Xxxxxx
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
9.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Utah without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Utah or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Utah.
9.10 Amendments and Waivers. The Parties may mutually
amend any provision of this Agreement at any time prior to the Closing with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to shareholder approval will be subject
to the restrictions contained in the Utah Business Corporations Act. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by both of the Parties. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
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9.11 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
9.12 Expenses. Each of the Parties will bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
9.13 Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
9.14 Incorporation of Exhibits and Schedules. The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
NEBO PRODUCTS, INC.
By:
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Title:
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NAVISET HOLDINGS CORP.
By:
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Title:
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